HM Executive Roundtable: How to create profitable F&B operations

The role of food and beverage in the hotel industry was addressed in Hotel Management’s recent roundtable sponsored by Entegra. A variety of hotel executives came together during the Lodging Conference in Phoenix at the JW Marriott Desert Ridge Resort & Spa. During the roundtable, the executives discussed the changing F&B landscape, the trends they are seeing, and what they can do to improve profitability in their F&B and auxiliary operations.

There are a variety of factors that impact profitability in food-and-beverage operations in hotels—waste reduction, sustainability, menu planning, training—all levers hoteliers can pull to help. Regarding F&B profitability, it all comes down to how you leverage what is at your fingertips, said Martin Schellenberg, VP of enterprise sales, U.S. at Entegra.

“So you need to find somebody that you can trust … that can translate your data into something that’s meaningful to you and your operators,” he said. “And once you get to that point, you start planning. Then you just need to figure how to report that back to your teams and hold them accountable to it.”

Third-party operator Remington Hospitality President Chris Green said one way to have a broader view of your F&B operations is to audit the hotel as if your company was taking over that property. “We have an above-property F&B team and we do a self-audit. If this hotel was going to be taken over, what would somebody else say about our operation? The key is making sure all of those levers are being pulled.

“It doesn’t matter what I say here today, it has to be true in hotels,” Green continued. “And if it’s not true in hotels, that’s all just talk. And that’s not a good outcome for the hotels or profitability. We have to look at ourselves in the mirror and say, ‘Are we … effective? Is our team effective? If we give them the tools and technology with 10 percent or 15 percent less staff, can they still win?’”

A focus for Meyer-Jabara Hotels right now is offering guests a memorable experience. “People are looking for food and beverage, which really drives home the experience—something besides just the egg-and-bacon buffet on the property,” said Justin Jabara, president of Meyer-Jabara Hotels. “Give the guests an experience within the hotel operation that they would get at a standalone unit.”

Remington Hotels also is leaning into the experience-forward F&B operations but they are focusing more on the beverage aspect right now. “It’s really beverage-forward we are focusing on,” Green said. “We are moving cocktails out to the center of the menu, the center of people’s minds, the center of the marketing, because that’s really what people are pursuing.”

Green also said his hotels need to have the Instagrammable food. “It’s got to be the same food they want but it’s got to be picture-worthy,” he said. “People want to capture that memory when we’re traveling and food has really been something we have been leveraging and driving.

“While the rooms have to have a great shower, great internet and a great bed, guests are going to remember and record that cocktail,” he continued.

Sustainability and Savings

“Ten to 12 years ago, sustainability was a buzzword, but it’s gained full traction now,” Dimension Hospitality COO Joe Viglietta said. Social media has propelled that traction in recent years and hotels should be marketing their sustainability achievements and goals to gain advantage of that appeal to guests.

“We can promote that reduction of carbon footprint inside our F&B stations on the property,” he continued. He believes the industry will see more hydroponics and vertical farming for the on-property F&B establishments at hotels.

Dina Belon, president of Staypineapple Hotels, agreed, saying the business travel segment, which is a large portion of Staypineapple Hotels’ business, requires sustainability information on all of their requests for proposals. “Although our company is very small, we support a number of the largest tech companies in their travel,” she said. “So if we aren’t doing it and it’s not certified, then we’re not going to be included in the RFP at all. It’s a must nowadays.”

To Belon, health and wellness in hotels are tied into the sustainability strategy, and shared how the brand’s sleep system is tied with the bicycles they provide and the aluminum water bottles the hotels keep in their lobbies for guests.

Schellenberg agreed—it’s not just a “feel good” initiative anymore. Consumers and the brands are really driving it. “But it can also be substantial cost savings for your operators,” he said. “There are many great initiatives out there and available for everyone—it used to be for the big operators, but now even the smaller mom-and-pop places can get their hands on those savings.”

Schellenberg recalled working with a customer out of California who leveraged a 30 percent tax credit to put a solar system on top of their hotel and ended up saving 35 percent on energy costs—a payoff that was achieved in fewer than four years.

Green agreed, but warned that if you don’t have the right product in the right environment that the consumer actually wants, you will only get so far in your sustainability and cost savings goals. “If you don’t have an offering that the consumer wants to buy and one that you’re able to drive the top line, it isn’t going to work,” he said. “No one wants the basic egg and waffles anymore. You’ve got to be really sacred about how you draw the customer in with those mocktails and exciting food options. Because if you don’t have that, you won’t be making money.”

Jabara conducted an interesting exercise across Meyer-Jabara properties—looking at the trash. “We went through the kitchen trash—[and it’s] staggering how much trash comes out of the kitchen,” he said. “When you go through the trash, you start to understand where the waste is [and] you can reveal some interesting things.”

One of the biggest things Jabara’s team noticed in the trash was the guest usage of plastic water bottles, so the company is looking how to eliminate that plastic on their properties.

“Ultimately, one of the things that [our team] came up with, on the breakfast side, was getting rid of a lot of buffets,” he said. The properties now have a la carte breakfast options. “It delivers a better, fresher product, there’s much less waste and it’s more personalized for the guests. It’s just changing that mentality of ‘this is way that we’ve always done it so we must continue it.’ Now we look at it [as] ‘how can I approach this differently?’”

Schellenberg noticed that even the large casinos are eliminating the buffet—something that they have been known for. “Everything is going back to a la carte,” he said.

