Hotel_Management_and_Operations_by_Denney_G_Rutherford,_Michael

231Section 5.10 ᭿ Case Study: Housekeeping, Engineering, and Security

the streets of the city her hotels operate in side hotel entrances and exits, parking struc-
were becoming increasingly unsafe due to ag- tures were relatively obscure and unmoni-
gressive panhandling, street crime, muggings, tored; and housekeeping, engineering, and
physical and sexual assaults, and automobile- guest services staff training had not, as yet, re-
related felonies. flected the security concerns of the twenty-
first century.
Because her hotels total in excess of 1,500
rooms and cater mainly to convention, corpo- To help her deal with the potential prob-
rate, and free independent traveler (FIT) lems presented by the current situation,
markets, Tomes knew that at any given time a Denise Tomes called a meeting of the heads
large number of her guests were on the streets of security, housekeeping, and engineering.
of the city and that, additionally, due to the She challenged them to come up with a plan
public nature of hotels in general, it was likely to increase security for the hotels and their
that criminals could enter the hotel properties guests without building armed fortresses. The
seeking victims. first task of the directors of security, house-
keeping, and engineering was to set forth for
These hotels were built during the late Tomes an analysis of the potential risks. The
early 1980s and, although regularly redeco- second is to produce a range of alternative
rated and remodeled to continue to appeal to suggestions about how those risks might be
the upscale market, they still reflected the ar- managed through the efforts of their depart-
chitectural and security consciousness of their ments and respective staffs, combined with
era in operational terms. This meant that specific recommendations for equipment and
guest room door locks were still of the stan- facility upgrades.
dard keyed variety; elevators, fire stairs, out-

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Berlonghi, A. 1990. Special Event Risk Manage-

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Clery, B. 1995. “Commercial Insurance Carriers LaBelle, A.M., and J. Barton. 1951. Administrative
Write Disclaimer for Crime.” Campus Watch Housekeeping. New York: G.P. Putnam’s Sons.
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33(6):30–35. ton Chronicle, April 27, p. E1.

Donohue, Chris Hiley (ed.). 2004. “Prevent Work- Levin, P.F., J.B. Hewitt, and S.T. Misner. 1996.
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———. 1996. Bureau of Justice Statistics: Source-
Fisher, Reed Allen. 1986. “A Documentation of book of Criminal Justice Statistics—1995. Al-
Factors Which Determine Staffing Levels for bany, NY: Hindelang Criminal Justice
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gov/niosh.

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157–310, pp. 2–9.
Riehle, H. 1994. “Table Service Restaurants Post
Sales Gain in 1993.” Restaurants USA 14(9): Tucker, G., and M. Schneider. 1982. Professional
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Rossman, G., and S. Rallis. 2003. Learning in the U.S. Department of Labor, Bureau of Labor Sta-
Field: An Introduction to Qualitative Research, tistics. 2004. Census of Fatal Occupational In-
2nd ed. Thousand Oaks, CA: Sage. juries, 2002. Retrieved August 13, 2004, from
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tel Engineer’s Job.” Cornell Hotel and Restau- van der Smissen, B. 1990. Legal Liability and Risk
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Cincinnati, OH: Anderson, p. 3.
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1987. “Understanding and Managing Your Li- Wasmuth, William J., and Stanley W. Davis.
ability for Guest Safety.” Cornell Hotel and 1983. “Strategies for Managing Employee
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58–63. ministration Quarterly 24(2):65–75.

Rutherford, D.G., and William J. Schill. 1984. “The- Whataburger, Inc. v. Rockwell, 706 So.2d 1226 (Ala.
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Saied, Jamelia. 1990. “Approaches to Risk Man-
agement.” Cornell Hotel and Restaurant Ad- Wynn, R., N. Clarkin, T. Cox, and A. Griffiths. 1997.
ministration Quarterly 31(2):45–55. Guidance on the Prevention of Violence at
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The Professional Housekeeper, 3rd ed. New
York: Van Nostrand Reinhold.

SUGGESTED READINGS

Books Cournoyer, Norman G., Anthony G. Marshall, and
Karen L. Morris. 1999. Hotel, Restaurant, and
Berlonghi, A. 1990. Special Event Risk Manage- Travel Law: A Preventive Approach. Albany,
ment Manual. Dana Point, CA: Event Risk NY: Delmar.
Management.

234 Chapter 5 ᭿ Operations: Housekeeping, Engineering, and Security

Marshall, Anthony G. 1995. Don’t Lose Your Hotel Articles
by Accident. Cleveland, OH: Advansta Mar-
keting Services. Bean, Nelson R. 1992. “Planning for Catastrophe:
The Fast Track to Recovery.” Cornell Hotel
Martin, Robert J. 1998. Professional Management and Restaurant Administration Quarterly
of Housekeeping Operations. New York: John 33(2):64–69.
Wiley and Sons.
Dale, J. C., and Theodore Kluga. 1992. “Energy
Newland, Loren E. 1997. Hotel Protection Man- Conservation: More Than a Good Idea.” Cor-
agement: The Innkeeper’s Guide to Guest Pro- nell Hotel and Restaurant Administration
tection and Reasonable Care. Spokane, WA: Quarterly 33(6):30–35.
TNZ.
Malk, M., and R.S. Schmidgall. 1994. “Financial
Prestia, Kenneth Lane. 1993. Chocolates for the Analysis of the Rooms Division.” Bottomline
Pillows, Nightmares for the Guests. Silver 8(6):18–21.
Spring, MD: Bartleby.
———. 1995. “Analyzing Food Operations.” Bot-
Schneider, Madelin, Georgina Tucker, and Mary tomline 10(3):23–27.
Scoviak. 1999. The Professional Housekeeper.
New York: John Wiley and Sons.

Smith, Harry. 1993. Hotel Security. Springfield, IL:
Charles C. Thomas.

SOURCE NOTES

Chapter 5.2, “A Day in the Life of a Director of Chapter 5.6, “The Engineering Department and
Rooms,” by Kurt Englund. Financial Information,” by Agnes Lee De-
Franco and Susan B. Sheridan.
Chapter 5.3, “Housekeeping Organizations: Their
History, Purpose, Structures, and Personnel,” Chapter 5.7, “The Legal Environment of Lodging
by Thomas Jones, adapted from Housekeeping Operations,” by Melissa Dallas.
Operations, 2nd ed., edited by Robert Martin,
Copyright © 1992. Adapted by permission of Chapter 5.8, “Asphalt Jungle,” by Je’anna Abbott
John Wiley & Sons, Inc. and Gil Fried, is reprinted from the April 1999
issue of Cornell Hotel and Restaurant Admin-
Chapter 5.4, “On Being an Executive House- istration Quarterly. © Cornell University.
keeper,” by John Lagazo. Used by permission. All rights reserved.

Chapter 5.5, “The Hotel Engineering Function: Chapter 5.9, “Workplace Violence in Hotels,” by
Organization, People, and Issues in the Mod- Mark Beattie and Jacinta Gau.
ern Era,” by Denney G. Rutherford.

chapter six

FOOD AND
BEVERAGE DIVISION

6.1 I N T R O D U C T I O N

In discussing the ways that hotel organiza- recognition lost during Prohibition. Recovery
tions have changed, we pointed out that in was further delayed by the Depression and
earlier times food played a significant role in the uncertainty and reordered national prior-
the organizational structure and product/ ities that accompanied World War II.
service mix of hotels. It has been speculated
that the preeminent role played by hotel In 1945, at the conclusion of World War II,
foodservice in society became significantly di- well-documented major shifts in population
minished with the onset of Prohibition and and economic emphasis began to occur. Free-
during the 1920s. People stopped going to standing restaurants continued to compete ef-
foodservice establishments where they couldn’t fectively with hotel foodservice. Movement
“get a drink.” Prohibition gave rise to compe- was away from downtown and central busi-
tition from street restaurants that operated ness district hotels. Motels and motor hotels
sub rosa as speakeasies. These restaurants were built on highway and freeway inter-
were not constricted by the visible, public na- changes to take advantage of the mobility of
ture of hotel dining rooms. This diminished the American family. Fast-food restaurants,
role was compounded in many ways by the too, affected the away-from-home eating
depression years of the 1930s and the war habits of Americans. Consequently, many ho-
years of the 1940s. tel companies saw as too great the cost of pro-
viding high-quality competition in the face of
In general, it was difficult for most hotels’ these forces. The net effect was that many ho-
foodservice to recover from the effects of tel guests and operators came to believe that

235

236 Chapter 6 ᭿ Food and Beverage Division

hotel foodservice was little more than a nec- • Food and beverage outlets must become
essary evil. For many operations, this became amenities that produce room-nights.
a self-fulfilling prophecy, and hotel foodser-
vice floundered for many years. • Hotel food and beverage units must
adopt street restaurant philosophies; mer-
This situation has been reversed in recent chandising, advertising, decor/ambience,
years. Of the many factors mentioned earlier menu, and service must compete with lo-
that forced organizational change (market cal competition.
segmentation, return on investment, demo-
graphic shifts, and so forth), it seems that re- • Food and beverage can be used to fill
turn on investment has played a dominant marginally profitable space in rentals,
role in this turnaround. The double-whammy storage, or production areas.
issues of construction cost and return on in-
vestment expectations of people outside the • New food and beverage outlets can lever-
hospitality industry strongly suggest that age existing facilities like storage and
space devoted to foodservice should con- kitchens by spreading fixed costs over a
tribute at least its share to the profit structure wider sales base.
of the modern hotel service system.
Hubsch’s article, now considered a classic,
As a result, hotels seem to be willing to is among the suggested readings for this
try anything to capture additional revenue, section.
prestige, and competitive advantage. Among
the tactics addressed in several of the articles Robert H. Bosselman is the director of
and essays included in this section are part- the Dedman School of Hospitality and Ded-
nering with restaurant companies, outsourc- man Distinguished Professor of Hospitality at
ing a hotel’s foodservice, new catering and Florida State University. From his perspec-
beverage management strategies, celebrity tive, looking ahead to the future state of hotel
chefs, and rethinking the entire role of hotel food and beverage operations, Bosselman
food and beverage. provides an in-depth analysis of the way the
hotel food and beverage organization has
᭤ FOOD changed over the last eight to ten years and
offers tantalizing clues and examples that
Over 35 years ago, Allen Hubsch (1966) sug- echo the prescriptions proposed by Hubsch.
He also addresses the structure of the organi-
gested a number of ways to revitalize hotel zation, interactions of food and beverage ele-
food and beverage service that have proved ments within the lodging operation, operating
eerily prescient. Among his suggestions were: ratios, and potential trends in this major—and
expensive—operational component.
• Hotel food and beverage facilities must
become profit centers—no more a neces- Dominic Provenzano is director of opera-
sary evil! tions of the Downtown Marriott at Key Cen-
ter in Cleveland, Ohio. From the perspective
• Food and beverage management calls for of a previous position as director of food and
new and increased professionalism and beverage, he provides front-line detail of how
less reliance on the old chef–maître d’ Bosselman’s theory of food and beverage
model. plays out for the food and beverage director.

In a major research effort that began in
1998, Laurette Dubé, Cathy Enz, Leo Re-

237Section 6.1 ᭿ Introduction

naghan, and Judy Siguaw of the Center for going articles, the chef is nevertheless an inte-
Hospitality Research at Cornell University gral part of the competitive strategy and a
studied the best practices of hotels in the U.S. full-fledged department leader. He or she is
lodging industry. In their words, “The goal of no longer purely a technician. This individual
this research was to surface and summarize must have developed a significant range of
practices of use and value to the entire lodg- managerial skills to complement the technical
ing industry” (Dubé et al., 1999, 7). Siguaw and artistic training we have come to expect
and Enz summarize several of the practices from an executive chef. The appearance of
from that study that have been developed by ultra-high-profile celebrity chefs adds an-
hotels to achieve the “strategic charge of prof- other interesting variable to the food and bev-
itably meeting customer needs” (1999, 50). erage director’s mix of challenges. If a hotel
The authors describe how top hotels integrate commits much of its food and beverage strat-
the ideas of restaurant design and conceptual- egy to the talents of one famous person, it can
ization with all of the variables that affect the enjoy a significant competitive advantage but
quality of the food and the experience for the also become hostage to that person’s whims
guest. and personality. Many high-profile hotels in
Las Vegas have “name” chef programs, and in
The concept of outsourcing was men- many major population centers, top chefs
tioned earlier in the context of how some ho- have made their hotels destination venues
tel companies are rethinking the role of hotel due to their fame in the kitchen.
food and beverage and how to maximize in-
vestments in facilities, furnishings, and equip- Patti Shock and her colleague John Ste-
ment for foodservice outlets. According to fanelli highlight the importance of the ban-
Strate and Rappole (1997), because hotel quet and catering functions of hotel food and
restaurants have often been managed as a beverage in their piece, updated for this edi-
secondary function, owners and operators are tion. With the increased national attention
questioning the conventional wisdom about and focus on the importance of conferences,
how hotel food and beverage is conceived and conventions, meetings, and events of all kinds,
managed. They state that this new focus on foodservice professionals who specialize in
hotel foodservice results in innovative con- planning and serving meals and beverages
cepts and strategic alliances with well-known to large groups of people are increasingly
restaurant brands. In their article, they ana- important. The authors note, “Although on-
lyze this trend outlining historic antecedents premise catering is generally the second-
of the practice and use the Texas firm Bristol largest source of revenue for most hotels,
Hotel Company as a case study. following sleeping rooms” and “often the
highest visibility the hotel has on a local
Few would argue that should a hotel level,” banquets and catering are still too of-
choose to do its own foodservice, a first-class ten ignored by hotel school curricula. In this
executive chef is essential to allow a hotel or- article, we partially address this lack.
ganization to compete effectively for food
and beverage business in today’s market. It is, Catered affairs represent a significant
however, fairly clear that chefs today do not contribution to the profit picture of hotel
have the dominant role they had a century food and beverage service. The efficacy of a
ago. Given the importance of the food and hotel’s efforts in selling and servicing the
beverage function, as established by the fore- group business market may very well be the

238 Chapter 6 ᭿ Food and Beverage Division

difference between profitability of the food • Coordinates the requests of other depart-
and beverage function and some less desir- ments that require beverage services—for
able outcome. Shock and Stefanelli explore instance, banquet and catering, room
the organization, personnel, and processes service, chefs, management.
of the catering department and give the
reader an in-depth view of catering execu- • Assures that his or her department is in
tives and banquet organizations. The article compliance with federal, state, and local
includes Internet addresses for additional laws and regulations.
information.
The beverage manager administers or
It is the revenue and visibility importance manages up to four types of bars.
of the catering function that makes the ener-
getic essay by Rich Benninger so intriguing. The front or public bar is that in which the
From rising at 6:00 A.M. or so, thinking today guest can, if he or she so desires, interact with
is the day he will “get everything done” in the the bartender and other service personnel.
catering and convention services office of a There are provisions for guest seating at the
5,000-room resort hotel casino in Las Vegas, bar itself, which may be part of a restaurant or
to hitting the sack after midnight, Benninger a separate room or area. Separate tables and
gives the reader an insider’s view of life in the stand-up areas may also be available for bev-
fast lane of Vegas catering and convention erage service. A front bar may or may not in-
services. As executive director of catering and corporate entertainment.
convention services at the Caesar’s Palace
Resort Hotel and Casino, Benninger is A service bar is a hidden bar designed for
uniquely positioned to provide these insights. use by the hotel’s food and beverage service
staff only. It may serve one or more foodser-
᭤ BEVERAGE vice areas and/or room service, and it is de-
signed specifically for efficiency and economy
In any hotel that has more than one formal of service. In most cases, speed is considered
the essential ingredient in service bars. Ser-
bar, there is usually a separate function within vice bars typically are centrally located in the
the food and beverage department called bar back of the house, out of guest view.
or beverage management. Ideally, that office
coordinates all matters that concern liquors, Portable bars are designed for maximum
beers, and wines. The beverage manager is re- flexibility and can be used in conjunction with
sponsibile for purchasing, receiving, storing, beverage sales associated with guest activities
and issuing liquor, wine and beer inventory, anywhere in the hotel or on its grounds. This
and quite obviously has the managerial re- may be extended in resort areas to include
sponsibility to control that inventory. recreational areas.

