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Why F&B in hotels isn't as competitive as standalone concepts !

Many industry veterans know the key factors that make independent restaurants and bars more competitive than hotel outlets.

In some areas around the world, some restaurants and bars that are located inside certain hotels might be more successful, popular, and attractive than standalone ones, but I am talking about the majority of concepts mainly in cosmopolitan cities and very competitive areas.

I will not take a particular city as an example but I will talk about the main key factors that make standalone concepts more popular and more successful.

in some countries, Alcohol is only allowed inside hotels and I have addressed this in a previous article, this gives restaurants and bars inside hotels a competitive edge due to local laws and regulations.

When it comes to cities where any concept can serve alcohol within or outside a hotel, you will have those that would like to arrive at a hotel, get the valet parking open their car doors and take their cars for parking, walk inside a prestigious lobby until they reach an elevator and proceed to the restaurant or bar where they will feel the vibes, VIP treatment, and prestige that they are looking for.

Another tier of people prefers to park their car close to the restaurant/ Bar entrance and walk straight to their destination without passing by a lobby, climbing stairs, or take elevators to reach where they will be seated, and this latter type of people is on an increase.

Now talking about the type of budgets allocated for F&B resources inside hotels, if we go back 10 to 15 years in time, we know that the revenue ratio for hotels was around 75-80% from room sales & 20-25% F&B sales more or less as an industry average. Therefore, the mentality was to focus on getting revenues from rooms at least cost and not to invest in F&B, when the world has evolved with third-party booking portals and Air BnB and more competition came into play, room sales dropped as well as hotel profitability overall, therefore hotel minds realized that F&B is that brings reputation and more traffic into their hotel's and started franchising out many of their F&B business in the aim of setting their hotels' on the map and we started seeing hotel's revenue shares changing drastically, where in some hotels' with extensive F&B operations, F&B can generate as much as 60-70% Vs rooms depending on many factors.

The mentality is still in some hotels to run their F&B with the least investment & expenses possible.

As for standalone successful concepts, many have become local and even international destinations due to their attractiveness this starts with the level of engagement that the units have in place, paired with solid F&B offerings and very well-selected staff members that in many cases are models and very good looking staff that in many cases their pay is not within hotel's budgeted pay. This formula has contributed to the fact that a successful concept expands and becomes a successful franchise all over the world, while it is very rare to see a hotel concept that follows the same path!

From the above, we note that the concept allocated budgets, accessibility & people are all competitive areas that standalone concepts enjoy but not hotel concepts.

Adding to that another important key factor that not many talk about is "Flexibility ", a standalone concept is flexible in many areas, how many hotel F&B concepts might accept hiring staff with tattoos? piercing? colored hair? where we know that Gen Z is the main workforce in our days and they look to work in free environments that accept them the way they are and not to dictate every peace of grooming and behavior as it happens in corporate hotels especially those that are part of large chains.

To add to the above, the corporate way of managing F&B is another weakness, The hotel's F&B leader and his/her staff can't make all the decisions when it comes to what is good or not for their operations, there is the GM, and some other HODs & Corporate F&B and other senior's in Head office, all might have something to dictate in a way or another, sometimes under what is called corporate image / corporate standards, and this simply leads to less vibrant concepts and more corporate feel which a client feels the difference immediately when entering a standalone concept where he/she can feel the vibes, freedom of service and independence in character and style of the place .

In fact, the new independent concepts are becoming more and more creative in engaging their audience, while hotels' F&B are still tied to certain levels by corporate guidelines unless a unit is franchised out and is fully independent in the way they manage their operations.

There might be some other factors, such as Pay , incentive , and Bonuses are more competitive in independent concepts than in a hotel , in many cases, if a restaurant / Bar have met or overachieved their budgets might not get a full bonus if the whole hotel operations didn't meet or exceeded the profit level , while an independent unit has only one level o profitability to achieve and that becomes more attractive for the staff working in these independent units.

These are some of the factors that makes a difference between hotel & independent F&B concepts, but definitely there are some more factors that i would list in another blog soon.

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