Round table: In house F&B concepts
How can a hotel's in-house F&B concepts compete?
According to the December 2015 STR Global Pipeline Report, there are 514 hotels totalling 147,746 rooms under contract in the Middle East and 319 hotels totalling 60,713 rooms under contract in Africa. All these hotels will invariably have an F&B component to their name, and with the increasing trend of importing concepts from abroad — not just well-known branded names, but celebrity chef or Michelin concepts — there are exciting times ahead.
However, the catchment audience is not as big as one would hope; hoteliers (and restaurateurs) are all going after the small percentage of people who have the purchasing power to spend more than just on special occasions.
In an atmosphere brimming with potential, how do hoteliers cope with the trends of the market, as well as the demands of the consumer? Hotelier Middle East gathers up the experts one morning at Al Maeda restaurant at Doubletree by Hilton JBR, and finds out.
Hotelier: Tell us briefly about the trends that all of you are seeing in the market right now?
Adam Van Den Bussche: The restaurant business is starting to become a bit more exciting, having dipped a bit in the West. It’s still very vibrant and dynamic, especially in Asia.
Gianluca Sparacino: Earlier the restaurant was primarily an amenity for the guests; we’ve managed to change the dynamic and realise that by creating great restaurants in a hotel that are run on a free-standing basis, you can actually create a separate heart and soul to the hotel itself. Having said that, there are operators out there who do a better job than we do. Tying ourselves with some of these operators and creating a balance of portfolios in our hotels is what we’re really trying to do. It really depends on what ownership is looking for, for their hotel, and what makes the right fit.
Mikael Svensson: The other thing is how you balance it internally — at the end of the day it all falls under the roof, and the guest doesn’t necessarily know that. How do you balance where you’re outsourcing and not? How do you marry the two so that it feels like a restaurant under the umbrella of the brand?
Marc Gicquel: Ultimately the market dynamics have changed. We strongly believe that less is more, and focus on the quality versus the quantity of our outlets. The time when there were 12-15 outlets in a resort is gone but the concept has to be different as well. From a setup point of view, you still need to have in-house concepts, but we also need to get the support of big franchises and brands as well, as well as going into lease. There’s no one size fits all, it depends on the location and the type of hotel.
Niki Robinson: The challenge that I think we have is that in bringing these global brands and working with local, independent operators, it forces us to rethink the in-house concepts as well. Because it’s got to be up to muster. We want something simple for the guest, but we also want an amenity for our hotel owners and stakeholders. That’s the biggest challenge that I see is for hotels new into this market. It doesn’t suffice to have a boring all-day dining outlet, it doesn’t suffice to have just a Caesar salad on your pool bar menu. The other thing singular in Dubai is licensing. In London, you wouldn’t think to go to a hotel restaurant, ever. Here it’s very much the norm. Alcohol does dictate with these things.
Elias Chakhtoura: It’s started in the US when costs started exceeding profitability in F&B. Here, there’s also pressure from the owners to maximise the space. But you need to find the right partner. We have a space and we’re trying to outsource, because the owner wants us to. Either it’s really hard to find the right partner, or the location is not ok with them, so you really have this problem. But if it’s done right, associating a brand with your hotel can be very good.
Hotelier: Let’s talk in detail about bringing brands and celeb chefs to hotels.
Niki: It’s great to bring all these amazing celebrity chefs in, but the reality is we’re all chasing the same 10,000 people. The ones that are really active are four times a week. There is a huge market saturation, there’s so much choice; it’s an F&B mecca if you’re a customer. That’s the other thing that forces us to reinvent and reimagine the wheel all the time. You can’t stand still — everything from how you operate in-room dining, all-day and banquets. The customer knows more about food and beverage and are more interested than they used to be.
Adam: It’s interesting how all the big international hotel groups within 24 months of each other have recognised that their F&B spaces are not performing as well as they could do. That is on the back of a slow decline — the actual hotel business has become more difficult and sophisticated, and the job of the general manager has become more specialised. And F&B has become a distraction. We’ve done a lot of research internationally on why it’s changed, the challenges and solutions. And with that comes changing customer dynamics. Millennials are the next generation, they are the next customers to bring all the money to us. The millennial mind-set also influences the generation preceding them.
Gianluca: The customer profile has really changed. The local customers here have travelled the world. They’re seeing what is possible outside, whether it is brand-named or not. They’re expecting the same to happen in places wherever we operate. So what we’re having to do, as hoteliers, is [make sure] that we’re able to provide the same experience. Whether that’s through a third-party operator or do it yourself, or find a mix between is very important. It’s also easy for ownership to get caught up in, ‘oh we saw this great concept, why don’t you bring it here?’ There’s this huge economy that is involved in bringing these guys in.
