Ever wondered why hotel restaurants are considered the industry’s uncool cousin? Pablo Flack has an answer: “Laziness. You have floors of rooms making astronomical money. F&B is dwarfed by that. Why go to the hassle of creating [good restaurants], when you can put on cheap food, charge way over for it and sell it to a captive audience?”
If that sounds like a wasted opportunity – one that produces soulless, financially flat hotel restaurants – a growing number of restaurateurs and hoteliers agree. Inspired by America’s hip Ace Hotels and the UK Hoxton brand, a new wave of city hotels and aparthotels (serviced apartments for long and short stays), are throwing their doors open.
These former silos are turning their bars, restaurants and lobbies into democratic, vibrant neighbourhood venues aimed at local audiences as well as hotel guests.
In Manchester, for instance, DJs-now-restaurateurs the Unabombers have created the multi-functional Refuge within the city’s Principal hotel. In east London, alongside David Waddington, Flack has created the Hoi Polloi restaurant at the Ace Hotel in Shoreditch and in October the duo will launch Cultureplexat Ducie Street Warehouse, this time in Manchester.
“In terms of revenue generation in urban locations, it makes perfect sense. Why rely solely on guests to spend money in your F&B outlets when you can open them up to locals? Flexibly designed spaces can be busy from breakfast until late at night,” says George Sell, editor at International Hospitality Media.
“Waterloo’s Stow-Away aparthotel has a space run by wine bar Unwined, with regularly changing chefs and menus.
“It’s popular with the local office crowd even though there is a host of street food, cafés and pubs vying for business on Lower Marsh.”
Hotels as public spaces
For hotels courting a millennial clientele, this is a win-win. Typically, hotel F&B has made poor use of prime city centre real estate and such spaces are increasingly unattractive to travellers. Guests want to socialise in places that feel contemporary and authentic. If hotels do not provide that, they will eat elsewhere – and stay elsewhere, too.
The solution? Partner with independent operators and allow them to open self-contained businesses within a hotel. “Often, hoteliers don’t have the skill set to understand the market and stay relevant,” says Refuge co-founder Justin Crawford. “They’re big, cumbersome corporate businesses. Local markets often need local operators.”
For non-guests, the concept of hanging out in a hotel is still counter-intuitive. Hotel entrances are a huge mental barrier and operators have to work hard to package their bars and restaurants as public spaces. Inclusive pricing and dynamic menu design help, but many hotels – hip hotels courting a similarly hip clientele – are also turning lobbies into relaxed co-working spaces and curating cultural programmes (music, talks, exhibitions, movie nights), to lock-in the local cool kids.
“If you want ground floor buzz and energy, that’s how you do it, not with an exclusively hotel audience. That’s where you end up with the classic dead, lifeless hotel-run F&B outlet,” says Guy Nixon, whose property management company Native is in overall control at Ducie Street Warehouse. It has similar aparthotels planned across the UK.
Naturally, that approach suits restaurateurs with an artsy hinterland. Prior to Hoi Polloi, Flack and Waddington had created restaurant-cum-cabaret venue Bistrotheque and were encouraged by the Ace Hotel to contribute to its creative life. “It was a gang having fun, doing stuff organically,” says Flack. Manchester’s Cultureplex will include an 80-cover Bistrotheque; coffee shop Klatch; a large co-working lounge, bar and casual food space; a mini-cinema; a terrace and event areas. By collaborating with local creatives, Flack hopes it will become a platform for cutting-edge Manchester music and arts talent. The site also includes a Blok gym.
Similarly, over at the Refuge, the Unabombers creatively steer both a restaurant and bar and the wider cultural life of this vast, handsomely refurbed Victorian space. They manage everything, from booking DJs and sporadic club nights, to conceptualising weekend showcases: be it an all-day street party at gay Pride to family arts and crafts events at Easter.
As MD of No Chintz, a branding and interior design agency focused on creating communities in large property developments, and owner of Foundation Coffee House, Dominic Beardwell firmly believes that F&B outlets can double as community hubs. Foundation has a second store at Manchester’s Whitworth Locke aparthotel (Locke is also in London and Edinburgh), where it manages Locke’s co-working space and an events programme that ranges from French classes to yoga.
“Our pitch is that we’re bringing a community and in return we want investment into the space,” Beardwell explains. At Whitworth Locke, that secured Foundation favourable fit-out and lease costs compared with a typical storefront. Unlike many brands, says Beardwell: “We’re trying to expand with vastly reduced debt.” Foundation still has an on-street presence at Whitworth Locke and business splits roughly 50:50 guests and locals. But, for Beardwell, sitting within “big assets” with a captured audience gives him a much more sustainable business. “Relying on sheer street footfall is tough,” he says.
