Mushrooming Standalone Restaurants Hitting Business of Hotel F&B Outlets

By Sudhir Pai FOOD AND Beverage outlets at five-star hotels are no longer the big draws they once were. Top hotels in India are now opening fewer in-house eating houses, as specialty restaurants mushrooming all across towns, are luring away diners and eating into hotel revenues. Today hotels are setting up not more than two restaurants each in their upcoming hotels since it's no longer viable to have more. With the increasing numbers of free-standing restaurants, footfalls are much lower for high-end hotels. Earlier, it wasn't uncommon to have five to seven restaurants in a five-star hotel, today, this isn't feasible. Non-resident guests who form the back-bone of a hotel’s specialty restaurant clientele, now find them less accessible and convenient due to issues of accessibility, security arrangements, and sometimes, even ambience. The threat from high-quality standalone restaurants is very real. Guests feel hotels cater to a more generic taste which is true, because in hotels, one has to cater to diverse international clientele and Indian travelers as well as local guests. Today, modern guests want constant novelty, new concepts and affordable experiences. Local standalone restaurants are making us reconsider the number of outlets we need to have in hotels. Hence city business hotels do not opt for multiple restaurants, a single restaurant in addition to a coffee shop is the right combination. With the increase in business from meetings, incentive, conference and exhibitions (MICE), hotels are expanding their banquet space while reducing the number of restaurants. City hotels specialise in large conference and MICE businesses. The large banquets have capacity to hold large product launches, high profile company dinners and wedding segment is also growing. This gives a better profitability to hotels than running F&B outlet. Concept restaurants are going out of style for most hotels as younger guests want to go out and try something new. If we are in a city-centre, we prefer an all-day dining restaurant in the lobby with more choice of cuisines and smaller portions. This is because tier-1 city centers have more eating options. For hotels profit on rooms sales is much higher than in running a F&B operation as the overhead costs are very high. Nowadays, instead of opening a separate specialty restaurant besides the all-day dining, hoteliers are incorporating special cuisine like Italian or Chinese by including it in existing all day dining set up .They are hiring specialised chefs for these cuisines within the all-day dining outlet. These hotel chains are also reworking their F&B offerings. The all-day dining restaurants are slowly transforming to include specialty menu and dishes, which save the cost of building a separate restaurant. I feel today when we are conceptualising restaurants within hotels, one must factor in lot of points to make the food and beverage offering in our property compelling and profitable. It is understandable why many hotel operators would be skeptical about the success standalone hotel restaurants are seeing. For years hoteliers have experienced significant financial losses in the food and beverage departments of their hotels and many often consider food and beverage to be the ’necessary evil’ of their businesses. The cost of doing business in the restaurant outlets is significantly more than on the room’s side. F&B requires more people and labor to execute services than any other department in a hotel. The opportunity for theft, shrinkage and overall loss is exponentially more worrisome. Food and beverage requires more management, oversight and attention to detail. Gone are the days where a hotel restaurant must have the standard meat, chicken, fish, caesar salad and club sandwich. Food is exciting ’ fresh, local, seasonal and interesting. It is okay to do ethnic cuisine or use non-traditional meat cuts or cooking techniques. As consumers spend more and more time watching the Food Network and reading cookbooks, they are more willing - and frankly expect ’ to try new things while traveling. Why should we not provide this for them in the comfort of their hotel? Wine lists should no longer be heavy volumes dropped on the guest’s table while a sommelier stands by waiting to sell the most expensive bottle. Local wines should be served without the traditional high mark up making hotel bars more interesting. Cocktails should be well-crafted, delicious, and imaginative. Lounges should no longer be the place for single business travelers to sit down with their laptop and have a conference call, they should act as an epicenter of a hotel. Hotel chains are tying up with ’celebrity’ chefs and restaurateurs. If an hotelier and celebrity chef or restaurateur can become aligned on concept and basic offerings, suddenly the hotel can collect a monthly rent check and often a percentage of revenues from the third-party operator while the partner generates excitement and attracts and brings in new patrons. This works best when the hotel and restaurant operators have similar goals and can work together. The hotel often benefits from the marketing and PR from the restaurant and the overall positioning in the local market place. The hotel restaurant and bar scene will continue to evolve. Today we have the opportunity to create restaurants that provide a not-yet-realised need and make guests’ dining experiences memorable. The resulting word-of-mouth marketing that happy guests provide is priceless. Take a look at the restaurant in your hotel. Can it use an entrepreneurial approach to driving revenues and creating dynamic guest experiences? The author is Executive Chef, at the Holiday Inn Mumbai International Airport.