Niki: And not to mention, you can’t translate brands directly, you transliterate them. Brand arrogance is the biggest mistake people make in this market.
Mikael: It’s also about bringing the DNA of the restaurant, because you can’t just bring a name and think it’s going to work. It became well-known because of what it produced, not the name on the door.
Marc: There’s a difference between bringing a celebrity chef and bringing a brand. I can disagree with you in a sense that — the Dubai market is very brand focused. A good brand still needs to be well executed and implemented in the region, and that goes to whether it’s a celebrity chef or a brand. There should be a discussion between our owning company, operator, and brand owner to find the right sweet spot, whether it’s from a pricing, and training or recipe point of view.
Niki: The problem is — and I come at it from a restaurant owner’s perspective — the success of restaurants is about people, and you can’t replicate that genius, you can mimic it. Dubai is coming to understand the mid casual dining now, there’s a greater focus on the product itself rather than the fanfare that goes around it.
Miakel: Absolutely. Further to your point, we need to open it as a restaurant, not a hotel restaurant. It’s an independent restaurant, and if you take that approach, whether it’s a celebrity name or you’re running it, it will be successful.
Gianluca: If you’re going to commit, you need to commit 100% as a restaurateur and not as a hotelier.
Hotelier: Pricing is also a consideration?
Mikael: Going back to the financial aspect, there’s a huge burden on the owner who brings these people, because there’s an extra fee.
Niki: The big difference from hotel to independent restaurants is your cost of sales margins. As an independent restaurateur, I bank cash not a gross profit. I want to turn that product as quickly as humanly possible. So I’m looking at cash margins over gross profit percentages. The problem is that doesn’t look so tidy on a P&L. Obviously if you’re hitting your topline revenues, no one cares, or the bottom line. That’s the thing, trying to negotiate your way through — that’s when, if they’re true independents, they are paying you a lease and it’s brilliant. But if it’s the new trend emerging, which is creating in-house and rolling it out through the portfolio, that’s the big challenge, which is in this market, if you want to play ball with the independents, you can charge AED 150 for that bottle of wine instead of AED 195 and it’s starting to make waves. You make a stand and give house water instead of selling Voss. Because consumers locally are starting to get annoyed by it and you see it in social media diatribes that kick off as soon as new restaurants open.
Adam: There’s always the mind-set here that you’re either the cheapest or the most expensive, and the thing in the middle… I still struggle to convey to our business partners and owners that a good value offer which is maybe above average is what will fit the market.
Marc: In the past, there was much less competition and you had to go to some key places to get alcohol — and these places would charge whatever they wanted, and not always be focused on the right quality and deliverables.
Adam: Fine dining has democratised across the world. Everyone has taken out half of their silver, tablecloths, all the clutter which became the very Swiss-style of fine dining. All the big guys with Michelin stars are doing more casual places today with spanners or spoons, or whatever it is.
Marc: You don’t want to attract one person once or twice a year, you want to attract them more regularly and the price has also to match to create repeat customers.
Hotelier: When signing international brands or chefs, what factors do you have to take into account?
Marc: Customer mix and what positioning we want, what style of hotel it is, and where it is located in a city or a region. That will drive a brand or franchise, a lease, a joint venture with a celebrity chef, or an in-house concept depending on what we want to achieve for the company that manages the hotel, as well as the owner.
Niki: Also, where is your business coming from? If you’re bringing a famous celebrity chef from America, they’re not necessarily well known. But if they’re bringing many American customers with them to the hotel, then it becomes a destination.
Elias: We have a location and then we shortlist brands to fit into that location.
Marc: We need to shift the other way around. In the past, because of a hotel’s location, it needs to find something to [incentivise people to] get there instead of looking at what the market needs and then designing the hotels and the number of outlets we want based on that and dynamics.
Elias: Successful openings and partnerships are hotels which have thought about that before opening and knew what would be outsourced and have a good mix.
Marc: Sometimes an owner will say he wants 10 restaurants and you come back and say, no we want to have only five. We also want to be driving the decisions based on the market dynamics, but otherwise you will end up with concepts which are empty, not because they are not good concepts, but because they are not the right concepts for that location.
Mikael: Yes, we want restaurants to be independent and have that feel but you can’t forget the hotel you represent. There needs to be a synergy between what type of hotel you have, what type of customer you have, and what you want to deliver.