Additionally, the beverage manager: A new facility popular in many hotels is
that of the in-room bar, mini-bar, or honor
• Hires, trains, schedules, and controls all bar. While sometimes the responsibility for in-
beverage and bar personnel. ventory of these bars rests with room service,
the beverage manager in most cases is also
• Promotes the various beverage depart- deeply involved in their design, marketing,
ment services. and control.

In many ways, the beverage manager’s
job can be compared, in terms of historical

239Section 6.2 ᭿ Managing Food and Beverage Operations in Lodging Organizations

stereotype, to that of the housekeeper. Often ciani, professor of beverage management at
the beverage manager has worked his or her the University of Nevada, Las Vegas. Lu-
way up through the ranks of beverage server ciani’s essay, reprised here from the third edi-
and preparer and through experience, tion, draws on his industry experience,
longevity, and interest becomes the beverage research, and teaching beverage management
or bar manager. There is reason to believe and provides a view of how the modern bev-
that in many ways this pattern is changing. erage manager has evolved from his or her
Like many other areas of hotel management, historical counterparts.
the beverage management function now faces
a range of issues that are more sophisticated The planning, preparation, service, and
and complicated than traditional beverage management of food and beverage in modern
management problems of the past. It may be hotels have changed significantly since the
that the beverage managers of the future will first edition of this book was written. The es-
have to bring to their job a level of manage- says, research, and commentary presented
rial, organizational, and administrative so- here are chosen to illustrate the breadth and
phistication that was previously unnecessary. depth of this process of change. The reader
who is interested in hotel food and beverage
The issues, responsibilities, and structural should be able to synthesize an accurate vi-
management of the hotel’s beverage function sion of the practices and realities of this major
are analyzed and discussed by Valentino Lu- operational division of modern hotels.

6.2 M A N A G I N G F O O D A N D B E V E R A G E
OPERATIONS IN LODGING
ORGANIZATIONS

Robert H. Bosselman

Like the lodging industry in general, foodser- This introductory essay discusses the
vice in the hotel market has improved its po- mission and goals of food and beverage de-
sition over the last few years. A typical partments in lodging operations, the orga-
characteristic is a market posting steady but nizational structure of such departments,
not significant growth and emphasizing cost interactions of food and beverage elements
containment and innovation. As lodging food- within the lodging operation, operating ratios,
service competes with the multitude of com- and potential trends in the area.
mercial foodservice operations for the
consumer dollar, value remains the focus of ᭤ MISSION AND GOALS
both operators and consumers. A number of
studies have identified food and beverage “The goal of our food service operations is to
services as a primary contributor of value to a
customer’s lodging experience. provide the highest quality of food and

240 Chapter 6 ᭿ Food and Beverage Division

service in a sophisticated, comfortable ambi- can better serve these tourists. In addition, a
ence, by friendly and professional staff, ensur- clear, objective analysis of local competition
ing that every patron returns,” states the Four is necessary to determine the segment and
Seasons Hotel in Las Vegas. This statement, genre in which the hotel can compete and
succinct and focused, exemplifies what lodg- succeed.
ing operations nationwide are seeking. Most
lodging executives identify food and beverage If the hotel is competing with an estab-
operations as one of the more complex areas lished local competitor, then the hotel food-
to manage in the entire lodging arena. Lodg- service operation must outdeliver on all levels
ing foodservice not only involves the tradi- of quality, service, and ambience. In a large
tional difficulties associated with both hotel, it is also necessary not to compete di-
producing and serving food and beverages rectly with another unit in the same hotel.
but also the performance of these functions Units must be diverse to give different seg-
every day, often 24 hours a day. The resulting ments of the market a choice; the ideal out-
labor costs and operational expenses prove come is that hotel and local guests choose to
burdensome for many lodging establishments. dine in one of the hotel’s offerings. A strong
In order for these food and beverage opera- food and beverage program that delivers a
tions to survive and thrive, they must draw high-quality product and experience can be
not only guests of the lodging facility but also used as a competitive advantage as well as a
consumers from the external market of the sales tool for the lodging facility.
lodging property. Hoteliers are analyzing
their operations to identify ways of increasing Many hoteliers choose not to compete in
the percentage of guests who stay to dine on- this environment. Instead, their strategy is
site, known as the capture rate. to eliminate food and beverage operations
altogether, or to lease food and beverage op-
In fact, the more profitable lodging food erations to outside companies, either chain-
and beverage operations obtain more than 50 operated or an independent restaurant (see
percent of their business from non-guests of the article by Strate and Rappole elsewhere
the property. The hotel or motel guest is not a in this section). In particular, food and bever-
captive diner; he or she has many other op- age sales in motels and motor-hotel restau-
portunities for dining. Yet, in order for a hotel rants continue to decline as a percentage of
property to be profitable, a significant per- overall sales when compared to full-service
centage of sales must be produced by food hotels, primarily as a result of an increasing
and beverage operations. To accomplish this, number of lower-priced lodging operations
lodging facilities must successfully compete offering free breakfast and no other meal
with the numerous chains and independent service. However, that free breakfast has be-
restaurants that offer a variety of services. come a competitive positioning statement for
One advantage for full-service hotels is the the property. Guests now expect it, and they
banquet business, which can be a major rev- expect quality, yet such lodging facilities must
enue producer and operate at a high profit maintain their cost structure.
margin. It becomes critical for lodging opera-
tors to research tourists’ specific food needs While the reader may start to think that
and wants, and how their specific operation hotel food services are not major players in
the overall foodservice market, 2005 pro-
jected sales were estimated at $25 billion,

241Section 6.2 ᭿ Managing Food and Beverage Operations in Lodging Organizations

according to the National Restaurant Associ- ters. It was not until the post–World War II
ation. There are five major hotel chains whose era that independent restaurants and restau-
foodservice sales per hotel average more than rant chains grew in both number and influ-
$2.3 million. At the top lies Sheraton Hotels, ence over the customer. As we enter the
whose properties average well over $4.6 mil- twenty-first century, lodging foodservice ac-
lion in foodservice sales. It should be noted counts for approximately 7 percent of the
that a number of convention/resort hotels total foodservice market. From total domina-
could do well over $30 million in annual food tion of the market to its role as a secondary
and beverage sales. Clearly, foodservice pro- player today, lodging foodservice has under-
fessionals have as much or more opportunity gone dramatic change. As properties struggle
for success as in other segments of the food- to decide whether or not to offer foodservice
service industry. With potential sales like and, if so, the number of foodservice units and
those noted, lodging food services remain a the level of service to offer, future managers
critical partner with respect to both the rev- must recall what the goals and mission of the
enue and profit of the property. A smart, re- foodservice operation should be:
sourceful manager makes the foodservice
operation unique, thus attracting additional 1. To provide the appropriate level and de-
patrons to the lodging establishment. Thus, gree of food and beverage service to the
foodservice can be looked on as a means of property’s guests.
gaining competitive advantage over other
lodging operations. 2. To support the overall goal(s) of the
property.
The field of lodging has a long history of
serving people food and drink during their 3. To assist the property in gaining a com-
travels. From the earliest days of the Roman petitive advantage over other lodging
Empire, when people traveled on foot, on an- establishments.
imal, or in vehicles drawn by animals, to the
modern age of air, rail, and car transportation, 4. To function efficiently and effectively in
hotels and inns provided for their needs. In order to produce a profit.
fact, early hotels were usually the center of
community activity and often the only place ᭤ ORGANIZATIONAL
one could eat away from home. The glamour CONSIDERATIONS
years of the late nineteenth and early twenti-
eth centuries produced grander hotel proper- The organization of foodservice departments
ties, the so-designated palaces of the people,
which solidified this perception of hotels as within lodging establishments varies depend-
centers of public entertainment and as ing on the type of facility and, in the case of
sources of food and drink for guests. This rep- chain operations, corporate policies. Due to
utation continued well into the twentieth cen- this degree of variety, categorizing lodging
tury, as hotels became the logical place to properties can be difficult. For example, a
meet for entertainment and business discus- property located in a resort environment may
sion. Foodservice operations independent of also have extensive convention space. A prop-
hotels were rare even in the larger urban cen- erty known primarily as a convention hotel
has room enough to accommodate large

242 Chapter 6 ᭿ Food and Beverage Division

groups. Foodservice outlets likely include sis on food and beverage operations in such
restaurant(s), lounge(s), banquet facilities, facilities.
and room service. A resort property provides
all the amenities that focus on guest enter- Economy properties are coming off a pe-
tainment and relaxation, with emphasis on riod of significant growth. This is the segment
specialty restaurant(s) and room service. that often rejects offering foodservice opera-
Unique problems may face resort managers tions. Midscale brands such as Ramada Inn and
with respect to seasonality of operations, lo- Hampton Inn are noted for their aggressive
cation, and layout. The latter points are im- growth in building new properties with little or
portant because the property itself, as well as no food services. Additionally, significant
individual food and beverage outlets, may be growth is expected in the lower-tier extended-
located in hard-to-access areas, which affects stay market. However, some properties are at-
operational expenses. tempting to redefine the concept of value to the
customers. An example is Courtyard by Mar-
An example of a resort is the Renaissance riott, which combines comfortable lodging with
Sea World Resort in Orlando, Florida. David downsized foodservice operations. All-suite
McKeever, director of restaurant operations, properties remain one of the hottest concepts
is responsible for three full-service restau- in the lodging field. While some units contain
rants as well as banquet and conference ser- kitchen facilities, many offer complimentary
vices. David notes that his facilities aim for an food and beverage services—particularly at
upscale perspective, highlighted by regional breakfast—for the busy traveler.
and contemporary menu influences and char-
acterized by upscale wine sales. He identifies The Four Seasons Hotel in Boston
the property clientele as wanting a relaxed demonstrates one example of how a hotel
environment in food and beverage services. food and beverage operation can be organ-
ized. The food and beverage division has four
Lloyd Wentzell, vice president of food departments; food preparation, catering sales,
and beverage, provides a slightly different stewarding, and sales outlets. The latter has
view of these services at the Riviera Hotel five operations: private bars, room service, a
and Casino in Las Vegas. He notes that the full-service lounge, a fine dining restaurant,
food and beverage operation there is an and banquet facilities. Each department has
amenity. The buffet and coffee shop are for in- line employees who report to assistant man-
house guests, and the (three) gourmet rooms agers who, in turn, report to department
are for guests including those who come to heads, who then report to a director of restau-
the shows at the hotel’s four entertainment rants and bars, who, in turn, reports to the di-
venues. The snack bar in Nickel Town is used rector of food and beverages. Regardless of
to bring visitors from nearby properties. the size of the lodging facility, food and bev-
Room service is a necessary loss leader used erages must be produced and served. How-
to maintain resort hotel status. ever, the increased size and complexity of
some operations makes it critical that man-
Airport properties have grown with the agers communicate well with all levels of em-
increase in air travel. Quite often, travelers ployees. The trend may be toward flatter
choose these properties based on the conven- organizational structures as well as to com-
ience factor. While occupancy rates are high pletely separating out certain functions of the
during weekdays, weekend business tends to food and beverage area.
drag. There does not appear to be an empha-

243Section 6.2 ᭿ Managing Food and Beverage Operations in Lodging Organizations

᭤ FOODSERVICE vice is organized today have been reported in
PERSONNEL studies of best practices. The Boulders, lo-
cated in Arizona, created a food forager posi-
Who are the key people in the organization tion to improve quality of products. Menus
are designed around foods actually located,
of lodging foodservice? Our attention here is which saves time spent trying to find ingredi-
on the operational players, those individuals ents to fit a menu while providing guests with
most often responsible for the work of pleas- a unique dining experience. The Greenbrier,
ing the guest while holding the line on costs. in West Virginia, designed a formal three-year
culinary apprentice program. This allows the
In most kitchen operations, an executive resort to attract a continuous supply of tal-
chef is responsible for management related to ented chefs as well as create a cooking school
production activities. Depending on the size for guests (thus adding value to the guest ex-
and complexity of the operation, the execu- perience). The Pierre in New York City uti-
tive chef may actually perform little in the lizes an independent consultant to manage
line of food production. In a small operation, purchasing. This frees the chef to focus on
the chef may also be a part owner and per- food production and has led to reduced food
form most of the food-related functions. One and labor costs.
of the exciting trends today is the use of big-
name chefs in hotel food services, often al- The dining room can have an equal de-
lowing them to create a signature room in the gree of complexity, depending on the opera-
lodging property. The proper positioning of tion. There may or may not be a supervisor,
the restaurant in a niche market can also have often called a host or hostess, or a maître d’.
a residual positive effect on average rate and This individual greets guests and supervises
occupancy. Marketing a celebrity chef as a the waitstaff. At the actual service level are
primary component of a hotel may yield a the captains, servers, bussers, and cashiers. If a
competitive advantage among that specific lounge operation is present, so are bartenders
hotel’s competitive set. and cocktail servers. As one can readily imag-
ine, working as a team is imperative.
With the trend toward downsizing opera-
tions, it would be the rare organization in In today’s cost control environment, food
lodging foodservice that employed numerous and beverage operations are trimming pay-
back-of-the-house employees engaged in a rolls and consolidating job responsibilities to
single function. Some examples of the past cut operational expenses. This cross-training
might include the sous-chef, the executive of staff allows an individual to take on multi-
chef’s assistant and often the staff supervisor; ple responsibilities. The Breakers Hotel in
the saucier, or sauce cook; the garde-manger, Palm Beach, Florida, utilizes a cross-training
the cook in charge of all cold food prepara- program that allows the property to com-
tion; the chef pâtissier, or pastry chef; and the pletely reorganize its staff annually, facilitat-
banquet chef in charge of catering. Each of ing mobility of staff as well as improved
these positions would have had assistants. In service to guests. In the past, it was not un-
addition, other jobs were steward, purchasing common for the food and beverage operation
manager, storeroom clerk, and several janito- to employ workers around the clock, as most
rial staff. items were made from scratch. With modern
equipment and the use of more convenience
Some examples of how lodging foodser-

