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From Scratch

Finding the perfect hotel-restaurant match involves soul searching, “first dates,” compromise, and trust, in order to build a healthy and successful business relationship.

“Without the trust that you’re both in it for the same reasons with the same objectives, then it becomes adversarial,” says restaurant, retail, and foodservice consultant Arlene Spiegel. “The last thing you want as a hotel owner is to have an adversary living in your ground-level retail environment.”

There is no one-size-fits-all solution for hotel owners who are hunting for the right food and beverage operation to match their properties. Chain restaurants can mitigate risk because the brands have already been proven successful in other locations, but their formulas and protocols often don’t provide much flexibility. Property owners who want more control over the customer experience might consider implementing their own restaurants.

Building and operating a unique restaurant can help a hotel enhance its brand while reaping all the profits. The target market will dictate hours of operation, menu offerings, price points, style of service, overall design, and ambience. Another option for owners who don’t have a firm grasp on the demands involved with operating their own restaurant involves leasing out their ground-level space to a skilled executive chef. That way they can still count on the safety net of a monthly rent check.

“My restaurant clients are always open and ready and willing to go into a hotel situation. They love it,” says Spiegel, a third generation restaurateur and founder and president of Arlene Spiegel & Associates and Hospitality Matchmaker. “There are built-in guests to the restaurant, common area parking and facilities, and the build out is usually less expensive because the infrastructure, the mechanicals, the engineering, and the plumbing are usually already in place.

“It’s very often not just about money,” Spiegel adds. “It’s really about the restaurant brand and the hotel brand enhancing each other to go to a different level.”

By conducting a feasibility study, foodservice consultants like Spiegel can determine the best solution to reduce risk. For example, would the owner prefer to focus on marketing, occupancy, and community outreach, becoming the business hotel of choice, or hosting special events for leisure travelers? “Once you determine what the goals are of the ownership,” she says, “then you can start narrowing down and filtering what their best options are.”

Generally speaking, Spiegel would choose control over guaranteed rent. “Even if you bring in a high profile celebrity chef it does not guarantee that what that chef wants to do is going to resonate with the guest. Nor will the chef necessarily be flexible because of egos or his own brand positioning to maybe come up with some more pedestrian culinary offerings that the hotel needs but the chef doesn’t want to stand behind,” she says.

COMPLETE CONTROL
Launching an independent restaurant involves more risk and investment, but allows hotel owners to mold the concept to their needs. In some cases, the chef may act like an independent owner but is actually an employee of the hotel.

“The upside is that when you create your own concept, you really have the most control,” Spiegel says.

When Barry and Elaine Sussman acquired the Peacock Inn in Princeton, N.J., in 2006, and embarked on a multi-million-dollar renovation, they didn’t anticipate having to develop their own dining concept for the property too. The Sussmans had invested in the 18th century Colonial mansion with an executive chef business partner who would operate the restaurant and bar, but the relationship went sour and they bought him out.

The Sussmans originally planned on a bistro-style restaurant within the 16-room luxury boutique hotel, but opted for a high-end, New American cuisine concept once they hired Manuel Perez as executive chef. Perez’s experience includes training at Le Bernardin under celebrity chef Eric Ripert and the Water Club in New York, and chef de cuisine at the top-rated Restaurant Nicholas in Red Bank, N.J.

After a three-and-a-half-year renovation, the hotel opened in January of 2010, followed by the restaurant that May. The inn has a strong corporate base and also attracts European business, parents of prospective and current university students, and travelers from New York and Philadelphia who crave a long weekend away. The restaurant has three private rooms for corporate and special events, including a lower-level space that many believe was used as a Prohibition-era speakeasy.

Sussman admits he was nervous launching a fine dining restaurant in the midst of an economic recession, but so far it has been the right approach for Peacock Inn, which is a short walk from Princeton University. Although Sussman is a partner in a Holiday Inn Express in Wilkes-Barre, Pa., a Holiday Inn in Philadelphia, and a Quality Inn in Cookstown, N.J., and has minority ownership in a Hampton Inn in Long Island, N.Y., and a Springhill Suites in Rhode Island, his only previous food and beverage experience was as a non-operating partner and franchisee in three Burger King restaurants in South Jersey.

Peacock Inn serves dinner daily, offers a regular Sunday brunch, and opens up for private luncheons. The team switched to a fixed-price menu last year to increase efficiency and streamline service. The kitchen staff has better control over food and labor costs by knowing what set of ingredients to purchase and the quantity of food that will be served.

The Sussmans considered outsourcing the operations, but decided that a better balance would be achieved by developing their own concept. With guestrooms right above the dining room, he didn’t want a late-night operation that would disrupt his guests. “The reason to do it ourselves is to have total control,” he says.

To cover the mortgage, Sussman can rely on revenues from both the restaurant and the hotel. “When one is in a slower season, it can fall back on the other,” he says. “It’s much easier in that respect.”

OUTSOURCING OPERATIONS
Leasing hotel restaurant space is like having a roommate, says Jonathan Lundy, chef and owner of Jonathan at Gratz Park in Lexington, Ky. It inevitably has its challenges, but Lundy and the hotel’s managers are committed to the relationship and provide business opportunities for one another.

“I like being there,” Lundy says of his location at the 41-room historic boutique inn. “They help me, and I help them.”
A fully booked hotel means more potential restaurant customers. And when occupancy is low, the hotel gains exposure from local and out-of-town diners and special event attendees. “Having a restaurant inside your hotel, whether you’re a chain or small boutique inn like us, is an asset,” says General Manager Zedtta Wellman. “It gives your guests something to pull from, especially when you have a local chef.”

In 1998, Lundy left a small independent restaurant group in Lexington to open Jonathan, where he puts a culinary spin on traditional Kentucky dishes, uses seasonal ingredients from regional farmers and producers, and incorporates Kentucky bourbon in many of his dishes. He signed a one-year lease with Gratz Park Inn with a six-month break clause, and learned how to operate a restaurant on the fly.

“I compete mostly with other local fine dining restaurants, and I happen to be in a hotel,” says Lundy, who began his culinary training in 1991 as an apprentice under chef Emeril Lagasse in New Orleans. “It’s been good for me in the sense that it has given me constant exposure.”

When a new management team took over hotel operations in 2007, Lundy stayed on board. The team invested significant funds in upgrading the property and creating an Old World ambience with a more universal appeal.

“My motto is ‘no rules, just do it right,’” Wellman says. “Having a great restaurant really helps deliver the whole experience.”
Of course outsourcing operations to an independent restaurant brand or operator requires extra time and effort to develop the relationship and maintain flexibility, but it often results in a happy marriage for both parties. “You get the rent but you also get somebody who’s invested in making that restaurant successful and has the most flexibility along the course of that lease to make sure that the food and beverage is in alignment with the hotel owner’s goals,” Spiegel says.

Most hotel restaurant lease-out deals involve a partnership with shared objectives and rewards. For instance, the base rent might be low and then the hotel ownership would share a percentage of the profits. “That’s kind of the best scenario where everybody has so-called skin in the game,” Speigel says. Then the hotel’s sales and marketing team can collaborate with the restaurateur to bundle packages and weekend getaways that include a brunch or arrival dinner.

For their part, maintaining separate operations of the hotel and restaurant allows Lundy and Wellman to each focus on what they do best. “A lot of people don’t know the hotel and restaurant are separate,” Wellman says. “They work together so well that sometimes we don’t even think about it.”

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