Gianluca: A lot of that discussion has to do with ownership and how much are they willing to invest.
Adam: And how much freedom they’re going to give you.
Hotelier: How involved do owners get with F&B selection, and has it always been this way?
Adam: Part of it is that they know a great restaurant will help differentiate a hotel. Sometimes you’re left alone, and it’s a professional process. Sometimes you’re not left alone, and it’s still a professional process. And sometimes it’s different to those two! In terms of selecting a partner, no one has yet made a success in terms of outsourcing all the outlets. We’re looking at partners, we have to be clear that we’re not buying the name, we’re buying chemistry and DNA. They have to have experience working outside their home markets and they understand the story behind the product is as important as the quality of the product, the people, and all these things have to be treated equally.
Niki: If you look at someone like Marco Pierre White, then that was very much a commercial opportunity. But the thing is, you need someone hungry for that marketing themselves, who’s very active on social media without which you die in restaurants.
Adam: Driven by a passion for food, for service, for making people happy.
Niki: And making a restaurant fun.
Adam: And as a by-product make some money.
Niki: And it should be a by-product, that’s the key.
Marc: The challenge as a hotelier is that we have a big opportunity in the in-house guests and we still need to cater to them with a variety of expectations. An independent restaurant is closed at midnight, but we still need to cater at 3am, 24/7. A big part of our business is rooms and we need to make sure we deliver the minimum expectations of a traveller.
Elias: Your hotel becomes associated with brands.
Adam: Yes the Edition in London gets more publicity on the back of Jason Atherton’s restaurant than it does as a hotel itself, and that’s one of our flagships.
Marc: It shows the importance of the F&B associations with any hotel. At the end of the day, F&B total turnover percentage in this region is still massive compared to a lot of other regions in the world. When you’re doing minimum 30-40% F&B turnover in some of your hotels — some of my hotels are doing more on F&B than in rooms — that shows the importance of being associated with good and strong F&B concepts because that allows the hotel to sell rooms and position themselves in the market.
Gianluca: There are certain brand names that definitely fill your lobby. There is an aura that great restaurants bring, and those restaurants [in Four Seasons’ Restaurant Village], the traffic they bring in is phenomenal.
Adam: The other argument is that a restaurant adds to, not just the traffic, but to the perception of the hotel and the room rates. That helps really argue the case for investment. It pushes your RevPAR, and helps to release the capital to go for the right name.
Elias: Hoteliers sometimes look at the problem at the wrong angle. We fundamentally have a problem with managing F&B and we need to fight back. We are being outsourced because we have a weakness, but long-term I don’t think outsourcing is the right way to go.
Adam: I think it is, you need a mix because the owner wants to diversify risk. If you lease out a restaurant, someone else invests in it.
Marc: You’re good at C&E, all day dining… you get so many things to focus on, that it adds a lot of value to bring on a restaurateur who do one thing. Allowing you to focus on the overall operation and having the F&B supporting you, not being a burden or taking your time. The balance is critical. It depends on what you think outsource is. It can be pure rent, a franchise, a joint venture, all of these models are outsourced. It’s very positive to bring expertise that you don’t have in-house. If you have the right mix between franchise, lease, a joint venture with a chef, it’s a balance.
Gianluca: What is really important in this discussion is that at the end of the day we are business managers. And our job as businessmen is to make sure our business is as successful as possible, using whatever method that we have available to us. We need to be totally open to ask: ‘what is the best format to make this successful for the owners?’ Outsourcing, or bringing in a celebrity chef, or doing something ourselves — that’s the choice we need to make as business managers. That’s what we’ve evolved to. We provide a ROI that the owners are looking for.
Hotelier: Going back to in-house concepts having to be as good as international names; what do you need to do to make sure these are as successful?
Niki: You need to give something an identity, it’s got to be a great space. You’ve got to come at it in exactly the same way Gordon Ramsay would come at his, obviously without the goodwill that goes with it. You’re harnessing the goodwill of the name of the hotel. All it is, is a mind-set.
Adam: Restaurants are the ones with long-term success, the ones that evolve.
Mikael: You’ve got to get the right people, the right designer, and if you don’t know how to do it, learn from them.
Marc: The key is before you bring the chef in. It’s about having the right concepts that complement each other rather than cannibalising each other.
Mikael: If one of your restaurants is really not successful at all, it’s never going to be successful. It’s very difficult to create success in a restaurant when the one next door is full.
