The new hotel I purchased representing a vulture fund had a sad-looking piano lounge. This was the space that overlooked the entrance on one side and the reception on the other. On any day there were only 2-3 patrons at the most.
There was an alcove at one end with two steps. I would sit there every evening to visualise what it will take to convert it to be a money-spinning space. After two weeks my conclusion was that this space is perfect for a coffee shop. The location allows guests to observe who is coming with whom and who is checking in and out with whom, nosey minds.
However, the hotel had an existing old coffee shop on the other end that was going to be renovated as suggested by our hotel consultants. When I took over as the MD, the renovation started for the old coffee shop and guess where the temporary coffee shop had to be located? It was the empty Piano Lounge.
I was staying in house and came down very early to take my son running when I glanced at the set up for the temporary coffee shop. I knew instinctively that it is the right location for the coffee shop and the decision to renovate the old coffee shop by the hotel consultants was the wrong one.
After taking my son to school I had breakfast in the temporary coffee and decided to spend the whole day asking all the guests what they feel about the location. It was almost 100% positive that this is the right location for the coffee shop.
I decided to change the location into the permanent coffee shop and after about six months of operations the revenue increase by five times. I felt great.
What to do with the old Coffee Shop?
With the cancellation of the renovation of the old coffee shop we had a debate on what to do with the location. It was decided to convert it into a Chinese Restaurant. I felt the location was good for a Chinese Restaurant as the guests can arrive and walk straight to the restaurant without having to walk down a floor to the current small Chinese restaurant which was losing money.
With the input of all the team member the cuisine was to consist of Dim Sum, Cantonese food with a barbeque section.
The Fortune Palace was borne.
After six months of operations I had the first shock of the hotel industry when the financial reports showed a monthly loss in spite of the great business. The loss was after charging utilities cost and a rental rate lower than market.
The restaurant had 180 seats and the monthly revenue was about 180,000 a revenue per seat of 1,000 which everyone thought was great.
What went wrong, no one can explain so I had to dig in myself.
I interviewed the owner of the Overseas restaurant and the Manager and Chef of Golden Phoenix the most successful Chinese restaurant in a hotel at that time. Both told me their normal turnover pays for costs it’s the Chinese weddings that makes them profitable. The Golden Phoenix can seat 500 persons and I myself had attended weddings there.
The three chefs of Golden Phoenix also cost RM 25,000/month at that time and there is no way the Fortune Palace can afford a team like this with only 180 seats.
I also learnt with much regret that the Dim Sum kitchen crew and the Cantonese food kitchen crew were no able to help each other as the skills were quite different.
The implication was that the Fortune Palace was actually running two restaurants each making 90,000 per month, no way to make money!!!
First lesson learnt. Lots of show but no dough!
Old Chinese restaurant what to do?
The old Chinese restaurant can seat about 50 persons and incurring monthly loss. With the desire utilising the space and to move the hotel into a five-star status the team decided to make it a street side type French Brasserie. The Brasserie was opened to much fanfare and again failed to attract customers. So why the loss?
The hotel was located in the area which were more Chinese at that time so the Fortune Palace was able to attract customers whereas those who favour French food was rather small in comparison.
Another loss.
Since I was researching all the different restaurant types by that time, I was intrigued why a Japanese restaurant can be tucked away somewhere and still do a rip-roaring business. I came to the conclusion that rent in the major Japanese cities were very high so the location had to be tucked away. Secondly Japanese food especially sushi and sashimi are not trendy food. As long as the food is consistent a royal clientele can be created and they will remember the location.
I must admit I never had the chance to test it out.
I was having serious doubts about what the hotel experts are telling me and why must a five-star hotel have multiple restaurants.
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