The Covid19 Impact: Keeping Dining Experiences Memorable, Affordable and Profitable

As the General Manager of the historic Palace Hotel in San Francisco, the impact of the pandemic has been, and continues to be - the most unpredictable and difficult challenge I have faced during my career. In March of 2020, like many properties, we were forced to close our doors.  Notifying and saying goodbye to our associates was truly heartbreaking.  Working in the empty hotel for the next 14 months was lonely and sad for the few who remained.  The guests and associates give life to a property.  Our hotels were made to welcome people and provide them with a wonderful experience.

Food and Beverage offerings have always been a big part of that experience. Now, the effects of Covid19 have drastically impacted the Food & Beverage world - causing commodity shortages, loss of suppliers and huge price increases. Once again, we are called to action and must adapt to change. 

Our hotel reopened on May 27th 2021. Due to restrictions, we reopened with modified services and amenities.  The Grab & Go concept carried us through until restrictions were lifted.  We were able to reopen our dining venues in July and are making every effort to offer our guests the experience the Palace is known for.   But the reality is, some things had to change due to the impact of Covid19. So - what exactly are we looking at and how are we going to overcome these hurdles in order to continue to wow our guest? 

While we do not have the perfect solution, we are doing our very best. This has certainly been recognized and appreciated by our guests.  We will keep listening and responding to their feedback and keep learning and adapting as we go.  I hope that by sharing our experiences with others, we offer valuable insight, useful information and lend support to our friends throughout the industry.

Here's What We're Facing

Commodity Shortages

Lack of access to product has been a big challenge.  During the pandemic many suppliers went out of business and those that were able to survive - did so by rethinking their business. Suppliers who were unable to sell to hotels, airlines and restaurants, had to change their strategy and inventory.  Sourcing and selling products to hospitals and health care facilities became a big part of some of the successful new models.  Many shifted from selling wholesale to selling retail. Of course, all of this impacted the product producers and the domino effect continued. 

Now, as hotels and restaurants reopen and travel resumes, producers need to ramp up in order to meet demands.  This is not easy after more than a year's time.  And the challenge is made worse because many of their trained and experienced staff have taken other jobs.  The increase in demand and slower productivity means longer lead times for hotels.  This is projected to continue for at least 6-12 months and will affect how we do business.

Loss of Suppliers

We lost businesses – big and small, that serviced our industry for decades.  It seems the demand from the larger companies is being picked up by those who were fortunate enough to survive – once again impacting productivity.  It is the smaller, artisan suppliers who offered specialty products that no are longer available. Those that created something unique, hand crafted and extra special. These treasures add so much to our menus and elevate the overall guest experience. 

As a luxury hotel, our brand is built on celebrating all that is indigenous to our area and highlighting locally sourced products.  This is something that many hotels and restaurants are proud to do. When business came to a complete halt in 2020, these smaller farms, makers and crafters were severely impacted and many lost everything overnight. Rebuilding this community, establishing new relationships and cultivating loyal partnerships will take time and great care – but it must be done.

Price Increases

When we can't access product, prices go up.  It's simple supply and demand but the numbers are still shocking.  We saw the cost of Beef skyrocket - Beef Tenderloin went up 84%, Prime NY Strip 57% and Tri-Tip 67%.  Chicken Wings are up 46%, Scallops 49% and Dungeness Crab (if you can even get it) is up 31%.  The shortage of labor is also driving these increases. While our guests may or may not be aware of these facts, we as hospitality stewards need to find a way to maintain variety, quality and affordability for our guests. 

Here's How We're Adapting

Sourcing New Suppliers

This is an ongoing process until things settle and become a bit more predictable.  Since we lost several suppliers, our culinary team has been aggressively researching, sampling and negotiating with new suppliers to get the best product at the best price.  We began this process before we reopened in order to be as proactive as possible.  Even with these plans, flexibility is key to survival once again. 

Making Menu Modifications

Many hotels are very fortunate to have excellent culinary reputations.  The offerings served in their dining venues and at private events are often the reason guests choose their hotel over another.  Chefs are going to need to be even more creative and resourceful. Our experience has taught us a few key things:

• Accept the things we cannot change and implement change instead - develop a menu with good alternatives to those favorite items that may not be available or are simply unaffordable.

