F&B Outlets in Hotels – Too Much on the Plate?

In an interesting trend that we are seeing in our portfolio of Asset Management clients, the most consistently performing (and often ignored) revenue stream in the F&B Division is In-room Dining. We are seeing this across brands, positioning, city hotels, resorts and without seasonal ebbs and flows.  Guests are increasingly choosing to dine in their rooms than at your restaurants. This can be attributed to factors like growing affinity to OTT content, a desire to spend time in private after busy meetings surrounded by people, and the draw of ‘comfort food’ after several indulgent meals while on the road. It is, therefore, surprising that hotels pay scant regard to the in-room dining experience.

IRD menus have largely remained unchanged for decades, featuring the usual suspects without any creativity. Service standards and equipment too are very basic with no “wow” elements. There is clear value in focusing on this aspect of your guests’ experience, which they are clearly indicating is important to them. Instead, many F&B heads see IRD as cannibalising their restaurants, which is a shortsighted view.

Our team is working closely with hotels to help recognise this pattern and make IRD a key focus area. One-bowl meals that are easy to have while sitting on the bed, quick delivery options that can be served within 15 minutes, smart room designs (especially in leisure destinations) that allow for a premium table setup and dining experience in the room/balcony, regularly changing menus that feature local specialties and current food trends – these are some ways to optimise your guests’ in-room dining experience.

Nowadays, with some exceptions, hotels are businesses run –or owned– by managers (not “hoteliers”) who keep a hawk’s eye on revenues and bottom lines. Metrics like revenue per sqm. and outlet-wise profitability take centre stage. One must reevaluate old norms in terms of having multiple F&B outlets simply because “this is how it’s always been done”.

So how many outlets should your hotel have? Here is a quick reference guide. Bear in mind, this is only indicative and local factors will carry weightage in the final decision.

This, of course, is in addition to the aforementioned In-Room Dining and Banquets.

But what if you have an existing hotel with under-performing outlets?

• • • Hire the restaurant core management team (Restaurant Manager and Outlet Chef) from reputed standalone restaurants. There is a growing crop of outstanding professionals who have honed their skills not at hotels but in top restaurants. Empower them to run the outlet as an independent business. This is a specialised skillset that needs to be recognised as such.
    • Consider handing over space to a well-regarded restaurant chain on lease or revenue-sharing basis. There is no ego in acknowledging that the best restaurant operators today run their business more efficiently than hotel brands do, simply because they have no room to hide. Leveraging their expertise, along with the captive audience that is your in-house guest, could be a win-win solution for both parties.
    • Explore converting an outlet into a dedicated space where visiting chefs and restaurants curate popups in a pre-planned roster for every quarter. This can be communicated well in advance to the local community and online.
    • Evaluate turning idle restaurant spaces into small meeting rooms or an event studio or co-working space.

F&B operations in most hotels today are dominated by the ubiquitous buffets in the coffee shop and banquet events. A strong showing in these areas can mask failures in other outlets, as the Division profitability will look healthy.  Shedding dead weight will enable the team to focus more strongly on the areas that positively influence revenues rather than those that are an uphill battle.

A good Asset Manager will not only drown out the noise and focus on the micro-factors that impact performance but also give practical solutions to optimise the yield of your asset.