Advice

Image of a resort pool in the evening, with palm trees and the hotel in the background
by David Klemt David Klemt No Comments

The 7 Principles of Hospitality

The 7 Principles of Hospitality

by Doug Radkey

Image of a resort pool in the evening, with palm trees and the hotel in the background

Let’s start with a simple but important question: When you hear the term “hospitality industry,” what first comes to mind?

For many, the first thing that comes to mind is….hotels. And while hotels are a significant part of hospitality, they’re definitely not the complete picture. In fact, the true essence of hospitality often transcends what we experience in a standard hotel environment.

Bars, restaurants, resorts, and entertainment venues are all spaces where the principles of hospitality should be experienced equally. Hospitality is about how we treat people—our guests, visitors, our vendors, and even our team members—with generosity, warmth, and genuine care.

Yet, in recent years, a shift has occurred. Many people I speak with in the industry feel that we’ve lost touch with the foundational principles of hospitality in a variety of settings. Whether it’s the focus on tech integration, rush to hire due to labor shortages, lack of proper onboarding and training, or clarity in what we do —and why we do it—something has gotten lost along the way.

As we move forward, it’s time for the industry to refocus on what hospitality truly means, and realign with the core principles that make this industry remarkable.

No matter the style of concept you operate or plan to operate, the seven principles of hospitality are the foundation of exceptional service and memorable experiences. These principles aren’t just for fine dining or five-star resorts, and they aren’t just fancy buzzwords. They’re actionable insights that can elevate any hospitality business.

1. Self-Awareness

Hospitality starts with you. The first step to great hospitality is understanding how our own behavior impacts those around us—our guests and our teams.

Practicing self-awareness isn’t always easy, particularly in high-pressure situations. So, ask yourself: How aware are you of the emotions you’re instilling in others during conversations, especially under stress?

Self-awareness is more than a personality trait; it’s a skill that helps create a warm, caring environment for guests. It’s about managing how we come across to others actively, and ensuring our actions align with the culture we want to build in our business.

To create a genuine sense of hospitality, we must start with a clear sense of self.

2. Guest Awareness

Read your guest’s energy, not just their appearance. The ability to read guests and anticipate their needs is crucial, but it goes beyond surface-level assumptions.

Hospitality isn’t about stereotyping based on appearance, accents, or perceived financial status. Instead, it’s about sensing the energy and mood they bring into your space.

When we understand the energy guests bring, we can adapt our approach, tailor our communication, and build genuine connections. This is hospitality in its most fundamental form: creating a personalized experience by being attentive and observant.

3. Connection

Hospitality is about meaningful connections. When you’re both self-aware and guest-aware, you can begin to tailor your interactions to each specific guest (and your staff, too).

Authentic, unique, and genuine hospitality is what leaves a lasting impression. Building a connection with guests isn’t just about providing a service. The key is to cultivate an experience that feels personal.

In his work, author Daniel Pink talks about intrinsic and extrinsic motivation, noting that connection is one of our core intrinsic motivators. We’re drawn to hospitality because of our natural desire to connect with others. It’s this connection that creates the most memorable guest experiences and fosters loyalty.

A business grounded in genuine connections will always stand out.

4. Authenticity

Be yourself. Guests can tell when you’re not—so stop the act.

Authenticity is essential in hospitality. Yet, so many teams I work with feel they need to become someone else on the floor, changing their voice or putting on a façade. Often, this stems from misguided career advice imparted early on that tells us we aren’t interesting enough as we are.

But here’s the truth: The most engaging and captivating version of yourself is the real one.

People connect with genuine personalities, not manufactured ones. Drop the façade, and bring your authentic self to every interaction. Guests sense authenticity, and it’s what will draw them back again and again.

So, next time you interact with a guest, do a reel for social media, or interview a potential team member, bring your authentic self. That’s the version of you with which people connect.

5. Anticipation & Attention to Detail

Tell guests what you’re going to do, do it, then tell them you’ve done it.

One of the secrets to providing an excellent guest experience is being prompt, responsive, and thorough in communication. A big part of managing guest expectations is being clear about what to expect. Tell guests what you’re going to do, keep them informed while you’re doing it, and follow up afterward.

Increasingly, guests want their visits to feel personalized. Whether you add small, thoughtful touches to a meal, or offering a personalized greeting in a hotel, attention to detail shows guests that they’re valued.

Anticipation of guest needs is what sets hospitality apart from other service-based industries.

6. Alignment

Help your team see how their role fits into the bigger picture. Alignment means connecting each team member’s work with their broader life goals and values. Many people in our industry might not see hospitality as their forever career, but that doesn’t mean their time with us can’t be meaningful.

Find out what matters to each team member, whether it’s professional growth, financial stability, or simply enjoying their work. Then, align their role with these values.

A team that feels connected to their work is more motivated, more focused, and more likely to deliver a higher level of service.

Alignment isn’t just about job roles, it’s about helping people find purpose and satisfaction in what they do. It’s crucial that we build team experiences just like we create guest experiences.

7. Presence

Be engaged in the moment fully with your guests. Presence means engaging completely with what you’re doing.

When you’re talking to a guest, be invested in that moment completely. Avoid distractions, scripted conversations, or rehearsed interactions. Genuine presence is about being open, honest, and interested in their experience.

For leaders, fostering a culture of presence is crucial. Every interaction you have with your team either reinforces or diminishes this value. Be mindful of how your behavior impacts others, and encourage your team to approach each guest with this mindset.

Celebrate moments of genuine connection, and provide feedback when things don’t go as planned. Presence isn’t just a skill; presence is a cultural value that transforms service.

Real-Life Example: The Solmar Resort

To illustrate these principles, I’d like to share a personal experience from the Solmar Resort in Cabo San Lucas, Mexico.

After a hurricane passed near the Baja Peninsula, David and I arrived for a business retreat, only to find the resort quieter than usual. Despite the calm, the staff maintained a vibrant and uplifting culture. They were fully engaged—no one was on their phones, no one was leaning or looking board, no one was gossiping, and the team members greeted each other with genuine joy and fist pumps.

Even with more staff than guests on the property, their sense of purpose and commitment to hospitality was evident. From dancing and singing while performing side duties, to the warm, friendly interactions with us as guests, the experience was unforgettable. The Solmar team embodied the “one-house” approach: everyone worked together seamlessly to deliver an exceptional experience.

During our visit, we experienced true hospitality in action, where every interaction was meaningful an, most importantly, intentional.

Reclaiming the Foundation of Hospitality

The seven principles of hospitality—self-awareness, guest awareness, connection, authenticity, anticipation, alignment, and presence—are not just theoretical ideas. These are actionable values that can transform guest experiences, and set your brand apart in a crowded market.

At its heart, hospitality is about people. It’s about creating an environment where our team and our guests feel welcomed, seen, and valued. If we want to elevate our industry, we need to return to these foundational principles, and train our teams to embody them in every interaction.

So, let’s commit to reclaiming the true essence of hospitality. Whether you’re running a bar, restaurant, or hotel, these principles provide a roadmap to building a culture of excellence that guests won’t soon forget. By focusing on experience and connection, we can redefine hospitality for a modern audience, and make it as impactful as it’s ever been.

Remember, hospitality isn’t just about serving food and beverage, or providing a bed. Hospitality is about creating memories that guests carry with them long after they’ve experienced your brand.

Image:

KRG Hospitality Contact 60-Minute Impact Session

Looking to Start, Stabilize, or Scale? Book Below to Setup a 60-Minute Result-Driven Impact Session.


by David Klemt David Klemt No Comments

Understanding TAM, SAM, and SOM

Unlocking Growth Potential: Understanding TAM, SAM, and SOM

by Doug Radkey

Image of a person in a suit superimposed over a chart and city skyline

After working through this with a client the other day, we thought it would be a good opportunity to explain the acronyms of TAM, SAM, and SOM.

These concepts can help your business start, stabilize, or scale.

Let’s be real: in the hospitality industry, understanding your market and its potential is paramount for sustainable growth and profitability. This is where the concepts of TAM (Total Addressable Market), SAM (Serviceable Addressable Market), and SOM (Serviceable Obtainable Market) come into play.

