3 Reasons Why Hotel Food and Beverage Is on the Rise

By. Rory Crawford

Eating is as critical to the human experience as finding a place to sleep.

I’ve had the pleasure of working with thousands of great hospitality businesses over the last few years. One shift I’ve noticed and heard from our customers time and time again, is the increasing focus on food and beverage within the U.S. hotel space—spending at hotel bars and restaurants grew 5% last year. I recently sat down with three industry leaders to get their perspective on growing trends, the history of hotel food and beverage programs in the U.S., and where they think this evolution is taking the industry.

Hotel food and beverage programs were a luxury, not a basic amenity

Hilton, Hyatt, and Marriott: three massive hotel brands that historically dominated the hotel market. In the past, they were solely focused on driving revenue with their rooms. Food and beverage programs were considered an amenity, not a core competency. Lokesh Singh, who has 35+ years of experience managing food and beverage for various hotels and government agencies explains the breakdown. “40 years ago, things were very different. Food and beverage was not a revenue-producing department for brands like Sheraton. If you broke even, you were in very good shape.”

When hotels did invest in their food and beverage programs, it was often in their banquet and event catering business. Dean Wendel, Corporate Director of Food and Beverage for Concord Hospitality explained how extravagant these events really got. “Going back to the Ritz Carlton in the mid 1980’s, we had large corporations were spending a lot of money on events and conferences. There was seemingly no expense too grand to pull off an event. We were doing single events going for $100k, $200k, and more.”

The U.S. hotel industry was hit hard by the 2008 economic downturn. Between 2008 and 2009, market demand shrunk by 7.5%—a blow felt by everyone in the industry, including Wendel. “Staffing got cut and changes were made to maintain the level of profits…brands like Courtyard and other select service hotels were focused on gaining the profits from rooms. Once we hit 2008, everything kind of just fell out. We had to work twice as hard to capture the same amount of business, and you had to execute flawlessly or you would lose the business.”

Almost a decade removed, things are looking up for the hotel industry. But, with time comes changing tastes and needs. In my experience working with food and beverage directors, I’ve noticed three specific trends most of all.

Third-party management companies are here to stay

Third-party hotel management companies are here to stay. For many brands looking to reinvent themselves, hiring these companies makes sense—their approach to hoteling is holistic, creative, and can be much more dynamic than legacy hotel brands.

These management companies are also increasingly focused on upscale full-service food and beverage projects. In order to compete, these management companies are creating a unique food and beverage core competency and executing their strategy across their portfolio of hotels. That way, every patron gets the same exceptional experience across the brand, regardless of which individual location they’re visiting.

Essential Bar Management: Ordering Dynamics and Reducing Shrinkage

By Rory Crawford

Among the many challenges that go into managing a bar or restaurant is dealing with shrinkage or lost product, a huge profit drainer.  According to beverage auditing companies Beverage Metrics and Stock-Taker, industry average shrinkage rates are 25 percent, and the National Restaurant Association reports that 75 percent of shrinkage is due to theft.

While many restaurants and bars focus on inventory control systems to reduce shrinkage, reconsideration of ordering processes can be even more helpful. These simple tips will help you make smarter purchases that reduce shrinkage, and ultimately generate greater profits for your establishment.

Avoid Purchasing Based on Quantity Discounts     

We know it can be difficult to resist a good deal. And while it might seem like quantity discounts increase overall profitability due to the potential of reducing your cost per ounce, factoring estimated shrinkage into the equation will directly counteract these cost reductions.           

Let’s assume a regularly priced case of vodka costs $200 and the distributor is running a two-plus case quantity discount that grants you 10 percent off each case if you purchase two or more.

Despite only needing one case, that 10-percent discount is too tempting, so you buy two cases for $360 (Two times $200 per case – Two times $20 discount per case). Instead of spending $200, you end up spending an additional $160 and getting twice as much product.

If we assume 25 percent shrinkage, $40 (25 percent x $160) of this additional product will be lost. Since the $40 loss is equal to the total discount you received in the first place, shrinkage ends up wiping out any cost benefits of the order. Top it off with the extra space and time needed to count the additional product, and that good deal suddenly feels like a rip-off.

