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4 trends driving F&B revenue generation

Column: industry Tag: hotel,F&B revenue,food and beverage Published: 2017-11-09 10:37 Source: Author:

PHOENIX—Savvy hotel owners and operators are warming up more and more to the idea of food-and-beverage outlets as viable profit centers for many types of hotels. Those who are doing F&B right know how to mix trends with experiences to yield high-margin operations, according to speakers on an F&B panel at The Lodging Conference.

“In the past, a lot of F&B ops were there as an amenity for hotels, almost as loss leaders, to provide a service to the guest,” said Bob Neal, principal at Cooper Carry, on the panel titled “Generate income with F&B.”

“We started to see hotels change the way they’re designed so they could focus more on F&B as an income generator,” he said. “We’re starting to see lobbies be extensions of the bars and restaurants now. There are opportunities even in select-service hotels. There’s a new and refreshed way in how owners are approaching F&B as a profit center.”

The architects and consultants on the panel agreed that four major trends are helping F&B outlets gain revenue traction and answer guest demands at the same time.

1. Experience, experience, experience

“Most people don’t make a decision to stay at a hotel based on the F&B there, but once they arrive, it’s the overall experience of their stay that captures them, and no doubt, F&B sits at the center of that,” said Ken Taylor, VP of strategic development for bar and restaurant consultancy MarkeTeam.

Dan Richardson, national director of business development and hospitality for Entegra Procurement Services, agreed that F&B plays a big role in the total experience that so many guests are seeking from hotel stays these days.

“F&B can make or break the guest experience,” he said. “You can have an F&B operation that enhances the experience, and people talk about it. Or you can have an (inexperienced operator) who can undo everything about the guest experience.”

Making sure the F&B experience matches the hotel’s goals is critical for owners, and that includes deciding whether to operate F&B outlets in-house or to outsource them, panelists said.

The panelists agreed that infrastructure and hotel experience are key, whether it’s the hotel operator managing the restaurant or a third party. Often when hotel companies operate F&B, they don’t understand the intricacies of the operation, panelists said. Conversely, inexperienced third parties can forget that the same quality needs to apply to breakfast and banquet services as it does to a standout dinner experience.

“When I was on the hotel side of the business, we had to remove people who ran restaurants for us (as third-party operators) because they brought guest scores down,” Richardson said. “They were great at dinner service but didn’t care about breakfast because it wasn’t profitable.”

His solution: If you go with an outside operator, have representatives sit on your hotel executive committee so they’re aware of what contributes to the total guest experience.

Keeping F&B operations in-house can have a big payoff, as long as attention is paid to margins and bench strength, panelists said.

“It can be more profitable to do it yourself; you just have to do it right,” said Christopher Meskers, COO of Concierge by Foodbuy/S. Sherman Associates. “We tell people they don’t have to bring in celebrity (chefs)—just do it right and you’ll probably end up with the same capture rate for dinner anyway.”

4 trends driving F&B revenue generation

Hotel F&B experts at The Lodging Conference debated ways to make food-and-beverage operations profitable. From left: Entegra Procurement Services’ Dan Richardson, International Hotel Network’s Sumner Baye, East Carolina University’s Robert O’Halloran, Cooper Carry Architects’ Bob Neal, S. Sherman Associates’ Christopher Meskers and MarkeTeam’s Ken Taylor. (Photos: Stephanie Ricca)

2. Multiuse spaces equal profits

Panelists said the distinct lines between traditional hotel lobbies, restaurants, bars and meeting spaces are blurring—and that’s a great thing for F&B profitability.

Repurposing breakfast spaces into lounge spots later in the day is one trend that’s been successful for owners, panelists said. What makes this work is that the same staff and same equipment can be used in the morning for breakfast, and then later in the day for small bites and drinks.

That practice illustrates the larger trend that eating and drinking in hotels can’t just be confined to separate restaurant and bar space these days, especially if owners are looking for extra revenue.

“F&B operations are extending beyond just the restaurant and bar,” Neal said. “That’s where a big shift in thinking is happening—it’s not just the restaurant, it’s a larger area.”

That means more owners and operators are expanding restaurant spaces to spill over into traditional lobby or other meeting spaces.

“The whole experience of arriving at a hotel means arriving through the lobby,” Taylor said. “You have to have a bar-centric lobby. That’s where everyone should be.”

And while most restaurant experts will tell you that separate street entrances—in addition to interior hotel entrances—are key for generating foot traffic, that’s not the only way to bring the public in, panelists said.

“We often feel restaurants should have street entrances, but I’ve been told I’m wrong in many cases,” said Sumner Baye, president and partner of International Hotel Network. “Some of the most successful F&B operations these days are up on the roof, and people are getting up there.”

The logistics to transporting people to rooftop spaces can be tricky—including managing crowded elevators during high-volume times. Still, rooftops, along with pools and patios, are great locations for generating extra F&B revenue, speakers said.

3. Should it be B&F, not F&B?

“If you’re developing a restaurant in a hotel and ‘bar-centric’ isn’t the terminology you’re using, you’re already behind. That’s where you’re making the most money,” Taylor said.

Meskers agreed that any comprehensive F&B program should maximize beverage spend.

“At a large majority of our hotels, the food cost is lower than the beverage cost (to customers). The right engineering and menu selection makes everything come together,” he said.

That bar spend fits well with the trend of adding lounge functionality to lobbies, Richardson said, and it also serves customers who want small bites at different times during the day.

“If we can find a way to integrate a menu around a lobby bar, like by offering tapas, that’s what we’re doing,” he said.

4. Service makes a difference

As far as the human element, great service can elevate an F&B experience, but labor is expensive, particularly in F&B, panelists said.

Panel moderator Robert O’Halloran, professor and director at East Carolina University’s School of Hospitality Leadership, said he notices the F&B track at many hospitality schools is the least popular, and fewer students are opting to take that route.

Richardson said when he started out in the industry, “no matter what your background was, you started as a dishwasher,” though he noted that doesn’t happen much anymore.

Taylor emphasized that hotel management companies need to do a lot of the training if they want restaurant operations to really mesh with the overall hotel goals.

“Training is so essential,” he said. “You have to adapt to the fact that you’re going to have to train and train well.”

Baye said he notices hospitality employees with an F&B background have better business acumen, which is key to running a profitable hotel operation.

And while great service, particularly in guest-facing bar operations, can make or break the experience, panelists agreed that technology can help streamline some processes that aren’t guest-facing.

“Tech will drive a lot of what we see in the future, especially how to remove labor from the back of the house,” Richardson said.

“Ultimately, there’s going to be automation,” Taylor said. “But my guidance is to hire young and train and develop and create brand leaders for your groups.”

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