Hotels have a high degree of operating leverage, a relatively high level of fixed costs, and a relatively low level of variable costs. This level of operating leverage makes the business volatile. When a hotel is below the break-even point, it can lose money very quickly. But once it gets over the break-even point, the marginal cost of filling one more room and servicing one more guest is insignificant. Profits increase dramatically.
The hotel industry is much more volatile than other real estate industries, like office buildings and shopping centers. It is much more similar to the airline industry, which has comparable operating leverage.
If a plane has 100 seats and has sold 99 seats, the marginal cost of selling the last seat is a few cents. The passenger gets half a can of soda and some pretzels. But the plane neither hires any more flight attendants nor another pilot. So, the marginal profitability of selling that last seat is pretty close to 100%.
The hotel industry is similar in that the marginal profitability of selling each additional room after crossing the break-even point is remarkably high. So, its profits increase quickly. On the flip side, when business deteriorates, the economy weakens, a hurricane comes, or there’s a health or other momentous event that affects people’s travel plans and disrupts the travel cycle, hotels can suffer drastically. It is very challenging for the industry to tighten its expenses to cut losses.
Hotels are always trying to be nimble, but they’re working against the structural aspects of the industry. It is hard to be efficient. When the hotel industry is doing well, profits rise dramatically. But when the industry is suffering, profits can erode rapidly.

There are many ways to get into the restaurant industry. The quickest and simplest is to get a job at a restaurant. Become a server, cook, or manager. The easiest way to get into the business is to get a job at a food establishment.

There are more complicated ways because you may want to have more ownership in the restaurant. Franchising would be another way to get into the restaurant business very quickly. We see franchises every day-Dunkin’ Donuts, McDonanld’s, Chopped, and Burger King. They’re all around us. These franchises provide you with all the rules, regulations, and instructions.

You rent all of this from the franchisor, and the franchisor helps you establish your business. It is a quick way to get into the business. Quick meaning three to four months- especially if you’re buying a franchise that was already in existence and the restaurant was already open. If you choose to build a new franchise, it may still take only four months, but it’s going to be a lot more difficult because you’re dealing with the construction of a restaurant.

If you don’t want to become a franchisee and buy into somebody else’s product, you can always buy a restaurant that is closed. It has a kitchen, there are tables and chairs, and it has lighting fixtures, equipment. The kitchen is equipped, but it hasn’t been open for months. You’re going to buy it, clean it up, buy food, and start a new restaurant there.

That’s another fairly simple way to get into the restaurant business fairly quickly. More complicated ways to get into the restaurant business include developing a concept of your own brand-new restaurant and then find a bare space to design a kitchen and dining room. Now you may be 18 months away from opening your business because there are permits, licenses, fees, and training.

You need to establish how you’re going to buy food and test your menu. It’s a lot more complicated. That’s the most difficult way to get into the restaurant business. The speediest way is to work for someone in the restaurant business. If you want to be an owner, a quick way if you have the capital is to buy an existing restaurant that’s already open. When you buy it, it will continue to be open and operate.

A lot of research must be done to make sure that it is a restaurant that is profitable and will continue to be profitable. If it is not, then you could be buying someone else’s albatross, and you could be out of business quickly. If it’s not, but you have a great vision of how to reinvigorate energy into the menu and the concept and know that you can market it and build an entirely new crop of consumer for it, is a quick way to get into the restaurant business and be successful fairly fast.

A lot of events—like sports events or art events—really wouldn’t be possible without sponsorship. What we see is that private companies will invest to have their brand logo displayed or to have advertisements during the event so that their brand is connected to the brand, or the event itself.
At the Olympic games, major sponsors might be, for example, McDonald’s or Samsung. They invest a lot of money so that their product is aligned with the value of the event itself.
This can also happen in much smaller events. For example, there might be a local food festival where you live, and there might be local restaurants or food companies that sponsor that. Ticket sales, of course, are a major factor. Hopefully, you can sell enough tickets to raise the money that you have invested into staging the event.
There are other ways, particularly if you work in the arts. You could tap into government funds. There might be an application process so that you can host your event for the sake of the greater good of the community. That’s where local governments often invest.
They often do that because of the tourism impact it might have. You might attract people to the event that will spend money and thus bring benefits to the community. Maybe your event has other benefits. Maybe you have a community sports event that promotes healthy living or healthy eating, and the government wants to support it.
If we think of the venues where these events might take place, some of the main stadia in New York City you might well be familiar with. Think of Madison Square Garden or Radio City or the Barclays Center, but don’t forget that a lot of events also take place outdoors. For example, the New York City Marathon ends at Central Park, or the US Open, a tennis tournament, takes place at Flushing Meadows. Other famous examples would include Yankee Stadium and MetLife Stadium.