Purchase to Reduce Sitting Inventory

Since shrinkage takes the discount out of Quantity Discounts, how can you increase profitability with smarter ordering? Focus on one key goal when making purchase decisions: reducing sitting inventory. 

If you have $40,000 in inventory and sell $10,000 of product each week, you have four week’s worth of sitting inventory on hand. By reducing your sitting inventory to $30,000, you will not only gain $10,000 back in your pocket, but you will also reduce your shrinkage by $2,500 (25 percent times $10,000). Remember that if 25 percent of any product you purchase will be lost to shrinkage, the less product you have on hand the less you lose, and therefore the greater your profits.

By only ordering product that you absolutely need, you will quickly reduce your sitting inventory levels, increase your bar’s efficiency, reduce shrinkage losses, and increase your bar’s overall profitability.

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7 Reasons New Restaurants Fail (How to Succeed Instead)

Starting a restaurant? A healthy fear of restaurant failure isn’t a bad thing. But no need to panic. The latest research found that only 17% of new restaurants fail in the first year. Instead of focusing on how to survive, learn to thrive. Let this list of 7 reasons for restaurant failure – and how to avoid them – be your guide.

1) The Fail: Poor Planning

You know the saying. Fail to plan, plan to fail. To prepare for success and reduce the risk of restaurant failure, start with a business plan for opening a new restaurant. As you write your plan, pay close attention to these 3 critical variables.

• Wrong Location: The #1 Reason for Restaurant Failure

Experts agree, the most common reason for restaurant failure is choosing a bad location. To find the perfect place, look for spots with plentiful foot and vehicle traffic. What’s nearby? A college campus or office building with potential customers? Dig deep. What business was there before? Were they victims of restaurant failure?

• Customer-Focused Concept and Name

Reality is your friend. You may dream of opening a fancy French restaurant. But if you’re in a blue-collar community, that concept is ripe for restaurant failure. Use these steps to select a successful concept:

1. First, do a demographic analysis. Who lives in a 10-mile radius of your restaurant? Middle class families or trendy young professionals? More seniors or singles? Are there seasonal customers?
2. Build your restaurant concept around the customers identified in the first step. For example, a bistro with global flavors (and a large bar area for socializing) would be ideal if catering to a younger crowd with adventurous palates. Your concept should also be unique and different from other restaurants in town.
3. Select a name that describes your concept. Do your homework to ensure the name isn’t trademarked or could be confused with a competitor.To read full article click on the link

How to Boost Profits Without Selling More Drinks – Your Guide to Strategic Drink Pricing

 With a few pricing adjustments, and a slight shift in pricing strategy, most bars and restaurants could add significant profits without selling more drinks.

The key is moving from an overly simplistic pricing model to a more strategic pricing model. The industry standard is to group brands into different categories and then apply a standard mark-up in each category. For example, a bar might mark-up their well liquor brands by 9x the cost and their premiums by 4x the cost.

This approach was necessary years ago when most bars used a simple cash register with keys limited to “well”, “call”, “premium”, “domestic beer”, etc. But with today’s Point-of-Sales (POS) technology, you can, and should, set the optimal price for each and every drink to maximize profits.

How much are you charging for Tito’s vodka?

Before we get into an analytical look at the important variables to consider, let’s start by asking a simple question: how much are you charging for Tito’s Vodka?

In Southern California, Tito’s costs $21.50, roughly the same cost as Absolut vodka. So most of our clients apply the same mark-up and charge the same price as Absolut – let’s say $6.25.

Sounds reasonable but that thinking is too simplistic: the fact is that most of your guests regard Tito’s as a premium brand. They regard Tito’s as a “better” brand than Absolut but perhaps not quite as “premium” as Grey Goose – more or less at the same level as Ciroc vodka which is priced at $7.25 at many establishments. Because your guest believes Tito’s is as good as Ciroc, you should charge $7 or $7.25 for Tito’s.

If a bar sells 150 Tito’s every week and they adjusted their pricing to that of Ciroc, they would make an extra $7,800 in pure profit per year. That’s just one example of how a strategic pricing approach can be more profitable.

