How to open a restaurant in a hotel: run it yourself or contract out?

Problem: "We have a 25-bedroom hotel in Maida Vale, London, and are looking to add an income stream by opening our restaurant all day. Currently, we serve breakfast and food to guests and a few regulars. We have seating for 45 inside and can accommodate another 60 outside on our terrace. There are a lot of residential blocks of flats nearby and there is no restaurant nearby. Would it be better to get an operator in to run the restaurant, or should we run it ourselves by employing a chef/manager? Mohammad, The London Carlton Hotel, Maida Vale.

Solution: Whilst it is important to understand the style and quality of your 25-bedroom operation, the basic principles behind this advice remain true of all establishments looking at a change in direction. To do this, two key areas need to be considered to help you decide what, when and how to progress your business's expansion. I have broken them down into two areas - The Experience and The Market Edge.

The Experience

Functionality: Whichever direction you choose, franchise or expansion, your premises need to be suitable to deliver a sound level of functionality. You'll need to consider, for example, the amount of staff you'll require, your stock of crockery and cutlery, where you can hold a stock of food, if you have sufficient kitchen equipment and a dining venue that functions within the market you’re looking to engage. Your business will also need to have a structured, functional, and rationalised business plan that links into and protects your current business model.

Accessibility: Judging by the fact that you're located near a number of residential blocks, your accessibility would lean you towards satisfying this residential market on your doorstep. It would be for you to assess the demographic profile of your target client and to provide a product and service suited to that client. The accessibility of competition in your market is also to be considered which from your profile would appear favourable. Given the size of your venue you might look to explore a bistro/brassiere style option, or perhaps a café/bakery concept, or both.

Emotional link: Given that your business is functional and accessible I would always recommend that you create an emotional link with your clients. That is, you provide a memorable experience that will encourage them to return. This emotional element is often mistaken by what the proprietor might project. Instead, let your market shape this area. It might be something small like how you decorate a cappuccino or it might be that you provide fresh doughnuts deep fried to order.

The Market Edge

Consistency: Regardless of the potential for your business to be functional, accessible and emotional, always remember that if you mess around with guest expectations, because you’re not consistent, you won’t be able to build or sustain a stable customer base. In some ways, a franchise takes care of this issue as they bring tried and tested expertise and systems into your business.

News Worthiness: Be part of the scene! Make an aspect of what you do eye catching, news worthy and interesting. Perhaps get involved in the community, local event, tourism initiatives or a charity.

Summary

I see several plus points to your business moving forward and running a restaurant full time.

Your exclusive location within a residential market, allied to the fact that you have seating for up to 100 in the warmer months, provides you with a significant advantage. The lack of competition also allows you to be flexible with your offering so that feedback from an initial multi-market concept could provide a good steer towards your typical client.

If your hotel business is steady then this provides you with the security and bread and butter to allow you time to grow your all day dining concept. The argument of a franchise over hiring a new chef/manager really depends on how much you want to get involved and how much money you want to make.