The Labor Challenge

At the end of the day, everyone in the hospitality industry right now is concerned about the labor market—or the lack thereof right now. The turnover challenge does affect the bottom line, especially in F&B operations, said Viglietta. “If the labor and turnover expenses were put on the [profit and loss totals], it might change the way we operate things a little bit,” he said. “When you factor in training, uniforms, recruiting costs, orientation—it all screams that we should do the math on it.

“So it goes back to cultivating an environment where your staff feels a sense of purpose—that’s one of the most critical pieces of the pie,” he continued.

All participants agreed that hoteliers have to have the right people in the right job. Belon summarized why hoteliers need the right personnel: “All the systems in the world aren’t going to [match the skills of] a professional food-and-beverage person—they know that a six-ounce piece of chicken versus a seven-ounce piece of chicken is what we need because that’s going to save us X dollars across our portfolio,” she said. “This is how we’re going to accomplish that, and these are the changes we need to make to the menu.”

With all of the technology discussed and that can be implemented, Belon warned that hoteliers can’t lose sight of those director-level people that are implementing the big ideas, making sure they are occurring out in the field and happening consistently. “I think that is a core element to any food or beverage operation,” she continued.

Viglietta believes the application process is critical and often not rigorous enough. “For the past three and a half years, it’s been, like, ‘I need someone now,’” he said. “We’re all knee-jerk in the interview—’I like this person and they can start tomorrow.’ Those type of hiring decisions are not necessarily best for the enterprise in order to fill that hole.”

Viglietta shared a conversation he had with Enterprise Rent-A-Car’s head of human resources. He asked her what her secret was to the personable, friendly, accommodating and hospitable staff they have serving customers every day. She said that the application for employment takes 45 minutes to complete.

“So if you’re not truly invested in working for this company, you’re not going to go through it,” Viglietta said. “You’ve already done half the battle right there.” While Viglietta does not expect hotels to implement a 45-minute application process, “making it more rigorous than a simple one-click ‘apply’ is important.”

Green shared that Remington has had success with testing a gig-economy structure in F&B at one of its Florida resorts. A gig economy is a labor market that relies on temporary and part-time positions filled by independent contractors and freelancers rather than full-time permanent employees, providing flexibility and independence for its workers. These gig workers have to be rated, get background checks and be pre-screened, Green said. If they earned five stars from the nearby Ritz-Carlton, they are good to come in as banquet server or a prep cook.

“This Florida resort does about $8-ish million in revenue, so it’s a busy place and we’ve had great success implementing this there,” he continued. “The transient nature of F&B lends itself to this gig economy. It gives the workers the flexibility they want but also allows us to hire them just like we’d hire an Uber driver. It’s a solution for those [high]-demand times. It has allowed us not to have overtime; we’ve been able to quantify our cost-per-event and know where we’re going. I’m very enthusiastic about the gig economy and what it can do for us on the labor side.”


While robotics are gaining hype in the food-and-beverage industry right now, all of the participants agreed they won’t replace the workers needed in the daily operations. “The workers are what gives the food the special sauce, right?” Schellenberg said. “They are the ones putting everything on that burger just right—I don’t think a computer will ever be able to do that.”

But from a procedural perspective, “I think we will see more and more solutions, like robots, that will make the staff’s life easier, which leads to retention,” he continued.

Schellenberg noted that the QR code is an excellent example of technology integration that is helping F&B operations. Belon agreed: “It just expands the footprint of our restaurants. We’ve expanded service into our lobbies and we don’t need to wait for someone to come by.”

The QR code also allows for dynamic pricing in F&B, something that Remington Hospitality is working on in some of its properties. The only problem they are encountering is the point-of-sale integration, Green said.

“Let’s take our Melrose hotel in Washington, D.C. that will be crushed during Fourth of July—why shouldn’t our drinks go up a dollar or two?” he said. “If you don’t have any resistance to that price, you may not go back to the lower price—it is a great way to test the threshold of the pricing.”

Another benefit of the QR code technology is the capability to not only show photos of the menu items but also videos of the food being prepared or the chef discussing how the salmon is prepared, Green said.

Artificial Intelligence

Belon believes AI and procurement is technology that will explode in the future. “Everything will be barcoded and automated,” she said. “I really want people to stop counting inventory.”

Schellenberg, however, noted the high price of technology. “When it comes to data management and procurement, you’re talking on all trillions of data points a year that go through these organizations,” he said. “In some cases, they’re still a little bit archaic when it comes to how organizations manage the data. But the truth of the matter is [that] everybody has the same level of data. The question is: When will everyone share that data with the same transparency they share other things?”

Jabara said his company had recently moved its AP software over to an AI-based processing software, which has streamlined the process. “If you look at an invoice and everyone that touches has to review it until it gets paid, that’s painful process,” he continued.

Jabara said it has taken some time for the AI engine to learn the processing correctly but management has found that it is accurate. “It’s working and it’s been a nice adoption for our company,” he said.

Remington properties have also adopted AI. “We changed menus systemwide every quarter and we have started using AI to menu plan—it helps with demand, what’s happening in the future and it helps us decide what next quarter’s menu will be,” Green said.

Remington has an in-house business intelligence platform that tracks all of its costs—like F&B and labor—and that shows what the properties are selling the most and what they are making the most money from.

But before quickly adopting any type of new technology, Jabara warned that his world in the front office is very different than the world of the general manager, chef or line cook. “So go stand in at the hotel—whether at the front desk during check-in or a busy night in the restaurant,” he continued. “As we talk about technology, it’s more [about] ‘How do we augment so our staff can do their roles better and spend more time with the guest, which is our customer?’”