Between tight margins and high guest expectations, hotel food and beverage is a tough department to operate. LODGING Back of the House checked in with several F&B leaders to learn about top strategies for maximizing profitability, particularly amid heightened labor and supply costs.
1) Rethink the Menu
There’s no silver bullet for mitigating the higher costs of doing business, but rather a multitude of smaller measures that can add up to significant savings, according to Michael Carr-Turnbough, Senior Vice President of Crescent Restaurant Group, which provides conceptualization, development, launch, and operations services for hotel and resort restaurants. For instance, he suggested developing smaller menus and incorporating seasonal items, which are typically less expensive. Fewer items on the menu requires fewer back-of-house staff and reduces à la carte work. Scale back—but give guests options. “You don’t have to have something for everybody anymore, but you still need to have a nice variety,” said Carr-Turnbough.
Recipe guides can also help manage back-of-house costs, said Chris Collins, vice president of food and beverage, OTO Development, a hotel development and hospitality management company. Recipe guides help determine what exactly goes into a dish and the cost per item—information that can be used to build an overarching menu cost that aligns with business goals, Collins explained. Assess the property’s location, competitive set, and what guests want—whether tapas-style small plates or hearty, full entrées—to determine portion sizes that align with the brand.
OTO Development is currently focused on understanding production needs and portion sizing, Collins shared. “There’s a lot that can be accomplished by bringing in your own product, hand trimming, and hand cutting—you have the benefits of controlling what the portions are, but then you also have a little bit more of a yield that you would buying a frozen product.”
2) Consider Pre-Made and Batch Products
There are many products on the market today designed to help hotel F&B departments cut down on prep work and cooking times. The industry has experienced a resurgence in sous vide (slow cooking vacuum-sealed food) and new beverage innovations like canned cocktails and batch drink machines, “which is very helpful from a labor and cost perspective,” Carr-Turnbough added. In particular, he suggested elevating pre-made products to simplify operations while maintaining a high-quality guest experience. For example, add housemade barbecue sauce and sides to pre-smoked ribs for a more customized dish that’s easy on staff to plate.
3) Reduce Food Waste
Food packaging is an area that’s received more attention in recent years. As Carr-Turnbough explained, “Shelf-stable packaging is probably one of the innovations we’re starting to see more in this country; that has been around in Europe for a long time.” For example, vacuum-packed pre-cooked grains are less likely to spoil and provide another pre-made food option.
Technology solutions are also helping to reduce back-of-house food waste. Collins shared one use case for this technology: Monitoring the temperatures of refrigerators and freezers, and alerting staff when they fall below a certain threshold so they can promptly fix the issue and prevent spoilage.
With self-serve taps, “We’ll be able to monitor trends based off of the ounces being poured, what’s being poured, why they’re being poured, what offerings are working, what’s not working.”
Chris Collins | Vice President of Food and Beverage, OTO Development
4) Deploy Technology to Manage Expenses and Drive Revenue
The back of the house is increasingly relying on technology for controlling costs. Justin Shoener is the director of restaurant financial operations at The Indigo Road Hospitality Group, which owns, operates, and manages restaurants and boutique hotels throughout the country. Through a software called Margin Edge, Shoener said the company has been able to track daily expenses, costs of goods, labor, fluctuations, and trends that would impact overall margins. “The tools they offer help our management teams control their costs and see clearly how they are trending over the course of the month,” he explained. Teams can use a built-in recipe feature to monitor daily cost fluctuations based on the current prices of F&B items, and weekly reporting helps them quickly adapt to price jumps.
Hoteliers can also use technology to analyze guest behavior data and make strategic decisions about their F&B offerings. Collins shared that OTO Development has used technology to glean insights from cover counts. “We’re retrieving that information and are able to not only understand the behaviors, but ultimately build metrics to drive the behaviors of our guests,” he explained, such as directing them to better-margined menu items that guests will enjoy.
Hotels are also increasingly adopting guest-facing, self-service technologies, from self-pour beverage taps to grab-and-go retail kiosks, all of which can leverage guest behavior data to improve upselling and drive revenue. For example, with self-serve taps, “We’ll be able to monitor trends based off of the ounces being poured, what’s being poured, why they’re being poured, what offerings are working, what’s not working,” Collins explained.
5) Invest in Training
Amid ongoing staffing shortages and rising labor costs, it’s essential to support employees and improve retention. “The labor pool was disseminated during the pandemic. We lost a lot of people both in front and back of the house,” Carr-Turnbough noted. And while guests previously showed a willingness to make some concessions to the adjusted service levels necessitated by the pandemic, Carr-Turnbough said that’s no longer the case. “Guests are back to pre-pandemic expectations; you have to execute again at the highest level,” he explained. “There are a lot of new people coming into the industry that need a lot of training. … Onboarding and ongoing training has become a constant necessity.”
Hoteliers now have access to an array of professional training programs powered by technology, including apps that employees can access from their mobile devices. “There has been some great innovation from a training perspective from different companies across the country,” Carr-Turnbough said. At Crescent Restaurant Group, servers, bussers, and bartenders participate in a week-long training program from the offset as well as ongoing training via daily lineups with managers, each of which are structured and focused to cover topics from culinary training and speed to the table to welcoming guests and upselling. “It’s nothing new to the industry,” Carr-Turnbough pointed out. “It’s just something that has to happen all day, every day to keep everybody fresh and to create a culture of learning.” Suppliers may also offer specialized training that can come in handy. For example, Carr-Turnbough said, “We hold wine and spirit training seminars on a regular basis to continue to enhance our employees’ knowledge.”
Collins emphasized the importance of training staff across multiple disciplines to ensure operations run smoothly and to ultimately lower labor spend. “If I have five stations in the kitchen, I don’t necessarily need five people to run those stations for a restaurant to operate,” he explained. “There’s a little bit of a training investment upfront in order to do that, but the long-term gains are certainly there.”