244 Chapter 6 ᭿ Food and Beverage Division

food items, such as preportioned meats, it is food and beverage. These divisions interact in
now rare to find butcher shops or pastry every imaginable way 24 hours a day to pro-
shops in hotels. Again, hotel operations are duce the guest experience. It is necessary that
concentrating on quality, value, and cost. If the strategy or mission of the operation as a
the property can find a product on the mar- whole be communicated to all levels of the or-
ket, the trend is to purchase rather than make ganization to ensure a consistent guest expe-
from scratch. rience. In order to maintain continuity within
the organization, all strategic moves must be
There has been increased attention on the consistent with the mission of the operation
education level of chefs in lodging operations. and build toward the long-term goals of
In recent years, traditional culinary arts pro- profit, quality, guest satisfaction/loyalty, and
grams have expanded from two-year to four- employee retention and growth.
year education programs, while traditional
four-year hospitality institutions have ex- Perhaps the best way to describe this in-
panded their curricula into culinary arts. Un- teraction is to characterize food and beverage
der the direction of the author (when he and other departments as mutually depend-
served there as department chair), the De- ent. Direct interaction can be observed be-
partment of Food and Beverage Management tween food and beverage and the front desk
in the Harrah College of Hotel Administra- with respect to specific guest service issues.
tion at the University of Nevada, Las Vegas, Direct interaction can also be observed with
was the first four-year hotel administration the sales department and the convention/ban-
degree program to offer a bachelor of science quet department. Indirect interaction be-
(B.S.) in culinary arts management. People tween departments comes from areas such as
who earn this degree can command reward- rooms, in the form of overnight cleaning; en-
ing pay, but much is expected of them as well. gineering, in the form of maintenance and re-
They must be able to produce high-quality pair; and accounting, in the form of financial
products utilizing minimal resources. They analysis. For example, food and beverage
must also direct all activities in the back of the team members must communicate their
house, including the training and supervision reservation needs or restrictions to concierge
of employees. Their responsibility is the and bell staffs. One example is announcing a
means by which a food and beverage unit pro- new menu that has been initiated, or that a
duces profit for its parent institution, the special activity will occur. Likewise, food and
lodging facility. beverage depends on information submitted
to them regarding occupancy, VIP guests, or
᭤ OPERATIONAL demanding guests.
INTERACTIONS
No matter the type of lodging property, it
Hotels are complex institutions divided into is critical for management and staff to meet
regularly to discuss department interaction
separate operational areas, among them and better ways to service the guests. Another
rooms, engineering, administrative, account- example with a special case to consider is a
ing, human resources, and sales, in addition to casino resort hotel. Historically, food and bev-
erage has been perceived as an amenity for
players. The casino and slot departments are

245Section 6.2 ᭿ Managing Food and Beverage Operations in Lodging Organizations

continually in contact with food and beverage hotel and how they affect its profitability.
units, particularly room service, to request When developing annual budgets, the team
special arrangements for their clients. These must take into consideration seasonality,
requests might range from amenities being group business and its particular needs, tran-
delivered and set up in the guest room to sup- sient guests, and regional events that may af-
plying the gaming area with special foods and fect guest occupancy and mix.
drinks.
The food and beverage manager must
The type of client sleeping in the guest know who the customers are and how many
rooms significantly affects the revenue-gener- patrons to expect. Information about hotel
ation potential of a lodging food and bever- guests such as house counts, market mix re-
age operation. Because a majority of food and ports, group commitment reports, and
beverage customers may be hotel guests, it is rival/departure patterns assists the food and
important to book the right type of people beverage team in making decisions on sched-
into the hotel. The sales mix of the hotel is a uling, food ordering, and whether or not to
delicate balancing act. Sales staff must make close a particular outlet.
sure they are contracting groups that maxi-
mize hotel revenue per available room Every hotel employee is a sales agent for
(Revpar). Do you know the utilization rate of the property’s food and beverage outlets. The
the food and beverage outlets for the various staff must be trained to refer and recommend
market segments? Do business travelers eat hotel services to guests. It is clear that the
more or drink more than the leisure/pleasure quality of food and beverage operations can
market? Which convention uses the food and affect overall hotel operations and profitabil-
beverage outlets more than others? The ball- ity. Quality is particularly important for con-
room space must be managed closely to en- vention hotels and resort hotel properties.
sure that the best business opportunities are Guests come to such properties for specific
maximized from the rooms and food and bev- purposes. Therefore, a reputation as a high-
erage perspectives. Groups with high demand quality food and beverage operation will at-
for banquet space must meet room-night ob- tract customers. These operations generate
ligations at a given rate and provide the nec- word-of-mouth advertising from travel
essary revenue in catering. Local niche agents, corporate meeting planners, cab driv-
opportunities must be explored when there is ers, airline companies, and tourism offices.
an opportunity to sell the ballroom when ho- While this reputation can attract guests, it is
tel guests are not utilizing it. It is possible that the responsibility of management to plan ef-
local catering sales can be a larger portion of fectively for their needs.
the total catering dollars, particularly when
the rooms mix changes to a larger proportion Imagine you run a hotel restaurant, oper-
of transient guests. Your management and ate room service, provide food and beverages
sales staff must know the answers to these for employees, and now are also catering sev-
types of questions. Sales personnel cannot just eral types of meals/functions for different
be concerned with achieving room-night quo- groups. Recall that the goal of the hotel prop-
tas or generating revenue; they must know erty is to service its clientele. Therefore, each
the impact of their decisions throughout the area of the hotel must complement the other
in providing the service. Managers, particu-
larly in food and beverage, must communicate

246 Chapter 6 ᭿ Food and Beverage Division

effectively and train constantly in order to A number of club managers the author
maximize the goals of the lodging operation. recently spoke with noted that operating ra-
tios are important to keep expenses in
᭤ OPERATING RATIOS check, as well as to monitor improvements
or income contributions from one area of
Many operating ratios are utilized by the the property to another. They identified
food cost and labor cost percentages as most
food and beverage department. Controlling important. A casino hotel controller from
operational expenses is perhaps the biggest Las Vegas utilizes operating ratios such as
challenge facing food and beverage managers. cost per cover, percentage of sales, cost per
Managers at every level must be controllers. employee, utilization rate (number of cov-
In addition, it is the duty of every food and ers/number of guests), revenue per occupied
beverage manager to maximize the revenue room, sales per hotel guest, average check,
and profit potential of his or her specific unit. sales per employee, table turnover, inven-
An empty seat cannot be resold later. If a tory turnover, revenue per square foot, rev-
restaurant has a significant drop in sales on a enue per seat, cost per square foot, return on
given day or time of year, a strategy must be investment, covers per employee, average
developed and implemented to fill that void covers per day, and average sales per day. In-
and thus provide a new revenue source. Most dustry professionals note that ratios are
hotels’ food and beverage operations have a only tools and that it is more important to
minimum fixed cost that must be maintained have a clear idea of what needs to be meas-
in order to meet the needs of the hotel. ured and the impact of each variable on the
overall operation.
It is increasingly difficult to make a profit
and provide high-quality service when rev- What we can observe is that food and
enue does not support the labor necessary for beverage managers utilize ratios to determine
even minimum levels. The challenge is to whether or not they have been successful in
maintain a strong revenue flow so that effi- generating revenues and minimizing ex-
ciencies of scale take place. The kitchen is the penses. Such ratios can then be compared
highest cost producer of any part of the food with figures from prior accounting periods of
and beverage operation. The challenge of the that operation. Let us examine some of the
kitchen manager or chef is to deliver a high- more common ratios.
quality product, yet maintain close controls
on food and labor costs. Food and Beverage Sales per Available
Room
The key for success in this area is to have
a clear understanding of production manage- ᎏTNotuaml FboeᎏordofaAndvaᎏBileavbelreaRgᎏeooSmaless ϭ $
ment so as to reduce waste and spoilage, cre-
ate dynamic menus that drive business, and Food and Beverage Occupancy
continue to build an ongoing training pro-
gram to instill the best practices into line as- ᎏNNuummbbᎏeerrooffCSᎏoevaetsrs ϭ Turns
sociates. In very large establishments, the
kitchen manager or chef may find himself or
herself using a computer more than a knife.

247Section 6.2 ᭿ Managing Food and Beverage Operations in Lodging Organizations

Sales per Available Seats have different as well as similar factors. For
example, average check is common to all,
ᎏNFuomodbearnᎏodfBAevvaeirlaabᎏgeleSSaeleasts ϭ $ while a measure of seat turnover applies only
to the coffee shop or the sit-down restaurant.
Average Check The accumulation of information should be as
easy as possible for management. The use of
ᎏFooNduamndbᎏeBreovfeCraoᎏgveeSrsales ϭ $ point-of-sale technology enhances this
process. Technology can also be applied to
Ratio of Beverage Sales to Food Sales storeroom management, including inventory
controls and purchasing. Labor management
ᎏBeFvoeoradgᎏSeaSleasles ϫ 100 ϭ % technology has contributed to attaining opti-
mal staffing guidelines based on forecasts,
Food Cost Percentage group needs, and position qualifications. Use
of the Internet is now a standard tool in mar-
ᎏFFooooddᎏSCaolests ϫ 100 ϭ % keting strategy, where the guest may book a
reservation directly online. Managers should
Labor Cost Percentage not spend all their time determining what the
ratios are or what they mean. Management
ᎏFooFdooandᎏdanBdevBeerᎏvaegreaLgeabSᎏoarleCsost ϫ 100 ϭ % should be able to quickly ascertain what has
occurred in the operation and take corrective
Note that costs are usually stated as a per- action, if necessary.
centage of sales. These percentages can then
be compared with those of previous time ᭤ TRENDS IN LODGING
frames. While the dollar values for costs are FOODSERVICE
necessary to determine the percentages, it is
difficult to compare dollars to dollars ex- In presenting trends, we must exercise cau-
pended per time period. Measures of revenue
often tell management how much effort food tion, as what works in one food and beverage
and beverage staff have expended for the operation may not in another. Recall that the
benefit of the operation. Those ratios combin- goal of lodging food and beverage operations
ing food and beverages can be broken down is to meet hotel guests’ desires, with attention
by category. Note from the comments pro- paid to price, value, quality, service, and at-
vided earlier that ratios utilized vary depend- mosphere. Food and beverage managers are
ing on the operation. Your goal as manager is wise to study similar hotel operations as well
to gain the best information available to assist as restaurant operations. Guest surveys are
you in making decisions. also essential to determining customer de-
sires. Your objective should be to discover
Individual units, such as catering, room what customers want and need in terms of
service, coffee shop, and sit-down restaurants, food and beverage products and delivery, and
how your operation can better serve them.

Hilton Hotels has added to its Vacation
Station program. It provides children a canvas

248 Chapter 6 ᭿ Food and Beverage Division

bag with an insulated compartment to hold of their business from hotel guests, and this
lunch or snacks, with a mesh-net drink holder cooperative arrangement eliminates the capi-
on the side. Parents can order from a variety tal cost of building a restaurant on site. Westin
of Snack Pack selections via room service for has teamed with established steakhouse chain
pickup later. Radisson Hotels and Resorts operators The Palm and Shula’s Steak House
teamed with a culinary school and supplier to in its properties. Doubletree also developed
create a low-carbohydrate menu. Sheraton specialty steakhouses, but with their own pro-
Hotels has also introduced a Lo-Carb Life- prietary concept, Spencer’s.
style program in its restaurants, banquets,
room service, lounges, and to-go snacks. Another example of branding your own
concept comes from the Riviera Hotel and
Holiday Inn Hotels and Resorts is testing Casino.They created Hound Doggies as an out-
use of a wireless electronic menu that allows let that targets the walking traffic on Las Vegas
a customer to view a list of options updated in Boulevard (the Strip). The location is only a
real time. The consumer can find related nu- few steps off the sidewalk and has been suc-
tritional information while searching for in- cessful in drawing nonstaying guests into the
formation about the hotel itself. Also in an property. They implemented this concept only
experimental phase is their new prototype after studies identified walking traffic as a po-
restaurant, Kem’s Café, named for founder tential market.The goal for the outlet was quite
Kemmons Wilson. Guests can use the e-menu basic: Bring people in the door. Through the
to order from a choice of comfort food. use of a 1950s theme, high-quality food, and low
prices, the Riviera has exceeded its expectation
Back at the Breakers Hotel in Palm of nonstaying guests. As the unit was not cre-
Beach, management renovated their existing ated specifically as a revenue-generating cen-
formal dining and casual dining restaurants, ter, success is measured by its impact in other
developing single-theme outlets to give guests areas, such as increased slot play.
choice of cuisine rather than choice dictated
by guest attire. This has led to stronger hotel Some Four Seasons Hotels and Regent
restaurant identities and an increased capture Hotels and Resorts are promoting the strate-
rate. Peacock Alley in New York’s Waldorf- gic use of a single food and beverage outlet
Astoria Hotel replaced appetizers and main coordinated with the concept of cuisine
courses with a variety of dishes of in-between choices. This strategy has resulted in a more
portion sizes and added more wines by the focused approach. In properties where it is
glass and half-bottle to complement the ex- implemented, the strategy has resulted in sig-
panded possibilities of the new menu. This nificant capture rates as well as increasing lo-
version of a tasting menu was developed in cal traffic (nonstaying guests).
response to diners, who kept substituting
dishes from the regular menu. One of the more exciting trends in lodging
foodservice operations is in hotel beverage
The concept of branding has also affected operations, specifically hotel bars. In many
hotel food and beverage operations. For ex- large-city properties, hotel operators have
ample, Country Inns and Suites has co- found such facilities to be considerable mon-
branded with established restaurant concepts eymakers—as much as 50 percent bar profit
(see Chapter 6.5 by Strate and Rappole). The margin. These bar operations are clearly
restaurants average approximately 20 percent driven by the youth and vitality of the new In-

