A recent survey carried out on a large scale at EXPO Milano 2015 by Horwath HTL has highlighted the clear trend in international demand not to prefer the restaurant of the hotel when it comes to a holiday in Italy.
This proved true for chain hotel too. The reasons may be well understood. International clients, during a stay in Italy (apart from isolated resorts and those that offer mainly FB formulas) are in contact with an infinite number of alternatives, some of which often seem more attractive or updated than the old hotel restaurant. As much as 25% of the interviewed customers never tried the chain hotel’s restaurant where they reside: “Only ¾ of respondents have experienced the hotel restaurant, meaning 25% of hotel guests has never had not even one meal at the hotel restaurant, dining outside”, the report says.
Without investigating the causes, we can use this opportunity to explain, in addition to other factors, as the profitability of a hotel restaurant may be on the whole so low in Italy.
In fact, for a city or S & B destination hotel (excluding villages that practice only FB) not working with banqueting, all F & B normally offers no return or one reaching 10% at the most on the revenue generated. Excluding the services that is important however to offer and that in fact would surely provide some margin, such as the Minibar, the Bar and breakfasts service, the most valuable losses are concentrated at lunch and dinner. Some restaurants in the 4 and 5 star segment in Milan downtown for lunch daily record about 20-25 average covers and at dinner about 40-50, even in periods of high demand, when they host 100-150 guests.
On the other hand, even when the numbers (very modest) are clear, the low profitability of the F & B department is typically associated with the wrong perception of costs incidence: since the effect on the average meal of the cost of raw materials is – usually and on average – equal to about 28-32%, given that the utilities can account for a further 5-6%, the bulk of the costs as we all know is due to the human resources of the department. This sometimes reaches a 50% incidence of departmental revenues.
One should reflect on the need to improve the profitability of this department: often it remains low with the expectation and attitude that the service must be offered and that it supports the room selling. In other cases, but it’s worse, some may try to make it more efficient by revising the menu, the raw materials, the workforce. A few times instead someone tries a relaunch of lunch and dinner service that could, in some cases, resolve the real and most common problem, emerged from Horwath research, which is that of low volumes or, if you prefer, of the leaks out of the hotel.
In any case, for each correct analysis on the operating margin of this department it is necessary to verify that its revenues are correctly allocated. For example: breakfasts are basically now a component (implicit or explicit) of the sale price of the room, but the corresponding revenues are often not allocated to the department and therefore the contribution of breakfasts is null, while there are obvious costs to produce them.
Another important area of investigation brings to verify the potential of the restaurant towards external clients; that is often possible according to legislation but it still rarely explored as a hypothesis that could, in many cities, generously affect the number of covers and balance the accounts of the department. Can you open the restaurant to outer clients? There is an issue of competition with existing restorative exercises, or perhaps a theme feared competition.
In any case, a margin of 5-7% overall from the activity of F & B would not be disappointing, generally speaking, today that out of the revolving door, on every corner one may find freshly baked pizza slices or a steaming kebab, all serenely opened to the hotel guests!