For bars, restaurants, and hotels, these metrics aren’t just marketing or financial jargon. Each provides critical insights that inform feasibility studies, shape marketing strategies, and guide business decisions.

Below, we’ll break down each of these concepts, illustrate how to calculate them, and explain their role in building effective strategies for your hospitality business.

The Definitions

TAM (Total Addressable Market)

TAM represents the overall revenue opportunity available if your business held 100 percent of the market share. It is the entire potential market size without any constraints like geography, budget, sociographics, or operational limits.

Example: For a new bar, the TAM would represent the total annual spend of all consumers in your market who drink out, regardless of their preferences, location within a region, or budget.

SAM (Serviceable Addressable Market)

SAM is the portion of TAM that your business can reach realistically, given practical limitations like geographic location, regulatory constraints, more targeted sociographics, and operational scope. Going further, SAM also considers factors that make a portion of the TAM unfeasible for your business to serve.

Example: Using the same bar concept, SAM would represent all the people within a certain radius who are willing to visit a bar with a similar concept, who can afford your menu, and who are within your reach given your physical location.

SOM (Serviceable Obtainable Market)

SOM is the segment of the SAM that your business can capture. This metric accounts for your competitors, market share estimates, and your unique ability to attract your ideal guests within your SAM.

Example: For the bar, SOM would be the percentage of patrons within your SAM that you expect, realistically, to convert into regular guests, taking into account competition, unique value proposition, and brand positioning.

Why These Metrics Matter

Each of these metrics provides a progressively more realistic picture of your business’ revenue potential.

Your business plan cannot be “targeting males and females between 25 to 45 years old.” You have to go much deeper than that to be successful.

TAM shows you the broadest possible opportunity, but SAM narrows it down based on serviceable factors. SOM gives you a realistic goal to aim for based on your most targeted factors.

Their Role in Feasibility Studies and Marketing Plans

In hospitality, feasibility studies are essential for understanding whether a business idea is viable.

When you’re assessing the potential of a new bar, restaurant, or hotel, the TAM, SAM, and SOM calculations give you quantitative data that can help you avoid common mistakes such as overestimating your market potential, or failing to identify target demographics accurately.

Feasibility Studies

  • TAM Analysis: Helps validate whether there’s a broad demand for your concept.
  • SAM Analysis: Identifies a focused portion of the market that fits within your operational range.
  • SOM Analysis: Helps set realistic revenue goals by factoring in competition and market positioning.

When preparing a feasibility study, using TAM, SAM, and SOM ensures that your projections are grounded in reality, giving potential investors or stakeholders confidence in your plan.

Marketing Plans

Once you’ve established a feasible market, TAM, SAM, and SOM inform your marketing strategies.

  • TAM helps you understand the entire universe of potential guests, useful for broader brand awareness campaigns.
  • SAM directs you to specific geographic or demographic segments for targeted campaigns.
  • SOM guides the creation of highly focused, competitive strategies to capture and retain market share in a specific segment.

By utilizing TAM, SAM, and SOM, your marketing plan becomes tailored, efficient, and likely to generate a higher return on investment.

How to Calculate TAM, SAM, and SOM for Your Hospitality Business

Step 1: Define Your Target Market

Before calculating TAM, SAM, and SOM, it’s essential to understand and define your target market. This includes analyzing demographics (age, income, education) and psychographics or sociographics (lifestyle, preferences, values).

For a local bar, restaurant, or hotel, understanding these details about your audience is crucial because your business’ reach will likely be local or regional.

If, for example, you’re opening an elevated cocktail bar, you might define your target market as:

  • Travelers aged 30 to 50 with disposable income between $70,000 and $90,000 per year.
  • Downtown business professionals who are interested in after-office food and beverages.
  • Individuals and tourists seeking upscale F&B and unique guest experiences.

Did you know? In Canada and the US specifically, there are over 65 sociographic or “tapestry” profiles that make up the fabric of our neighborhoods.

Step 2: Calculate TAM

To calculate TAM, consider the total market demand for your type of service.

  • Formula: TAM = (Total number of potential customers) × (Average annual spend per customer)
  • Example for a Bar: If the estimated number of people in your city who visit bars is 200,000, and the average spend per person is $500 annually ($41.67 per month), the TAM would be 200,000 × $500 = $100 million.

Step 3: Calculate SAM

To calculate SAM, refine TAM by narrowing down to the guests you could reach realistically based on your location, budget, and other factors. Use your sociographic/tapestry profiles to help.

  • Formula: SAM = (Total number of reachable guests within your service area) × (Average spend)
  • Example for a Bar: Out of 200,000 potential guests, suppose only 50,000 are within a 10-mile radius who are between 25 and 45 years old, who drink, and who make between $50,000 and $70,000 per year. SAM would be 50,000 × $500 = $25 million.

Step 4: Calculate SOM

Finally, to determine SOM, evaluate how much of the SAM you believe you can capture realistically. This often depends on your competitive positioning, your marketing effectiveness, and operational capacity.

  • Formula: SOM = (Total number of targeted guests you can convert realistically) × (Average spend)
  • Example for a Bar: If you believe you can capture 10 percent of your SAM, SOM would be 5,000 guests × $500 = $2.5 million.
  • Now, compare that to your daily, weekly, and monthly traffic projections and your daily, weekly, and monthly revenue projections. How close are you?

Sample Calculations for a Boutique Hotel Business

To illustrate these calculations, let’s imagine a boutique hotel in a medium-sized city:

  1. TAM Calculation:
    • Target market: All tourists visiting the city annually.
    • Estimated annual visitors: One million.
    • Average annual spend per tourist on accommodations: $1,000.
    • TAM = 1 million × $1,000 = $1 billion.
  2. SAM Calculation:
    • Focused market: Visitors who prefer boutique hotels versus chain flags who are between 22 and 42 years old.
    • Estimated visitors who prefer boutique hotels: 20 percent of TAM (200,000).
    • SAM = 200,000 × $1,000 = $200 million.
  3. SOM Calculation:
    • Realistically, the hotel expects to capture five percent of SAM based on its operations, the number of rooms, its daily rates, and expected occupancy rates.
    • SOM = 10,000 guests × $1,000 = $10 million.

Why Defining Your Target Market is Crucial

All that said, calculating TAM, SAM, and SOM is only effective if you have a clearly defined target market. Hospitality businesses must understand their audience’s demographic and sociographic details, which is why initial market research is so essential.

For instance, if a new restaurant targets health-conscious millennials, knowing their spending patterns, dining preferences, and local competition will make the calculations more accurate.

With detailed sociodemographic insights, you can more precisely estimate TAM, SAM, and SOM, creating a feasibility study that reflects realistic market conditions.

The Benefits of Using TAM, SAM, and SOM in Your Business Planning

By incorporating TAM, SAM, and SOM into your feasibility studies and marketing plans, you can make data-driven decisions that increase your business’ chances of success.

Here’s how each metric adds value for you and your business:

  • Informed Decision-Making: These metrics offer clarity for market potential, helping you avoid costly mistakes.
  • Financial Confidence: TAM, SAM, and SOM provide stakeholders with measurable data, increasing confidence among investors or lenders.
  • Efficient Marketing: Focusing on SOM in marketing efforts allows you to deploy resources effectively, targeting guests you are most likely to convert.
  • Adaptability: These metrics aren’t static; you can adjust TAM, SAM, and SOM as market dynamics change, ensuring your business stays relevant.

Why Now is the Time to Embrace TAM, SAM, and SOM

In a competitive hospitality landscape, using TAM, SAM, and SOM can provide a strategic advantage. By understanding your true market potential, you can design a feasibility study and marketing plan that align with realistic growth goals.

While TAM shows you the big picture, SAM and SOM bring clarity to your specific opportunities, helping you prioritize resources and strategies that will yield the best return.

As you move forward with planning, remember: calculating TAM, SAM, and SOM is not a one-time task. Updating these metrics regularly as your business and the market evolve can provide insights that will keep your brand relevant and profitable.

My final thoughts: Before you dive into launching a new bar, restaurant, or hotel, take the time to do a deep dive into TAM, SAM, and SOM. It’s not just about understanding your market; it’s about maximizing your opportunity to stabilize and then scale within it.