• Don't try to sell the guests what they don't want - if a good substitution is not available and will comprise the menu item – omit it.

• Maintain a good mix - that represents the brand while offering variety that is appealing to your guests.

• Fill a void – sadly numerous restaurants have gone out of business and people are missing their favorite places.  Consider this when planning menus. It may help inspire new ideas and additions to the menu mix.

• Manage the balancing act - with the current focus on health, guests are looking for menus that support this lifestyle. On the other side, familiarity brings comfort and many have been seeking the classics. Keeping a good balance is key.

• Make it in house – if you have the ability to do so, create things in house. This provides hours for associates, guarantees delivery, can help with cost and keeps menu offerings special and unique to your hotel.

• Do not overcomplicate menus – especially in these ever changing times. Be creative while keeping it simple, flavorful, fresh and flexible.

• Think cost, affordability and profitability – it has always been industry practice to watch food cost while putting out a quality product that is price friendly for our guests and still profitable for the hotel.  It's the same juggling act with a few more balls tossed at us. Our solution simply cannot be to pass the newly inflated expenses on to the guest.

Changing Buying Patterns

Established hotels become masters at forecasting and predicting their buying patterns based on flow of business.  Covid completely changed this.  Our hotel may have been established in 1875, but, it is almost like we have opened a new hotel in a new city.  Annual conventions  have not completely rebooked, social events are in flux, travel has not fully recovered  and occupancy is still evolving. 

The unpredictable calendared events and bookings, limited access to product and delivery cutbacks have made us change our buying patterns.  We use to plan purchases several weeks out and receive deliveries six days a week. Now we are making purchases within a 2-6 day window and expect deliveries once or twice a week.   In order to maintain quality, consistency and affordability the Director of Purchasing and the Executive Chef are working more closely than ever before to achieve these goals.  Good menu planning and costing, along with strategic ordering, will enable us to maintain our high standards, keep price points affordable and directly impact profitability.

Managing Guest Expectations

In our industry it is, and always will be, about the guest.  Communication plays a great role in our ability to anticipate their needs and exceed their expectations.  This is nothing new to us and certainly remains true as we share what is happening in the Food & Beverage world.  We can count on loyal guests returning to our restaurants to enjoy their favorite culinary craving and it no longer being part of the menu.  We can be sure that the couple that had to postpone their wedding (maybe more than once) will want the same menu they tasted and approved in 2019 - at the same price.  As we anticipate this – we work hard to find alternatives that more than satisfy our guests. 

The guests appreciate that the hotel has gone the extra mile to keep things affordable. It is always best to get in front of these situations. Printing an explanation and apology for any inconvenience on dining menus is helpful.  For private events - having the hotel or hotel representative initiate the outreach, honestly communicate the reason for change, and present a very desirable solution is just good business practice. As hoteliers, we are experts at this and we know this tried and true communication process works wonders and most importantly, keeps our guests happy. 

Every one of us has learned so much through this process and we can certainly learn more from each other.  As I work side by side with the Palace team through changes and more changes, I am committed to doing all I can to help them remain inspired and positive.  And I am grateful that they are doing the same for me.

Our team is really excited to be back at work but the struggles we face are real.  Our hotel is deeply rooted in tradition and Food & Beverage is an important part of our history.  The Green Goddess dressing was invented at the Palace as was Turkey Tetrazzini and the Boothby Cocktail. We've had to accept that for the first time since 1909, we cannot offer Dungeness Crab – the star component used to create our Signature Palace Salad.  We have decided to make this an opportunity and celebrate its return when we are able to get the product.  After all, we need more celebration these days!

Choosing to take the high road isn't always easy but it has helped us as individuals and has definitely helped our industry survive. The challenges have us all thinking differently – opening us to creative and impactful solutions. We work more closely together and discover new ways to solve problems. We've become even better at managing guest expectations.  Our communication is more proactive in order for us to be more reactive.  We are better neighbors and partners and have developed stronger relationships within our communities.

I know many hotels are experiencing the same outcomes. Witnessing this strength during comeback is truly inspiring. It gives us hope and proves our resiliency.  And it is yet another reminder of how proud I am to be part of the amazing hospitality industry. 

By Clifton Clark General Manager, Palace Hotel