The money no one is talking about
22 JANUARY 2016 6:59 AM
Hoteliers should focus on a renewed F&B perspective, concentrating on quality, efficiency, profitability and the 1% approach.
The past several years have been successful ones for the hotel industry. But while owners and operators are generally focused on robust revenue-per-available-room growth and other strong baseline numbers, there is a tendency to overlook other viable and potentially valuable sources of revenue. It is easy to be complacent when revenue and cash flow are healthy. In reality, this is the most critical time to remain focused on continuous improvement.
When was the last time your management team took a critical look at your food-and-beverage operation?
A renewed focus on F&B makes even more sense today—a time when the return of group business heralds a particularly valuable opportunity to boost catering and drive sales. Whether it’s increasing in-house capture rates or improving catering revenue, your F&B operation needs to be fresh, relevant, and able to both deliver a quality experience and provide value for your guests.
But how do you make that happen? How do you keep your guest’s F&B dollars within the four walls of your hotel?
A new mindset
Dining options at hotels are largely based on convenience, and guest dining expectations are constantly changing. White tablecloth restaurants have been replaced by fast casual concepts and lobbies have transformed to social meeting places, often with a bar as the central feature.
Whatever your hotel’s situation, a strong F&B offering begins with understanding best practices. Priorities include:
- Defining menus that align with the needs of the hotel and guest preferences;
- Standardizing a purchasing program through a preferred purchasing system to ensure that cost controls are met;
- Implementing standard portion sizes and efficient prep systems that use high-quality imagery;
- Establishing service standards; and
- Following through with benchmarking and refining to optimize offerings and processes.
If you think of the F&B revitalization process similar to a flow chart, it might look something like this:
- Create a conceptual plan that fits the market position of the hotel.
- Visualize and identify customers and offerings, and choose menu items and recipe selections that meet clientele needs.
- Create order guides, setting up a purchasing and delivering strategy to meet your cost targets.
- Develop your beverage and cocktail plan. Will you offer regional beers or specialty cocktails? Can you partner with a distributor to offer quality wines by the glass?
- Marketing and promotional efforts targeting local, in-room and group guests as part of the group offering—i.e. directional signage, posters and social media.
- Concept/service delivery and follow-through.
- Benchmark by setting and tracking goals.
- Analyze results and evaluate opportunities and shortcomings.
- Refine and make strategic changes where appropriate. The best hotel F&B operations engage in ongoing menu reformatting, both to remove or replace menu items that don’t move and to reposition items that are selling.
Be vigilant in sticking with the process, and results will most certainly follow.
Often, properties that might seem to have the least opportunity can have the greatest financial impact with an improved F&B program.
At one hotel, for example, management was able to execute a remarkable F&B turnaround implementing a new restaurant concept in conjunction with a renovation. The hotel developed a menu based on guest preferences with regionally focused menu and beverage selections. They worked with a distributor, supplier and purchasing partner to develop/identify the right products that met food-cost and quality-delivery targets. They created a database of recipes to maximize purchasing power and improve product consistency, including photos of the plate presentation. They trained their team, marketed their new offerings, and tdelivered a memorable experience—food + beverage + service + ambience. This is significant because hoteliers rarely deliver on all fronts.
The results were eye-opening. In the first three months, the new concept boosted revenue in dining food by 30.6%, in-room service by 59.8%, in-bar food by 27% and in-bar beverage by 42.5%, driven almost exclusively through double-digit in-house capture rates. Overall revenue for the new concept was up 30.3%. At the same time, restaurant/bar payroll was trimmed by 22%, and food costs were reduced 3%.
The 1% solution
Apply the 1% approach to your F&B, and it can lead to big results. This method was popularized by Dave Brailsford, who became the general manager and performance director for Great Britain’s professional cycling team in 2010. The strategy is based on the idea that if you improve every aspect of what you are doing by the tiniest of margins, just 1%, those small gains aggregate across the board and can have a tremendous overall impact.
Why not bring that same philosophy to F&B? Strive for 1% improvement in every aspect of your F&B operation. Reduce waste by 1%, capture 1% more lunch business or move the mark on your roomservice checks 1%. Wherever you see opportunities in your operation, make it a focus to make improvement and pay attention to every detail. Small steps can make a difference, and getting 1% more out of everything adds up. That 1% mindset can and should be a big part of a potentially transformative F&B performance initiative. Performance is about continuous improvement, constantly striving to do better.
Leaving it on the table
Over the past 20 years the importance of a hotel restaurant has changed from a prestigious dining destination to a required amenity—one that too often has been accepted as a loss leader for more profitable rooms operations. Successful owners and operators should always review their options and think differently about how a change in approach could have a meaningful impact on the bottom line. Today, more progressive brands are thinking critically about how to maximize F&B profit, taking a profits-per-square-foot mindset and continually asking: How is this square footage making me money today?
A few forward-thinking management companies and brands offer customizable plug-and-play restaurant concept plans, providing a complete package—including things like branding, menu and logo design, food selection, beverage and specialty cocktail selection, marketing, signage and social media support. The best of these scalable solutions encompass every aspect of F&B operation, defined by a strong framework of operational standards leading to higher revenue, efficient cost controls and reduced labor while delivering a memorable dining experience.
As the hotel industry continues to evolve, the continuing push to look at new opportunities and improve different parts of an operation is contributing to a mindset shift with respect to F&B. The bottom line is that people have to eat—and they are going to eat somewhere. They will either frequent a hotel’s dining establishment or they won’t. And owners and operators can either make money on F&B or not. It’s not luck; it’s a choice. There are real opportunities there for those who take advantage of them.
And for those who don’t? They are quite literally leaving money on the table.
Chris Green is principal and COO of Chesapeake Hospitality and brings more than a quarter century of successful hospitality operations experience to Chesapeake's corporate team, including nearly a decade in the field at various Chesapeake-managed properties. He is responsible for all field operations of the Chesapeake managed estate, a portfolio of properties that continues to evolve to reflect the contours of a changing marketplace. Under Green’s leadership, Chesapeake has demonstrated a proven ability to deliver industry-leading financial results across a wide range of markets and hospitality concepts. Green understands how to balance a property’s long-term strategic vision with the practical immediacy of day-to-day operational demands, and he takes a leading role in actively managing, improving and protecting every asset.
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