Food and beverage is one of the most complex departments in any hotel. It can also be one of the most expensive. When it is running above benchmark on wages and cost of sales, and below benchmark on revenue, the losses compound fast.
The challenge
A capital city hotel with more than 100 rooms, a restaurant and function space was losing over $362,000 in its food and beverage department each year. The hotel ran at high occupancy and drew strongly from corporate and groups markets, but the F&B numbers told a different story. Kitchen wages, restaurant floor wages, the cost of sales on food, and restaurant revenue were all outside the range you would expect for a property of that type and size.
What we did
We ran a Profit Boost Review. That meant reviewing the last two years of financials and testing every line against hotel-specific benchmarks for a business of this type. The numbers pointed clearly to four opportunity areas.
We then ran a discovery process with the client and the food and beverage leadership team: the Head Chef, F&B Manager, Functions Coordinator and Operations Manager. The goal was to understand what the team thought was holding performance back, and to get their input into how the benchmarks could be reached. The engagement of the people closest to the operation is part of what makes the changes stick.
Each recommendation in the final report was quantified to dollars per year. The client could see exactly what each change was worth before committing to it.
The result
Over a 12-month period, after a new resourcing structure, a revised menu, a sales strategy and clearly shared targets for each area:
- Kitchen wages: $165,000 saving, 29% more efficient
- Restaurant floor wages: $136,000 saving, 28% more efficient
- Cost of sales on food: $104,000 saving, 24% more efficient
- Restaurant sales: $232,000 more income, a 32% increase
The department moved from a $362,000 loss to a $223,000 profit. A $585,000 turnaround, achieved within two years. The method: review it, quantify it, report it – business then implement it.
