Food and Beverage in Hotels: a Recipie for Success?

It is a very well established fact that independent, freestanding Food and Beverage outlets are more successful than their hotel equivalents. There has always been a lot of scrutiny into the monetary role that Food and beverage operations play within hotels and if they are a venture that will compromise the total profitability of the establishment. Hotels, right until the 1950’s predominantly generated its revenue from room sales. This all changed when the wars ended bringing economic stability through international commerce.

Food and Beverage outlets, especially hotel restaurants were very well received and often celebrated for the unique gastronomic experiences they offered. These hotel departments propagated an abundance of revenue for their establishments and as the industry flourished so did the competition. Since the late 1980’s there has been a sudden boom in independently owned restaurants and other Food and Beverage outlets. This new addition not only revolutionized the Hotel Industry but also has made it into the commercial juggernaut that it is today.

Freestanding Food and Beverage operations offer an almost infinite array of cuisines and other services compared to the generic Hotel Restaurant and bar. With such varied and unique choices on offer it’s not hard to deduct why the consumers favor independent outlets to their Hotel counterparts. According to political economist Dr. Elliott R Morss (June 2009), There are in estimate of over 8. 7 million independently owned restaurants worldwide. These freestanding businesses generate more than US$550 billion globally and that’s not taking into account Alcohol, which is a jaw dropping estimate of US$1,163 billion.

With a handicap of such numbers the Food and Beverage outlets within the Lodging establishments unfortunately perform very poorly. Hotels have to maintain Food and beverage Operations as providing these amenities helps them maintain a competitive edge within the Industry and this constantly works against them. In his book, Michael O’Fallon (2011) elaborates upon this situation calling it a ‘necessary evil’ because many Hotel establishments tend to believe the costs of running labor heavy Food and Beverage operations consisting of very high quality products and services in the midst of all this fierce competition will very likely utweigh the benefits. Due to this attitude consumers have come to expect hotels to provide such amenities as a standard necessity. Lodging establishments providing Food and Beverage facilities are termed as “ Full Service” Hotels, which usually have multiple outlets catering to various demographics both, to in-house guests and visitors alike. The problem with having many departments is that if one outlet isn’t making enough profit it will adversely affect the total overall revenue of the establishment.

Smaller businesses and Independently owned operations do not face such a dilemma. They can afford to take more calculated risks and make several drastic changes without compromising their position in the market. Whereas Hotels cannot afford this luxury as they have to account for several other departments and have to maintain a respectable industry repertoire. With independently run Food and Beverage operations in the drivers seat some Hotel Chains have resorted to leasing or outsourcing their outlets and operations in an effort to cut their losses.

A certain trend has begun within the industry especially with Hotel restaurants where establishments have started leasing their own established dining facilities to keen entrepreneurs or Celebrity Chefs. Many Hoteliers have seen success adopting this trend, the best example of this being the main hotel restaurant of the Claridiges, London that is being run by world-renowned chef Gordon Ramsay. This venture has made the Hotel into a bit of an attraction and savors millions in new incoming revenue.

Some establishments choose to take another approach by completely getting rid of the Food and Beverage Operations. Such a method, according to Tushar Kapoor (2006), Director of Professional Development at the California State Polytechnic University is extremely implausible and will work against the company’s reputation. He suggests a more strategic option would be to become more competitive within the local markets. Start with adopting a fresh new approach and implementing new financial and business strategies by doing adequate market research.

Freestanding enterprises also face many challenges just like hotel establishment but they have a much smaller stake to loose in comparison to the latter. Ironing out these issues requires good management and competent market knowledge. In an article for Parkway Hospitality Mgmt. , Michael Haynie, SR. (2010) writes that modern day Food and Beverage operations should be more geared towards profitability. Strategically tweaking and modernizing both physical and operational aesthetics of the business can achieve this goal. For e. g.