Hotel asset management for food and beverage

Area Directors often lack the skills set to analyze and critique a hotel’s asset management  program for food and beverage.Many just don’t have the experience or background, and many corporate food and beverage executives are more focused on bringing out group-wide programs or promotions, mostly of some meaningless importance, which could well be driven at hotel level, instead of focusing on areas where real difference can be made to an owner’s real estate asset value.

Given approximately 65% on average of full service hotels revenue comes from room sales, at around a 80% profit margin, and with that the majority of a management company’s fees , it is no wonder the focus is on the rooms department to drive profits, but this is barely partially correct.

Owner’s needs are therefore often neglected. Positioning a hotel’s food and beverage offering is critical to drive profits in both rooms and the food and beverage operation, lack of skills and ability at corporate level therefore affect profits and with that a hotel’s value is not maximized.

Lets take the UK here, and ok, some efforts at corporate level have been made by some, but let’s face it, they are few, and hotel restaurants on the whole are a dying breed. I blame corporate leaders and so called brand franchise standards.

Asset Managers are not tied to some corporate protocol and brand standard, and have the skills set to asses a food and beverage operation to bring in positive change. They can bridge the gap between owners and management, safeguarding the owner’s asset interests.

In food and beverage this is a detailed process, from understanding a hotel’s investment strategy, its type, positioning, asset hold period, and capital resources, to assessing the existing conditions, studying the hotel offering or what is termed the food and beverage program, the competitive set and local offering, doing a swot, and compiling a financial analysis.

Then produce a road map, putting it all together. For owners’ best interests.

Let’s take just the financial aspect of this process alone. No help here from external sources and industry reports, this involves knowledge and the ability to get down to the core of how the food and beverage department is operated. Scary stuff for some management companies!

An important key to this process is to breakdown the profit of each outlet within this department. Opportunities are so often lost because of management mostly just looking at the whole department’s net profit and not what outlet is drawing down profit potential within the whole department. A lazy approach at best.

I could talk all day on this, but let’s as an owner ask ourselves a few questions, in this small segment of financial analysis within this large area of expertise.

  • Do you know how each outlet is contributing to profit, that’s breaking down all costs including kitchen production cost?
  • Do you know if all your labor costs and labor production skills are in line with your average checks and service levels?
  • Do you know your group vs. transient per cover expenditure?
  • Do you know how your average check per seat compares throughout your departments, and with it the reasons and opportunities and the action plan you have to improve it?
  • Do you know your outlet loss leaders?
  • Do you have a detailed financial profile on each outlet and with that the issues and plan to improve performance?
  • Is your pricing focused on margins only, and not based around menu engineering and with that a focus on the amount you actually bank?? That’s an eye on $’s not %’s

That’s a few of many that need asking, just in the finance reality check.

For a reality check on your food and beverage department contact me at mark@turnerlodgingco.com

 

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