Thursday, June 21, 2018

Simple Ways of Improving the F&B Bottom Line

One hears so often that the food and beverage area of an accommodation business is not as profitable as it should be.

In many cases just one dining experience by an observant neutral diner will highlight a number of reasons why a restaurant is not making the profits they should.

Quite often the three basic rules of improving the bottom line with F&B at an accommodation complex are forgotten: Increase hotel guest usage, increase hotel guest average spend, and increase outside patronage from the community.

The first of these is the tricky one. A lot of travellers still hold that eating at a hotel restaurant, for example, is more expensive than it is at a nearby café and, once this was correct but far from the case today.

Posting a menu in very visible guest areas (like the foyer and lift) and mini-menus in rooms as well as in the compendium can go a long way to foiling the ‘too expensive philosophy’.

Many accommodation restaurants tend to go too up-market. If your property is three-star, don’t offer a five-star dining experience unless you can rely on an awful lot of community patronage. Quite a proportion of travellers, especially business ones, want a good, hearty, value-for-money meal not the ultimate dining experience.

Increasing the customer spend can be achieved by offering a bit more: a free glass of wine while you order; a carafe of house wine free when you dine again tomorrow night; free newspaper with breakfast…

Without being pushy, make sure table staff encourage more eating and drinking. If someone’s glass empties quicker than the others at the table, zero in on that guest to ask if they would like another drink. Don’t ask if anyone wants dessert, wheel out an eye-catching dessert trolley – it is harder to resist a chocolate smothered cake when it is sitting right in front of you begging to be eaten than a line of type on a menu.

Outside patronage largely relies on getting a fantastic reputation in the community simply because accommodation house advertising and promotion tries to do everything – sell rooms, push meeting/wedding venues, entice diners and imbibers, market the spa and any other service on offer. Rarely does the F&B facilities get promoted as a stand-alone facility to the local community.

Especially with smaller operations, marketing budgets need to be targeted to the main function of the business: selling bed nights. If marketing budgets are tight, seek out the local newspapers, radio stations and the like, give them a free meal for their F&B reporter and make sure they have a top-knotch night out. Also make some freebies available as competition prizes – it is amazing how quickly a restaurant name can become very well known.

Special events (outside of the ubiquitous Mother’s Day, St Valentine’s Day etc promotions) can be a good way of encouraging locals: ethnic groups are especially good value, like a Greek night, but care has to be taken with food preparation, provision of alcohol and entertainment. There is now a new bit of industry jargon that is strangely apt. It refers to menu engineering. Part of this is obviously menu design but as everyone has an opinion about menu design – make sure decisions here are best for the bottom line not just for aesthetics.

The other side to menu engineering is just what is written on it. For ease of handling, many menus use ‘flat’ prices – in other words they are rounded off to the nearest dollar. By adding $0.95 or even $0.50 can increase your F&B sales/profit significantly. A $19.00 dish becomes $19.95 and most diners will still read it as $19 but that extra 95 cents over the course of a hundred dishes is an extra $95.

Decoy pricing is a way of making the bulk of your prices appear cheaper than they are. If your dearest main course is $22.95, add one to the menu at $28.95 and highlight in some way. It has the effect of repositioning value on the menu and, surprisingly, there are a group of diners that will go for the dearest item, often just to impress!

Your best profit items should be first in each category. It is a fact of life that the first item will sell most, simply because it is the first.

Beverage sales are an easy way to increase profitability because the costs are lower and the gross margin is far greater for beverage than for food. But here, special promotions must be carefully thought out as encouraging the consumption of alcohol is highly regulated in some states.

None of the above lowers the need for product acquisition management, inventory control, efficient costing methods and user-friendly point of sale computerised systems. But they are an easy way of giving the bottom line an upward nudge.

About Tim Svenson

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