In an economic environment that has seen countries facing double- and even triple-digit year-on-year food price inflation, the hospitality sector suffering from persistent staffing shortages and food and beverage revenues continuing to lag behind 2019 levels, how might hotel operators utilize new strategies and tools to solve operational challenges in the current cycle of escalating costs on labor and products?
Death of the buffet?
When it comes to identifying inefficiencies, the spotlight turns to the buffet. Operators say the format has made a comeback post-pandemic, but addressing the amount of waste it produces requires creative thinking.
“Buffets are not going anywhere unfortunately, but it’s how you make it smarter, how you reduce hours of operation,” says Guy Heksch, COO of real estate business Omnam Group, which is developing an Edition hotel in Italy’s Lake Como and announced a strategic partnership with Mohari Hospitality last year.
The Ritz-Carlton Berlin offers a la carte items alongside its buffet breakfast, and general manager Torsten Richter agrees that buffets are “here to stay”.
“People want it, they like it… [but] they also prefer a freshly made egg rather than scrambled egg on the buffet,” he suggests.
Michael Ellis, who was appointed president of F&B and culinary experiences at hospitality project management company FEBC Group last year, suggests using technology like Winnow to measure food waste, and being clever about presentation – creating attractive displays with decoration and greenery but less food that is more regularly replenished.
“The ability to take what is not used in a buffet and recycle that either within the community or for staff meals… is very important, because it’s something that really hurts the bottom line. When you’re forced to dispose of those products, no-one wins,” he points out.
Back to basics
Ellis adds that establishments are also having to reconsider the ingredients they’re using. “Things like seabass and wagyu beef, a lot of the typical components used in a fine-dining meal are becoming prohibitively expensive. What we’re advising is, go back to using cabbage, carrots, cauliflower, potatoes and asparagus,” he says.
“I think there’s a reawakening of the fact you can use ingredients that are not necessarily the most expensive. Obviously, they have to be of the highest quality and the preparation, taste, depth of flavour and texture have to be there, but they don’t have to be typically luxury ingredients.”
However, he recognises the skills and time required to turn humble ingredients into fine-dining meals, which are in short supply. With hospitality students increasingly moving into sectors such as real estate, insurance, banking, consulting and luxury, although Ellis is bullish about the continued attractiveness of a culinary career, he says that the industry is having to rethink how it treats its workers, with many restaurants increasing salaries and reducing opening hours.
“It’s not necessarily money – staff want to have time off; they don’t want to be working 12-15 hours. That’s something the industry is going to have to adapt to. It’s not going to be easy, but if they don’t, they’re not going to survive,” he adds.
And if you do manage to recruit a solid team but operate a seasonal business, Heksch points out that venues need a solution to retain staff off-season.
In the meantime, there are ways to get around staff shortages, such as reducing menu sizes and preparation time. Some operators are replacing in-room dining with the ability to order food through delivery platforms.
Heksch suggests reducing the amount of food storage space to avoid filling it unnecessarily, and using space more profitably, and while kitchens may be getting smaller in Europe, Ellis says that he’s observed restaurant kitchens in Dubai getting bigger and venues turning around three dinner services. However, he warns of subsequently failing to offer good service: “If you try to milk that cash cow too much, you’ll get a backlash.”
Maximising beverage profits
The same applies to beverages – Ellis warns that although for many establishments in Dubai, 70% of revenue comes from alcohol, you can only push prices so far before guests push back.
“You have to find that sweet spot where they’re getting value for money,” he says. “It takes trial and error to find out where you want to position your beverage programme.”
For example, lowering the price of wine can mean selling more, while making a beverage “more experiential” can command a higher price point.
And using pre-made ingredients or batch drinks to save on man hours doesn’t mean reducing service standards, says Heksch. “Rather than doing 15 cocktails, let’s do six, let’s do them well and engage with the guest,” he says.
While there is an increasing trend for ‘low to no’ alcohol options, particularly among younger guests, Richter suggests that reports of a declining booze industry have been somewhat exaggerated: “I see it on the shelves of the supermarkets… but I can’t confirm it’s in the revenues we’re doing in the hotel,” he says. He suggests that young people are opting for quality over quantity and spending “top dollars” on luxury spirits.
“The people who do spend this money, €20-€30 for a drink or €200 for a bottle of Champagne, are getting younger,” he says. “They’re more aware of the quality, they’re more educated about brands.”
For operators, tough times will mean a laser focus on both margins and service, maximising profit from every avenue but still providing a guest experience that makes them want to come back.
“That’s absolutely crucial for anything that’s going to be sustainable,” says Ellis. “Keep an eye on the bottom line but keep a very close eye on the overall guest experience and listen to what guests say when they come back.”
All those quoted in the article appeared on stage at the International Hospitality Investment Forum (IHIF) held in Berlin between May 15 and 17, in a session called: Optimizing F&B Programme Operations to Manage Cost and Increase Profit Margins.