Slicing, dicing latest trends in F&B profitability

NATIONAL REPORT — Finding methods to improve or further accelerate food and beverage profitability is on the menu for hotel operators as they look to slice and dice escalating costs, waste and ongoing labor shortages.

According to Justin Fowler, chief operating officer of Denver-based Sage Restaurant Concepts (a division of Sage Hospitality Group), labor is the most significant challenge in the F&B space.

“Minimum wage increases for both tipped and non-tipped employees have substantially increased our labor costs. This, coupled with the post-pandemic labor shortage, has created a perfect storm. The scarcity of skilled labor impacts service quality and drives up overtime costs, significantly eroding our profitability,” he said. “This trend, combined with rising food and beverage costs, puts immense pressure on the bottom line.”

Davidson embraces developing mocktails/specialty cocktails to drive additional revenue.

To mitigate these challenges, Sage has made strategic investments in technology, said Fowler, citing platforms such as Craftable and Hotel Effectiveness that have “proven invaluable” in optimizing operations for Sage, which has 67 restaurants across 12 states. This includes the upscale casual standalone F&B outlet Mercantile Dining and Provision in Denver.

Both the rising cost of goods and the labor market tick the challenge boxes for Jordan Davis, senior director of sourcing and culinary strategy for Atlanta-based Davidson Restaurant Group, a division of Davidson Hospitality Group, which has F&B operations in nearly all of its 85 upper-upscale properties.

Davis said partnerships have become one of the core strategies for reducing challenges and improving the profitability of F&B operations.

“Utilizing partnerships like Foodbuy Hospitality and building direct partnerships with suppliers where gaps exist is a highly effective strategy for managing and controlling the cost of goods sold in an environment where prices are rising,” she said. Another tact is reviewing competitive set restaurant, bar and banquet menu pricing on a regular basis “and adjusting our pricing to match market expectations,” she added.

While Charleston, South Carolina-based Indigo Road Hospitality Group has a smaller portfolio of six independent boutique properties (two of which it owns), each hotel includes an F&B concept. The group has 38 separate restaurants/event venues, with F&B representing 60% of its total revenue, according to Jennifer Krapp, director of restaurant operations.

Jordan Davis

“Many of the challenges we’re facing in operating profitably are industrywide. Like others, we are experiencing rising expenses across the board, including food costs, labor costs and other operational expenses,” she said.

Krapp credits IRHG’s team members with continuously finding ways to improve efficiency while the company provides training and development programs to enhance their skills.

“While we appreciate the role technology can play in cost control — and we’re certainly not afraid to use it… we focus on empowering our team rather than immediately turning to automation or other technological solutions,” she said. “We train and educate our team members to improve communication, streamline communication, reduce workflows and reduce waste.

“To support these efforts, we’ve also created a dedicated purchasing role to strengthen vendor relationships and ensure we maximize the value of our partnerships.”

Krapp said Indigo Road is leveraging technology “where it makes sense,” and cited MarginEdge, a restaurant management software program, as an “invaluable tool” for monitoring and controlling F&B costs.

Sage’s Fowler suggested there’s always a learning curve with new tech, “but we have seen some great returns. We’ve streamlined our operations by eliminating unnecessary steps and implementing more efficient processes. By leveraging technology and focusing on operations, we’ve been able to improve our profitability and maintain our commitment to delivering exceptional dining experiences.”

With F&B representing 28% of total revenue for Davidson, Davis agreed that leaning into advanced technology is important on different levels for the company. “Leveraging new technology and focusing on sustainable operations are both key initiatives for DHG to not only boost profitability but also to stay relevant in today’s competitive and environmentally conscious market,” she said.

Getting creative

Boosting the bottom line for F&B is being approached in various ways, including getting creative with operations.

Jennifer Krapp

On the technology side, one innovative approach Sage is implementing is leveraging benchmarking technology within its point-of-sale system, appropriately named Toast. Fowler noted that F&B represents approximately 18% of total revenue for Sage.