By leveraging TAM, SAM, and SOM, you’ll be equipped to create a hospitality concept that doesn’t just survive but sets a new standard for success.

Image: Canva

KRG Hospitality Contact 60-Minute Impact Session

Looking to Start, Stabilize, or Scale? Book Below to Setup a 60-Minute Result-Driven Impact Session.


Flipping through an open book
by David Klemt David Klemt No Comments

5 Books to Read this Month: November 2024

5 Books to Read this Month: November 2024

by David Klemt

Flipping through an open book

Our November book selections focus on recognizing your own potential, developing and enhancing culinary and cocktail skills, and leadership.

To review the book recommendations from October 2024, click here.

Let’s jump in!

Soups, Salads, Sandwiches: A Cookbook

Who doesn’t appreciate dining on a soup, salad, and sandwich? It’s one of the most famous food-based trinities in the world. Each of these individual items is a blank canvas for creativity from your kitchen team; they can be as simple or complex and inventive as you and your team desire. A soup, salad, or sandwich can introduce guests to new flavors. When presented as a trio, they can also tell a cohesive, compelling culinary story. In this aptly named cookbook, Matty Matheson tells interesting stories, and shares more than 120 recipes.

From Amazon: “Packed with character, personal stories, 126 scrumptious recipes, and vivid photographs of a day-in-the-life with Matty and his family, Soups, Salads, Sandwiches will have you fearlessly whipping up your own combinations in the kitchen.”

Order your copy today on Amazon, or wherever you get books.

Unsliced: How to Stay Whole in the Pizzeria Industry

Mike Bausch, the author of Unsliced, was one of the first guests on the Bar Hacks podcast. If you’d like to give his episode a listen, it’s number number 18 (Spotify link | Apple Podcasts link). In his book, Bausch lays everything out for pizzeria operators, from leadership and marketing to adjusting your mindset.

These two sentences from the description of Unsliced say it all, and they resonate with me and my partners at KRG Hospitality: “It’s hard not to get discouraged in this business. But with the right perspective, smart systems, and hard work, your restaurant can thrive.”

From Amazon: “If you own a pizzeria, you know something most people don’t: the pizza business is more cutthroat, stressful, and multifaceted than Wall Street. Every day is a constant struggle to manage overhead, attract loyal customers, stand out from the pack, and keep your employees motivated.

“Running a pizzeria is hard. But it doesn’t have to be as hard as you think.”

Pick this book up here.

The Bartender’s Pantry: A Beverage Handbook for the Universal Bar

Published earlier this year, The Bartender’s Pantry by Jim Meehan and Bart Sasso offers a unique departure from the standard cocktail recipe book. As you glean from the word “pantry” in the title of this book, Meehan and Sasso encourage bartenders to take a culinary approach to crafting drinks. However, The Bartender’s Pantry is also aimed at cooks. Really, this is a great book that should help bring the front and back of houses together. There are more than 100 recipes, and this book is available in a flexibound version, which makes it infinitely cool.

From Amazon: “Each chapter features artfully illustrated recipes incorporating the featured ingredients that bring the reader into the kitchens of some of the world’s most revered bartenders, baristas, importers, and chefs. Their innovative takes on traditional recipes including horchata, matcha, Turkish coffee, sorrel, kvass, and ice cream are followed by full-page photos of over 50 cocktails that incorporate them including modern classics like the Gin Basil Smash, Earl Grey MarTEAni and Penicillin.”

Grab the flexibound version from Amazon.

Beyond the Hammer: A Fresh Approach to Leadership, Culture, and Building High Performance Teams

Author Brian Gottlieb identifies three challenges that just about every business faces: leading staff to take ownership of the work they do; friction between departments or separate teams; and producing inconsistent results. He also presents a strategy in Beyond the Hammer to overcome these challenges, in addition to high employee turnover, and burnout.

From Amazon: “These common issues create high turnover and force managers into crisis mode where they’re consumed putting out daily fires. Over time, the very nature of the business changes and a new culture emerges; one shaped by the lowest level of acceptable behavior.”

Hardcover available on Amazon.

Hidden Potential: The Science of Achieving Greater Things

If you’ve listened to episode 100 of the KRG Hospitality-produced Bar Hacks podcast (Spotify link | Apple Podcasts link), you’ve heard Tako Chang talk about discovering the Double Chicken Please team’s hidden talents. Moreover, you’ve heard how impressed she is with the team’s skills, and encouraging each member to develop them further. That’s an example of great leadership.

This book, written by organizational psychologist Adam Grant, addresses finding and exploring your own potential; doing the same for others; and why we should focus more on learning than working ourselves to the bone to achieve success.

From Amazon: “Hidden Potential offers a new framework for raising aspirations and exceeding expectations. Adam Grant weaves together groundbreaking evidence, surprising insights, and vivid storytelling that takes us from the classroom to the boardroom, the playground to the Olympics, and underground to outer space. He shows that progress depends less on how hard you work than how well you learn. Growth is not about the genius you possess—it’s about the character you develop. Grant explores how to build the character skills and motivational structures to realize our own potential, and how to design systems that create opportunities for those who have been underrated and overlooked.”

The hardcover costs less than the paperback right now on Amazon.

Image: Image: Mikołaj on Unsplash

KRG Hospitality Contact 60-Minute Impact Session

Looking to Start, Stabilize, or Scale? Book Below to Setup a 60-Minute Result-Driven Impact Session.


A person standing in water, creating a circle and sparks with steel wool and fire
by David Klemt David Klemt No Comments

Why Your Inner Circle Matters

Why Your Inner Circle Matters

by Jennifer Radkey

A person standing in water, creating a circle and sparks with steel wool and fire

Is your inner circle creating sparks of inspiration, or burning you down?

In the world of hospitality, where every interaction counts, there’s one factor that could be influencing your success more than you realize: the people with whom you surround yourself.

As a hospitality professional, you work in highly social environments, so it’s essential to understand the impact your inner circle has on your mindset, and the success of your business.

How can the energy and attitudes of those around you shape your success? And how can being intentional about your relationships elevate both your personal and professional life?

Let’s take a closer look.

The Power of Influence

We’ve all heard the saying, “You are the average of the five people you spend the most time with.”

It’s a concept that rings true in both personal and professional settings. In the hospitality industry, where relationships and team dynamics are crucial, the people you spend your time with can have a major impact on your mindset.

Your inner circle can either lift you up or drag you down, influencing your thoughts, behaviors, and even your beliefs about what’s possible. When you need to maintain a positive mindset, this influence can make or break you.

Energy and Attitude: The Contagious Effect

Ever notice how working with someone who’s upbeat and energetic can make a shift fly by? Or how spending time with a negative, cynical colleague can drain your motivation?

The energy people bring to the table is contagious. Over time, it seeps into your mindset.

Think of your mindset like a garden. If you plant yourself in rich, fertile soil—surrounded by positivity, encouragement, and growth—your mindset will flourish. But if your garden is full of weeds—like negativity, doubt, and pessimism—it becomes much harder to grow.

In hospitality, where guest service relies heavily on positivity, allowing negative energy to take root can stifle your personal growth, and your ability to grow a loyal guest base.

As a team leader, your mindset sets the tone for the entire team. Show up to team meetings with a negative mindset and your meetings will sound like reprimands and demands instead of inspiration, growth, and encouragement.

The Role of Supportive Relationships

One of the most powerful ways others influence us is through their support—or lack thereof. In a high-pressure environment, having people around you who believe in your potential, challenge you to improve, and celebrate your wins can be transformative.

Supportive relationships remind you of your goals when you’re feeling down, push you to persevere when things get tough, and keep you focused in the chaos.

On the opposite side, if you’re surrounded by people who doubt your ambitions or criticize your efforts, it can be difficult to stay motivated. In the long run, these negative influences can damage your confidence, and make you question your ability to achieve your goals.

In an industry where confidence is crucial to providing top-notch service and leading successful teams, the people you surround yourself with can either enhance or diminish your sense of worth. By aligning yourself with those who inspire and uplift you, you’ll be better equipped to maintain a positive mindset, even in challenging situations.

Setting Boundaries to Protect Your Mindset

So, how do you ensure that the people around you contribute positively to your mindset and success? It starts with setting boundaries.