Hotelier: Before we sign off, can you share what one trend you think will rise in the market in the next 12-24 months?
Elias: In this market, there will be a big focus on food waste, and restaurants and hotels are going to start promoting that like they do sustainability.
Niki: On the same vein, provenance is always going to be a key thing in restaurants. We have a horrific carbon footprint in the Middle East. There is a credible community movement with the farmers market. I think we have a corporate social responsibility to start using them more and not holding them to these horrific price hikes that supermarkets do. Price: we’re going to have to move on it. Because what’s happening is, where we’re sitting, it’s presenting ever more an expensive option to come to Dubai. One of the big things that’s going to kill tourists when they get here is F&B. That’s something that we’re all going to have to look at.
Mikael: The restaurant scene is exploding, but it doesn’t have necessarily the culture in the city. It doesn’t have the big food markets you can engage in. The trend is going to be to try and diversify on that. Have that type of restaurant type environment within a market setting.
Gianluca: The way I see it, Dubai is still a fledgling market in food and beverage. They have a lot of brands here, but they’ve imported a lot. Dubai will transfer from bringing in to creating. Look at New York or London, and slowly Dubai will catch up to that. There’s more focus on establishing Dubai as a gastronomic capital. Over a period of time, finding clean product to bring into this city to use — sourcing coffee, knowing the coffee supplier. Globally everyone is in tune with what they’re eating and where it comes on. Provenance, farm to table, whatever you want to call it, it’s not going anytime soon.
Marc: Dubai is already a big food destination, maybe not worldwide but definitely in Middle East and Africa. The main trend we’re following is ‘less is more’, and focusing on quality over quantity. From pricing to sourcing to waste, to sometimes mono-product, to reviewing what we’re doing overall, and challenging ourselves.
Niki: We need a respected guide here as well. It’s about time, and you’ve got enough players here who could actually compete.
Marc: There is also more to be done in the supply chain and logistics point of view, to make sure we get a wide range of product that will allow us to develop our [F&B] offer. The market has opened up a lot but there’s still some way to go in terms of sourcing of products.
Adam: Our buzzword for 2016 is local —supply chain, customers, staff, ideas, and network. It stems from the idea that if your restaurant or bar in the hotel is attracting local customers, then you will by default retain your hotel guests. ‘Go local’ is a bit of a cliché but it does manage to encapsulate the idea.
Meet the experts
Elias Chakhtoura, F&B relay for the Middle East & Egypt, Accor Hotels Luxury & Upscale brands
In addition to his wider F&B role, Elias Chakhtoura is also operations manager for Pullman Dubai City Centre. He graduated from the Institut Paul Bocuse in Lyon and began his career in the catering industry in France in several Michelin-starred restaurants.
Niki Robinson, F&B director, Taj Dubai
Niki Robinson has extensive experience with independent restaurants. She arrived in Dubai in 2012, and prior to her current role, which she began in 2015, was the general manager at the helm of The Ivy Dubai. Prior to moving to Dubai, she ran her own tapas & cocktail bar concept restaurant, Graze Bar & Kitchen, on the south coast of England.
Mikael Svensson, general manager, Viceroy Dubai Palm Jumeirah
Swedish-born Svensson joined Viceroy Hotel Group from Park Hyatt Canberra. Previously, Svensson held a number of leadership positions with Hyatt in Seoul, Hong Kong, Taipei, Osaka, Mumbai, Tokyo, and Hua Hin in Thailand.
Gianluca Sparacino, corporate director food & beverage EMEA, Four Seasons Hotels and Resorts
Following his graduation from the hotel management school Les Roches in Switzerland, Sparacino has had a global experience, commencing with Hyatt in Singapore, and continuing to concentrate on food and beverage with positions in Hong Kong, Bangkok, and Taipei.
Marc Gicquel, regional director of F&B Arabian Peninsula, Hilton Worldwide
Gicquel joined Hilton in 2013, having previously worked for Nestlé Professional. Prior to this he had a three-year stint at Jumeirah Group between 2006 and 2009, where he was brand franchise developer and then director of development. The French national has also worked for DisneyLand Resort Paris.
Adam Van Den Bussche, senior director of operations F&B, Middle East & Africa, Marriott International & ritz-carlton
Adam Van Den Bussche has over 25 years’ experience working within and around the restaurant business, working in New York, Sweden, The Middle East and Russia. Before moving to UAE, he headed the restaurant development function for Hilton in Europe; this covered the instigation and leadership of new F&B projects from Ireland to Russia.