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Third-party F&B outlets offer solid results
August 21 2012

To differentiate from competitors, hoteliers are looking to F&B outlets to enhance brand identity and attract new clients.

Highlights
  • By partnering with an outside restaurateur, hoteliers have the opportunity to outsource the majority of start-up costs to the operator, alleviating major budgetary constraints.
  • The restaurant operator also becomes responsible for paying salaries for these positions, rather than coming directly from the hotel’s revenue stream.
  • A restaurant benefits from a built-in customer base in a hotel.
By Steven Kamali
HNN columnist

Hotel food-and-beverage programs are an important way to enhance the marketability and profit margins of a hotel operation. Quality F&B options not only enhance the level of perceived service a hotel has to offer, but also allow an opportunity to further brand the hotel by developing unique concepts that complement the tastes and preferences of the guests the hotel aims to attract.

But when it comes to structuring F&B operations, hotel operators have to decide whether to handle the program internally or hire a third party to operate these services.

Third-party operators are becoming increasingly popular in today’s hotel F&B market, and they offer valuable opportunities to restaurant and hotel operators. When it comes time to decide which route to take, it’s important to be armed with the knowledge of how these partnerships function and how to get the best results. Let’s take a closer look:

1. Overhead costs
Hotel operators that decide to manage their own F&B programs often run into exorbitant start-up costs, depending on the scope of the renovation and equipment needed. These costs can range anywhere from $500,000 up to $1.5 million. By partnering with an outside restaurateur, hoteliers have the opportunity to outsource the majority of these costs to the operator, alleviating major budgetary constraints while taking advantage of the increase in traffic and sales to the hotel property. In some instances, the hotel operator may opt to pay for tenant improvements to incentivize partnerships with outside operators. It’s important to structure a deal that will be mutually beneficial to both parties, ensuring costs are well managed.

2. Staffing
As most hotel managers know, finding and training the right staff can be an extremely tedious task. It takes time and energy to ensure all F&B positions are filled by qualified candidates.

When partnering with an outside operator, the burden of filling these positions is placed on the outsourced party. The restaurant operator also becomes responsible for paying out salaries for these positions, rather than coming directly from the hotel’s revenue stream. This frees the hotel from overhead obligations that can become burdensome and allows greater cash flow that can then be reinvested in additional hotel amenities.

One important point to note, however, is ensuring the staff hired by the restaurant is well versed in the service standards of the hotel in which it operates. The service standards should appear seamless throughout the hotel’s guest offerings. Because the outsourced restaurant operator is responsible for hiring staff that will be actively interacting with guests, it will be beneficial for them to undergo the same training course given to the rest of the hotel’s staff. Ensuring the service standards of the restaurant are up to par with the hotel’s internal standards is an absolute necessity for a successful partnership.

3. Traffic and sales
The main reason restaurants and hotels look to partner up is to enhance traffic, and ultimately sales, of each business. The hotel benefits by being able to offer a comprehensive F&B program without the additional costs and overhead of handling these services in house. This also leads to higher averages in the daily rate and occupancy when there is a strong F&B option in place.

The restaurant, on the other hand, benefits from having a built-in customer base. With at least 100 rooms or more sitting atop the restaurant, there is a secure client base for the restaurant to serve.

4. Branding
Partnering with an outside restaurant operator allows the hotel to appeal to more market segments. Not only do they benefit from offering their own client base a dining experience, but also they have the opportunity to appeal to the restaurant operator’s market base as well. This has a synergistic effect that ends up boosting the appeal of both businesses.

There are many concepts hoteliers can choose for restaurant operations. However, it is important the chosen concept, and operator, complements the hotel’s branding and works to not only satisfy its client base but also extends to others within their market segment. With the hotel industry becoming an increasingly competitive landscape, operators will look to F&B programs as a way to further enhance their brand identity and offer a truly unique guest experience.

As New York’s premiere restaurant and hospitality consultant, Steven Kamali serves as a translator between the investment and hospitality worlds. Working with clients at the intersection of hospitality, restaurants and nightlife, Steven has skillfully advised partners and clients on some of the most successful, high-profile projects New York and beyond. Named to Crain’s New York Business’ prestigious “40 Under 40” list, is regularly quoted as a trend expert in publications including The New York Times, Forbes, New York Post and New York Magazine. He can be reached at info@stevenkamali.com.

The opinions expressed in this column do not necessarily reflect the opinions of HotelNewsNow.com or its parent company, Smith Travel Research and its affiliated companies. Columnists published on this site are given the freedom to express views that may be controversial, but our goal is to provoke thought and constructive discussion within our reader community. Please feel free to comment or contact an editor with any questions or concerns.

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