Boundaries are essential for protecting your mental and emotional well-being. If someone’s energy is toxic or draining, it’s important to limit the influence they have over you.

In business, where teamwork is essential, setting boundaries might not mean cutting people out of your life completely. However, it does mean being mindful of how much time and energy you invest in relationships that aren’t serving your growth. It also means being aware of the energy of a person when choosing whether to have them join your team or not.

Protecting your mental space ensures that you remain focused on your goals, and can give your best to your team, your guests, and yourself.

Seeking Growth-Oriented People

To thrive in both business and life, it’s essential to seek out people who are growth-oriented; those who are always looking to improve themselves, who push you to think bigger, and who motivate you to take action.

Building a network of ambitious, driven individuals within the hospitality industry can be transformative.

When you surround yourself with people who are passionate about growth, their energy becomes contagious. They’ll challenge you to step outside your comfort zone, pursue new opportunities, and push past self-imposed limits.

Taking Action: Evaluate Your Circle

Take a moment to reflect on the people in your life, particularly within your professional circle.

Who are the five people with whom you spend the most time? How do they make you feel? Do they lift you up, or hold you back? Are they helping you move closer to your goals, or keeping you stagnant?

This exercise can be eye-opening, and it’s an essential step in building a more positive, growth-focused environment for yourself. Remember, only you can choose what mindset you want to adopt, and how you will allow others to influence you.

Final Thoughts: Be Intentional About Your Circle

As a hospitality professional, your mindset is key to your success. The people around you play a major role in shaping it.

Be intentional about surrounding yourself with those who uplift, inspire, and challenge you. Protect your mental space with boundaries, and actively seek out relationships that align with your goals and values.

If you’re looking for a supportive community of like-minded hospitality professionals, join us in The Collective, a group coaching program designed to help you achieve your goals with clarity and confidence. Together, we’ll create an environment that supports both personal and professional growth.

Remember, you have control over who you allow into your life, and how much influence they have. Choose wisely, and watch your success story unfold.

Cheers to personal and professional well-being!

Image: Harry Shelton on Pexels

KRG Hospitality Contact Request for Proposal 30 Minute Discovery Session

Book Below to Setup a 30-Minute Complimentary Discovery Call and Request for Proposal.


Person holding up fingers, making the "focus" film or photograph gesture
by David Klemt David Klemt No Comments

Shifting Focus on KPIs

Shifting Focus on KPIs

by Doug Radkey

Person holding up fingers, making the "focus" film or photograph gesture

Key Performance Indicators (KPIs) have long been the cornerstone of measuring success in business, particularly in the hospitality industry.

Restaurants, bars, and hotels rely on these metrics to track occupancy rates, average ticket prices, cost of goods, and guest satisfaction scores, among many others. However, as the industry evolves, so too must our understanding of what truly drives sustainable success.

The traditional KPIs measure outputs—numerical results that often focus on profitability, efficiency, and growth. But as hospitality businesses become more guest-centric and employee-driven, we need to rethink what KPIs really mean.

Instead of focusing solely on these cold, hard numbers, we should be emphasizing what I call the new KPI: Keeping People Informed, Involved, Interested, and Inspired.

This shift acknowledges that success in hospitality is not just about what’s measurable on a spreadsheet but also about engaging employees, nurturing guest and vendor relationships, and fostering a culture of collaboration and growth.

This article, which I have been planning to write for quite some time now, will explore how redefining KPIs to prioritize keeping people informed, involved, interested, and inspired can transform the hospitality industry, leading to more engaged teams, happier guests, and better business outcomes.

KPI: Keeping People Informed

In any form of hospitality business, from boutique hotels to bars and restaurants, the foundation of success lies in clarity, transparency, and communication.

Keeping people informed, whether they’re employees, guests, or stakeholders, is key to fostering trust, loyalty, and operational clarity.

Informing Employees

Despite the growth in technology, employees are still the lifeblood of the hospitality industry. Informed employees are empowered employees.

When they understand the bigger picture—what the business is trying to achieve, and how their role contributes to that goal—they feel a greater sense of purpose and motivation.

In the past, KPIs often stayed in the boardroom. If they left the boardroom, they remained among the leadership team on the floor. So, either way they were detached from true day-to-day operations.

A shift toward the new KPI requires involving employees in the business’ key metrics, and sharing relevant information transparently.

For example, when a hotel shares its Total Guest Revenue Management goal and explains the efforts needed to improve these numbers, every department can align their strategies to support this objective. Housekeeping understands the need for timely room turnovers. The marketing team knows where to focus their efforts. Guest services is equipped to handle the flow of on-property guests more efficiently.

Practical Steps:

  • Hold regular meetings to discuss current business performance and future goals.
  • Share performance dashboards that are accessible and understandable to all staff members.
  • Break down KPIs into department-specific insights, so each team knows how their performance impacts the overall business.

Informing Guests

On the guest side, keeping them equally informed is crucial in today’s digital age, where transparency and real-time information drive decision-making.

Whether that means updating guests on room availability, menu changes, or special promotions, being proactive with information helps manage expectations, and creates a seamless guest experience.

Hotels and restaurants can use digital platforms to keep guests informed, providing them with personalized experiences. For instance, a hotel app that informs guests about spa availability or the restaurant’s current waitlist times ensures that each guest feels valued, and in control of their experience.

Practical Steps:

  • Implement digital platforms, like apps or SMS services, that keep guests informed of their bookings, promotions, and real-time service updates.
  • Train staff to be communicative and transparent about wait times, service delays, or special offerings to manage guest expectations.

KPI: Keeping People Involved

Engaging with employees and involving them in the decision-making process is crucial for motivation and a sense of ownership.

KPIs should not be top-down metrics that only the leadership team values. Instead, they should provide a framework that allows employees to contribute actively, and understand how their efforts influence success.

Involving Employees

In the traditional sense, KPIs are viewed as targets employees must meet, and are provided without much context.

Keeping people involved means allowing employees to help define these targets, along with the pathways to achieve them. Involving employees and allowing them to set their own performance indicators gives them ownership of their work, and makes them feel accountable for outcomes.

For example, a restaurant can engage its service staff by involving them in discussions about upselling, suggesting specific strategies that they feel comfortable executing. They become part of the plan to improve the average ticket price or increase sales of high-margin items, rather than feeling like they’re being micromanaged.

This approach cultivates a culture of continuous improvement, collaboration, and engagement. When employees feel that their input is valued and implemented, they are more likely to be motivated to contribute actively, and innovate within their roles.

Practical Steps:

  • Host brainstorming sessions with employees to identify goals, challenges, and solutions. This fosters a sense of collaboration and inclusion.
  • Implement feedback loops where staff can share what’s working and what’s not on a consistent basis. Adjust KPIs based on this real-time insight.

Involving Guests

In the hospitality industry, guest involvement often determines the quality of their experience. Personalized service, where guests are involved in customizing their stay or dining experience, results in higher satisfaction levels.

From hotels offering customizable room amenities to restaurants allowing diners to build their own experiences, guest involvement directly correlates to guest loyalty and satisfaction.

Practical Steps:

  • Offer personalized experiences, such as allowing hotel guests to choose room preferences, or dining guests to customize their meals and dining experience.
  • Utilize surveys, post-stay feedback apps, or other mechanisms to involve guests in shaping future services and experiences.

KPI: Keeping People Interested

Maintaining interest and enthusiasm among employees and guests alike is vital for long-term success.

The new KPI focuses on creating a sense of purpose, engagement, and excitement about the work being done.

Keeping Employees Interested

Employees who are interested in their work are far more productive. They’re also committed to delivering high-quality service.

Traditional KPIs can sometimes feel disconnected from day-to-day tasks. Reframing KPIs to focus on team engagement and purpose helps keep employees interested in their roles. This is where challenging yet meaningful KPIs come into play.

For instance, a restaurant’s kitchen staff can be challenged to reduce food waste by five percent. Instead of just announcing this target, the leadership team should encourage the kitchen to come up with the strategies to achieve it. Whether that means repurposing on-hand ingredients for an LTO or improving portion control, the involvement and challenge keep staff interested and motivated.

Reviewing progress regularly, celebrating milestones, and recognizing achievements enhances employees’ engagement and satisfaction, keeping them interested in their contributions to the team’s success.