249Section 6.2 ᭿ Managing Food and Beverage Operations in Lodging Organizations

ternet, or millennial, generation. The bars are panies, for example, might not be familiar
seen as lively gathering places where business with room service or catering. In an extreme
and personal time merge. Lodging chains are case of moving away from foodservice, some
taking notice of such activity. Starwood pur- lodging properties limit services to in-room
chased a stake in a company that initiated a minibars and microwaves, with limited food
popular bar chain. Even the names of the bar items available for sale in the gift shop. The
operations reflect a youthful vitality associ- gift shop may even be transformed into a con-
ated with the location: Whiskey Blue, Skybar, venience store.
and Whiskey Rocks. One concern associated
with these bar operations can be their impact We have observed that some properties
on traditional hotel guests. Many outsourced sense a rebirth of simplicity in food and bev-
bar operations do not extend traditional erage operations. A good example is a coffee
amenities to lodging guests, such as billing to shop. Over the last ten years, the coffee shop
room, preferred seating, and even reserva- concept has been abandoned in favor of
tions. In fact, the clientele of the bar may be higher-priced dining. But in letting a coffee
quite different from the hotel guest. shop be a coffee shop, you tap into the con-
sumer’s consciousness of value as well as
In order for your lodging food and bever- menu variety and fast service. While some
age operation to succeed, sound marketing find the concept boring, consumers often seek
and keen observation of what people want the comfort of knowing they can get a good
must accompany high-quality food and ser- meal at a good price day after day in your
vice. While consumers choose your hotel for operation.
specific reasons, such as price or service, they
seek more creativity in a food and beverage Room service is also seeing significant
operation. If you cannot attract the hotel changes. In some properties, the concept of
guest, you will find that attracting clientele room service has been eliminated, while in
from the local area is also difficult. Quite others it has been revived. For example,
likely, each hotel has its own character that menus are limited to particular concepts, such
suggests a variation of food and beverage op- as pizza or Asian food. Food items are pack-
erations in different markets. Management is aged to appear as though they came from a
wise to remember that a food and beverage freestanding restaurant. In some cases, the
unit in a hotel serves the interests of the hotel lodging property has an agreement with a lo-
as well as its own. cal restaurant to provide the room service.
Some lodging properties even list the room
While some limited-service lodging oper- service phone number under the name of the
ations have entered into cooperative relation- food item (for example, pizza). The key, again,
ships with foodservice companies, the concept is to know your clientele. But the move to
holds significant potential for the appropriate simpler menus, accompanied by lower prices,
market. One example is where the hotel’s could bring room service back as a major con-
foodservice operation is marginal at best. The tributor to overall operations. Some larger
lodging property can concentrate its re- hotel operations are focusing on a tighter
sources on rooms and lease the food and bev- menu and faster service through room ser-
erage service to an identifiable brand. Hotels vice. For example, one property has converted
should be aware, though, that restaurant com- a freight elevator into a mobile kitchen unit,

250 Chapter 6 ᭿ Food and Beverage Division

thereby allowing service delivery within min- It should be obvious from reading this
utes of an order. While this option may not be overview that an emphasis on cost control is
possible for all hotels, it again points out likely a key strategy for lodging foodservices.
knowing what to offer your specific clientele. With increased competition from other food-
Room service has seen a resurgence in certain service operations, hotels are finding it more
lodging properties, primarily as a result of difficult to generate revenues and increase
guest lifestyle. With more adults working and customer counts. Attention to value and ser-
engaged in active lifestyles, convenience vice is of significant concern to consumers.
and accessibility become paramount. Room Managers of lodging foodservice must utilize
service fits the criteria of convenience and better control tools, such as sound forecasting
accessibility. techniques and menu analysis. Banquets,
catering, and room service hold the most po-
᭤ CONCLUSION tential for profit generation in lodging food-
service. These functions allow management
As you can see from the foregoing discussion, the best opportunity for accurate forecasting
and staffing. Beverage areas, such as lounges,
it can be difficult to pinpoint which trends continue to be profitable despite a trend to-
may be most important to any individual ho- ward less alcohol consumption throughout
tel. What we can say is some lodging proper- the population.
ties, notably chain properties and large-size
properties, seem to be differentiating them- The probability of producing profit in ho-
selves to provide excitement for their food tel restaurants depends on their type and size.
and beverage clientele. These operations are There is no reason why a hotel cannot do
essentially reinventing themselves in order to well, but attention to detail is often lacking in
keep fresh and provide creative food and bev- some operations. It is clear that lodging food-
erage opportunities for staff and guests. These service offers managers unique challenges in
operations view foodservice as integral to the the dynamic world of foodservice manage-
overall success of the lodging operation. ment. Food and beverage operations may not
be the major focus in a lodging property.
On the other hand, we can also see a However, they may have significant impact
trend toward reduced or even nonexistent on the customer’s perception of the quality of
foodservice, primarily in smaller properties the entire property. Therefore, food and bev-
and the lower-end chain lodging properties. erage operations in lodging properties can
These operations view their business as serve to differentiate top performers in the
strictly lodging and leave foodservice to crowded lodging market and enhance guest
someone else, now often a well-known na- loyalty for the specific property.
tional brand restaurant.

251Section 6.3 ᭿ As I See It: Hotel Director of Food and Beverage

6.3 A S I S E E I T : H O T E L D I R E C T O R O F
FOOD AND BEVERAGE

Dominic Provenzano

A food and beverage director in a major lodg- goals and cover issues specific to each
ing property must be ready for a variety of department.
tasks each and every day. In one sense, this • (Monthly) Staff Meeting. Purpose: Re-
position requires two different individuals to view operations by all department man-
keep the operation moving forward. One is agers and general manager of the hotel.
the leader, or strategic visionary, looking • (Monthly) Employee Recognition Meet-
ahead to the future of the operation (that may ing. Purpose: Honor employees of the
be just one or three months, or it could be one month at a luncheon.
full year out). The other is the day-to-day
manager, constantly moving through the or- To gain a better appreciation of the job of
ganization to be sure all events are proceed- a director of food and beverage, we should
ing according to plan and guests are treated look at an actual job description. Again, rec-
beyond their expectations. ognize that all job descriptions are written as
an ideal, and every day brings deviations from
In this position, I have the responsibility that ideal, given the unique daily circum-
of overseeing several departments: culinary, stances found in any dynamic lodging
banquets, room service, specialty and theme property.
restaurants, and all private bars. While an
ideal day is spent on planning, more often ᭤ Position: Director of Food
than not I find myself in discussion with staff and Beverage
or guests. Regular meetings include the fol-
lowing examples: Reports to: General Manager

• (Daily) Banquet Event Orders (BEO) Objectives:
Meeting. Purpose: To go over BEO for the 1. Meet and exceed guests’ needs and ex-
day.
pectations by ensuring proper service
• (Weekly) Food and Beverage Meeting. standards, providing quality food and
Purpose: Review operations with depart- beverages, and managing all aspects of
ment managers. operations, resulting in an increasing
guest satisfaction index (GSI) and de-
• (Weekly) Executive Meeting. Purpose: creasing guest complaints.
Overview operations with all executive 2. Provide all guests with the highest quality
committee members and the general food and beverage experience by working
manager of the hotel. as a team with all food and beverage

• (Weekly) One-on-One Meetings. Purpose:
Meet with individual food and beverage
departmental managers to establish

252 Chapter 6 ᭿ Food and Beverage Division

outlets ensuring prompt, courteous, and cludes ongoing monitoring of business
professional services, resulting in increas- levels and review of daily performance.
ing employee morale, decreasing em-
ployee turnover rates, and lowering • Achieve budgeted sales and maximum
employee service times. profitability.

3. Seek profitability in the food and bever- • Maintain an appropriate level of commu-
age department by decreasing all costs, nity public affairs involvement.
maximizing sales in all outlets, achieving
budget and profit guidelines, creating pro- • Maintain fair wage and salary administra-
motions, and meeting and/or exceeding tion in the department in accordance with
long and short range goals. division policy.

Specific Operations Functions: ᭤ Guest Relations

• Provide the highest quality in food, bev- A major part of my job involves maintaining
erage, and service in all food and bever- warm, hospitable guest relations in all guest
age outlets. Includes at least one daily contacts and positive employee relations in a
walk-through of all food and beverage supportive environment. I also try to in-
areas. crease guest satisfaction index scores (our
feedback mechanism) and to lower guest
• Maintain existing programs and develop complaints by ensuring prompt, courteous,
new programs ensuring the highest qual- and proper service and surveying guest com-
ity of food and service. Consists of daily ment cards to correct negative situations
talks with all staff and managers, review- immediately.
ing plate-ups in different outlets.
It is also important to ensure that my di-
• Maintain a high-quality hotel image vision is operating in compliance with all lo-
through effective housekeeping and sani- cal, state, and federal laws and government
tation in the F&B operation. regulations. To assure that our guests have a
quality stay, I am also responsible for commu-
• Maintain physical security for all F&B nicating effectively within and between de-
property and inventories. partments, ensuring good safety practices of
employees and performing special projects as
• Maintain knowledge of local competition requested.
and current industry trends. Includes
changing menus based on seasonality, In trying to achieve or exceed budgeted
product availability, and input from staff. sales goals, our division management team
constantly seeks ways to operate within bud-
Specific Management Functions: geted guidelines by maintaining effective con-
trols. This includes developing and forecasting
• Direct and coordinate the activities of all accurate and aggressive long- and short-range
assigned personnel and departmental re- financial objectives and monitoring them
sponsibilities. Examples are daily contacts through daily, weekly, monthly, quarterly, and
with staff and performance reviews. annual reviews of our performance.

• Maximize sales potential through aggres-
sive marketing of each F&B unit. In-

253Section 6.4 ᭿ Best Practices in Food and Beverage Management

᭤ General Functions As you can see, the job of a hotel food
and beverage director requires a high-energy
I am expected to perform special projects as person who loves working with people in a
requested and to maintain a high level of pro- variety of dynamic situations. The ability to
fessional appearance, demeanor, ethics, and lead a group of employees in pursuit of oper-
image of subordinates and myself. Part of our ational goals is paramount. Students should
culture in this hotel concerns professional de- actively seek experiences in their college ca-
velopment of staff associates, and it is among reer that provide opportunity to learn the
my responsibilities to find ways to provide for skills mentioned in this article.
this.

6.4 B E S T P R A C T I C E S I N F O O D A N D
BEVERAGE MANAGEMENT

Judy A. Siguaw and Cathy A. Enz

One critical attribute of successful hotel food accomplish the strategic charge of profitably
and beverage outlets is their ability to appro- meeting customer needs. The champions se-
priately respond to the changing needs of the lected via an intense screening process are
market while maintaining a profitable opera- The Boulders, The Breakers, Country Inns &
tion. Yet few hotel food and beverage outlets Suites, Four Seasons & Regent Hotels & Re-
excel at this fundamental strategy. Instead, sorts, The Greenbrier, Hyatt Arlington Hotel,
generic restaurants that provide undistin- The Pierre, Walt Disney World Resorts and
guished menu items and offer guests a poor Theme Parks, The Waldorf-Astoria, and Wynd-
value-for-money proposition frequently char- ham Hotels and Resorts (see Table 6.1).
acterize hotel food service. Such hotel restau- Through their best practices, this select group
rants fail to provide menu choices, ambience, demonstrates the capability of executing
or service desired by the dining-out market the strategic mandate of making money while
(let alone their guests), and therefore they responding to the needs of their target mar-
frequently operate at a loss. Indeed, some an- kets through revitalized food and beverage
alysts have declared that hotel restaurants by operations.
their nature will lose money (Hanson, 1984).
In the following pages we first present the
Recently, as part of a large, comprehen- several practices that have been used by our
sive study on best practices in the United food and beverage champions to provide
States lodging industry conducted by Cornell their outlets with a competitive advantage.
University’s School of Hotel Administration We then examine the measures of success and
(Dubé et al., 1999), we identified a group of report the advice our champions give others
best-practice food and beverage champions on how to prosper with hotel food and bever-
that had developed practices to successfully age service.

254 Chapter 6 ᭿ Food and Beverage Division

Table 6.1 Overview of Food and Beverage Best-Practice Champions

F&B Champions Practice Initiated, Developed Measure of Success

The Boulders Food forager to improve quality Increased food quality, decreased food cost,
of restaurant offerings decreased waitstaff turnover, and increased prices,
The Breakers profits, and waitstaff gratuities
Single-theme restaurant Increased revenues
Country Inns & concepts
Suites Cobranding of hotel and Increased customer satisfaction, reduced hotel
brand-name restaurant capital cost (from not building a hotel restaurant),
Four Seasons & increased lunch and dinner business
Regent Hotels & Single dining venue with broad Boosted capture rate of hotel guests; increased
Resorts cuisine choices (and two dining local patronage, labor cost savings
The Greenbrier rooms)
Establishing resort as a center Maintained occupancy and reputation, retained
Hyatt Arlington for culinary excellence, including skilled kitchen staff, increased off-season
Hotel a culinary-apprentice program business
Reconceptualization and Doubled revenues and cover counts, received
The Pierre redesign of dated dining room, rave reviews
sports bar, and lobby lounge
The Waldorf-Astoria Independent consultant made Decreased food and kitchen labor costs, reduced
responsible for food purchases number of vendors
Walt Disney World (with preferred-vendor program)
Resorts and Theme Applying revenue-management Doubled cover counts, increased effectiveness of
Parks practices in all F&B outlets F&B marketing, improved customer satisfaction
Wyndham Hotels (plus staff training)
and Resorts Restaurants designed to provide Achieved high customer satisfaction and
a touchable experience return rate

Upgrade of organization’s food Achieved higher average checks, increased staff
and beverage culture earnings and retention, increased total sales,
wine sales, and profits

᭤ THE BEST PRACTICES and Resorts). A second group emphasizes the
elements of restaurant concept and design in
The best practices adopted by our champions their best practices (namely, The Breakers
Hotel, Hyatt Arlington Hotel, and Walt Dis-
can be broadly categorized into three areas. ney World Resorts and Theme Parks). Finally,
One group stresses providing a high-quality The Pierre’s and The Waldorf-Astoria’s best
F&B product to their guests (comprising practices focused primarily on controlling
practices by The Boulders, Country Inns & costs and generating additional revenue (see
Suites, Four Seasons & Regent Hotels & Re- Table 6.2).
sorts, The Greenbrier, and Wyndham Hotels

255Section 6.4 ᭿ Best Practices in Food and Beverage Management

Table 6.2 Food and Beverage Best-Practices Cases, Descriptions, Implementation,
Contact People

F&B Champion, Description of Case Method of Contact Person
Title of Case Implementation

The Boulders Created position of food Forager first focused on Gray Ferguson,
Food Forager to Improve forager to obtain the best buying the highest-quality food and beverage director
Quality in F&B fresh products, allowing produce only within the 602-488-9009
creativity in the kitchen. state of Arizona, where the Fax: 602-595-4664
The Breakers resort is located. Later, the
Annual Food and Replaced formal dining forager broadened the Joanne Schultz,
Beverage Staff and casual dining search and expanded the director of food and
Reorganization and restaurants and bars with number of items sought. beverage
Single-theme Restaurant single-theme outlets to give Forager hotline keeps all 561-659-8434
Concepts the guest the choice of the F&B outlets apprised of Fax: 561-659-8452
cuisine desired rather that incoming supplies. Menus
Country Inns and Suites the choice dictated by are restructured around the Paul Kirwin,
Successful Cobranding guest attire. products the forager finds. president
with Established Transformed old-fashioned 612-212-1326
Restaurant Concepts Developed cobranding formal dining room into a Fax: 612-212-1338
strategy to locate Country modern, Florentine
Inns and Suites adjacent to restaurant; casual restaurant
(co-owned) T.G.I. Friday’s into a top-caliber steak-
or Italiani’s. house; main bar into an
oceanside restaurant; and
a Victorian restaurant into
a southern Italian pasta
house; plus opened a
French Riviera–style
restaurant.
Seeks an “A” location that
provides visibility,
convenience, high traffic
count, and proximity to
dense residential areas for
the restaurant. Positions
restaurant at forefront of
property.

