Mr. Heroian

Food & Beverage

Modifying Your F&B Offerings to Meet the Demands of Today's Cost Conscious Diner

By Menze Heroian, Vice President , Tishman Hotels & Realty

What do you do when you own or operate a restaurant which has a menu which is no longer valid in today’s economic market, a market which over the past three years has reflected a dramatic shift from lavish dining covered by expense accounts, consumption of expensive bottles of wine and thirty day demands for prime time dinner reservations? In this article I will provide an example of how Shula’s Steak House located in the Sheraton Chicago Hotel & Towers modified its offerings to meet the demands of this emerging trend of the cost conscious, value oriented customers looking for the same quality experience for a more economical price.

After the housing crash of September 2008 the impact on business at this high end restaurant located in the heart of downtown Chicago was immediate. Covers went down, as did average check, premium wine sales and corporate dining. Within months, the aftermath of the crisis in lost business was evident as was the realization that this was not an issue which was going to go away any time soon.

There is good news which was recently printed in an article by Restaurant News that there are indications that high end steak houses are making resurgence, especially in Chicago, but it will take some time to get back to the pre-crisis years. The options left on the table for operators were to wait for the economy to come back or to be creative and do what many hotel-based food service programs are looking at, ways to build and capitalize on current and emerging trends to attract new guests and add value to their overall experience.

The opportunity in this particular situation at Shula’s , Chicago was to find a way to capture this new market of cost conscious diners without compromising the integrity of the Shula’s brand. Business in the dining room was down as was the group dining segment. The one area in the restaurant which was showing positive results was the lounge and bar. There was a noticeable influx of customers sitting at the bar and the lounge and ordering off the bar menu which offered more casual fare at a lower price point.

The focus, therefore, was to capitalize on this positive shift of business to the bar and lounge. The menu and pricing seemed to coincide with the emerging trends which I have described above. The goal going forward was to capitalize on this new found market and create a “restaurant within a restaurant.”

The process to achieve this goal is broken down into five components which are to: 1) Create separate revenue centers for the bar/ lounge in order to track and differentiate revenues between the main dining room and the bar/lounge, 2) develop and expand on the bar menu utilizing the resources of the Shula’s Corporate 3) expand and capitalize on the football theme of the restaurant brand as an entertainment venue, 4) modify the floor plan and tabletop presentation of the lounge area to create a less formal but inviting casual atmosphere and 5) create a marketing plan which provided exposure to the concept of a “restaurant within a restaurant.”

At the time of the initiation of the project the restaurant did not have the ability to break down the revenues between the main dining room and the bar and lounge. The POS system registered all revenues under one revenue center. We felt it was important to be able to track the revenue contribution between the two areas so we contacted Micros and purchased software which allowed us to separate the revenues between the main dining room and the bar/lounge in order to be able to measure the success of the project. The software has been in place for six months; revenues are now reviewed and analyzed monthly.

The next item on the list was to contact Shula’s Corporate and ask for their assistance in putting together a bar menu with the following objectives, create a menu using recipes which worked in other Shula’s concepts, particularly ones which offered a more casual lunch menu a s well as menus from their more casual concepts such as Shula’s 347 Grill. Analyzing sales reports, the best sellers remained on the menu. We conducted a menu tasting with Shula’s Corporate Chef choosing items which balanced out the menu, items, as mentioned, had a history of success in other venues. We utilized products from the dinner menu to avoid compromising the production of the main menu in the kitchen during peak hours. The menu items were simple but of high quality. We also kept the protocol that if a guest wanted to order off the main menu in the bar and lounge they could do so, which we found was a significant percentage of diners.

On the beverage side we capitalized on the trend of consumers opting for wine by the glass vs. the bottle. We increased the by the glass offerings and added more high end wines which has been a great success. In addition, we expanded the beer menu adding micro beers and local and regional selections, which made sense with the sports venue.

The theme of Shula’s is based upon the perfect 1972 season. We took advantage of the football sports theme and added two flat screen TVs, increasing the total to five flat screens. The Sheraton Chicago is primarily a destination convention hotel with visitors from all across the country. We contacted Direct TV and added the Sports packages i.e. the NFL package which provided the capacity to televise all the games around the different cities of the NFL. We also recognized that having these games on meant longer table times and more revenue. NFL promotional menus are introduced each week with specialty food and beverage items representing foods from the different team cities. The plan is to continue with the sport packages throughout the year.

In order to capture the feeling of a restaurant within restaurant we made changes to the floor plan and tabletops. We removed the line of white table cloth banquettes along the perimeter of the wall and replaced them with wood top tables without losing seating. In addition we changed the round high top cocktail tables to larger high top squares providing the ability to build seating for large parties which the round tables did not accommodate. The seating capacity increased with the addition of the square high tops, adding more revenue.

The last and most important piece was to get the word out. The marketing package is ongoing. Internal exposure included adding to promotion to the web site, promoting it on the hotel TV channel, and promoting the entertainment sports package within the restaurant. Externally, the Business development manager promotes the restaurant to the local concierge as well as local businesses within a few blocks of the hotel. Social media is also utilized on a temporary basis to reach a large market audience. Marketing a restaurant requires constant attention to remain current and viable.

Results over the past few months have been very positive. Sales have grown from same time last year and although tracking the revenue history is fairly limited to the time frame mentioned, the results have shown an increase in the bar and lounge area of about 7% from same period sales a year before. With the football season in full swing and the recent addition of the Direct TV sports package that number will only increase. Building a customer base is essential as is staying on top of marketing initiatives which will attract more business and build the brand name. The other positive feature is that the bar lounge area is very busy, which brings people in vs. walking into an empty room. There are many hotel restaurants out there which have similar circumstances. Understanding the demands of each market is essential to implementing the right concepts and menus to capitalize on food service venues.

Menze Heroian is the Vice President of Tishman Hotels & Realty, a company headquartered in New york and comprised of a diversified staff of experienced real estate, financial and hotel management specialists, and complemented by a technical staff of architects, engineers and construction management professionals. THR typically manages all components of its projects, from feasibility, design, budgeting, financing and development management to ongoing property and asset management. Mr. Heroian began his career with Westin Hotels in 1983 opening three consecutive hotels to include The Westin Copley Place, The Westin Maui and the Walt Disney World Swan, all in food and beverage operations before departing to Las Vegas taking on the position of Director of Food and Beverage at the legendary Caesars Palace. Mr. Heroian can be contacted at 212-399-3617 or mheroian@tishman.com Extended Bio...

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