December 15, 2015
The New Rules of F&B Partnerships Want to maximize your F&B profit line? Here’s some expert advice to chew on.
Even as well informed as today’s executives can be, there are still areas in which many are still operating from a deficit. Of course, there is technology – which is understandable because it’s complex and potentially confusing. The other area equally puzzling to hoteliers? F&B.
Now I know many out there will argue their hotels are doing great when it comes to F&B, but after years in this business, I know for a significant amount of you out there F&B is a necessary evil you’re not passionate about. Or at the very least, feeling outside of your comfort zone regarding this topic. Also, to those that are doing great I ask, is that realty the best you can do or are you fooling yourself into that notion?
Of course, there are some exceling in this arena; but that’s the small minority as so many folks have come up through the hospitality ranks on the focused service part of the business. That can create a challenging situation with an ever-increasing emphasis and importance of F&B on the property level, it’s an area of expertise that while tangible is can still be somewhat mysterious.
Even on the full-service side of the business, F&B continues to remain a complex conundrum. It’s not just about getting people staying in the hotel to eat there, but also about luring locals. Without buy-in from the community, hoteliers are forced to rationalize their underperforming space as a loss leader, that’s just a shame and it doesn’t have to be that way. Oddly, even hotels with a famous name on the kitchen marquee can find that may not be the tasty success recipe they expected.
I’m losing my appetite just thinking about it.
“The past several years of well-known chefs being brought together with restaurant operators has not been thoughtfully curated,” explains Phil Colicchio, principal of Colicchio Consulting, which brings together top developers, retail projects, hotel owners, and asset managers with award-winning chefs and restaurant operators.
“The truth of what has been happening is if you don’t correctly identify the cultures [between the hotel and the chefs] and have them appreciate each other’s cultures while also structuring the business deal so each party could have material impact on the bottom line, then both parties are really setting themselves up for future resentment,” Colicchio explains.
The other danger, he explained, is when a hotel simply buys a chef’s name and then doesn’t have an active, collaborative relationship with that chef. That could spell danger for both parties that will most likely fail to deliver desired results.
Meanwhile, Trip Schneck, also a principal of Colicchio Consulting, said this year is going to be a critical one when it comes to food and beverage.
“I look back at the timeline of the hotel industry and the late 1990s were all about revenue management. Then 2000 to now has been all about distribution and online marketing technology. I really feel as though 2016 and beyond will be about reprogramming F&B because hotels have run out of ways to differentiate each other form one another. To compete and be relevant, hotels need to rethink their approach to F&B,” says Schneck.
Schneck is most definitely on to something. As the industry looks for ways to fit into our modern ‘experience economy,’ F&B is one place that is essentially all experience driven. If not, everyone would just sit home alone eating cereal.
Essentially, not getting the right F&B partner is tantamount to not doing anything at all. If the deal won’t make a big difference in the hotel’s image and bottom line, then what’s the point really?
Putting together smart partnerships is the backbone of several deals Colicchio Consulting has been instrumental in putting together, such as bringing Boston Chef Tim Cushman to open O Ya restaurant and Roof bar at NYC’s Park South Hotel. The group was also instrumental in structuring a deal nabbing renowned Chef Tom Colicchio who will open a restaurant, event space and lounge at The Beekman, which debuts next year in Lower Manhattan.
Finally, what we’re talking about here is very different than simply leasing out the space to a third party operator. That way of doing deals is outmoded, says Schneck. “Hotel operators want to lease the space to make a predictable stream of income while allowing them to focus on rooms, but the problem with that strategy is you give up control. It doesn’t allow for service continuity and there is no point of differentiation to the hotel because most groups that do leases are national chains and that doesn’t differentiate,” he says. “You need to have something that connects to the community.”