Table 6.2 (Continued)

F&B Champion, Description of Case Method of Contact Person
Title of Case Implementation

Four Seasons and Regent Uses only one F&B outlet Single outlet allows for a Alfons Konrad,
Informal Dining Venue senior vice president,
and Alternative Cuisine with two dining rooms. focused approach for food and beverage
416-441-4306
The Greenbrier Provides cuisine choices of improving food quality and Fax: 416-441-4381
Programs Establishing the
Resort as a Center for Alternative Cuisine, presentation, grasp of small Rod Stoner,
Culinary Excellence vice president of food and
homestyle, and vegetarian details, and delivering of beverage
Hyatt Arlington Hotel 304-536-1110
Redesigning and options. higher service levels due to Fax: 304-536-7860
Revitalizing a Food and
Beverage Outlet small, qualified staff. George Vizer,
general manager
Alternative cuisine was 703-525-1234
Fax: 703-875-3298
developed in response to a

need for healthier items,

homestyle cuisine was

added for frequent travelers

who were tired of traditional

restaurant food, and

vegetarian was added due

to increased trend of

vegetarianism among

guests.

Instituting a formal Established relationships

culinary apprentice program, with principal culinary

a culinary school for guests, schools in the United States.

conferences and seminars Opened formal three-year

with food critics and writers, apprentice program to

and a high school culinary- graduates of two-year

training program. Also culinary schools or

publishes The Greenbrier individuals with equivalent

Cookbook and sends experience. Successful

newsletters to 600,000 applicants work in all areas

guests. of the hotel’s kitchens and

attend formal classes.

Promises permanent

employment to applicants

from local high school.

Dated dining room, sports Comprehensive research

bar, and lobby lounge were and analysis indicated likely

reconceptualized into success of a fusion of

Mediterranean cuisine contemporary and

restaurant. Mediterranean themes.

Floor-to-ceiling windows

replaced one side of

building, and martini bar

complemented redesigned

restaurant.

256

257Section 6.4 ᭿ Best Practices in Food and Beverage Management

Table 6.2 (Continued)

F&B Champion, Description of Case Method of Contact Person
Title of Case Implementation

The Pierre Has given financial The consultant and . Franz Klampfer,
F&B Cost-Plus responsibility for food
Purchasing Agreements purchasing to an executive chef write executive chef
independent consultant.
The Waldorf-Astoria specifications for food
Revenue Maximization for Instituted revenue
the Food and Beverage management for all food products; consultant 212-838-2000
Department and beverage outlets,
scheduled staff more negotiates contracts with a Fax: 212-826-0319
Walt Disney World efficiently, and repositioned
Providing a Touchable outlets to attract non-hotel single vendor in each food
Dining Experience markets.
category on a percentage
Wyndham A touchable dining
An Integrated Approach experience is provided via markup basis. Consultant
to Food and Beverage the atmosphere and the
food to transport guests to audits the vendors’ books
another setting, another
country, or another culture annually.
while they dine.
Each unit developed a plan Christophe Le Chatton,
Created “Best of Class”
program to upgrade the to increase revenue and director of food and
food and beverage culture.
profitability, with a focus beverage

on reducing labor costs.

Matched staffing levels with 212-355-3000, ext. 4804

expected volume of business. Fax: 212-872-7272

Trained line staff to ensure

the highest level of service.

Theme restaurants are Dieter Hannig,

designed to be as authentic vice president of

as possible in the decor, food and beverage

menu, beverages, and

service. Line-level 407-566-5800

employees are empowered Fax: 407-560-9131

to make decisions with

respect to service recovery.

Reengineered menus and Patrick Colombo,

recipes; reconceptualized vice president of

restaurants; modified dining food and beverage

rooms and introduced concepts

exhibition kitchens;

upgraded tabletops and 214-863-1000

uniforms, and china, glass, Fax: 214-863-1665

silver, and specialty

merchandise; developed

seasonal F&B festivals and

promotions; promoted F&B

258 Chapter 6 ᭿ Food and Beverage Division

Table 6.2 (Continued)

F&B Champion, Description of Case Method of Contact Person
Title of Case Implementation

products within the hotels;
recruited culinary talent;
obtained unique product
from vendors; implemented
wine-by-the-glass program;
developed server-training
program emphasizing
product knowledge and
upselling; implemented
waitstaff incentive programs;
and reinvented room
service standard operating
procedures.

Note: The case titles correspond to the cases written on each champion in: Laurette Dubé, Cathy
A. Enz, Leo M. Renaghan, and Judy A. Siguaw, American Lodging Excellence: The Key to Best
Practices in the U.S. Lodging Industry (Washington, D.C.: American Express and the American
Hotel Foundation, 1999).

᭤ FOCUS ON PRODUCT ities of purchasing spices, shellfish, cheeses,
QUALITY and meats. To keep the kitchen apprised of
what items are coming, the forager uses a hot-
The problem for The Boulders was that the line to report expected delivery dates and ex-
penditures. The Boulders’ chefs then adjust
variety and quality of the produce it was ob- menus based on the incoming items. Conse-
taining were not up to the resort’s high stan- quently, the food ingredients are of the high-
dards. As a result, the food and beverage est quality, and the chefs have the chance to
department’s culinary passion seemed to be experiment with a continuously changing
declining along with the quality of the food menu.
ingredients. The resort’s management re-
sponded by creating the position of food for- Also seeking to instill a passion for food
ager, who initially focused on buying and beverage, Wyndham Hotels and Resorts
high-quality produce locally (i.e., in Arizona). designed its “Best of Class” program, with the
Later, though, the forager traveled farther overall objective of making Wyndham a
afield and took on the additional responsibil- leader in food and beverage innovation, qual-
ity, and service. The Best of Class was a wide-

259Section 6.4 ᭿ Best Practices in Food and Beverage Management

ranging effort that involved both sides of the restaurant brands that are co-owned by Carl-
house. The chain: son but freestanding, primarily T.G.I. Friday’s
or Italiani’s. This practice ensures the guest
1. Reengineered menus and recipes. access to a high-quality, brand-name restau-
rant on site, but it eliminates the capital cost
2. Reconceptualized its restaurants. of building a generic restaurant in the hotel.
While the core concept of locating a limited-
3. Modified dining rooms and introduced service hotel adjacent to a restaurant is not
display kitchens. new, Carlson’s approach to the strategy is in-
novative, since it owns all the brands (another
4. Upgraded tabletops, waitstaff uniforms, brand that expressly pursued a strategy of lo-
china, glass, silver, and specialty merchan- cating next to restaurants in the 1980s was
dising pieces. Days Inns). To implement this cobranding
strategy, Carlson seeks a large, “A” location
5. Developed seasonal food festivals and that will support the restaurant, which is built
beverage promotions. at the forefront of the property for visibility.
Both the restaurant and hotel benefit from
6. Promoted F&B products within the this arrangement.
hotels.
The goal of Four Seasons hotels is to be
7. Recruited outstanding culinary talent. rated as having one of a given city’s top three
restaurants. To achieve this goal the chain of-
8. Collaborated with food vendors to obtain fers a single restaurant in its hotels—but that
distinctive products and with wine ven- restaurant has two dining rooms, one more
dors to upgrade wine lists and conduct formal and one less formal. Thus, with a single
tastings. F&B outlet the hotel can offer two dining
rooms that differ in design, but that share the
9. Implemented a wine-by-the-glass pro- same menu, chefs, line cooks, and kitchens.
gram using premium varietals with high Compared to having multiple outlets, this ap-
brand awareness. proach allows its F&B staff members to pro-
vide greater attention to food quality and
10. Developed a server training program that presentation, to focus on small details, and to
emphasizes product knowledge and up- deliver higher service levels via a small, highly
selling techniques. qualified staff. In response to guests’ stated
desire for alternatives to a heavy, meat-based
11. Implemented incentive programs de- cuisine, Four Seasons has broadened its menu
signed to motivate servers to become bet- choices to include its trademark Alternative
ter educated about food and wines being Cuisine, comprising a nutritionally balanced
served. menu of alternative meals, vegetarian dishes,
and homestyle preparations. Alternative Cui-
12. Reinvented room service procedures by sine items are low in fat, cholesterol, sodium,
providing training in proper service eti- and calories to correspond with guests’
quette, modifying training videos and
manuals, and upgrading equipment.

13. Revised in-house marketing materials,
such as menus and in-room directories.

To deliver high-quality food and beverage
products to its guests, Country Inns & Suites
chose to develop a cobranding strategy with

260 Chapter 6 ᭿ Food and Beverage Division

greater interest in health and fitness. Simi- ᭤ RESTAURANT DESIGN
larly, vegetarian recipes have been added to AND
the menu in response to an increased trend of CONCEPTUALIZATION
vegetarianism among guests. Homestyle
recipes, on the other hand, are just what the The common thread of the following cases
name implies: they have been developed from
the chefs’ favorite family recipes. The latter that feature restaurant redesign is that the ex-
cuisine choice suits travel-weary guests who isting restaurants were operated in a func-
wish for a homecooked meal. tionally competent fashion. They had lost
their competitive spark, however (or stood in
The Greenbrier has instituted several danger of doing so), because of changes in
practices to establish itself as a center for guests’ preferences. In response, operators
culinary excellence. The resort had to address took a lead from freestanding restaurants and
two major problems, both of which stemmed focused tightly on customers’ current wishes
from its remote location. First, for a time the for theme-based casual dining.
resort was having difficulty attracting and
retaining experienced culinary personnel. The Breakers recognized that the public
To end a constant cycle of recruiting and has long had an aversion to hotel restaurants,
training workers and to improve the food which stems from the days when hotel restau-
product being offered to guests, The Green- rants tried to have some of every variety of
brier established a three-year culinary- food they thought a guest might desire—none
apprenticeship program. The resort recruits of it particularly distinguished and all of it
candidates from principal culinary schools in seemingly overpriced. In response to guests’
the United States to complete an apprentice- negative feelings about hotel restaurants,
ship in all areas of the kitchens, as well as at- many hotels have dropped food service en-
tend classes. Because the program runs for tirely, but this option is not open to a five-star
three years, the apprenticeship has helped to hotel or resort. Instead, The Breakers chose
stabilize the kitchen staff. Further stability to create its own strong restaurant identities
comes from an agreement with the local high through single-theme outlets that replaced
school by which the resort will provide per- the resort’s existing formal- and casual-dining
manent employment to interested students. restaurants and bars. The practice not only
The second problem is attracting guests dur- helped The Breakers change the public per-
ing shoulder and off-season times. Continu- ception of hotel restaurants, but it allowed
ing with its theme of culinary education, The guests to choose their cuisine according to
Greenbrier established cooking classes for what they wanted to eat, rather than what
guests and promoted symposiums conducted they wanted to wear. Thus, the resort’s old-
by food critics and writers. The Greenbrier is- fashioned formal dining room became a mod-
sues a quarterly newsletter to 600,000 guests ern, Florentine-style gourmet restaurant. The
and has published The Greenbrier Cookbook owners converted the former casual dining
to further identify the resort as a culinary room to a top-caliber steak house—with am-
center—and to remain in contact with poten- bience to match. Perhaps most strikingly, the
tial guests. resort converted its main bar and lounge,

261Section 6.4 ᭿ Best Practices in Food and Beverage Management

which had virtually no business during the ing the “touchable” experience for the guest.
day, to a beautiful ocean-side seafood restau- Each restaurant is designed to be as themati-
rant. The former Victorian restaurant became cally authentic as possible so that all elements
a Southern Italian–style pasta house, and the of the physical facility and operations com-
Beach Club was converted to a French Riv- bine to transport the guest to another setting,
iera–style restaurant. Thus, the resort now has country, or culture. The dining adventure is in-
five restaurants that feature their own distinc- tended to produce the feelings, tastes, sounds,
tive decor and ambience, without a loss in and excitement the guest would experience at
food quality. the actual locale being replicated. Access to
the restaurants is designed to be easy and un-
The food and beverage outlets of the Hy- complicated. Accordingly, many restaurants
att Arlington Hotel similarly had lost their are freestanding so that guests do not have to
customer appeal because of their dated con- walk into hotel lobbies or down corridors.
cept and design. After the hotel undertook a Further, line-level employees are empowered
comprehensive market-research study, the to make decisions to improve service recov-
hotel’s managers selected a restaurant theme ery and ensure a great dining experience for
that blends contemporary (postmodern) and the guest.
Mediterranean concepts. In developing the
new theme, the hotel replaced the restau- ᭤ CONTROLLING COSTS
rant’s outer wall with floor-to-ceiling windows
to transform the previously dark and unimag- Our last two champions focused on costs and
inative restaurant into a sun-drenched venue
splashed with the Mediterranean’s vivid col- revenues in the food and beverage arena. The
ors. To complement the new restaurant, the Pierre focused on upgrading its restaurant’s
hotel installed a quintessential martini bar. purchasing function—that is, setting specifica-
tions, selecting vendors, obtaining best prices,
Walt Disney World Resorts and Theme and monitoring receiving. However, The
Parks has long recognized the value of themes Pierre’s management was concerned that con-
to a guest’s experience—not only in its parks, trolling purchasing activities would divert the
but also in its many restaurants. Conse- executive chef’s attention from the kitchen’s
quently, WDW set out to create a “touchable” culinary creations. To allow the executive chef
foodservice experience for the guest that to focus on the menu the hotel delegated fi-
combines design, decor, ambience, food, ser- nancial responsibility for food purchasing to
vice, and entertainment in such a way as to an independent consultant, who worked with
stimulate all of the senses, not just the palate. the chefs to develop specifications for all food
The idea is to “offer a personal experience products. The consultant analyzes available
which is highly customized, memorable, and foodstuffs and may recommend changing
judged by our guests to be worth the price,” specifications if a less expensive item can be
remarked Dieter Hannig, vice president of substituted without comprising quality or
F&B. when off-site preparation would be equally
good but less expensive than preparing the
With more than 500 theme food-and-
beverage outlets, WDW’s managers realized
that a restaurant’s design is crucial to provid-

262 Chapter 6 ᭿ Food and Beverage Division

food item on site. The consultant also trained ᭤ SUCCESS OF THE
kitchen employees to adhere to strict receiv- PRACTICES
ing standards. Most important to cost control,
the consultant negotiated contracts with each The success of these practices can be gauged
vendor specifying that the vendor would earn
a given percentage profit over its cost. (Some by various indices, depending on the practice.
existing vendors may have blanched at this The food forager program at The Boulders,
proposal, but most signed on to keep the ho- for instance, improved the quality of the food
tel’s business.) To ensure that costs are in line and lowered food costs. With new and inter-
and that vendors are fulfilling their agree- esting foodstuffs, the chefs have developed
ments, the consultant regularly audits inven- distinctive menus that allowed price in-
tory and cost lists from each vendor and creases—boosting average checks and profits.
annually audits the vendors’ books to verify As a result of the increased average check,
that the vendors are accurately stating the waitstaff gratuities are higher and employee
cost of each item. turnover has been reduced. The resort also
implemented menu meetings in which chefs
The Waldorf-Astoria’s management also explain their creations to servers. Chefs are
believed that the revenue potential of the ho- once again passionate about their creations,
tel’s foodservice operations was not being and the meetings have created a greater rap-
achieved, but they looked beyond cost con- port between the front and back of the house.
trols. Instead, the hotel took several steps to
boost F&B revenue—instituting a revenue Wyndham’s “Best of Class” program also
management program, implementing cost- reenergized the chain’s F&B culture—result-
cutting measures, training chefs to schedule ing in a 15 percent increase in total sales and
employees more efficiently, and repositioning a 40 percent increase in wine sales. Since costs
F&B outlets to attract guests from outside the were controlled as part of the program, the
hotel. The hotel created a marketing position hotels enjoy a 55 percent profit flow-through
to coordinate the marketing efforts of all food on the newly generated revenue. As at The
and beverage units and to help implement Boulders, Wyndham’s higher average checks
revenue-maximization efforts. Service recov- have increased staff earnings and improved
ery systems were improved. The hotel trained retention. In addition, the promotion of high-
line employees on wines to improve their ef- quality food has upgraded the chain’s overall
forts in selling and serving wines. A new image.
restaurant reservations system was intro-
duced to improve dining-room use, cut tele- At The Breakers the new theme restau-
phone use in restaurants, and improve rants have increased F&B revenue by 70 per-
communication with guests. Lastly, a dining- cent over the last four years, with much of the
out program, which allowed servers and growth being fueled by the substantial
kitchen employees to dine in various Waldorf- amount of local business attracted by the new
Astoria restaurants, generated many ideas for outlets. Likewise, the Hyatt Arlington Hotel
improvement and created an increased has doubled cover counts and revenues since
awareness of food and service quality. its restaurant renovation, and the restaurant
receives rave reviews.