Practical Steps:

  • Implement monthly or quarterly team challenges that are tied to larger business objectives, with recognition or rewards for achieving these targets.
  • Organize regular check-ins to discuss career development, skill development, and other methods of keeping employees passionate about their work.

Keeping Guests Interested

The modern guest is no longer interested in just receiving a meal or room; they’re seeking a memorable experience. Hotels, bars, and restaurants must innovate constantly to keep guests coming back.

Whether through offering seasonal menus or LTOs, hosting unique on-premise events, or incorporating local culture into the experience, keeping guests interested requires ongoing creativity.

Practical Steps:

  • Rotate seasonal offerings or limited-time events to keep the brand fresh and exciting.
  • Personalize guest experiences based on previous stays, orders, or preferences.

KPI: Keeping People Inspired

Finally, people—employees and guests—need to be inspired. Inspiration fuels action, creativity, and, above all, loyalty.

When employees are inspired, they go above and beyond in their roles. When guests are inspired, they become loyal advocates of your brand.

Inspiring Employees

Traditional KPIs rarely inspire employees; they just feel like boxes to be checked.

But the new KPI focuses on creating ambitious yet attainable targets that challenge employees to push their boundaries. This includes setting stretch goals that inspire employees to think creatively, and innovate.

For example, a bartender could be challenged to create a new cocktail using sustainable ingredients. As another example, a hotel service staff member could be encouraged to improve guest check-in times while maintaining high guest satisfaction scores.

Leaders must also inspire their teams by sharing success stories through pre-shift meetings, fostering a positive workplace culture, and providing opportunities for growth and development. When employees are inspired by their leaders, they are more likely to take initiative, and drive the business forward.

Practical Steps:

  • Set SMART, ambitious goals that push employees out of their comfort zones but are still attainable.
  • Recognize and celebrate those who exceed expectations, and inspire others to do the same.

Inspiring Guests

Inspiration isn’t just internal; guests also need to feel inspired by the spaces and services they encounter.

In guests, a feeling of inspiration can be achieved through extraordinary design, unique offerings, or service that goes above and beyond. An inspired guest becomes a loyal one who shares their experiences, and recommends the business to others.

Practical Steps:

  • Design spaces and experiences that delight guests, and exceed their expectations.
  • Use storytelling in your marketing to inspire guests before they even walk through your doors. Then through a curated guest journey map, encourage them to share their experience with their network.

The New Vision: Why Now is the Time for Clarity

As we look ahead in this industry, there has never been a better time to build clarity in your hospitality business.

The post-pandemic landscape has shifted guest expectations, employee needs, and operational requirements. Businesses that succeed in this new environment will be those that understand the importance of keeping people informed, involved, interested, and inspired.

Clarity in your vision and execution will set your business apart in a competitive and dynamic market. By focusing on this new form of KPI, you can create a hospitality brand that not only survives but exceeds expectations in the years to come.

So, as you plan for the year ahead, ask yourself how you can keep your team and guests more informed, involved, interested, and inspired.

The answer will unlock your path to long-term success.

Image: Canva

KRG Hospitality Contact 60-Minute Impact Session

Looking to Start, Stabilize, or Scale? Book Below to Setup a 60-Minute Result-Driven Impact Session.


Upscale to luxury hotel room image from Canva
by David Klemt David Klemt No Comments

Hotel Total + Guest Revenue Management

Hotel Total + Guest Revenue Management: A Comprehensive Approach

by Doug Radkey

Upscale to luxury hotel room image from Canva

In the evolving landscape of hotel revenue management, the focus on traditional metrics like RevPAR (Revenue Per Available Room) and ADR (Average Daily Rate) is shifting.

While these metrics have been the gold standard for assessing a hotel’s performance, they no longer provide a complete picture.

Why, you ask? Because guest expectations and spending patterns have evolved. Hotels are not just places to stay; they are multi-faceted destinations offering a variety of services, such as dining, spa treatments, recreational activities, events, and more.

RevPAR and ADR measure performance based solely on room occupancy and rates, which overlooks the revenue generated from these additional services. They do not account for on-premise spending by guests on activities, food and beverage, wellness services, or other ancillary revenue streams that can impact a hotel’s overall profitability significantly.

Further, these traditional metrics fail to capture the qualitative aspects of the guest experience, such as personalized services, guest satisfaction, and long-term loyalty, all of which play a crucial role in a hotel’s success.

In essence, relying exclusively on RevPAR and ADR can lead to a narrow, and potentially misleading, view of a hotel’s financial health, missing out on opportunities to build a true legacy within this industry.

Where do we go from here, then? Enter Total Revenue Management (TRM) and Revenue Per Available Guest (RevPAG). These “new” metrics offer a more holistic view of a hotel’s financial health, moving beyond just room revenue to encompass the total guest experience, and the entire property’s revenue potential.

Understanding Total Revenue Management (TRM)

Total Revenue Management is a modernized approach that measures and maximizes revenue across all revenue streams within a hotel.

This includes rooms, food and beverage, spa services, recreational activities, and any other revenue-generating departments. TRM is about synchronizing and optimizing these various revenue streams to elevate the hotel’s total profit margin.

Let’s put this into perspective. Picture yourself as a hotel operator in Las Vegas. Maybe there is an instance where you have a group of high-rolling guests staying at your casino hotel/resort. Instead of charging them for their rooms, you decide to comp their stay entirely.

To some, giving away a free room in a city where occupancy rates are crucial might seem like a risky move. But you know that the cost of the room will be a drop in the bucket compared to the potential revenue they could generate on the casino floor, and on-site bar and restaurant. These guests end up spending hours at the tables and slot machines, contributing far more to the bottom line than a single night’s room rate ever could.

But it’s not just about the high rollers. What about off-peak times, where you have to get creative to keep the revenue flowing?

Perhaps you offer discounted spa treatments to your guests on weekdays when the hotel isn’t as busy. To your surprise, these guests who wouldn’t typically splurge on spa services took advantage of the discounted rates. This not only increases your spa revenue during slow periods but also enhances the overall guest experience, turning casual visitors into loyal guests.

These experiences are just two quick samples showcasing how maximizing revenue isn’t about charging for every service; it’s about understanding the broader picture, and making strategic decisions that drive total revenue for your property, every single day.

The framework of TRM is all about understanding the affiliation of each revenue stream available within your property. By taking a comprehensive view of the property’s revenue potential, you can create packages and services that encourage spending across all departments, not just the rooms.

The 5 Advantages of Total Revenue Management

It’s safe to say that implementing TRM can lead to a more robust and modern operation that benefits your hotel in several key areas:

  • Revenue Growth: TRM goes beyond just room revenue. By focusing on every revenue stream—be it dining, spa services, or recreational activities—TRM maximizes your hotel’s overall revenue potential. This comprehensive approach ensures that every aspect of the guest experience contributes to the bottom line, leading to a more diversified and stable revenue base.
  • Enhanced Asset Utilization: TRM encourages the optimal use of all hotel facilities, from restaurants to event spaces and wellness centers. By identifying underutilized assets and creating strategies to boost their usage, such as offering special packages or promotions, your hotel can increase its profitability significantly. This not only drives revenue but also elevates the guest experience by offering more value-added services.
  • Streamlined Operational Costs: A key benefit of TRM is the ability to streamline operations across various departments. Leveraging data and cross-departmental insights improves your hotel’s resource allocation, waste reduction, and implementation of more cost-effective practices. This leads to lower operational costs and increased profit margins, allowing your hotel to reinvest in areas that perhaps enhance the guest experience.
  • Unified Team Effort: TRM fosters a cohesive workforce by aligning all departments with a common goal of maximizing total revenue. When the front desk, housekeeping, food and beverage, and other teams are all working towards the same objectives, it leads to several improvements. These include enhanced productivity, improved guest satisfaction, and a seamless experience for guests. This unified approach creates a culture where everyone understands how their role impacts your hotel’s success.
  • Boosted Efficiency and Productivity: Implementing TRM encourages different departments to collaborate more effectively, streamlining processes and reducing redundancies. By focusing on total revenue rather than isolated departmental metrics, your hotel can create a more dynamic and responsive operation. This increased efficiency not only enhances the guest experience, it also drives higher employee satisfaction by creating a more organized and purpose-driven work environment.