You should be charging more for your premium brands

Economists talk about a concept called the “price elasticity of demand” which translated into English means “how sensitive are your customers to price changes?” When you think about someone who might buy an $80 Wagu steak, for example, you can imagine that sales wouldn’t drop much if the price was increased to $95, nor would sales increase all that much if they lowered the price to $65. That reflects low price elasticity: the customer ordering a Wagu steak just isn’t that worried about the price.

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Aldi: Green Alcohol-infused cheese, stouts, and Irish Bangers just in time for St.Patty's Day!

Aldi Is Selling Green and Alcohol-Infused Cheese for St. Patrick's Day

By EMILY PRICE 

February 25, 2019

Aldi is gearing up for St. Patrick’s Day by adding two specialty cheeses to its store shelves. The two kinds of cheese, a Pesto Gouda and an English Sage Derby, will each be sold for around $4 and have one unique thing in common: they’re green.

The cheeses will officially make their debut in stores on Wednesday, USA Todayreports.

Along with those green cheeses, Aldi is also bringing back its Irish Truckle Assortment for the holiday. Also priced at $4, the trio of cheeses includes an aged Irish cheddar as well as two alcohol-infused kinds of cheese, one infused with beer and the other whiskey.

The cheeses aren’t the only St. Patrick’s Day fare that Aldi will be offering this year. The store’s section for the day also includes Irish stout, Guinness Beer Bread mix, Shepard’s Pie, and a package of Irish-style bangers.

While it’s not Irish whiskey, last year, Aldi’s scotch whisky was named one of the world’s best by trade publication The Spirits business. Aldi’s Highland Black Scotch Whisky also won the gold in the 12 years and younger category at the Spirits business Scotch Whisky Masters.

Aldi currently has 1,600 stores in the United States spread across 35 different states. In 2017, the company said that it hopes to expand its U.S. store base to 2,500 by 2022.

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Alcohol delivery and take home wine? What a time to be alive.

Pour yourself a drink: Bills would allow alcohol delivery and take-home wine!

SANTA FE, N.M. (KRQE) - Get ready to raise your glass. A couple of bills at the State Capitol would make it easier to take home partially consumed wine, and even have alcohol delivered to your front door.

State lawmakers said they hope these bills are ways to reduce DWI's.

"We have two wonderful wineries in my district, in Luna County, and so the wine growers in the state have been trying to get this legislation passed so that it encourages people to come to their winery, taste wine, purchase wine and still be able to take a partially consumed bottle home," said Rep. Candie Sweetser, (D) Deming.

Rep. Sweetser is sponsoring House Bill 549, which would allow people who don't quite finish their bottle of wine bought at a winery to take it home. The winery would have to re-cork the bottle, seal it in a tamper-proof bag with the receipt before you leave. 

Over in the Senate, there's another liquor bill in the works.

"It is an attempt to try to foster the tourism business," said Sen. Gerald Ortiz y Pino, (D) Albuquerque. "Foster people having nice meals at home provided by a local restaurant...Instead of having to get dressed up and go out, you can have the same experience in the comfort of your own home."

Senate Bill 484, sponsored by Senator Ortiz y Pino, could let you stay at home and get beer or wine delivered to you. But there's a catch: you have to order $25 worth of food from a restaurant to also order alcohol. Sen. Ortiz y Pino said local delivery services would have to check your ID before giving you the alcohol.

Both lawmakers stressed the importance of reducing DWI's, as well as seeing this as an opportunity for local businesses.

Rep. Sweetser's wine bill unanimously passed in the House Commerce and Economic Development Committee. It's now headed to the floor.

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FL Dog park meets full bar

Bark park with a bar; new Florida dog park to serve alcohol

By Jeff Tavss 

ORLANDO - Leave it to Florida to find a way to combine dog play with alcohol.

A new dog park in Orlando will include a full-service bar when it opens later this summer, according to WESH. Boozehounds Dog Bar is the creation of two University of Central Florida graduates who may have come up with this not-so-harebrained idea while on a college bender.

Along with the actual bar, there will be televisions and plenty of space for Fido and Rover to play. Boozehounds will sell passes to the dog bar, with a monthly pass costing a fun-loving dog owner just $20.

Not just any dog will be welcomed at Boozehounds. Rules state that dogs must be over 4 months old, while all dogs over 8 months old must be spayed or neutered.