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  • Lou Trope President at LJ Trope & Company

Why Hotel Restaurants Struggle

Part 1 of 6 Part Series

Hotel restaurants have long been the angst of owners and operators. Although some are very successful, there is the large majority that struggle to make a slim margin or none at all.

We see it all the time, the hotel is running at a high occupancy yet there is a stream of guests walking out of the door. Sure, there are the common excuses, “they have been here all day and need to get out of the building” or “they ate here for breakfast they don't want to come back to the same place”. Although these may be valid, they are merely excuses that mask the fact that the restaurant is not relevant. The fact is that if the restaurant was successfully operating a clearly defined concept that resonated with a defined target guest there would not only be hotel guests filling up the room but also locals.

So, it begs the question, why is this so? Well, it’s not an easy issue to solve and has many contributing factors to address. However, let’s start with the obvious. Lack of focus. The restaurant has no clear concept, no understanding how to execute at a reasonable level and/or no reason for being there except to be an amenity for guests who need something to eat and doesn’t want to venture out of the hotel. It is basically a ship without a rudder just there going along with no clear direction.

The easiest way to determine if this is an issue is simply ask the team. Go to the servers, cooks, front desk, bellmen, concierge, chef and managers. Ask them to describe the restaurant in 7-10 words. Odds are there will be a wide range of different responses. Also, ask the General Manager the same question, once again in most cases they will respond with a completely different answer. So, it’s no wonder the restaurant is struggling. The classic hotel restaurant criticism is that it tries to be all things to all people and ends up being nothing to anyone. This is the brutal reality to many operators.

A successful restaurant needs to understand who it is. Although it sounds simple it is not always the case. A restaurant that describes itself as “a regionally defined restaurant with seasonal menus, caring service and a welcoming atmosphere”, still has no identity. Descriptions like this are very common and mean nothing and have no relevance to the guest. A more appropriate description would be, “We are a Pacific Northwest Seafood Grill”, “A California Bistro”, “A High Energy Sports Bar”, “An Italian Inspired Coffee House”, “A Road Side Burger Joint”. In other words, keep it simple.

Once the direction has been clearly defined it is time to start asking the hard questions. Some simple questions to ask yourself and the team to help clarify the concept are:

  • “Why are you better?”

  • “How are your different?”

  • “Why should I, as a guest come to your restaurant?”

On the surface it appears simple; however, they are not easy questions to answer and in most cases the first answer is not always the right answer. These are not questions that require a three-minute dissertation; these are one sentence concise answers. Stating “We are better because our food is better”; odds are that this is not the case. Take a hard look at the competitive set in the local market. Depending on the segment you are competing in food quality is a point of parity, meaning that most competitors offer a similar level of good food quality. A common response from a steakhouse restaurants is that they have a great wine list. Well, I would challenge you to name a steakhouse that does not have a great wine list. The real question is how is the wine list different from the competition and more importantly does the guest care? Is this a competitive advantage?

So, what does success look like? Very simple, ask the guests. Ask them why they come to your restaurant, what they like and what you do that is different from the competition that makes them come back. More importantly, will they come back? Keep in mind that a competitive advantage that defines the concept may have nothing to do with the food. It could be a great view, convenient location to meet with groups, free wi-fi, an amazing beverage program, or super knowledgeable team. The goal is to leverage those guest insights into something real and tangible. Make sure you take an expansive view to help define the special appeal and if nothing is showing it may be time to take a deeper more critical look at the business.

Obviously, this is a very simplistic approach to defining a strong restaurant concept which would include a deep understanding of the competitive set, market positioning, a realistic assessment of the talent pool and strategic plan to achieve financial success. However, it is a great way to get a gut check. Are we in the business we think we are? If not what can we do to help define who we are, deliver the offering the guest expects and in some cases, showcase an offering to the guests that has not been offered in the past. This is not a one stop solution to success but it is a great first step in getting a better understanding of the restaurant and more importantly what the guest expects.

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