Hoteliers say relevant menus and concepts needed to generate food profits

In the food and beverage equation, the beverage portion has proven to be much more profitable than food for the hospitality industry. But operators of full-service hotels with restaurants say one doesn’t come without the other.

Foodservices must be holistic in the hospitality industry, said Kyle Allison, who manages offsite foodservice sales at the DoubleTree by Hilton Hotel Reading in Reading, Pennsylvania.

“If you consider it purely based on profit margins, which generates the most profit – those who say B would be right. But in what world do you have B without F?” he said. “Maybe B generates the highest profits, but I think you can’t have the profits of B without embracing the F.”

Steve Palmer, Founder and Managing Partner of The Indigo Road Hospitality Group, said while the beverage side of food and drink drives profits and can lead the charge, the food side is also a necessity.

“Could you have a cocktail program where one drink is the star of the show? Yes. Do I think you could manage a full food and beverage program in a hotel without meaningful food? I don’t think so,” he said.

Beverage service will always be more profitable than food because of the profit margins of both, said Bill Kohl, senior manager and director of restaurant development at Greenwood Hospitality Group.

A $20 bottle of liquor with a mixer can produce up to 20 shots that can be sold for around $9 each while costing $1.50 to make – for a profit margin of 16.7%, a-t -he declares. On the food side, a $40 steak can be sold for $80, a profit margin of 50%, which is value in terms of the money brought in, but the profit margin per drink makes investing in the drinks a wise decision.

“The cost percentage on alcohol is much lower,” he said. “You’re never going to get those two percentages at par.”

Kohl said another factor is that beverage service only requires one or two bartenders to prepare and deliver drinks, while catering services require a kitchen full of cooks and servers.

To make foodservice profitable, menus must have a level of intent and selection that balances value and quality, Palmer said.

Indigo Road Hospitality is focused on “our chefs who curate more value-oriented protein, more value-oriented offerings,” he said. “Food cost is one of the functions of a good menu, but it also has to be delicious. It has to be things that people want to eat.

Kohl said hotels need to be smart with their food concepts, including streamlining menus with more bar fare than full dishes to complement drinks and help boost profit margins.

“I guarantee you that if you don’t have a relevant concept, you’re going to lose money because people won’t want to go there,” he said. “They need to be relevant and competitive with every other restaurant in the market because that’s where customers are going to look to go if they can’t find it inside.”

Maximizing foodservices starts by viewing them as a profit center rather than a hotel amenity. Too many mid-range, full-service hotels are doing the bare minimum with their restaurants, accepting a loss of money because they don’t try hard enough to offer desirable menus, Allison said.

“Food and drink is the energy. It’s the pulse of the hotel,” he said. “You have to be creative with the space you have.”

Allison’s DoubleTree property is near a theater which is a demand driver in the area. He said his hotel has set up chairs and stools in the lobby to accommodate customers on busy days when its 200-seat restaurant fills up. The hotel also got its liquor license extended to the outdoor sidewalk to serve alcoholic slushies as well as small food items to try to lure people inside the property.

Having multiple menu options readily available for different events or times of day is another way to maximize profits with food, he said. This includes lunch, dinner, late night and show menus, for example.

Knowing your guest is of utmost importance, Allison said. This includes setting up specialized menus for events and learning from the results to be more successful next time.

“We see from what we’ve adapted for this time what was most popular there, and then we focus so much that we know we have clear winners that we’ve precisely associated with the cost of doing it,” did he declare. “We know they’re going to do it, we know how much we have to order, and then it’s a profit at that point because we’ve worked on it over time.”

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