Hotelivate shares insights on the way forward for the Food and Beverage industry post-COVID-19

Shailee Sharma, Senior Associate, Hotelivate talks about the new normal and changes required for post COVID operations

Food and beverage industry, Post COVID-19, Hotelivate report, Hygiene and sanitation

The world of food and beverage is an ever-changing one, where stand-alone restaurants fight brutal competition to survive. While some of these restaurants succumb to the rivalry, hotel restaurants have perfected the art of staying constant. Of course, hotels have ensured that their food and beverage concepts were updated and trendy, innovative and hygienic, yet the very existence of these restaurants is
threatened today.

With travel bans limiting movement of both international and domestic guests, as well lockdowns restricting local guests from using hotel facilities, hotels have already realised the extent to which their food and beverage operations stand to be affected in the post COVID-19 era.

Even when the virus is brought under control, the fear of travel and crowded spaces will continue to affect people and their behaviour. Social distancing is expected to become the new normal and this will have multi-fold effects on the food and beverage departments of hotels.

The primary concern for these restaurants will be low footfall which will in-turn necessitate stringent cost-control measures, worst-affected by which will be the luxury and upper-upscale/ upscale hotels as they may feel the need to go 'frill-free'.

Some adjustments that food and beverage departments can take to ride the storm and adapt to the world post COVID-19 are as follows:

Focus on Hygiene and Sanitation: In the case of hotels where the Hygiene and Quality Control department is either non-existent or merged with Kitchen Stewarding, a shift will be required to a full-fledged Hygiene and Quality Control department that has the capability to conduct frequent food and other hygiene-related checks. Even in hotels that have this department, there may be a need to increase staffing and monetary budgets in order to accommodate the need for increased testing of staff (especially food handlers), incoming raw material and finished/stored food products.

Sanitisers and wipes will have to be made available throughout all outlets and back of the house areas and staff will have to wear masks and gloves in order to ensure the highest level of hygiene. Food safety and hygiene ratings/ certifications will need to be made visible in order to assure guests of the hygiene levels maintained and ISO  certification, which is currently considered as 'good to have' may become the norm going forward.

Compliance with the clauses under the licenses issued by the FSSAI (Food Safety and Standards Authority of India) will become essential and all food-handlers will need thorough training in hygiene and sanitation.

Cost Control Measures: In times of reduced income, one way for hotels to ensure an acceptable bottom-line is to employ the deepening strategy and control costs. Food and beverage costs are estimated to be in the range of 28% to 35% and bringing the cost down by even 3% to 5% could have a significant bearing on profitability. Inventory control for the food and beverage department in terms of par stock of dry foods, raw materials and stationery and other packaging items will need to be relooked at. As forecasting footfall accurately will continue to remain a challenge in the immediate to medium-term, the tendency to overstock items must be avoided and traditionally maintained par stocks may be reduced in order to cut cost and avoid spoilage.

Another area of focus for restaurants should be their menus. Undertaking a detailed menu engineering exercise to identify class A, B and C menu items based on popularity will help restaurants narrowdown on frequently selling dishes thereby giving them insights into how menus may be restructured in a costefficient manner. Food and beverage departments of hotels may also consider using the lockdown period and slower periods immediately after to multi-skill their service staff thereby creating an opportunity for their own staff to float between outlets and even support the banquet team, eliminating/ reducing the need for casual staff during events. This serves the dual purpose of controlling cost and controlling the number of unchecked individuals entering the hotel and coming in contact with guests.

Lastly, hotel brands with multiple properties in a vicinity can consider reducing redundancies in managerial positions by creating a cluster-level position to oversee food and beverage operations at these properties thus saving on payroll cost at each of the individual properties.

Food and Beverage Outlets: In the immediate to medium term, complying with social distancing norms, hotel restaurants may need to increase the area per cover thereby decreasing the total number of covers in the outlet.

While this may appear counter-productive, it must be reiterated here that footfall will be low enabling area per cover to be comfortably increased. There will be a shift away from buffets at the multi-cuisine restaurant and a la carte or table de hote menus will gain popularity. Also, the demand for in-room dining is expected to substantially increase as guests will prefer to dine in the safety of their own rooms and away from other guests, and hence the balance staff from the outlets can be re-assigned to assist stressed in-room dining operations.

The decrease in popularity of buffets will create an opportunity for hotel brands to permanently discontinue complimentary buffet breakfasts offered as a norm as this has been an expensive pain point for most brands but was an expectation for most guests. Also, owing to the overall reduction in demand for food and beverage outlets, hotels may consider shutting down a specialty restaurant in the immediate to medium term whilst continuing to focus on one large-format outlet. This will not only save cost for the department as a whole but also allow the hotel to utilise the staff from that outlet elsewhere.

Another area that hotel restaurants can capitalise on is the expected drop in demand for standalone restaurants in the post COVID-19 era. As standalone restaurants are usually smaller in area than hotel restaurants and have higher footfalls, people may be more inclined to enjoy an evening out at a hotel instead. Hotels have also traditionally been perceived as better in quality and cleanliness. To take advantage of the new opportunities before it, hotels will need to be more competitive in concept and pricing.

During the ongoing nationwide lockdown, many hotels have diversified to offer limited home-delivery menus, in order to stay afloat. This trend can continue in the post COVD-19 era in an effort to optimise food and beverage revenues. However, one must take into account that delivery is neither a competency nor a scalable feature for hotels and therefore, they will need to be open to tying up with food delivery aggregators such as ZOMATO and Swiggy.

The current crisis is increasingly reintroducing to the world the need for wholesome and healthy food, and food and beverage outlets will need to revise their menus to cater to this trend. Food promotions are also expected to gain popularity again as hotels strive to attract more guests to their outlets.

Banqueting: As corporates grapple with a slowing down economy and try to make up for lost productivity during the lockdown period, meeting budgets are bound to be reduced thereby reducing demand for corporate MICE at hotels. Banqueting, on average, makes up for ~35% - 40% of the total food and beverage revenue, however, this number may go up to as much as 60% - 70% in the case of MICE-centric hotels. For convention centres and MICEcentric hotels, this means a certain dip in banquet revenues. Hotels with banquet facilities will have to shift their focus and depend heavily on social events for the coming 12-18 months as well as consider a reduction in their banquet staff allocation. Reforecasting of Food and Beverage budgets, especially banquet budgets, is the need of the hour.

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