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Finding low-cost opportunities

Finding low-cost opportunities

In perusing news about the hotel industry, I found it interesting that 478 California hotels are in default; an 18% increase from the first quarter 2010 and 132% over 2009, according to Smith Travel Research. This is despite rates and RevPAR being up 1% over last year. However, when you look at the restaurant industry at large, it seems there is more vital growth year over year.  

National Restaurant Association’s Restaurant Performance Index
Values Greater than 100 = Expansion; Values Less than 100 = Contraction


Source: National Restaurant Association

In addition, the Expectations Index for both April and May were positive; running at 101.8 and 100.8 respectively. This measurement indicates restaurant operators’ six-month outlook based on same-store sales, employees, capital expenditures and business conditions.

What we have seen recently from restaurants we manage is a general uptick in sales in some cases large growth, depending on the ability to adapt to their market needs.  One restaurant’s sales went from $2.2 million to over $3 million by introducing a new lunch meal period.  Another yielded to its tavern atmosphere, and saw bar sales climb to 60% with much better margins. 

In this time of spotty recovery, there is low enthusiasm for expending hard-earned capital for room improvements that bear marginal returns. Instead, opportunities abound in the restaurant/food and beverage departments, and offer a low-cost means of increasing the hotel’s bottom line. 

Where, then, do these low-cost opportunities lie? Let’s call it guerilla marketing – that is focusing on your immediate trade area, and going after business in a one-to-one manner.  Have your sales people, hosts or hostesses visit businesses with samples of your food and invite people in. 

We have also had great luck with sponsoring office cocktail parties and providing complementary appetizers.
 Do this, for one group a week, and you introduce dozens and dozens of people to your restaurant.  If that isn’t enough, then go after small catering opportunities. Every office has a birthday or some sort of transition that they want to celebrate. If priced right, they will select your restaurant as the venue in which to hold these events. Develop prices that work for the restaurant, and your neighborhood. We have seen small, 10 to 20 person luncheons, cocktail parties, and dinners flourish in these times, as long as we have managed pricing according to the clients’ needs. Once the path is developed to your restaurant front door, the rest is up to execution.

Restaurants are still the one truly affordable luxury – if made affordable.  People to people, marketing can be effective and profitable.  

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