The back of house of a restaurant operation is like a manufacturing section. This is where culinarians perform. In the back of house you have several roles that make the kitchen hum, including:
* Executive chef
* Sous-chef
* Line cooks
* Grill cooks
* Utility team

Everyone likes to be romantic when they talk about their food, but the back of house is like a manufacturer. It might seem unromantic but the stark reality is that raw materials come in the back door of a restaurant.

From vegetables, meats, to fish, everything comes in a raw state. It is butchered, sliced, and diced by the team in the kitchen. Then just like you take raw materials to build a car, the materials are manufactured into a wonderful meal that leaves the kitchen. Ideally, it’s beautifully plated and at the right temperature, ready to impress the guest receiving the meal at their table.

The kitchen, or the manufacturing team, is the back of house. These are the people who we call culinarians – ones who are preparing all the food.

There are also a lot of utility jobs in a restaurant. There is someone to clean the restrooms and someone to make sure that the plates, flatware, and glasses are sanitized and clean. These types of jobs are also part of the back of house function.

Hidden in between back of house and front of house, there are lots of jobs in the restaurant industry. It might be easier to say front of house and back of house, but there are lots of professional jobs in between as well.

Many professional jobs that are also now part of the restaurant industry. Restaurateurs need to make sure they have a good attorney and good accountants. They may even need consultants who help them navigate city codes and health departments, to make sure that they can get their certificates in a timely way.

Restaurant operations are complex, and there are many back of house functions that help bring the food and beverage operations to life.

Let’s take a closer look at mega events and the hospitality industry. These events help with long-term regeneration and can transform a city for the better.

We’ve talked about some events and how important it is to coordinate between different stakeholders. But some mega-events change cities as a whole.
The Olympics are a key example. When the Olympic games are hosted the planning process starts a decade in advance. Cities have to apply to become host cities. They have to put in an application document.

They also need to start building the venues and the Olympic Village where the athletes will need to be housed. In some cities, there will be reorganizations in terms of transport infrastructure. We see that some cities approach this as a vehicle for long-term regeneration-so in other words, a vehicle for long-term change and new prosperity to different areas.

The London 2012 Olympics were a great example of this. They were hosted specifically in East London, an area that was, for a long time, seen as an ugly, polluted, former industrial area and where nobody wanted to build or live. So it was a bit of wasted space in a major city. What the Olympics did was inject a lot of investment in that area.

There was an entire soil cleansing process. All the old industries that were located there had left heavy metals in the soil, creating a very polluted area. The whole area was cleaned up and if you look at it now, it’s almost unrecognizable. None of that investment would have happened had the Olympic Games not come to town.

Sometimes, the event itself is much bigger than the two weeks that it takes place.

You have the Olympic Games. You have the Paralympics. And in principle, then everything is over. But the lasting effects of an event for a city can be much, much more significant.