Implementing Total Revenue Management

The first step to implementing TRM is to invest in integrated Property Management Systems (PMS) such as Mews, and Revenue Management Systems (RMS) such as Atomize. These systems are essential for tracking, reporting, and forecasting revenue across the entire property.

Further, such platforms provide real-time data that helps inform strategic decisions.

One of the biggest challenges in implementing TRM, however, is bridging the gap between technology, staff, and different departments.

Hotels must ensure that data flows across all departments seamlessly, allowing for cohesive decision making. This requires both employees and the property’s infrastructure to adapt to new behaviors and processes. Staff training and a culture that embraces data-driven decision making are crucial for the successful implementation of TRM.

The Transition from RevPAR to Revenue Per Available Guest (RevPAG)

While TRM offers a broad view of the hotel’s revenue potential, RevPAG provides a more guest-centric metric for assessing performance.

  • RevPAR (Revenue Per Available Room): You’re likely familiar with this one. This is the traditional metric that provides a quick snapshot of a hotel’s performance by considering both occupancy (OCC) and the average daily rate (ADR). While useful, it focuses solely on room revenue, ignoring other revenue streams, and the overall guest experience.
  • RevPAG (Revenue Per Available Guest): Unlike RevPAR, RevPAG looks at total revenue generated by each guest during their stay, regardless of how many rooms are sold, or how many guests occupy a room. It captures all spending, including dining, spa services, recreational activities, and more. This metric offers a more advanced understanding of guest behavior, and their total contribution to the hotel’s revenue.

The 4 Advantages of Revenue Per Available Guest

Focusing on RevPAG can drive on-premise spending, and enhance the guest experience. Some advantages for your hotel may include the benefits below.

  • Engaging Loyalty Programs: Loyalty programs are a powerful tool for encouraging repeat visits and on-property spending. Offering rewards, exclusive perks, and personalized incentives helps your operation foster long-term relationships with guests. Such programs prompt guests to return, and continue spending within the hotel. A well-designed loyalty program not only increases revenue per guest but also strengthens brand loyalty, turning one-time visitors into lifelong advocates.
  • Personalized On-Site Experiences: Understanding guest preferences will further allow your hotel to craft tailored packages and experiences that encourage guests to spend more on-property. Whether it’s guided tours, hands-on cooking or mixology classes, or themed live entertainment, these curated activities enhance the guest experience, and drive additional revenue. Personalized offerings create memorable moments that guests are willing to pay a premium for, increasing overall spend per guest.
  • Wellness and Lifestyle Services: Investing in wellness services such as spas, fitness centers, and recreational facilities opens up new revenue streams, and enhances the overall guest experience. By offering wellness packages, relaxation treatments, or fitness classes, your hotel can cater to the growing demand for health and wellness experiences. These services encourage guests to spend more on-premise, turning your hotel into a desired destination that meets various guest needs.
  • Elevated Dining and Beverage Offerings: Exceptional culinary and mixology experiences can enhance on-premise spending significantly. By offering unique dining options like chef’s table events, wine tastings, or mixology masterclasses, your hotel can attract food and beverage enthusiasts, and encourage them to spend more during their stay. These high-quality experiences boost revenue, and elevate your hotel’s reputation as a destination for food and drink.

Implementing Revenue Per Available Guest

To maximize RevPAG, your hotel needs to focus on creating personalized guest experiences, and integrating technology seamlessly across all touchpoints. This involves taking the steps below.

  • Personalized Guest Experiences: Tailoring services and offerings to your targeted, individual guest preferences to not only enhance their stay but also encourage additional spending. This can include personalized room amenities, bespoke on-premise experiences, and exclusive access to hotel facilities.
  • Seamless Technology Integration (Tech-Stack): Integrating Revenue Management Systems (RMS) with other hotel technologies, such as PMS and POS systems, allows your hotel to track guest behavior, spending patterns, and preferences in real-time. This data is invaluable for identifying up-selling opportunities, and creating targeted marketing strategies.
  • Total Revenue Management Mindset: Adopting a TRM mindset involves viewing each guest as an opportunity to generate multiple streams of revenue. Your hotel operations team should train staff to recognize and act on up-sell opportunities, while maintaining a high standard of service.

Benefits of Using Both RevPAG and Total Revenue Management

When used together, RevPAG and TRM provide a powerful framework for maximizing your hotel’s revenue and profitability.

  • Revenue Optimization: TRM ensures that every revenue stream is optimized, while RevPAG provides insight into the guest’s overall value. Together, they allow your hotel to create targeted strategies that maximize revenue from both rooms and ancillary services.
  • Enhanced Guest Experiences: By focusing on RevPAG, your hotel can deliver personalized experiences that encourage guests to spend more on-property, leading to higher satisfaction, and repeat business.
  • Informed Decision Making: With a TRM approach, your hotel can gain access to comprehensive data across all departments. This data-driven approach enables more informed decisions about pricing, packaging, and service offerings.
  • Competitive Edge: Hotels that adopt TRM and RevPAG are better positioned to differentiate themselves from competitors, offering a more value-driven guest experience while maximizing profitability.
  • Sustainable Growth: Implementing TRM and RevPAG strategies leads to sustainable growth by optimizing revenue streams, and reducing reliance on room occupancy alone.

This diversified revenue approach enhances your hotel’s resilience in fluctuating market conditions.

My Final Thoughts

There’s no question, the hotel industry is evolving, and so must its approach to revenue management.

Total Revenue Management and Revenue Per Available Guest offer more comprehensive metrics that go beyond the limitations of traditional measurements like RevPAR and ADR. By adopting a modernized approach that integrates these metrics, your hotel can optimize revenue, enhance guest experiences, and build a more robust, modern operation.

To realize the benefits of TRM and RevPAG fully, your hotel needs to invest in technology, embrace a guest-centric mindset, and foster a culture of data-driven decision-making. In doing so, you’ll unlock new opportunities for your brand that drive profitability, and secure a more competitive edge.

Image: Canva

KRG Hospitality Contact 60-Minute Impact Session

Looking to Start, Stabilize, or Scale? Book Below to Setup a 60-Minute Result-Driven Impact Session.


AI-generated image of a closeup of a loan application and pen
by David Klemt David Klemt No Comments

The Banks Have it Wrong

The Banks Have it Wrong

by Doug Radkey

AI-generated image of a closeup of a loan application and pen

It’s widely assumed that a well-written business plan will impress banks and SBA-type programs, and secure the funding required to launch a hospitality concept.

When starting a bar, restaurant, or hotel, most people are told exactly that: “You just need a business plan.”

The problem, however, lies in how these business plans are created. Too often, aspiring entrepreneurs turn to fill-in-the-blank templates provided by banks or online resources. They believe that simply completing the form will open the doors to financing, and start them on the path to building a successful business.

Unfortunately, this approach can do more harm than good. Let’s explore why the traditional reliance on business plan templates, including AI-generated business plans, can set both businesses and lenders up for failure.

In this article I dive into real-world examples, examine the success and failure rates of loans in the hospitality industry, and outline why banks and other programs need to rethink their loan approval processes to reduce risks for not only themselves but the entrepreneurs they serve.

The Problem with Business Plan Templates

Imagine this scenario: You’re excited to open a hospitality business, but you don’t know where to begin. You do some research, and learn quickly that you need a business plan to secure a loan. The bank or Small Business Administration (SBA) offers you a convenient template to complete, or you find one online that seems like it will do the job. You fill in the blanks, submit the plan, and, to your delight, the bank approves all or a portion of your loan.

However, the approval doesn’t mean your business plan is actually sound. Read that again.

It only means it meets the basic requirements of the bank’s loan approval checklist. A template provides a false sense of security, making entrepreneurs think they’ve covered all their bases when, in reality, crucial aspects of the business are left unaddressed.

For example, I recently reviewed a business plan for a client who had used a bank-provided template prior to our engagement. The plan was approved by the bank, but upon closer inspection, I found numerous errors: the start-up financial projections were unrealistic, the cash-flow analysis was incomplete, and crucial aspects of market analysis were missing.

The result? The project is on track to run out of money before it even opens its doors.

