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8 August 2006

Do Dubai Restaurants Make Reasonable Profits? ¦ By NP Chandrashekhar, CHA, MHCIMA

One would have observed in Dubai many independent food and beverage outlets are opened and closed within a span of two to three months. Even in many hotels the restaurants that cater mainly to the food and beverage for its clients do not make profits. I have observed and come across situations even food and beverage personnel unable to answer the reason for the outlet to be not successful.

Any one starting business should know their client otherwise the business will fail. This is the case with restaurants in Dubai. Either they open a restaurant where there is no market for their products or open a restaurant with the similar theme that are existing offering same products, hence, they fail to sustain with competition. Some fail to promote their product well. Some of those who take outlet on lease in a hotel have no clue of the basic calculations. I am trying to put forth my thoughts on the food and beverage aspect rather than financial aspect.

The popularity of any food and beverage operation depends upon the kind of food and beverage they serve. Further this will be strengthened if there is a good theme, concept, entertainment or unique selling point (USP) and overall dining experience. For example there are many brands of pizza available in the market yet, when a person thinks of pizza one thinks of Pizza Hut. Main reason why people go to Pizza Hut is because of the quality of Pizza one get and hence Pizza Hut is more popular than other brands. Popularity of any restaurant whether independent or within a hotel depends on the quality, price, standard of service and choice in the menu for its clients.

Once the concept, theme and the kind of restaurant is decided, preparation of menu becomes the next step for any food and beverage operation. Menu items offered must be compatible with the theme and atmosphere of the operation. Menu has to be prepared based on the market survey in terms of competition on pricing, products offered and choice available in the market. Menu is the starting point and the most important aspect for any food and beverage operation. Menu creates an impression of the food and beverage outlet in the minds of the client.

Any food and beverage outlet can be called successful when there is demand for the product they are offering and the outlet is profitable for the owner. Both are very important. This can be achieved only if there is proper and periodical analysis of the menu and its contents. One will be surprised to know even the design and positioning of each item in the menu has a great impact on the sales apart from just the contents of the menu.

The Menu is the foundation for the control process in a food and beverage operation. Starting with menu planning there are various other control points in every food and beverage operation such as, purchasing, receiving, storing, issuing, production and serving and ultimately end with guest satisfaction. The menu is not only the control tool but also sales, advertising, merchandising and marketing tool. Hence, menu addresses both control as well as marketing related issues.

Menu planning is a continuous process. It is a process that cannot be stopped as it is very much based on the expectations of the present and potential clients and the target markets. Menu has impact on all aspects of an operation starting from creating an image in satisfying the guests, influencing their purchase decision and merchandising the correct products. A sales transaction begins with the presentation of the menu to the guests. Hence, menu has to be properly planned and well designed to increase revenue and average guest checks.

There are reasons if any guest is coming to the restaurant, it could be good food and beverage, good ambience, good theme, good entertainment etc. There has to be a unique selling point to attract the guests. In a good food and beverage outlet, all other factors apart from food and beverage itself will only be a marketing tool and will help only to a certain extent. If the food and beverage is not of good quality and properly priced the guests repetition will diminish although one may have good theme or entertainment.

Any one wanting to increase the average check of the guest, the only way is to promote its product well. Before promoting one should know the clients well and their requirement. I have come across situations where the tent cards are kept on the table showing special menu items offered to its clients. Many times these items neither would have been promoted nor analyzed what was sold. This will remain on the table for months together although these menu items are sold one or two in numbers in a month. Is it really worth keeping such menu on the table?

Popularity of any restaurant depends mainly on the core substance of the outlet. If an outlet is serving Italian Food, guests come there to have the authentic Italian food. Added to this, they also look for Italian theme, decor and atmosphere in the restaurant. Putting all this together becomes the overall dining experience.

As many of us know in the Middle East, population of Keralites (Kearala is one of the southern states of India) are more. There are many outlets in Dubai with Kerala theme and most of them are flourishing. These joints are very popular in the middle-east as they cater to specifically Kerala food with theme and ambience of Kerala. The moment one enters the restaurant one can recognize Kerala specifics such as, Elephant pictures, Kathakali Dance Pictures, Coconut trees etc. In these joints, one gets good quality of Kerala food, properly priced, market is good and hence most of these outlets are flourishing.

There is an independent non-alcoholic food and beverage outlet in the Sheikh Zayed Road, called Lime Lite Café, the only restaurant caters to the Mediterranean cuisine in Dubai. The theme, decor and ambience go very well with the kind of food and beverage they serve. This outlet is very popular and the clients are mainly the locals, GCC and corporate. The menu covers reasonable range of Mediterranean cuisine that are unique and the quality of food served is very good. Service standards are high; people come there and spend lot of time as the overall dining experience is very nice and homely. This outlet is also very good for family gathering or getting together with friends.

Similarly, there are many food and beverage outlets in Dubai that are flourishing for long time. The only reason for the popularity of any restaurant is its main ingredient that is food and beverage and good service. All other aspects are important only to attract guests initially.

A successful food and beverage operation requires the blend of good manager who understands its clients, a good chef who prepares authentic food, quality people to serve the guest. Added to this, the theme, ambience and entertainment will help in promoting the outlet. The menu preparation should be done cautiously, it should not be too complicated (too many items) or too little, and its presentation should be easy for the clients to read and understand. It has to be in the cohesive order depending on the kind of restaurant. An explanation and ingredient of each item on the menu would help the client in choosing the food or beverage with ease.

It is important to know the guests’ likes and dislikes. This is possible only through a proper analysis of the items sold in the outlet. One has to establish what is being sold out of the menu and what is not. For selling and not selling there could be various reasons, such as quality of food (good or bad), pricing (low or high), visibility in the menu (prominent or non-prominent), etc.

One can make out the number of items sold and how popular each item is through popularity analysis of the menu. Still this may not give the right picture as to why the food is popular, may be it is cheap or really food quality is good or visibility in the menu is prominent. Ultimately, the owner is going to be happy only when the restaurant make money and not by mere popularity of the product. To meet both ends owner’s profitability and guest satisfaction one has to go deep into the subject to analyse which product in the menu is making money and which product is not and the reasons thereof. This process is called Menu Engineering. Popularity analysis and menu engineering are a continuous process in order to be successful in the food and beverage operation. Is your restaurant making profit or not? – analyze yourself.

CONTACT

NP Chandrashekhar CHA, MHCIMA
United Arab Emirates
Email: shekhar@etastar.com

ORGANIZATION

Hospitality NetChelsea Group
http://www.chelseagroupdubai.com
Chelsea Tower Hotel Apartments | Sheikh Zayed Road,
Dubai, United Arab Emirates
Phone: +971 4 3434347

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