Catering is a real benefit to restaurants. It can take a lot of forms. I can cater by having you pick up food at my restaurant. So, it could be as simple as a deli catering out a sandwich platter that Mr. or Mrs. Customer is going to pick up. That’s easy.
It could be that I’m delivering that sandwich platter. That’s still easy. It could also be that I’m delivering that sandwich platter and providing a service staff member to serve it for you at your home or your party. So, catering increases what we call same-store sales.
If I have 20 seats in my restaurant and, on average, I get two turns at lunch and two turns at dinner, that means that 80 people are going to be able to dine in my restaurant.
If my average check is $10, that means that I have made $800 that day by people eating at tables in my restaurant. But, I can also prepare food for 80 people at a catered event that will not be in my restaurant.
The consumer would pick it up or I would deliver it. I would still get $10 a person, maybe even more, because I’m supplying all of these disposables.
Now, I made $800 in my restaurant that day from people who came in and sat at tables, and at least $800, if not more, by catering one event for 80 people. So, I’ve increased my same-store sales — meaning, my same four walls, my same hours of operation — just by sending out catering.
Catering can typically be prepared when I’m not in the lunch or dinner rush. When I’m doing garde manger in the morning, prepping food for lunch, I could be cooking the catering food and putting it in the refrigerator to be delivered or picked up later. Catering is an extremely positive and profitable benefit for restaurants.

Now, that is catering that doesn’t happen at my restaurant. Many restaurants may have a banquet room where they offer catering. That is a place mostly for celebratory events. I guarantee it’s dark most of the week and they’re perhaps using it on the weekends. But they can use that room at any time. It does increase same-store sales as well. But you’re paying rent on that.
I’m a proponent of catering. My favorite kind is preparing food, getting it out the door, and letting people eat it elsewhere because I’m getting paid that revenue. I’m not cleaning it up; I’m not worried about China plates and flatware disappearing, and I’m not worried about someone taking up a seat in my restaurant while they’re on their smartphone for 45 minutes. I’m just getting it out the door and getting paid for it.
So, catering, again, can be very profitable. However, from an operations perspective, you need to prepare a good catering program. It can’t be haphazard, because then you will wind up spending more money than you’re making. Maybe you’re not buying or packaging properly.
You need to make sure that it’s well-packaged so that, when it gets to the guest, it looks great. Maybe they’re going to heat it at home. That’s all well and good, but it still has to look and taste great. Therefore, the way you package food makes a big difference.

From healthier options to gourmet burgers, fast casual is changing the way we eat and think of food and is taking business from well-known fast food chains.

The restaurant business is responding to some consumer trends better than others. One key trend is healthy eating. A good example is the whole category of fast-casual, which is eating business away from traditional fast food.

Why? Because consumers want healthier options.

They want more choices. They also don’t want to go to a traditional restaurant during lunchtime, sit down for an hour and a half and wait for someone to serve them.

When walking down Broadway from 42nd down to the 23rd, there are about 20 new restaurant concepts. Just by observing, many of them are based on salads. There’s a green wave and the consumer wants fresh, innovative salads. That’s a key growth segment.

You also have a gourmet burger. Shake Shack is a good example of that. It’s not necessarily a gourmet burger, but it’s a much better burger that you can get in McDonald’s. Then if you take bread-based companies, like Panera, which dominates the category, there are other players but they’re not even close to as big as Panera.

Panera understands that consumers want freshly baked bread with innovative combinations, not the traditional ham and cheese. They also make good salads and soups, and it’s pretty fast.

You can use technology, especially here in Manhattan. You can order, pay online, and then just go pick up, or they can do delivery.

Talking about trends in Mexican, Chipotle owns that category. If you consider the ingredients that they have, there are about a couple thousand options that the consumer can choose from through this combination of a dozen or so ingredients.

Again, it’s fresh. The ingredients are fresh. It’s prepared right there in front of your eyes. It is not something that happens in McDonald’s where it’s prepared behind the counter, and it’s always the same standardized. You have more flexibility and better ingredients.

Fast-casual is taking business from the casual family restaurants, the TGI Fridays of the world, and the fast-food players like McDonald’s, Burger King or Wendy’s.

In the restaurant industry, the customer-facing employees that greet you when you walk in the door are referred to as “front-of-house.” The host, front-of-house manager, or dining room manager are all important and frequently assist guests.

Yet, there are many front-of-house positions. These are the employees who closely interact with guests. Their roles include:
* Maintaining a consistent pace within the dining room
* Ensuring fast and efficient service
* Correctly charge guests
* Processing checks

The restaurant manager, host, and reservationist are the first to interact with the guest and show hospitality. They ensure that the dining room runs smoothly and that guests who arrive with a reservation are seated promptly. Our front-of-house team also includes servers and bussers because it encompasses everyone who has direct contact with our guests.