This example highlights a troubling issue: Templates don’t provide clarity, and they certainly don’t prompt critical thinking about the true costs to start, and the real challenges that the business will face once it’s operating.

The Risks of Using Templates

Business plan templates may seem like an easy solution, but they come with significant risks.

  1. False Sense of Security: A completed template may look professional, but it doesn’t guarantee that the plan is sound or comprehensive. Key elements can be glossed over, copy and pasted, or simply misunderstood.
  2. Lack of Critical Thinking: A template doesn’t ask tough or industry-specific questions. It doesn’t force you to analyze the competitive landscape, identify potential risks, or develop a clear financial strategy around a unique concept.
  3. Inadequate Financial Analysis: Templates often provide a basic structure for financial projections but fail to help you understand the true costs of starting and running a business. A template won’t be specific to your concept, your revenue and cost channels, or industry benchmarks. The template won’t catch errors in your financials, leaving you and the bank exposed to significant risk.
  4. Inability to Stand Out: In a crowded market such as the US, Canada, or Europe, differentiation is key. A cookie-cutter business plan won’t help you stand out from the competition. Despite handing them out, banks see thousands of these plans, and if you don’t demonstrate why your concept is unique and viable, you’re setting yourself up for denial.

The Dangers of AI-Generated Business Plans

As technology advances, AI-powered business plan generators are becoming more popular. I’ve seen a few ads for them over the past few months.

These tools claim to be able to create a business plan in minutes, promising efficiency and ease. However, relying on AI to write your business plan is just as dangerous as using a template. The same issues apply: lack of clarity, shallow financial analysis, and the absence of critical thinking.

AI-generated business plans may provide a surface-level solution, but they cannot replace the deep analysis required to make a business successful. Business plans need to be customized and thought out thoroughly, with insights drawn from real-world strategic planning.

Hospitality Industry Loans: Success and Failure Rates

The hospitality industry—particularly the accommodation and food service sectors—has one of the highest loan approval rates, but it also has some of the highest operator failure rates.

According to the U.S. Small Business Administration, in 2022 alone, 6,297 loans were approved for the accommodation and foodservice industry. These accounted for 13.2 percent of all small business loans, and 19.2 percent of total loan dollars. The average loan amount was US $784,768.

Despite these impressive loan numbers, the success rate of a business in this industry tells a different story. Only about 20 percent of hospitality businesses make it to their fifth year, and the average time to pay off a business loan ranges from five to ten years. The failure rates are driven by various factors, including cash-flow problems, a lack of market understanding, and poor financial planning.

So, why do banks continue to approve business loans based on inadequate business plans?

The Need for More than a Business Plan

Each reason for a business failing points to one underlying cause: lack of strategic clarity. In many cases, these businesses began with a standard business plan but skipped the other non-negotiable playbooks truly needed to be successful.

A well-rounded approach to strategic planning includes much more than a business plan.

Aspiring or seasoned bar, restaurant, and hotel operators need to develop feasibility studies to determine whether their business models can succeed in their target market. They also need concept development plans, prototype drawings, brand strategy plans, tech-stack plans, marketing plans, and financial playbooks.

Only after these steps are completed should the final business plan be written.

How Banks Can Improve Loan Success Rates

Banks have an opportunity to reduce their risks significantly—and increase the success rates of the businesses they fund—by requiring more than the completion of a business plan template during the loan approval process.

Instead, they should request detailed feasibility studies, along with the other playbooks, that go beyond the basics.

By working with entrepreneurs to ensure they have true clarity about their business model, market conditions, and financial outlook, banks can reduce default rates, and build stronger partnerships with their clients.

In addition, by encouraging the use of customized plans over templates or AI-generated plans, banks can ensure that they are investing in businesses with a clear path to success.

My Final Thoughts

Yes, a business plan is a vital tool for any entrepreneur, but it must be more than just a template, and lenders need to stop relying on these fill-in-the-blank approaches.

To build a successful business, you need more than a plan on paper; you need clarity, strategy, and a deep understanding of your market and financials. It’s time for banks, financing programs, and even angel investors to get it right and demand more than a standard business plan template. Only then will both the business and the lender see the long-term success they’re striving for.

Perhaps they, too, can then achieve success rates in the 90th percentile.

Image: Canva

KRG Hospitality Contact 60-Minute Impact Session

Looking to Start, Stabilize, or Scale? Book Below to Setup a 60-Minute Result-Driven Impact Session.


Bright, light and airy restaurant interior with communal seating across from the bar
by David Klemt David Klemt No Comments

The Psychology of Dining Space Design

The Psychology of Dining Space Design

by Nathen Dubé

Bright, light and airy restaurant interior with communal seating across from the bar

When someone decides they’re going to dine out, they’re basing their selection on more than just what they want to eat; it’s about the entire experience.

The design and layout of a dining space impact guest behavior, emotions, and overall satisfaction to a significant degree. From the colors on the walls to the lighting overhead, every element plays a role in shaping the dining experience.

This article explores the psychological principles behind effective dining space design, offering insights into how restaurants can use these elements to enhance guest satisfaction, and boost sales.

The Impact of Color Schemes

How Different Colors Evoke Specific Emotions and Moods

Colors are powerful tools in setting the mood and atmosphere of a dining space. Different colors can evoke specific emotions and reactions, influencing how guests feel and behave in a restaurant.

Warm colors like reds, oranges, and yellows are stimulating, and can create a lively, energetic atmosphere, often used in fast-food restaurants to encourage quick eating and high turnover.

On the other hand, cool colors such as blues, greens, and purples have a calming effect, promoting relaxation and longer stays, making them ideal for fine-dining establishments.

Neutral colors like whites, grays, and beiges provide a clean and modern look, allowing other design elements to stand out, and making a space feel larger and more open.

Examples of Color Choices and Their Psychological Effects

Red is known to stimulate appetite and increase heart rate, making it a popular choice for fast-food chains.

However, it should be used sparingly in fine dining as it can be overwhelming.

Blue, on the other hand, suppresses appetite and promotes calmness, suitable for seafood restaurants or venues where a relaxed dining experience is desired. Green, associated with freshness and health, is often used in vegetarian and farm-to-table restaurants to reinforce the concept of natural, wholesome food.

Case Studies of Restaurants Using Color to Influence Dining Choices and Atmosphere

Consider McDonald’s use of red and yellow in its branding and interiors. These colors stimulate hunger, and create a sense of urgency, encouraging quick dining and high guest turnover.

In contrast, Starbucks uses a palette of warm browns and greens to create a cozy, inviting atmosphere that encourages guests to linger, increasing the likelihood of additional purchases.

Lighting and Its Psychological Effects

The Role of Lighting in Creating Ambiance and Influencing Guest Behavior

Lighting is a crucial aspect of dining space design, affecting the ambiance and guest experience significantly. Different types of lighting can evoke various moods, and influence how guests perceive the space and their meals.

Natural lighting enhances mood, and makes spaces feel more open and inviting. Restaurants with ample natural light are often perceived as more comfortable and welcoming. Ambient lighting sets the overall tone of the space. Soft, warm lighting can create an intimate and cozy atmosphere, while bright, cool lighting can energize the space. Task lighting focuses on specific areas, such as tables or bars, enhancing functionality and highlighting key features.

Differences Between Natural, Ambient, and Task Lighting

Natural lighting is best for creating a connection with the outdoors, and making spaces feel airy and fresh, often achieved through large windows and skylights.

Ambient lighting provides overall illumination, setting the mood and ensuring guests feel comfortable. Typically, ambient lighting is provided via ceiling lights, chandeliers, and wall sconces.

Task lighting is used for specific purposes, such as illuminating dining tables or highlighting menu boards, typically achieved with pendant lights and under-cabinet lighting.

How Lighting Affects the Perception of Space, Food, and Time Spent Dining

Bright lighting can make a small space feel larger, while dim lighting can create a more intimate and enclosed atmosphere.

Proper lighting enhances the visual appeal of food, making it look more appetizing. Warm, soft lighting is often used in fine dining to highlight the colors and textures of dishes.

Lighting can also influence how long guests stay. Dim, cozy lighting encourages lingering, while bright lighting can make people eat faster and leave sooner.

