By Lee Jamieson
A successful F&B refurbishment can generate substantial revenue and boost your public image.
Lee Jamieson discovers the key to a successful F&B refurbishment.
Like the food they serve, the region's food and beverage outlets have a shelf life - and increased competition in the marketplace is making it imperative for operators to cost and time the refurbishment of their outlets effectively.
If managed successfully, a timely refurbishment can generate substantial revenue by creating an opportunity to realign the brand with the evolving needs of its customers. Also, it offers an opportunity to re-evaluate the marketplace, differentiate the brand from new competition, and capitalise on emerging trends.
In short, refurbishment programmes offer the opportunity to overhaul a business and change the public's perception of it.
"A redesign gives the operator a chance to demonstrate to the public that they are committed to staying ahead of the competition by offering their customers the best F&B product the market has to offer," explains Blueplate Studios F&B director, Michael Goodman.
"They have an option: either re-launch the same brand with a new perception, or create a new brand altogether. Either way, the operator is given a chance to reintroduce their business to the public.
"They say you never get a second chance to make a first impression ... F&B refurbishment is perhaps the only exception!"
For branded F&B concepts, interior design is equally as important as the food and service. The interior is responsible for establishing the customer's expectations, setting the ambiance and connecting the brand with lifestyle choices. Interior design is therefore the brand's most powerful touch point.
Unsurprisingly then, in a region driven by brands, refurbishment has jumped to the top of the agenda and an increasing number of operators are looking to overhaul their outlets and completely reposition their brand.
"We are certainly seeing considerable interest in the complete repositioning of brands in the Middle East," explains Tribe chief executive (and "chief worrier") Stefan Breg. "I think that this trend has been driven by the double whammy of a recession-induced revenue decline and the increased number of competitors from all of the new restaurant openings."
New brands - new ‘Choices'
In a bold move, Al Bustan Rotana Dubai used its restaurant refurbishment as an opportunity to reposition the F&B offering under an entirely new brand. Choices Restaurant, formally known as Fontana, was due to be refurbished as part of the hotel's wider renovation project when market analysis and diner feedback prompted a complete overhaul in order to maintain a competitive position.
Choices is a 24-hour, multi-cuisine experience which was developed to meet the diverse tastes and dining preferences of Al Bustan's clientele.
"In the end, it actually became much more than just a refurbishment project because we introduced an entirely new F&B concept," explains executive assistant manager Franck Royer. "The refurbishment was an opportunity for us to ensure that we were meeting the expectations of our guests in terms of quality, comfort and design."
Business beneath the brand
When attempting to reposition a brand, refurbishment is only part of the overall strategy. The process will of course involve rethinking every element of the business from the marketing strategy to the food served - but refurbishment is perhaps the most powerful weapon in the operator's armoury.
"Although an interior redesign can effectively reposition a brand in the market, there are limits," explains Breg. "For example, no matter how much redesigning McDonalds does, as it has done in Europe, it will always be perceived as a quick, counter-service hamburger outlet!"
It is important for operators to strike the right balance between repositioning and reinventing their brand. Although it is essential for any refurbishment to communicate a fresh, reinvigorated F&B concept, it must also stay committed to the brand's core principles. The new generation of brand-savvy consumers will be quick to spot a refurbishment that doesn't really reflect the business and will potentially become disenfranchised.
"Design can be used to reposition any business," says Nigel Witham, a chartered designer who has run his own UK-based design practice for more than 20 years. "However, if it is hollow and the business beneath the design has not genuinely changed, then it will fail. For this reason, I feel strongly that businesses should work with strategically thinking designers who can help make sure that the delivery matches the promise."
From Refurbishment to restoration: Bamboo Lagoon
In the Middle East's crowded F&B scene, the longevity of a brand is becoming more important to diners, as JW Marriott Dubai director of food and beverage Kevin Wills discovered when planning the renovation for its Bamboo Lagoon outlet.
"When the time approached for refurbishment, we were actually considering a complete redesign to better compete in the newer market place," he explains. "New menu, new look and new food presentations - all very exciting for a team eager to develop a new concept from scratch.