Sales and Service Sectors
Front-of-house employees work in the sales and service segments. They sell catering orders, take reservations, and assist with wine selections. They ensure food is ready for pickup and that tables are available. These employees also assist individuals who may need help with the menu. The service segment as a whole participates in the guest’s service. Waiters, bussers, sommeliers, and bartenders all fall within this category.

The Impact of Food Ordering and Delivery Systems on the Hospitality Industry
Many restaurants are adopting what I call commissary models. It’s where you buy food and beverages through a delivery service (e.g., Grubhub, Seamless, Uber Eats) and have it delivered to your home.

In this scenario, front-of-house employees take the reservation and deliver the food. The front-of-house manager, or owner, is in charge of the entire operation. They make sure that everyone is on the same page. Guests continue to receive the level of service they expect from the restaurant.

Let’s take a look at how a successful last can be modified and changed in footwear and the footwear business to increase sales and reach a new audience.
We love the last. We had success with its sales, but we can’t make the same shoe we made last spring. So to continue using this last, we have to take and modify certain things about the footwear we’re producing on the last.

We know we have a successful last, we know that it sells well, we know it looks great. So we can change any number of design features. We can do something as simple as changing the top-line cut of the shoe. If it’s athletic, we can put a collar and change the shape of the collar, the height of the collar, the Achilles pen, so on and so forth.

If it’s a dress shoe, we can change the top line cut by putting a dip on one, an asymmetrical dip somewhere on the top line, or put some sort of embellishment on a top line that wasn’t used in the previous spring season.

We’re also going to be changing our materials and colors for the new season. Those are simple changes that help to make the same last we used last spring, look, have the shoe look completely different next spring, just by its color, it’s cut.

We can also do other things. We can take and change the component tree or the structure of the footwear. The structure is the way the bottoming is done: the heels and the soles.

Last spring we used just the very thin, a ladies shoe and we used a very thin sole and just a simple high heel, like a spike kick. Next spring, if we wanted to, we could do a platform. We could do a full platform, we could do a partial platform under the ball and a higher heel, which we may have marketed as a 10-centimeter heel last spring.

We put a two-centimeter platform under the front, we add two centimeters to the heel to maintain the balance, which is part of the last itself. Now we can market the thing next spring as a 12-centimeter heel. Same last, completely different footwear.

This is a way of taking a successful last and amortizing it out over time without looking like you’re repeating yourself.

Conventions play a major role in the hospitality industry. As professionals plan their travels, there’s a lot of specifics event planners need to keep in mind.

Corporate conventions usually take place in the same location every year. For example, if you’re a tech company that is located in Silicon Valley, a lot of your corporate conventions will probably take place in Silicon Valley. It’s very different from association conferences.

Think of my dentist. We have dentists that are located all over the United States. The association that hosts the annual meeting for these dentists will probably want to rotate where the location of the convention will be.

For example, one year it will be in the Northeast and, the next year, it might be in California. It is very important to choose a location that is appealing to people. Because if you, as a dentist, decide where you might get your annual education or training, you might prefer to go to a place like Hawaii over a cold place in the winter, like Detroit.

So, a lot of associations think very carefully about which locations they select and, the destinations work closely with the organizers to attract them. There is also seasonality in terms of days of the week. If we think of conventions, the most popular days for conventions to be hosted are usually Tuesday, Wednesday, and Thursday. Those are peak times. A lot of the venues, such as hotels and convention centers, will be very busy during those times.

The reason is that if you are attending a convention as part of your profession, you want it to take place during working hours, during the working day. You might have to travel to that convention.

If I’m based here in New York and I need to go to a convention in Florida, I might want to leave the day before. So by starting your convention on a Tuesday, it means you give people travel time on Monday. By ending on a Thursday, it means, again, they can travel home on Friday, and they still have their weekend.

Many conventions will also take place anytime between March to May and then again between September to November. Staying away from the main holiday periods. You want to make sure you host a convention at a time when a lot of people are around, not when they’re all traveling or when they’re on vacation.