It feels as though hotel food and beverage has received a lot of renewed attention in the industry as of late. Twenty years ago, around the turn of the millennium, we experienced a reinvention of the hotel fine dining model with the introduction of big name ‘celebrity’ chefs into hotels through outsourced, leased and/or licensing deals. One of the most prominent of such deals was that made between Blackstone and Gordon Ramsay at Claridge’s in London, which spawned a decade of followers as hotel ownership succumbed to the old adage that “hotels can’t do F&B” and instead opted to give the space over to someone who supposedly could.
In more recent times, we have seen this creativity of thought respond to changing consumer tastes and habits at all price points and to spreading beyond the luxury-end of the market to embrace every hotel segment. Whether it be in the limited service segment with grab-and-go concepts or in the lifestyle sector with hipster coffee bars and rooftop terraces, the attention given to hotel F&B has risen sharply. This renewed focus on what is the second largest revenue generator in a hotel, after rooms, has been heavily driven, in part, by hotel asset managers seeking to maximise the income potential and profitability of every square inch of the property. Furthermore, players such as Hoxton, Soho House, 25Hours and Lime Wood have demonstrated the role that a buzzing F&B operation can contribute to a hotel’s overall brand proposition and performance.
The success of these and other groups in dispelling the myth that F&B is merely a support act to the rooms upstairs has been such that we at AETHOS have seen a push by both ownership groups and hotel management companies to upgrade their F&B (also known as Food and Drink) competencies and talent in the past two years. In many cases this has seen the introduction of a centralised F&B function with leadership that has an increasingly prominent seat at the table for the first time. In their desire to compete not just with other hotels but also with other food and drink venues in their respective markets, hotel groups have looked at hiring professionals from stand-alone restaurant and bar groups to bring some of their destination magic into the hotel environment.
Running a profitable food and drink operation, however, is a challenging business. One only has to see the financial struggles being faced by high street restaurant groups around the UK at present to see how hard it is to balance how much they can justifiably charge the consumer against the rising costs in labour, business rates and produce. Salaries and related payroll costs are the largest expense line on an F&B department’s P&L (a ratio of 44% to revenue according to a CBRE study from 2017), and staff turnover is the highest of all areas of the hotel.
Hotels, faced with the need or desire to upgrade their F&B offering, therefore, do not have much room to manoeuvre in terms of throwing money at the problem. When it comes to the talent component, the chef craze of the early 2000s certainly produced an upswing in the stock of creative culinary talent and their corresponding pay packets within the fine dining market. The more recent shift of attention to making the broader F&B offering more competitive has seen heightened value being placed on specialised skills. In reviewing hotel salary levels at London hotels over the last five years, pay for F&B professionals, both front-of-house and back-of-house, has remained largely static, generally rising with inflation each year. The exceptions to this are to be found in the areas of pastry, tea, wine and spirits.
Afternoon tea may be a particularly London trend but it is one being milked by top London hotels that now start serving earl grey and scones as early as 12pm noon. Accordingly, Head Pastry Chef salaries have grown by an average of 5% per year as have those of the Lobby Lounge Manager, who is typically overseeing this operation. For those wanting something stronger, wine is where it’s at. Between 2014 and today, pay packets of Head Sommeliers in London have gone up by 26%, more than for any other position in F&B. In the bar too specialised skills trump general ability with the pace of growth in mixologist salaries outstripping those of their counterparts.
Owners and operators are today treating hotel F&B as a true, core component of their brand and experience offering rather than as a necessary evil. They are bringing much more creativity and careful thought as to how to execute a competitive strategy that often times both integrates holistically with the hotel as well as standing on its own two feet in its local market. This includes deploying the right resources and brainpower, and we expect to see continued demand for innovative, profit-minded, strategic F&B leadership at ownership and corporate levels as well as for highly specialised practitioners in the field.