Of course, the events programme at Whitworth Locke helps maximise spend on-site but, in a hotel, such activity adds a subtler, very important value, too. It makes a hotel feel cool, which should boost occupancy levels and room rates. It is a virtuous circle. Busy, lively publicfacing F&B outlets can make money in their own right but, as a corollary, they increase bedroom revenues. This, in turn, enables hoteliers to offer independents potentially attractive deals.
Whitworth Locke has also taken a less than conventional approach to its restaurant offer. The group has opened The Cotton Factory within its Princess Street hotel, promoting itself as being the city’s ‘first permanent residency restaurant’. It says it is looking to collaborate with up-and-coming food traders to serve street food in a swankier setting.
Overseen by hospitality project consultancy The Initiative Group, the 78-cover The Cotton Factory will play host to an ‘ever-evolving’ series of residencies beginning with Mexican food traders El Camino, which hosted its first pop-up earlier this year. The menu features a range of street food-inspired options including a beer-braised ox cheek quesadilla with chipotle aioli, red pickled chilli and crispy shallots; masa fried chicken tacos with red salsa and habanero aioli; and grilled sea bream served with charred greens and salsa verde.
“We have a great space at The Cotton Factory and it is exciting to have the opportunity to fill it with a variety of hungry young operators to create unique one-off experiences in the city,” says Initiative Group director Youri Michel. Residencies will last between three and six months, with details of future traders at the restaurant yet to be announced.
Freedom to be unique
Curiously, despite that crucial link between a cool rep and increased room rates, intelligent hoteliers do not exert pressure on F&B partners to help drive room sales or cater to a broad hotel demographic. They leave them alone to create a genuine product.
At the Ace Hotel, the only top-down directive for Hoi Polloi was that it had to have a burger on the menu for room service. At Cultureplex, Flack feels equally free: “It’s not that the hotel is irrelevant to us, but we’re creating an F&B space which happens to have rooms above it. How do we create a space that people in Manchester want to hang out in? That occupies 95% of our mind. Then 5% is that people above need X, Y and Z for breakfast.”
Hotels are complicated. Typically, the building is owned by a capital partner (an investment fund, usually) but managed by a hotel brand, which may then sub contract services such as F&B. Deals with third-party indies – most come through recommendations from consultants or pre-existing contacts – can take many different forms.
Flack and Waddington conceptualised Hoi Polloi but Ace Hotels run it, like a franchisee. The Unabombers are very hands-on consultants at the Principal (on a three-year contract, renewed this year), but do not employ anyone. All staff report to the hotel. At Cultureplex, in contrast, Flack and Waddington lease the space. “It’s autonomous, the risk is ours, we employ everyone,” says Flack.
The advantages of consultancy are clear: the only risk is reputational and, because well-designed F&B spaces are a long-term asset, hotels tend to listen to restaurateurs’ advice. Ideally, if the deal is sealed at build stage, an operator can move into a good space with minimal outlay.
However, nimble indies used to making instant decisions can find the bureaucracy of large hotel groups a challenge. Decisions must go through layers of approval; all spending must present a strong business case; strict GP and supplier lists rule; complex induction processes can make it difficult to recruit talented staff quickly.
You have to adapt to what Crawford calls ‘hotel-think’: “We’ve had to learn how to understand their spreadsheets and P&Ls, get inside their heads and make sure we’re not asking for impossible things that don’t fit into their business model. Hotels are very accounts-driven because up the line they’re owned by investment vehicles who want to see X% return every year – that’s what they’re being marked on.”
If the Unabombers have learned to be patient, so too the Principal is now allowing them time to, for instance, establish their Sunday roast over nine months. “Two months in the numbers weren’t where they hoped. We had to reassure them. Now it’s 400-plus covers. They want to see a quicker return on decisions, whereas we’re more about building trade.”
“In a hotel you have to learn to be collegiate. It settles into a rhythm, trust builds and it becomes easier,” adds Flack. Some of this is as simple as learning from which department to apply for money. For example, the Principal has willingly supported the Refuge’s free outdoor DJ parties because the cost is covered in the marketing budget, rather than it negatively impacting P&L in other parts of the operation.
Slowly but surely, hip hotels and independents are discovering the mutual benefits of collaboration, says Beardwell. “For big hospitality providers, it’s simpler to whack a chain in. They’re concentrating on the overall growth of massive businesses,” he says. “But for smaller players, it’s a really clever way of creating a point of difference.”
This is a web version of an article that first appeared in the August issue of Restaurant magazine, the leading title for the UK's restaurant industry. For more features, comment, interviews and in-depth analysis of the restaurant sector subscribe to Restaurant magazine here