Why Hotel Restaurants Struggle: Personal Preference over Guests’ Needs
Things change, people change and guests’ needs change over time. As an operator one must always look forward and keep their eye on shifts in demographics, spending habits, market forces and countless other factors that can have an impact on their business. In the hotel restaurant, however, one of the biggest factors that can bring monumental change to an operation is a change in leadership.
A new Chef, Restaurant General Manager, Director of Food and Beverage or even hotel General Manager can singularly change the concept or direction of a restaurant because “it’s not what they do and they need to put their mark on it”. Think about it. Many times when a new Chef, Restaurant General Manager or Director of Food and Beverage arrives at a new property, one of the first things they will want to do is change the direction of the restaurant. Typically, this is a completely personal decision with little formal analysis, evaluation of the existing operation or competitive forces in the market. They are motivated because “things just aren’t working” but generally there is little effort put into diving deep into the operation and really understanding what could be the root causes impeding the restaurant’s success.
This is an anomaly in the business world because there is no other business where a new manager can come in and arbitrarily decide on a different direction for the business. Just imagine if you went into your favourite athletic shoe store to buy a new pair of running shoes and find out the new manager took it in a different direction and suddenly they are selling only cowboy boots. However, the name, people and ambience is relatively all the same. Doesn’t make much sense, but it happens every day in hotel restaurants. People don’t do this on purpose to hurt the business. They truly believe that they are doing the right thing to make things better and build on a grand plan; but without a deep understanding of the business, market dynamics, financial requirements and finger on the pulse of the industry, it is like shooting fireworks. The restaurant may have some initial success and “look pretty for a moment”; but, in many cases, it ends up falling short of expectations.
Imagine the guest’s experience. They have been going to the same restaurant on a regular basis and come in for a meal expecting the modern Italian cuisine that they have come to know. When they arrive, they see the menu is now New Orleans inspired because that’s where the new chef is from and he has some great recipes. The restaurant has the same name, the same servers, the same uniforms and the place looks the same, but the product is very different. Every time a hotel restaurant makes a drastic shift in concept, most of the frequent guests are lost and new effort must be undertaken to attract new guests and retain previous guests. This is not to say that the food is not very good, but it is not what is expected. This requires a well-planned strategic marketing campaign to clarify the message on how the restaurant is different even though it is still the same in many ways.
It’s not just Chefs that make these types of changes to hotel restaurants. The Restaurant General Manager, Director of Food and Beverage and yes, even the Hotel General Manager, can all have a hand in steering the restaurant to their personal likings. For example, many times a new front of house leader will come in and they will not agree with the direction of the wine program. Again, this is generally done with little or no understanding of the current wine sales mix. So, they begin to purchase new wine that reflects their passion, reformat the list, change the wine by-the-glass selection and do an intensive training program on the new wines. This is great! The team will be well versed on new wines and ready to engage the guest. However, odds are that when an inventory is taken of the wine in storage, there will be many wines (could be from this menu revision or earlier) that are not even listed on the new list. This is a sunk cost and the wine will remain in inventory with no opportunity to be sold until someone either does a special to “blow out” the inventory or gives the wine to the kitchen to “cook it off”. Needless to say, this is not the most effective way to manage the inventory or cash flow.
All of these people have the best intentions in mind of how to better the business but are taking the wrong approach. It’s a given that nothing ever stays the same and as a responsible manager and custodian of the business, one must always improve the experience and the business. It is the operator’s responsibility to adopt, be nimble and most importantly to be smart. The restaurant concept is the foundation of the business and must be protected and enhanced over time. All decisions proposed for the restaurant must be evaluated for their appropriateness in regard to the existing concept. Just because on Top Chef last night they did great dim sum dishes doesn’t mean it applies to your restaurant and should be the nightly special. Even if the Hotel General Manager or in some cases the owner’s Asset Manager likes sushi doesn’t mean it applies to your restaurant. The restaurant concept must always be the true north for all decisions.
As an operator, one must be vigilant in growing and enhancing the business. Even through things may be performing well, one must be constantly asking: Is the space being fully utilised? Are there guests’ needs that are being overlooked? Are you overlooking shifts in your target guest’s dining habits? Is there a new competitor that can steal share? As an operator, these are the types of triggers that should initiate change. A typical restaurant concept has a useful life of about 5-7 years; however, some last much longer. Regardless, it is the management’s responsibility to constantly refine their story and concept. At some point it will be time to change the concept and possibly move some walls. When that time does arrive, it is imperative to build out a strong proposal to ownership that demonstrates a strong understanding of the market, the competitive set and provides clear direction for the new concept based on shifting guest needs or market conditions. Valid financial analysis and projections as well as estimated project costs, from construction, lost revenue during renovation, opening costs and the marketing campaign, must also be determined.
Operating a hotel restaurant is no easy task and comes with its own set of unique challenges. It’s a very fast moving industry that changes constantly and the temptation to change the restaurant direction as a quick fix is always present. It’s not uncommon that every year during budget discussions, the topic of changing the restaurant concept will be brought up. However, the best fix is to be vigilant on the integrity of the restaurant concept regardless of leadership changes and put the right team in place to nurture, understand and improve the restaurant experience on a daily basis while continuously refining the concept. There are many very successful hotel restaurants that rival their independent competitors and are leaders in their market. It’s a long road to success; but, by ensuring that every guest experience is special, the food is always great and the operators truly understand the business dynamics of their restaurant, any hotel restaurant can achieve the success it aspires to achieve.