263Section 6.4 ᭿ Best Practices in Food and Beverage Management

WALT DISNEY WORLD’S F&B AWARDS: A SAMPLING

Since 1989, Walt Disney World proper- • Among the “Best New Restaurants”
(1998), from Esquire, awarded to Citricos.
ties have earned more than 100 food and
beverage awards. Listed below is a represen- • “Best Cover” (1998), from Restaurant
tative sample of those honors. Forum, awarded to Flying Fish Cafe.

• “Award of Excellence” (1999), from • “Restaurant Wine Award” (1995),
Wine Spectator magazine, awarded to Victo- from Wine Enthusiast, awarded to Artist
ria & Albert’s. Point.

• “Best Wine and Spirits Restaurant of • “Most Imaginative” (1993), from the
the Year” (1999), from Santé magazine, National Restaurant Association, awarded
awarded to California Grill. to Grand Floridian Café.

• One of the “Top Ten Sports Bars in • “America’s Best Bar Menu” (1993),
the Country” (1998), from USA Today, and from Cheers magazine, awarded to Crew’s
one of the “Top Five Sports Bars in the Cup Lounge.
Country” (1998), from Men’s Health, both
honors awarded to ESPN Club. • “Top of the Table” (1991, first place),
from Restaurant Hospitality magazine, one
• “Best Kid’s Menu” (1998, Readers’ each awarded to Beaches and Cream Soda
Choice Foodie Awards), from Orlando Sen- Shop and the Yacht Club Galley.
tinel, awarded to Chef Mickey’s.

One of many reasons that guests choose the hotels and for guests. For guests, having a
to stay at The Greenbrier is its excellent culi- popular brand-name restaurant adjacent to
nary reputation. Thus, its reputation as a cen- the hotel ensures that their dining needs will
ter for culinary excellence plays an important be satisfied. For the restaurant, the hotel
role in maintaining guestroom occupancy. The guests account for 15 to 20 percent of its busi-
ability of Walt Disney World Resorts and ness. For the hotel, the proximity of a name-
Theme Parks restaurants to provide a “touch- brand restaurant is an amenity that can
able” dining experience contributes signifi- encourage guests to book a room.
cantly to WDW’s profitability. Furthermore,
both the number of return guests and per- By using an independent consultant to
centage of satisfied customers are high—and negotiate with vendors and to monitor the
several WDW restaurants have won awards in F&B purchasing function, The Pierre was able
recent years (see sidebar). to reduce food costs by approximately 5 per-
cent and kitchen labor costs by 2 percent. In
The Country Inns & Suites cobranding addition, the number of vendors used has de-
strategy has been a winning situation both for creased, resulting in greater efficiency for the

264 Chapter 6 ᭿ Food and Beverage Division

hotel. Finally, The Waldorf-Astoria’s revenue ᭤ PROFITABLE AND VITAL
maximization strategy improved cover counts
by a staggering 100 percent, while increasing Contrary to much conventional wisdom, the
wine sales and guest satisfaction.
experience of these F&B champions shows
᭤ INSIGHTS that hotel restaurants can not only turn a
profit but can contribute greatly to the hotel’s
Our food and beverage champions offer the overall competitive position. We note, how-
ever, that virtually all the F&B champions are
following advice and observations to man- operating in the upscale, deluxe, and resort
agers seeking to implement similar programs: segments of the lodging industry. While many
hotel restaurants at all levels struggle to turn
1. The foundation for successful implemen- a profit, the actions of our champions indicate
tation is meeting challenges with enthusi- that focusing on guests’ needs can radically
asm and passion. reverse the downward trend of hotel restau-
rants. As Rod Stoner, vice president of food
2. Some practices, such as food purchasing and beverage at The Greenbrier, pointed out,
by an independent consultant, may not be managers must stay abreast of industry
warmly received by staff or vendors, but trends, study the programs of other proper-
the commitment of upper management ties, and seek distinctive ideas for adaptation
and a demonstration of benefits will help to their own hotels. This overview of best
gain acceptance. practices in food and beverage champions
provides a starting point for what Stoner sug-
3. Those practices that require constant gests. We hope that those managers seeking to
adaptation (like the food forager) will not revitalize or maximize the revenue potentials
work in a rigidly structured organization. of their F&B operations will carefully exam-
ine the practices discussed here and will con-
4. Cobranding strategies are suitable only tinue their progress by also investigating the
when the hotels are partnered with practices of other properties and other in-
restaurants that are targeting the same dustries. As a result, forward-thinking man-
market segment. agers will be able to identify those best
practices that will serve as the catalyst for im-
5. Hotel F&B outlets’ development must in- proving customer satisfaction and financial
corporate the guest’s total experience performance.
(and focus on competing with freestand-
ing restaurants).

6. Resources must be focused on a relentless
commitment to food and beverage consis-
tency, even when business is slow.

265Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

6.5 S T R AT E G I C A L L I A N C E S B E T W E E N
HOTELS AND RESTAURANTS

Robert W. Strate and Clinton L. Rappole

Over the years hotel restaurants have often matching the correct F&B concept to the target
been managed as a secondary function of the market for which the hotel has been posi-
hotel—that is, as a costly amenity rather than tioned. We will identify key criteria for estab-
a revenue center. In part because of the high lishing a seamless partnership between the
cost structure of hotel restaurants, which hotel and the restaurant. The results of such a
means high prices relative to other restau- marriage should be an improved property im-
rants, they developed among potential cus- age overall, enhanced customer value, in-
tomers a reputation for being a poor value, creased revenues, and a competitive edge. The
offering indifferent service and inferior food. following four main topics will be addressed:
Today, however, many hotel companies are
rethinking how to integrate food and bever- • The value of a brand-name partner
age services into lodging facilities. In the • Existing hotel-and-restaurant alliances
process of doing so, hotel owners and opera- • A description of Bristol Hotel Company’s
tors are asking at least four key questions
about their property-level F&B service. alliance with Good Eats Grill (including
critical-decision elements)
• What are the hotel customers’ food and • Future trends
beverage needs and expectations?
᭤ ALLIANCES
• Which food and beverage concept best
aligns with the positioning of the hotel? Developing alliances between brand-name

• Would converting the hotel’s restaurant hotel and restaurant companies is not a new
to a brand-name restaurant concept im- business strategy, but it does seem that this
prove the property’s overall bottom line? approach is currently being used more fre-
quently than ever to help companies maxi-
• Would turning to a brand-name F&B op- mize their profit potential (Lodging,
eration give the property a competitive September 1995). There are at least five rea-
edge? sons for this. An alliance may:

Two results of owners’ and operators’ 1. Create financial benefits.
new focus on hotel food service are that (1) 2. Provide customers with greater value.
innovative hotel F&B concepts are being cre- 3. Improve a property’s overall image.
ated, and (2) strategic alliances are being es- 4. Strengthen an operation’s competitive
tablished between well-known brand-name
hotel and restaurant companies. position.
5. Create operational advantages.
The primary focus of this article is to an-
swer the four questions stated above and pro-
vide the basic decision-making framework for

266 Chapter 6 ᭿ Food and Beverage Division

One of the first branded restaurant con- liances between brand-name hotel and
cepts to operate in hotels was probably Trader restaurant companies, most hotel companies
Vic’s, founded by Victor Bergen in 1937. By manage their own food and beverage services,
1949 Western Hotels (which became Westin) including those that also host Trader Vic’s. In
integrated Trader Vic’s into 13 hotel-based part that approach reflects the long industry
restaurants in nine countries (Withiam, 1995a, tradition of offering travelers both food and
14). Other chains also hosted the restaurants lodging. The Marriott Corporation is a good
and today, 60 years later, Trader Vic’s still op- example of a hotel company that has used this
erates in such hotels as the Beverly Hilton, strategy of going it alone. John Randall, Mar-
the Palmer House (Chicago), the Marriott riott senior director of food and beverage
Royal Garden Riverside (Bangkok), and the concepts, states that it is Marriott’s primary
New Otani properties in Tokyo and Singa- strategy to “completely manage our own
pore. Ruth’s Chris Steakhouse is another F&B services to provide food, service, and
example of a popular restaurant brand oper- quality consistency from property to prop-
ating successfully in unison with hotels, in- erty” (Hensdill, 1996).
cluding properties operated by Hilton,
Marriott, Holiday Inn, and Westin. The strategy of developing their own
F&B concepts has not been successful for all
Despite the evidence of successful al- hotel companies. This is evident from the fre-

Table 6.3 Hotel and Restaurant Company Strategic Alliances

Hotel Companies Restaurant Companies

Holiday Inn Worldwide Damon’s, Denny’s, Ruth’s Chris Steakhouse, T.G.I. Friday’s, Convenience
Courts (Mrs. Fields, Little Caesars, Blimpies, Taco John’s, Sara Lee)
Doubletree Hotel Corporation New York Restaurant Group (Park Avenue Café, Mrs. Parks Café)
Marriott Hotels Ruth’s Chris Steakhouse, Studebakers, Benihana, Trader Vic’s, Pizza Hut
Hilton Hotels Trader Vic’s, Benihana, Ruth’s Chris Steakhouse, Damon’s
Four Seasons Bice Ristorante
Choice Hotels Picks Food Courts, Pizza Hut
Promus Corporation Grace Services, T.G.I. Friday’s, Olive Garden, Pizza Hut
Radisson Hospitality Worldwide* Carlson Hospitality* (T.G.I. Friday’s, Country Kitchen), Damon’s

*The relationship between Radisson Hospitality Worldwide and Carlson Hospitality is not an
alliance per se but rather an example of a hotel company that owns and has vertically integrated
both its lodging and foodservice products into one corporation.
Sources: See “Restaurant Chains Partner with Hotels to Satisfy Different Needs, Tastes,” Lodging, September 1995,
pp. 1, 8–9; “Holiday Inn Offers Assorted Food Options with New Quick Food Concept,” Hotel Business, June 1996,
p. 9; “Holiday Inn Offers Convenience Court Concept,” Nation’s Restaurant News, May 1996, p. 208; Frank H.
Andorka, “High Recognition Restaurants,” Hotel & Motel Management, November 1995, pp. 43–44; Cherie Hensdill,
“Partnerships in Dining,” Hotels, February 1996, pp. 57–60; Judy Liberson, “A Working Marriage,” Lodging, February
1996, pp. 63–66; and Madelin Wexler, “Partnerships That Pay Off,” Hotels, May 1995, pp. 47–50.

267Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

quent “reconcepting” found among hotel ᭤ BRISTOL AND GOOD
restaurants. A hotel might run a lounge one EATS GRILL
year, convert it into a brasserie the next year,
and later decide to make it a grill. The end re- To comprehend fully the rationale and ad-
sult is inconsistency in F&B service and qual-
ity, and therefore low sales and profits vantages of a hotel’s decision to turn to a
(Parseghian, 1996). Several factors may con- brand-name restaurant for the hotel’s food-
tribute to a general manager’s believing that service, we analyzed the Bristol Hotel Com-
she or he can operate the hotel’s restaurant pany’s decision to match two of their hotels
services better than a branded restaurant with Good Eats Grill (Withiam, 1995b, 13).
company, not the least of which may be a Before creating the alliance with Good Eats
sense of self-assurance. Some hotel general Grill, the Bristol Hotel Company’s primary
managers want to prove that they can provide F&B strategy was to use its own internally de-
a fine-dining experience whether or not a veloped restaurant brands. This is a strategy
market actually exists. Others say it is because that has worked well for Bristol—for exam-
some hotel F&B operations continue to try to ple, eight outlets produced 32.4 percent F&B
be all things to all people rather than provid- profit margins in 1995, and 20 out of 22 Bris-
ing a product that is affordable and matches tol hotel-restaurants continue to use their
customer expectations (Wolff, 1995, 24). own internally developed restaurant brands.
Moreover, hotel restaurants in general have a
high cost structure relative to the freestand- Despite the success of Bristol’s own F&B
ing F&B operation down the street. Hotel operations, the firm decided to link two of its
restaurants have to contribute to the overall properties (Holiday Inns in Jackson, Missis-
property’s expenses while the restaurant next sippi, and Houston, Texas) with a franchised
door has little capital expense and is probably restaurant brand called Good Eats Grill—a
just leasing square footage. concept developed by Gene Street, who also
developed the Black Eyed Pea and Dixie
A current trend among hotels that have House restaurant brands. We wondered why
reevaluated their F&B operations is to re- Bristol deviated from its successful formula,
place the formal fine-dining, white-tablecloth and so we decided to investigate why the Bris-
concept with a more casual and relaxed din- tol Hotel Company elected to team with
ing experience (Allen, 1996; Liberson, 1996). Good Eats Grill. We narrowed our focus and
Another trend indicates that more and more analysis even further by evaluating just the
hotel companies are looking to establish Houston property using interviews of the
strategic alliances with brand-name restau- principals involved.
rant companies. Doing this has allowed hotel
companies to focus on managing the hotel it- We asked executives from both Bristol
self. Listed in Table 6.3 are examples of strate- and Good Eats Grill 70 questions in all, con-
gic alliances between hotel and restaurant ducted site visits, and found additional re-
companies. These examples illustrate that search information in various hospitality
some of the largest hotel companies have al- periodicals. Additionally, Mike Feldott, of
ready established strategic alliances with ma- HRC Consultants, L.C., was a key adviser
jor restaurant chains. on restaurant brands and operations for
hotels.

