Ms. Plant

Food & Beverage

The Hotel “Outlet” Concept Gives Way to “Stand-Alone” Restaurants and Bars that Drive Revenue

By Morgan Plant, Vice President, Food & Beverage, Joie de Vivre Hospitality

Fifteen years ago, if someone told me that I would be working in a hotel restaurant, I would have thought him or her crazy. “I am a restaurateur. I would never want to do something so boring,” I would have said. Times have changed, and so have I. While I work for a boutique hotel company, I like to think of Joie de Vivre as a restaurant company too, or more simply a lifestyle brand.

While all our restaurants are in hotels, making it appropriate to refer to them as “outlets,” that is where the traditional hotel restaurant model stops. We position most of our restaurants as if they were stand-alone (a restaurant that is not connected to another business and markets and maintains itself). Each of our properties has a different restaurant concept – one that will speak to our hotel guests and also the local community. They range from Japanese Izakaya, to modern Italian, to gourmet burgers, hyper-local farm to table, two star to four star, and everything in between. Sure, by doing this we take a bit of a risk of not being able to market as a brand or purchase as a group, but the reward has proven time and time again to be a strong bottom line, continued PR for the hotel, and having a business accessible not just to travelers, but to everyone in our local communities.

There are requirements that must be met in order for a Joie de Vivre property to have a “stand-alone” restaurant. When we’re concepting restaurants, we factor in whether the venue has a separate entrance from the hotel – preferably on the street level and on a prominent corner. We renovate to make sure that kitchen and lounge facilities are equipped and large enough for the style of service and guest experience we want to provide. We look to make sure there is opportunity for unique signage and wayfinding and the ability to create a sense of place outside of the hotel. If we can make all or most of these things happen, we are confident we can make the food and beverage offering in our property compelling and profitable.

In many boutique properties it is not uncommon for food and beverage revenues to average 30-40% of the total revenue of the property. This is very different from the traditional hotel model. We market the restaurants as end-destination experiences, and this allows us to gain traction during low occupancy swings from our loyal, local patrons, and to keep our revenue and labor models stable. The positioning of the restaurant can be a great contributor to room revenues as well. In some instances we find that guests book rooms in our hotels that house signature restaurants and lounges simply to guarantee themselves easy entry with reservations or priority seating in the lounges during peak periods.

Of course, there are reverse financial and operational benefits to having a “stand-alone” restaurant in a hotel. Operating costs like rent, utilities, credit card fees, along with services like cleaning and maintenance, can be shared with the hotel, making the cost of doing business more competitive to the stand-alone restaurant down the street. There are more resources for marketing and public relations, and we have the opportunity to cross promote our businesses and create distinctive packages and experiences that other restaurants cannot easily provide or accommodate. We still participate in local marketing events and in-store promotions, yet we have the ability to reach national audiences with our association with the hotel and the Joie de Vivre brand.

Where boutiques really differ from independent restaurants and competitors in the traditional hotel market is in their ability to offer unique catering and banquet opportunities. Restaurant and catering kitchens generally use the same staff and, most importantly, the same high quality ingredients to create memorable group dining and reception experiences. This allows meeting planners and social groups to have unique modern food and beverage offerings that rival the restaurant across town, but keep their group in house where no travel is required and meeting spaces can accommodate larger groups than the average restaurant. Generally these meeting planners are willing to pay a higher fee for the more personal experience and service they receive from a lifestyle property versus a large box hotel. Meanwhile, for the restaurant, the cost of providing catering is significantly less than the three-meal-a-day offerings. Having a strong balance of catering to dining helps keep the food and beverage departments profitable, and allows our chefs to choose and play with ingredients that in a completely stand-alone environment would be too costly for them to use.

It is understandable why many hotel operators would be skeptical about the success stand-alone 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 rooms side. Food and beverage 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. To mitigate the potential downsides, we have found what makes the biggest difference in creating successful, dynamic, and profitable stand-alone restaurants in hotels is the hiring of true restaurateurs to run them.

Restaurateurs are great business people. They’re usually are not used to having the significant resources a hotel can provide, such as human resources, engineering, accounting, etc., and they have an undying passion for creating memorable dining and drinking experiences. You can teach a restaurateur to understand the intricacies of in-room dining, the ins and outs of banquets, and the importance of breakfast (with a lot of patience sometimes). I doubt you can be as successful teaching someone who has come up through the ranks of big box, traditional hotel food and beverage departments to be a restaurateur. The difference is too significant between the two disciplines; it all comes down to passion and perseverance, which I’ve found restaurateurs have deep wells of naturally.

Although our hotel general managers may initially protest when we hire food and beverage managers without hotel experience, overall we find that these managers are far more entrepreneurial in their approach. They are not focused on the management of pennies, but on fractions of pennies, and they find creative ways to make money. In a stand-alone restaurant if you lose money three months in a row you may not lose just your position, your restaurant may cease to exist. This is rarely the case in the hotel world where room revenues and profits often hide poor management and bad operational decisions. Sure, restaurateurs may have a hard time in the beginning understanding collective bargaining agreements, and they may find employees less willing to go the extra mile initially, but give these managers some time and they can turn even the most unprofitable, disorganized, and stale restaurant around.

Along with great management, there are many consumer-facing components critical to making a stand-alone hotel restaurant a destination for locals as well as guests. One facet of dining that boutique hotels have begun to revolutionize is simply making it fun to dine in their restaurants by doing away with the hushed pretension of high-level cooking. Boutiques (much like the rooms in their hotels) can have a sense of humor about the dining experience they offer and are able to engage with the diner through playful cuisine or bar offerings. Gone are the days where a hotel restaurant must have the standard meat, chicken, fish, Caesar and club sandwich. Food is exciting – fresh, local, seasonal and interesting. It is OK 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 own hotel?

Wine lists are no longer heavy tomes dropped on the guest’s table while a sommelier stands by waiting to sell the most expensive offering. Local wines served without the traditional 500% mark up are making hotel bars more interesting. Cocktails are well-crafted, delicious, and imaginative. Lounges are no longer the place for single business travelers to sit down with their laptop and have a conference call, they are the epicenter of a hotel, and they’re becoming the communal living room of their neighborhood.

Another approach more and more boutique hoteliers are taking to create dining destinations in their properties is to partner with “celebrity” chefs and restaurateurs. Being able to create a lease situation or a management agreement with an outside third-party operator can make great sense, especially when strapped for capital. If a hotel has a meeting space that isn’t being regularly booked or a lack luster three-meal-a-day restaurant, they can easily lose money quickly trying to keep it open and running for the sake of hotel guests. As everyone knows, renovation is incredibly expensive – not only in raw materials and design, but in the down time your space experiences with no revenue coming in. But if a 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-realized 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?

Morgan Plant brings more than 20 years of experience in the restaurant and hotel industry to her role as vice president for food and beverage at Joie de Vivre. She first came to the company in 2004 to launch the food and beverage program at Americano Restaurant & Bar at the company's San Francisco flagship, Hotel Vitale. After a regional director of operations role, she moved into the position of Vice President in 2009 and helped launch the burgeoning Joie de Vivre restaurant collection, lending her operations savvy to implement creative, timely concepts for the brand's more than 20 boutique restaurant and lounges. Ms. Plant can be contacted at 415-364-5401 or mplant@jdvhotels.com Extended Bio...

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