At Indigo Road’s Skyline Lodge in Highlands, North Carolina, it introduced a guest chef series that utilizes a semi-private outdoor space typically unused on weeknights. The series, Krapp said, offers guests “a unique dining experience that celebrates distinctive flavors, fosters connections and boosts revenue on slower evenings. By leveraging semi-private spaces, we attract guests who want an elevated experience without the cost of event fees or fully private venues, creating a perfect balance between exclusivity and accessibility. Our team is undeniably creative. Creativity enhances the guest experience and often generates additional revenue outside of our normal operations.”

Fowler indicated that seizing on those creative F&B opportunities is imperative, noting that the Sage team is exploring creative partnerships with local businesses and community organizations to host special events.

“These collaborations attract new customers and foster a sense of community and loyalty. These can range from a one-off whiskey partnership at our restaurant in Virginia or movie nights at our restaurant in downtown LA,” he said.

Trends in F&B

When it comes to F&B, trends come fast and furious. Some prove transferable to hotel F&B operations, others not so much.

Standalone F&B outlets like Mercantile Dining Provision in Denver help drive revenue for Sage Restaurant Concepts.

A quick glance at the 2025 Hospitality Trends Report by AF & Co. and Carbonate may have hoteliers considering placing self-serve ramen noodle stations in their lobbies along with Korean and Japanese convenience store items; offering a plethora of pistachio-infused products, from cocktails to butter or capturing market share with non- or low-alcohol alternatives. According to executives, keeping an eye on what gets embraced is another key goal toward profitability.

“One way we track F&B trends is by closely observing how our guests interact with our concepts,” Krapp said. “Any changes we make must ultimately benefit the guest, but that doesn’t mean we can’t benefit as well.”

Indigo Road implemented changes at the rooftop bar of The Flat Iron Hotel in Asheville, North Carolina, that combined revenue maximization with cost reduction.

When we first opened, the rooftop featured a robust menu; however, we noticed that most guests came primarily for the views and cocktails. With this insight, we scaled back the menu to focus on small bites and fewer options, which required fewer employees to execute.

Jennifer Krapp

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“When we first opened, the rooftop featured a robust menu; however, we noticed that most guests came primarily for the views and cocktails. With this insight, we scaled back the menu to focus on small bites and fewer options, which required fewer employees to execute,” she said.

Fowler said Sage is focused on the significant trend of healthier dining options. “As consumers become increasingly health-conscious, we’re incorporating more plant-based, gluten-free, low-calorie dishes into our menus,” he said.

While smartphone cameras are usually everywhere F&B is, reaction was mixed regarding the role social media plays in helping to increase profitability.

“Establishing a destination F&B experience that can be splashed across social media is a powerful strategy for driving traffic and increasing profitability,” Davis said. “By embracing trends like Instagrammable dining, health-conscious menus, experiential events, craft beverages and pop-up concepts, DHG can stay competitive and create buzzworthy experiences that inspire guests to visit, share and return. These strategies ultimately help build a strong brand presence, foster customer loyalty and drive both local and international traffic to hotel F&B operations.”

On the flip side, Fowler said Sage acknowledges the power of social media when it comes to dining, “but we’re not interested in chasing viral trends. We’re committed to creating genuine and lasting dining experiences. Our focus is on delivering exceptional food and service that resonates with our guests on a deeper level.”

Revenue opportunities

Both Davis and Fowler said they would be considering revenue “add-ons” for their respective F&B operations.

Justin Fowler

“Banquets and catering revenue are the first things that come to mind,” Fowler said. “It’s far more cost-effective to offer this than à la carte restaurant revenue, with profit margins often reaching 50% to 60%.” 

Davis said that for Davidson, partner collaborations for pop-ups, marketing activations, and developing mocktails/specialty cocktails were options to drive additional revenue.

Another important consideration is having a dedicated restaurant entrance, according to Krapp. “It shouldn’t be hidden inside the hotel, making it hard for guests and the community to find. A hotel restaurant needs its entrance and identity and should be marketed and positioned that way. It should be a place where community members want to dine — not just hotel guests.” 

Treating the restaurant as a standalone property is the key to increasing profitability, Fowler noted. “By utilizing a standalone P&L, we can clearly understand each F&B outlet’s revenue and cost structure. This granular level of analysis allows us to identify areas for improvement and make data-driven decisions. It’s essential to view F&B operations as profit centers, not mere amenities.”