268 Chapter 6 ᭿ Food and Beverage Division

PRODUCT BRANDING price, quality, convenience). Within the hotel
industry a multitiered branding strategy has
Product branding refers to establishing a evolved among lodging companies. The fol-
lowing table illustrates how some hotel
well-known name for a given product or brands have become associated with differ-
service whereby the particular product or ent tiers. Note that some companies have de-
service and its attributes are highly recog- veloped products for more than one tier.
nizable and easily recalled by consumers.
The basic concept behind such so-called
branding is to establish a standard on which
consumers may rely to predict value (e.g.,

Economy, Middle Luxury, All
Limited Service Market First Class Suites

• Motel 6 • Holiday Inn • Four Seasons • Marriott Suites
• Days Inn • Ramada Inn • Ritz-Carlton • Embassy Suites
• La Quinta • Sheraton • Marriott Marquis • Residence Inns
• Hampton Inn • Hilton • Beverly Hilton • Homewood Suites
• Travelodge • Courtyard by Marriott • Hyatt • Bristol Suites
• Sleep Inn • Radisson • Westin • Clarion Suites
• Guest Quarters

Source: Ron N. Nykiel, “Corporate Strategy within the Hospitality Industry,” in The Complete Travel
Marketing Handbook, ed. Andrew Vladimir (Lincolnwood, IL: NTC Business Books, 1988).

An example of the multiple-branding Courtyard by Marriott, Marriott Suites, Res-
strategy can be illustrated by examining the idence Inns, and Embassy Suites.
different hotel brands of the Marriott Cor-
poration. Marriott has developed Marriott A somewhat similar branding strategy
Hotels, Marriott Resorts, Marriott Marquis, also exists in the restaurant industry, as
shown in the following chart.

Bristol Hotel Company. The Bristol Hotel generated $192 million in total revenues.
Company is a 39-property chain with corpo- (Many of the properties acquired in 1995 re-
rate headquarters in Dallas, Texas. In January quired renovation, and many of these rooms
1995 Bristol acquired a Memphis-based hotel were out of order, which negatively affected
company, United Inns, Inc., that had 26 hotels year-end 1995 financial numbers.) The rev-
based in six states. By the end of 1995 Bristol enues predicted for 1996 are around $250 mil-
Hotel Company had grown from 8 to 38 prop- lion. The following key indices summarize
erties with more than 10,000 rooms, which Bristol Hotel Company’s performance in 1995:

269Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

Quick Service Casual, Family Upscale Theme

• McDonald’s • Red Lobster • Ruth’s Chris Steakhouse • Planet Hollywood
• Taco Bell • T.G.I. Friday’s • Trader Vic’s • Hard Rock Café
• Pizza Hut • Damon’s • Del Frisco’s • Benihana
• Domino’s • Good Eats Grill • Bice Ristorante • Lettuce Entertain You
• KFC • Chili’s • Palm Restaurant • Front Row Sports Grille
• Church’s • Olive Garden • NY Restaurant Group • Country Kitchen

(Mrs. Parks)

The Country Hospitality Partnership, a Feder, “Radisson Seeks Marketing Advan-
subsidiary of Carlson Hospitality World- tages,” Hotel & Motel Mangement, pp. 3, 43;
wide, is an example of a restaurant company Ron Ruggles, “T.G.I. Friday’s Cruises into
with a multitier branding strategy. The Summer,” Nation’s Restaurant News, June
Country Hospitality Partnership restaurants 1996, pp. 14, 43; and Lawrence White,
include Country Kitchen (252 restaurants), “Growth Meister,” Lodging, September
T.G.I. Friday’s (365 restaurants), Italiani’s 1996, pp. 52–58).
(14 restaurants), and Front Row Sports
Grille (3 restaurants). Additionally, Carlson The Marriott Corporation is another ex-
provides a good example of a hotel company ample of a hospitality company that owns
that owns and has vertically integrated both and integrated its own restaurant brands
the hotel and the restaurant product into into its hotels. The key point is that the
one corporation. Carlson Companies, Inc., brand is recognizable, and this recognition
owns both Radisson Hotels Worldwide and equates to reliable value from the cus-
Country Hospitality Partnership. The T.G.I. tomer’s perspective. This enhanced cus-
Friday’s concept is being integrated into tomer perception can be used by a firm to
many Radisson Hotels (see: Laura Koss- gain a competitive edge and, in turn, in-
crease revenues and profits for the company.

Average occupancy 64.10% strategy versus management contracts in
Average daily room rate $62.67% managing its hotels. As of the time of our
RevPAR $40.20% study it owned 36 of its properties (93 per-
Gross operating margin cent) and managed the other three properties.
Rooms margin 29.62% Bristol’s primary focus was in the full-service
Food, beverage margin 71.61% segment, with 35 full-service properties (89
24.84% percent) and only four limited-service
properties.
Bristol primarily uses an owner-operator

270 Chapter 6 ᭿ Food and Beverage Division

Its primary target market is the mid- to tablished in part by achieving strong operat-
upper-level corporate traveler (the source of ing and financial results during the industry’s
90 percent of the company’s revenues). It also recent recession.
does substantial group-meeting business.
Bristol is anticipating that full-service hotels Second, it maintains a distinct corporate
will play an important role in meeting the fu- culture and management style that translates
ture lodging and business demand of those into low executive-management turnover.
two market segments. John Beckert, the chief
operating officer of Bristol, considers the Third, its centralized management struc-
“full-service segment as a segment that has ture allows managers to focus on the quality
been somewhat abandoned, but Bristol con- of a guest’s stay as the number-one priority.
siders the segment to be ‘solid’ as far as de-
mand (anticipate 6 to 10 percent increase in The company’s primary operating strate-
demand) and a segment that allows for gies are listed in Table 6.4.
greater pricing power.”
Throughout our discussion we will ana-
Bristol’s overall strategy is to provide cus- lyze Bristol’s six operating strategies. How-
tomers with a first-class-hotel experience— ever, our emphasis will be on understanding
but without being stuffy—and extraordinary why Bristol Hotel Company aligns its F&B
overall value (price and quality). While those services within their hotels in a certain fash-
goals are not unusual among hotel companies, ion and how it reaches the decision to do so
Bristol has distinguished itself in several one way instead of another.
ways. First, it has an excellent track record, es-
Among its 39 hotels Bristol has 22 hotel
restaurant outlets and uses three internally
developed restaurant brands in 20 of those
properties, as shown in Table 6.5.

Table 6.4 Bristol Hotel Company Operating Strategies

Strategies Implementation

Unique management culture Entrepreneurial and team-oriented
Control over hotel operations Owner-operator focus
Assets in select geographic markets 28 properties located in Atlanta, Dallas, and Houston (fast-growing
Direct sales and marketing markets)
Flexible use of brand names Focus on local market
Operate under its own brand names:
Emphasis on food and beverage services Harvey Hotels, Bristol Suites, Harvey Suites
Operate under national franchise brands:
Holiday Inn, Marriott, Promus properties, Hospitality Franchise
Systems brands
Bristol’s F&B profit margins (32 percent original eight and 25
percent overall) are above December 1994 national industry levels
of 17.1 percent.

Source: Bristol Hotel Company 1995 Annual Report

271Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

Table 6.5 Bristol’s Own Restaurant Brands

Brand Concept

Scoops Diner (4 units) • Theme restaurant with a 1950s concept
Remmington’s (4 units) • Comfortable and casual
• Eclectic
Bristol Bar and Grill (12 units) • More upscale than a Scoops
• Nice hotel coffee shop
• Designed as a hotel restaurant
• Flexible in handling fluctuations in sales volume
• Self-serve
• Friendly and fast

In addition to Bristol’s own restaurant plate. The approximate square footage re-
concepts and the two franchised Good Eats quired for a Good Eats Grill is 4,000 to 6,500
Grills previously mentioned, Bristol execu- square feet (includes both front and back of
tives are considering leasing space to a the house).
branded restaurant in two of their limited-
service properties. The following key indices summarize
Good Eats Grill’s 1995 performance:
Good Eats Grill. The Good Eats Grill
Company is a privately held firm that cur- Total revenues $23 million
rently has 17 restaurant outlets, of which 16 Food-revenue percentage 94%
are located in Texas and another in Missis- Beverage-revenue percentage 6%
sippi. Four of the 17 restaurant outlets are Overall F&B cost percentage
franchised, while the others are owned and Food-cost percentage 28.5%
operated by the company founder, owner, and Beverage-cost percentage 29%
president, Gene Street. Bristol Hotel Com- Average check 22%
pany is the only hotel company that is cur- Covers/year (approx.) $8.12
rently allied with Good Eats Grill. In 1995
Good Eats Grill’s annual revenues were $23 2.8 million
million. Good Eats Grill is a casual, family
restaurant stressing food quality and low Table 6.6 summarizes the Good Eats Grill
price. A Good Eats Grill can seat 150 to 200 menu.
diners, serves lunch and dinner, has a com-
fortable decor and casual atmosphere, and of- At the time of this writing, Good Eats
fers excellent food quality at an affordable Grill was doing business with no other hotel
price. Good Eats Grill’s best-selling entrees company besides the Bristol Hotel Company.
are its chicken-fried steak and vegetable We wondered why, and asked key people
within the Good Eats Grill management why
they had agreed to team with Bristol Hotels.
The key factors from the perspective of those
managers were:

272 Chapter 6 ᭿ Food and Beverage Division

• The companies share similar proactive, it is a freestanding restaurant, but in reality
team-oriented management styles. the restaurant is as much a part of the hotel as
the lobby.
• The firms’ corporate cultures blend well.
This particular Holiday Inn, a 400-room
• The projects were financially feasible. property opened in 1971, recently underwent
$11.5 million in renovations (of which some
• Bristol was looking for exactly the prod- $1.5 million was for the conversion of the pre-
uct that Good Eats Grill could deliver vious restaurant into a Good Eats Grill). This
(i.e., customer value in terms of quality hotel generates approximately $7.5 million in
and price). room revenues, operates at an 85-percent oc-
cupancy level, and has an average daily rate of
• Both companies wanted the deal to $60 and RevPAR of $48. Restaurant revenues
happen. are targeted to be approximately $1.5 million;
food profit, 25 percent; beverage profit, 55 to
Good Eats Grill executives believe more 60 percent; food cost, 28 to 29 percent; and
hotel-and-restaurant alliances are imminent beverage cost, 20 to 22 percent.
and such deals represent a trend that is here
to stay. Good Eats Grill’s management ex- Property selection. During 1995, the year
pects to do more restaurant-franchise deals Bristol acquired the United Inns properties,
with hotel companies as doing so offers a vi- Bristol Hotel Company executives evaluated
able option for expanding quickly without in- all of their hotel-restaurant outlets and made
tensive capital requirements. decisions as to which restaurant concept best
supported the targeted positioning of each in-
Property location. For our study we se- dividual hotel. Among Bristol’s development
lected the Holiday Inn Intercontinental, a strategies was a decision to use the Good Eats
Bristol Hotel Company property located near Grill concept in two of its properties. Just as
the Houston Intercontinental Airport. From
the outside, the Good Eats Grill appears as if

Table 6.6 Good Eats Grill Menu

Menu Items Price Range Comments

Appetizers 6 $1.99–$4.99 Steaks, pork chops, chicken, pasta, grilled fish
Soups and salads 5 $2.19–$5.79 Served with garden-fresh vegetables
Burgers and sandwiches 7 $5.29–$6.29 Add salad for 99 cents
Entrées 20 $5.99–$8.99 Full service

Desserts 5 $2.49–$2.99
Beverages (alcoholic
and nonalcoholic)

Source: “Ride the Branding Wave,” Lodging, September 1996, pp. 62–73.

273Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

we asked the Good Eats Grill executives, Another objective in replacing the Grand
“Why Bristol?” we asked Bristol executives, Cargo Cafe was to change dramatically the
“Why the decision to go with Good Eats Grill perceived atmosphere of the outlet from that
versus going with proven internally devel- of a coffee shop to a substantial restaurant.
oped restaurant brands or renovating the ex- Bristol’s Remmington’s concept, also reminis-
isting restaurant?” The key element in cent of a coffee shop but more upscale than
Bristol’s selection of Good Eats Grill for two Grand Cargo Cafe in price and quality, was
new locations was in Bristol’s overall assess- not considered sufficiently different to
ment of which restaurant concept would be achieve that goal. Moreover, Remmington’s
the best match for the repositioning strategies did not completely match the “casual and
for those specific hotels. comfortable” atmosphere desired to comple-
ment the overall hotel repositioning strategy.
At the Houston Holiday Inn Interconti-
nental, the existing restaurant, the Grand Bristol’s Scoops Diner concept offered a
Cargo Cafe, was a typical hotel restaurant close match to Bristol’s goal of providing the
with a coffee-shop feel. The Grand Cargo customer with good overall value in a casual
Cafe had average food quality and service, and comfortable atmosphere. Scoops’ 1950s-
low profit margins (5 percent), low sales vol- theme concept, however, was developed pri-
ume, high employee turnover, little name marily for walk-in diners rather than a hotel’s
recognition, and a below-average reputation overnight and meeting guests. Like Rem-
among those customers familiar with the op- mington’s, then, the Scoops concept did not
eration. In short, the Grand Cargo Cafe was a exactly fit the needs of the property’s new tar-
costly amenity for the hotel’s previous owners get markets.
and Bristol executives quickly determined
that a change was required. While hotel guests were to be a prime
customer base for the Intercontinental’s
Bristol first looked at the possibility of re- restaurant, the property was seen to also offer
placing the Grand Cargo Cafe with one of great opportunity for walk-in business. (Here
Bristol’s own internally developed F&B con- are some of the key site-specific characteris-
cepts (i.e., Bristol Bar & Grill, Scoops Diner, tics of the Holiday Inn Intercontinental that
or Remmington’s). After some consideration indicated a freestanding restaurant could gen-
it was determined that Bristol’s own concepts erate substantial walk-in business: (1) the
did not adequately complement the prop- physical layout of the property—parking, en-
erty’s repositioning strategy. The Bristol Bar trance, signs, and size—was considered excel-
& Grill is a quick-and-friendly self-serve con- lent; (2) the property is located close to
cept that is primarily focused on serving hotel Houston International Airport on a major
guests (i.e., banquet guests). Such a foodser- highway; and (3) there was limited restaurant
vice arrangement would be inappropriate for competition in the area despite the potential
the repositioned Holiday Inn Intercontinen- for customers from local businesses and sur-
tal, which has a large sales-volume potential rounding hotels, some of which are limited-
comprising both walk-in diners (85 percent of service properties.) With that in mind, Bristol
the lunch trade and 40 percent for dinner) executives realized that the Scoops and Rem-
and overnight guests (15 percent at lunch and mington’s concepts did not have sufficient
60 percent at dinner). preexisting customer brand awareness in