"However, upon a final competitive diagnostic, we discovered that many of the newer Asian concepts had experienced sharp decreases in demand shortly after opening. ‘New', without a timeless foundation, can become ‘old' quickly!
"So, we made a U-turn and moved from a refurbishment project to a loving restoration of a classic and successful concept. It made much more sense: our restaurant, though tired, had been continually successful and attracted a loyal clientele. I think it would have been a bad decision to have completely replaced that concept."
Securing a return
Increased competition in the region has fostered a commercially-minded approach to F&B refurbishment from operators and interior designers. As with any commercial investment, it is essential to understand the market drivers, weigh up the factors that determine the scale of the investment, strategically deploy the project and find effective ways to measure ROI.
Perhaps the most difficult factor to judge is the timing of the investment. Refurbish too soon and you may not maximise the value of the existing fixtures and fittings; refurbish too late and you could face having to rebuild your clientele - and then there is the timing of the refurbishment itself to consider. As any F&B operator knows, there is never a "good time" to shutdown operations.
"All restaurants have a shelf life," explains Blueplate Studio's Goodman, "and you have to make sure that you refurbish before you have passed your expiry date! After that, it will often take a complete rebranding to get you back on track.
"But, if you refurbish at the right time, you can ride the wave of press and new customers to a healthier bottom line. When we refurbished The Café at Hotel Mulia in Jakarta, we worked with a brand that had been around for a while and needed an update. Immediately after the re-launch there was a dramatic increase in the average cheque and footfall traffic."
Measuring ROI on an F&B refurbishment is notoriously difficult. Although tracking footfall, customer spend and frequency of visits is relatively straightforward, there are also many indirect benefits of refurbishing an outlet.
For example, F&B operations within hotels find it difficult to attach a cash value to the refurbishment's positive impact in other areas of the business. The ROI of the F&B refurbishment may be evident in occupancy levels, RevPAR, customer loyalty and cross-exposure to the hotel's other F&B outlets - the sum of which could equate to a substantial return for the hotel in the long-term.
"The most effective way to measure ROI is to look at the year-on-year profit and loss statement from before and after the renovation, as well as studying incremental revenue," continues Goodman. "It's best to trend the past several years of your establishment's profit and loss to forecast accurately.
"If you achieve a positive renovation and re-launch, the revenue will certainly trend up once you re-open, and the increase in footfall will be evident in both cover counts and the bottom line. The incremental revenue should also improve, as you'll be able to capture higher revenue per occupied seat."
All aboard the Double Decker
A measurable ROI strategy is at the heart of the forthcoming renovation of the Double Decker Pub at the Al Murooj Rotana Dubai. In a move to strengthen its market position, a refurbishment of the existing venue and the introduction of an outdoor beer garden is planned for the pub.
They have partnered with NG Landscaping, a landscape architecture company that demonstrated its commitment to ROI focused design when working on the Park Rotana Abu Dhabi and some projects in Lebanon.
"In general, when a project kicks off, too many people get involved in design decision-making and things get lost," explains Al Murooj's director of food and beverage, Philippe Harb. "Target markets are never clearly identified - or they get forgotten altogether! Operators also tend to set high expectations and unrealistic budgets and are later forced to make cutbacks on non-revenue-generating spaces, ultimately delaying the project.
"At Rotana, we are much more systematic: we create an action plan, vision and mission which outlines what our expectations are. We then clearly identify the financial acumens along with a ROI strategy for the owners. Each week we meet with our partners and suppliers to review the progress and ensure that our plan for the project is on track.
"The cost of renovation will be high, but we are fully expecting to break even after six months and close the year with healthy results."
Make or Break!
The refurbishment of an outlet can make or break an F&B business. Unless backed by solid market research, a robust business plan and a clear ROI strategy, the expense of the renovation could easily outweigh the income generated.
And, in a market which is flooded with choice, brand-conscious consumers could easily migrate to a rival brand if they feel that the concept behind the refurbishment is failing to meet their specific needs and expectations.
It is, therefore, more essential than ever before for operators to properly research and implement their outlet refurbishments and make bold decisions if need be. If properly managed, the rewards will be substantial.
"Most businesses experience at least a 20% increase in sales following a refurbishment," concludes Witham. "I have seen anything up to 400% in my own projects."
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