274 Chapter 6 ᭿ Food and Beverage Division

Houston to generate substantial walk-in traf- property’s image. Bristol COO Beckert illus-
fic. In the final assessment, then, Bristol pur- trated this by saying, “At Bristol we try to
chased the franchise rights to operate a Good identify uniqueness in our F&B concepts,
Eats Grill in Houston (and at one other which then become selling points for the
location). property. The restaurant then goes on a short
list that our sales staff use to sell rooms.”
A good match. Bristol management con-
siders Good Eats Grill to be a competitive The “right” match between the hotel and
concept that offers a quality product, a casual the restaurant can vary from property to
environment that customers enjoy, a re- property. At Bristol, all 39 properties were
spected and recognizable restaurant name in evaluated to determine which F&B concept
the Houston area, and proven sales volume. best fit each property, and only two locations
Another key factor mentioned by Bristol ex- were selected for a Good Eats Grill franchise.
ecutives was that the two organizations As we will point out later, several key factors
clicked, meaning that the corporate culture of such as conversion costs and nearby competi-
each was well matched with the other. Both tion must be taken into consideration prior to
have an entrepreneurial base, both are flexi- making the final decision.
ble, and both have high-quality standards for
a midlevel product at an affordable price. Turn up the volume. Another element re-
Shown on the next page is a table that com- lated to positioning is to determine the vol-
pares the hotel, restaurant, and combined ume and customer mix expected. For example,
marketing strategies of the two companies let’s review Bristol’s existing company-owned
(Table 6.7). restaurant brands: Scoops, Remmington’s, and
Bristol Bar & Grill. Bristol management will
Key positioning criteria. We found that a locate a Scoops or a Remmington’s in those
critical factor in the selection process of a ho- properties that have above-average hotel vol-
tel’s F&B brand or concept is to determine ume, and where restaurant-customer volume
the customer perception that you want to cre- comprises primarily walk-in diners who are
ate at the property and then select a restau- not using the hotel’s other services. A Bristol
rant theme that complements the overall Bar & Grill concept is used when the F&B

Table 6.7 Operating Strategies

Hotel Restaurant Combined

• Primary market • Family-style restaurant • Appeal to corporate and family travelers
• —Corporate business travelers • Excellent food quality • Mid- to upper-market value
• —Mid- to upper-range travelers • —Fresh • Casual and comfortable
• Secondary market • Value • Best overall value
• —Family travelers • Brand recognition • —Price and quality
• Brand recognition • Casual, comfortable decor
• First-class hotel, but not stuffy
• Physically competitive

275Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

market is primarily hotel guests and banquet • The physical layout of the property al-
business. The Bristol Bar & Grill is targeted lowed for conversion.
specifically to serve hotel patrons with a
quick-serve breakfast, convenient lunch, and • Parking, entrances, and signs would be
buffet-style dinner. The Good Eats Grill con- relatively easy to provide.
cept, on the other hand, generally operates as
a freestanding restaurant, has a proven sales • The local labor market could support the
volume ($1.5 to 2 million per year), offers con- concept.
sumer value, and has a comfortable decor
that’s attractive to both walk-in diners and ho- • The high-traffic location of the property
tel guests. (in a commercial area near the airport).

During Bristol’s examination of its hotel • Since there was only one freestanding
restaurants, it was determined that a Good restaurant within a two-mile radius, the
Eats Grill should be used when (1) it is neces- potential for non-hotel-guest business
sary to reposition the hotel, (2) a great restau- was great.
rant-volume potential exists, (3) the physical
layout and location of the property can sus- ᭤ SELECTION PROCESS
tain a freestanding restaurant, and (4) the
market mix comprises both hotel guests and A summary of the key advantages and disad-
walk-in customers.
vantages to consider when going with a fran-
Why Houston? Bristol’s management felt chised restaurant brand in your hotel are
that the Houston Holiday Inn Intercontinen- listed below (Lodging, 1995), while illustrated
tal needed repositioning and a recognized on the next page is a flow chart of the basic
restaurant brand like Good Eats Grill was es- steps to take when evaluating and choosing
sential for any repositioning strategy to work. which franchise restaurant company to use
Good Eats Grill already had two successful (Figure 6.1).
freestanding restaurants in the Houston re-
gion. Additionally, Good Eats Grill main- Advantages
tained an ongoing investment in local • Integral part of repositioning the hotel
advertising. By contrast, a Remmington’s, a • Potentially increases revenues, occupancy,
Scoops, or even the Grand Cargo Cafe did not
have anywhere near the same level of local profits
brand awareness and consumer acceptance. • Restaurant franchiser is continually as-

The following list summarizes the key fac- sessing the menu, whereas a hotel’s ten-
tors that Bristol’s executives considered when dency is not to change the menu
selecting Houston as a location for a fran- • Franchiser is knowledgeable about the
chised Good Eats Grill. restaurant business

• The property was being repositioned. Disadvantages
• Franchise fee
• Financial feasibility was evident. • Requires a certain level of volume to war-

• The property’s existing hotel restaurants rant utilizing a franchise brand
were producing low revenues. • High initial investment

276 Chapter 6 ᭿ Food and Beverage Division

Figure 6.1 Selection-process Flow Chart Contact
restaurant
Identify brokers
positioning
strategy • Make contacts
• Establish options
Define exactly
what you
want

Perform Meet
feasibility with
analyses principals

• Projected P&Ls Make
• Capitalization est. decisions
• Projected ROIs • CEO, COO
• Assumptions • Board of directors

Negotiate
contracts

• Brand can lose reputation and recogni- As previously noted, Bristol chose the
tion or quality levels could drop during Good Eats Grill concept over other restau-
the term of the franchise agreement rant companies because the Good Eats man-
agement was (1) flexible and (2) determined
• Room service and banquet service could to minimize the bureaucracy to make the deal
still require a separate kitchen operation

277Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

CRITICAL ELEMENTS TO CONSIDER

Summarized below are critical elements • Desired positioning of the hotel
• Financial trade-offs and feasibility
to consider when assessing which restaurant

brand concepts will best match a particular analyses
hotel property. • Competitive marketing analysis
• Physical layout of the facility
1. Determine the desired hotel market
position and customer perception you want (parking, entrances, signs, location
to create for each property. This includes of kitchen)
knowing all about the property’s competi- • The site location
tion, environment, and customers, and in- • The local labor market
volves creating a unique image for your
property. 6. The key criteria in selecting a partic-
ular restaurant company are:
2. Make sure that you objectively assess
the revenue and expense potential of each • Similar business goals and corpo-
operational option when examining your fi- rate culture
nancial trade-offs. Such options include run-
ning your hotel company’s own brand, • Initial investment cost
buying and operating a franchised brand, • The menu offered
and leasing space to a brand-name restau- • Ongoing new menu development
rant company. • New recipes on a regular basis
• Cooking specifications
3. Select a restaurant company that has • Franchise fee
a corporate culture that mirrors your hotel’s • Restaurant decor
corporate culture and also shares the same • Training support
basic operational goals. • Management support
• The ability to handle room service
4. Evaluate each property on a stand-
alone basis using all available facts and data. and banquets
Avoid making generalizations about what
will work for all properties. 7. View the hotel’s restaurant outlet as a
selling point that can enhance rooms sales
5. The key criteria in identifying which and as a profit center that can be held ac-
properties could benefit most from a brand- countable for achieving established profit.
name franchise-restaurant concept are:

278 Chapter 6 ᭿ Food and Beverage Division

happen. In today’s competitive market, busi- Fairfield Inn properties. In those cases Bristol
ness decisions must be made quickly and ac- managers seem to be indicating that it would
curately or else the window of opportunity be more profitable for them to lease out
may be lost. In this particular example the ba- square footage in the hotels versus operating
sic deal was struck after two executive meet- the F&B outlet themselves.
ings (however, it did take the lawyers a little
longer). The rest of the steps in the process Key franchise elements. Bristol has pur-
caught up with the decisions that were made chased the franchise rights for its two Good
after those two executive meetings. Such a Eats Grill operations. The key elements of
quick decision was possible because the two the franchise agreement are the menu,
companies have similar proactive manage- recipes, cooking specifications, franchise fee,
ment styles, the project made financial sense restaurant decor, music package, training
for both companies, the corporate cultures support, and negotiated special provisions
blended well, and the decision-makers went (e.g., use of Good Eats Grill recipes for ban-
with their instinct. quets). Basically, Bristol purchased a turnkey
operation from Good Eats Grill. Moreover,
᭤ CONTRACT Good Eats Grill provides pre- and post-
RELATIONSHIPS opening training support, new and updated
menu development, and such regional man-
There are four basic types of operational op- agement support as consulting, auditing, and
trouble-shooting.
tions that can be established between the ho-
tel and the F&B outlet in a hotel. Those four In exchange for the franchise and its
options are (1) internally developed restau- management services Good Eats Grill re-
rant brand, (2) franchised restaurant brand, ceives 3.5 percent of lunch and dinner rev-
(3) straight lease, and (4) management con- enues as a franchise fee.
tract. Bristol’s first choice (used for 20 of its
22 restaurant outlets) is to use its own inter- ᭤ MARKETING
nally developed restaurant brands. Bristol be-
lieves it has a proven track record in We have already mentioned how the Bristol
managing F&B operations profitably (Hotel
Business, 1996). sales office uses the company’s restaurants as
a selling point to assist in booking rooms,
When Bristol introduced Good Eats Grill meetings, and banquets. In addition there are
into two of its 22 hotels with food service, it three other marketing concerns that need to
showed a willingness to purchase a franchised be considered: (1) the competition, (2) cus-
brand, provided Bristol could maintain full tomer expectations, and (3) advertising.
control of restaurant operations and products
(as long as all franchise agreements were Competition. The primary hotel competi-
maintained). Currently Bristol is also assess- tors for Bristol’s Houston Holiday Inn Inter-
ing a leasing arrangement with yet another continental are a Marriott hotel (569 rooms),
restaurant company for a couple of Bristol’s a Hyatt hotel (315 rooms), and a Sheraton ho-
tel (450 rooms). As for nearby foodservice
competition, Marriott uses internally devel-
oped restaurant brands (Allie’s American

279Section 6.5 ᭿ Strategic Alliances Between Hotels and Restaurants

Grill and CK’s) along with a Pizza Hut kiosk, dition of the Good Eats Grill is a major rea-
while the Hyatt and Sheraton offer typical ho- son it is landing those new accounts.
tel restaurants. Additionally, there are some
limited-service hotel properties in the area Advertising. Bristol Hotel Company be-
that factor into the secondary market com- lieves in a direct sales-and-marketing ap-
petitive analysis. proach. The company therefore relies less on
national promotion activities than many other
The freestanding restaurant competition firms. The Holiday Inn Intercontinental is no
in the area is negligible. There is a Kettle different in this regard. The hotel does some
Restaurant nearby, but it does not pose a limited local advertising, but it relies primarily
strong business threat to Good Eats Grill as it on a direct-sales approach along with making
has a different target market. There is a Ben- personal local contacts. Other than the signs
nigan’s and T.G.I. Friday’s within three miles around the property, there is no joint advertis-
of the Holiday Inn, but there is no other no- ing or promotion done between the hotel and
table restaurant competition within a two- the restaurant. Good Eats Grill has four
mile radius of the hotel. As it turns out, the lighted signs on the property, and Bristol pur-
Holiday Inn’s Good Eats Grill is popular with chases no billboard ads for this property.
Marriott’s, Hyatt’s, and Sheraton’s hotel There are two other Good Eats Grill restau-
guests, and also with those hotel guests that rants located in Houston, and Good Eats Grill
are staying at the surrounding limited-service does do some radio promotion and rents bill-
properties. It can be expected, then, that a boards for those two restaurants.
guest who stays at a hotel other than the Hol-
iday Inn, yet eats at the Good Eats Grill, may ᭤ OPERATIONS
decide to stay at the Holiday Inn on return
trips to Houston. The value of the strategic al- As a franchisee Bristol maintains total opera-
liance between the hotel and the restaurant is
that it establishes a unique identity for this tional control of the restaurant, but Good
property that sets it apart from its competi- Eats Grill recipes must be followed exactly.
tion and provides a marketing edge. Unlike other Bristol properties, the restau-
rant has its own general manager. Bristol de-
Customer expectations. A primary mission- termined quickly that this particular property
statement goal of both companies is to exceed needed to establish the restaurant as a prior-
customer expectations. With the alliance of ity, but did not want the hotel general man-
the Holiday Inn Intercontinental and Good ager to get distracted from managing the rest
Eats Grill, Bristol management believes the of the hotel. Bristol therefore elevated the
customer is pleasantly surprised with the restaurant-manager position to that of restau-
overall product and services that the property rant general manager at this property. The
provides. Even though the hotel and restau- restaurant GM reports to the hotel GM, and
rant renovations were completed just re- the result is that the property receives maxi-
cently, in July 1996, the perceived overall mum management focus for all of its key
value of this property to the customer is al- operations.
ready generating new corporate accounts.
Bristol management believes the hotel repo- Another distinguishing operational ele-
sitioning strategy in combination with the ad- ment at this property is the way room service

280 Chapter 6 ᭿ Food and Beverage Division

and banquets are handled. The Good Eats investigate other potential financial gains by
Grill kitchen serves them. There is no sepa- comparing a summary of the actual 1995
rate kitchen or menu to handle room service. profit-loss statement of the Holiday Inn’s
Bristol also uses the Good Eats Grill kitchen original (pre-Bristol) foodservice concept
for banquets, and has the final say in estab- (Grand Cargo Cafe) with a conservatively es-
lishing banquet menus and costs. Moreover, timated profit-loss statement of the Good
Bristol has the option of using Good Eats Eats Grill for 1997 (its first year of full opera-
Grill menu items and recipes in preparing the tion; see Table 6.8).
banquet meals (provided that the recipes are
followed exactly). A quick comparison of those profit-loss
figures shows how establishing a strategic al-
᭤ FINANCE liance between a hotel and restaurant can im-
prove the overall profitability of the property.
We have shown how the correct match be- Other expenses such as franchise initiation
fee ($40,000–$50,000), cost of renovation
tween a restaurant company and a hotel op- ($750,000), cost of signs ($5,000), and other
erator can help to reposition a hotel, increase miscellaneous marketing costs (grand open-
occupancy, and increase F&B profit. We can ing, flyers), must also be factored into assess-
ing the feasibility of converting or opening an

Table 6.8 Profit–loss Comparison

Grand Cargo Cafe Good Eats Grill

Actual % Item description Projected
1995 % 1997

831,519 70.5 Outlet revenues1 59.8 1,269,455
199,920 16.9 Banquet revenues 28.4 601,000
148,072 12.6 Other revenues2 11.8 251,430
1,179,511 100.0 Total revenues 100.0
405,354 34.4 Food cost 26.4 2,121,885
525,634 44.5 Payroll3 43.2 561,137
43,561 3.7 Other expenses 917,621
974,555 82.6 Total expenses 7.1 148,532
204,956 Profit in dollars 76.7
17.4 Profit percentage 1,627,289
23.3 494,596

1Outlet revenues include restaurant revenues and room service.
2Other revenues include banquet-room rental, house portion of the gratuity, and

miscellaneous banquet fees.
3Including employee benefits and payroll taxes.

Source: Bristol Hotel Company.