Acoustics and Soundscapes

The Impact of Noise Levels and Music on the Dining Experience

Sound is a critical yet often overlooked element of dining space design. Noise levels and the type of music played can impact the dining experience significantly.

High noise levels can create a sense of energy and excitement, but may also lead to discomfort and difficulty in conversation. It’s essential to strike a balance, ensuring the space is lively without being overwhelming.

Low noise levels promote relaxation and intimacy, suitable for fine dining or romantic settings. However, overly quiet spaces can feel uninviting and lack atmosphere.

Balancing Background Noise and Creating an Appropriate Sound Environment

Effective sound management involves balancing background noise, and creating a sound environment that complements the restaurant’s concept and ambiance.

Strategies include acoustic panels to absorb sound and reduce noise levels, creating a more comfortable environment. Soundproofing materials like carpets, curtains, and upholstered furniture can help dampen noise.

Music selection is also crucial, with the type of music and its volume aligning with the restaurant’s theme, and the desired guest experience.

Examples of Restaurants Using Sound to Enhance Guest Comfort and Satisfaction

Many upscale restaurants use a combination of soft background music and sound-absorbing materials to create a tranquil dining environment.

For example, the use of live piano music in high-end restaurants can enhance the ambiance without overwhelming conversation.

Seating Arrangements and Layout

The Psychological Impact of Different Seating Configurations

Seating arrangements and layout play a significant role in influencing guest behavior and satisfaction. The choice between booths, communal tables, and individual seating can impact how guests perceive the space, and interact with others.

Booths provide privacy and comfort, making them ideal for intimate gatherings and longer stays, creating a sense of enclosure and personal space. Communal tables encourage social interaction and a sense of community, suitable for casual dining, and environments that promote socializing. Individual seating offers flexibility and can cater to a variety of group sizes, allowing for easy reconfiguration of the space.

How Layout Affects Flow, Privacy, and Social Interactions

The layout of a dining space affects the flow of movement, privacy levels, and the nature of social interactions. Key considerations include:

  • ensuring there is enough space for guests and staff to move comfortably without congestion;
  • clear pathways; and
  • strategic placement of furniture to enhance flow.

Balancing the need for social interaction with the desire for privacy is essential, using partitions, plants, or varying seating heights to create distinct zones.

Design the space to facilitate the type of interaction you want to encourage, with communal tables and open layouts promoting socializing, while booths and nooks offer more private dining experiences.

Strategies for Optimizing Seating to Enhance Guest Comfort and Turnover Rates

Optimizing seating involves creating a comfortable environment while ensuring efficient use of space to maximize turnover rates.

Strategies include:

  • using a mix of seating types to cater to different guest needs and group sizes;
  • investing in high-quality, comfortable seating, which encourages longer stays and repeat visits; and
  • designing the layout to maximize the number of seats without compromising comfort to ensure tables are spaced adequately, allowing for easy movement and service.

Case Studies and Expert Insights

Interviews with Interior Designers and Behavioral Psychologists

Interviews with interior designers and behavioral psychologists provide valuable insights into the principles of effective dining space design. Experts can share their experiences and recommendations for creating spaces that enhance guest behavior and satisfaction.

Key Insights on Effective Design Strategies

Key insights from expert interviews include adopting a holistic design approach, considering all elements—color, lighting, acoustics, and layout—together to create a cohesive and inviting space.

Focusing on the needs and preferences of your target audience is crucial, designing with the guest experience in mind to create a memorable dining environment.

Continuous improvement is essential. This involves reviewing and updating your design regularly to keep it fresh and relevant, and staying informed about new trends and technologies in dining space design.

Real-World Examples of Restaurants That Have Successfully Utilized Design Psychology

Real-world examples highlight how restaurants have implemented design psychology principles successfully to enhance guest satisfaction and increase sales.

For instance, a fine-dining restaurant may use soft lighting, elegant color schemes, and acoustic panels to create an intimate and luxurious dining experience, resulting in a space where guests feel relaxed and pampered, leading to longer stays and higher spending.

Conversely, a casual eatery might incorporate vibrant colors, upbeat music, and communal seating to foster a lively and social atmosphere, attracting a younger crowd looking for a fun and engaging dining experience, boosting guest turnover and repeat visits.

Highlighting Specific Design Choices and Their Outcomes

Specific design choices, such as using warm lighting to highlight food presentation or arranging seating to encourage social interaction, can impact guest perceptions and behavior significantly.

Highlighting these choices and their outcomes provides practical examples of how design can influence the dining experience.

Practical Tips for Optimizing Dining Space Design

Actionable Advice for Restaurant Owners and Designers

Implementing effective dining space design requires practical and actionable steps.

Here are some tips to help restaurant owners and designers optimize their spaces:

  • Choose Colors Wisely: Select color schemes that align with your restaurant’s concept, and desired guest experience. Use warm colors for energetic spaces, and cool colors for calm, relaxing environments.
  • Optimize Lighting: Ensure a balance of natural, ambient, and task lighting to create the right ambiance, and enhance the dining experience. Use dimmers to adjust lighting levels based on the time of day, and desired mood.
  • Consider Acoustics: Use sound-absorbing materials and strategically placed music to create a comfortable sound environment. Avoid excessive noise that can detract from the dining experience.
  • Plan the Layout: Design the layout to maximize space efficiency while ensuring guest comfort. Use a mix of seating types, and ensure clear pathways for easy movement.
  • Align Design with Brand Identity: Ensure that all design elements, from colors to furniture, reflect your brand identity, and resonate with your target audience.

Tips on Choosing Colors, Lighting, and Furniture

Choosing the right colors, lighting, and furniture can have a significant impact on the dining experience:

  • Colors: Choose colors that evoke the desired emotions, and match your brand’s personality. Test different shades to find the perfect balance.
  • Lighting: Invest in quality lighting fixtures, and consider the color temperature of bulbs. Use lighting to highlight key areas, and create focal points.
  • Furniture: Select comfortable and durable furniture that complements the overall design. Consider ergonomic options to enhance guest comfort.

Conclusion

The design of a dining space is a crucial component of the guest experience. Understanding and applying the psychological principles of color, lighting, acoustics, and layout helps restaurant owners and designers to create environments that influence guest behavior, enhance satisfaction, and boost sales.

Thoughtful design not only improves the dining experience but also reinforces brand identity, and drives business success.

Image: Adrien Olichon via Pexels

KRG Hospitality Contact Request for Proposal 30 Minute Discovery Session

Book Below to Setup a 30-Minute Complimentary Discovery Call and Request for Proposal.


Flipping through an open book
by David Klemt David Klemt No Comments

5 Books to Read this Month: October 2024

5 Books to Read this Month: October 2024

by David Klemt

Flipping through an open book

Our October book selections focus on restaurant and bar interior design, developing leadership skills, an infamous liqueur, and themed cocktails.

To review the book recommendations from September 2024, click here.

Let’s jump in!

Dining Out: The New Restaurant Interior Design

Impactful bar, restaurant, and hotel design is paramount. Your space is how your guests interact with your brand in person and online. It’s much more than just four walls; your venue is the physical manifestation and representation of your concept. Therefore, it’s important that you nail your design details. I think you’ll find Dining Out inspiring.

From Amazon: “The book takes the reader on a journey to some of the most cutting-edge examples in restaurant design and architecture from around the world. With a descriptive text for each project, it focuses on the craftmanship, color schemes, decorative details, lighting and furnishings that form the identity of the space, serving as a source of inspiration and reference for professional designers, foodies and other people involved in the restaurant business. Interior and exterior photographs, as well as blueprints of each design, present the reader with a rich range of styles, from modern minimalist spaces to ones defined by bold contemporary colors, a sleek industrial look or designs that look to the past for inspiration.”

Order your hardcover copy here.

Reset: How to Change What’s Not Working

Part of being an entrepreneur or member of a leadership team is implementing new initiatives. And sometimes, after monitoring these new initiatives for a set amount of time, we find out that they’re just not working. So, what do you do? This book will help you take decisive, timely action.

From Amazon: “Changing how we work can feel overwhelming. Like trying to budge an enormous boulder. We’re stifled by the gravity of the way we’ve always done things. And we spend so much time fighting fires—and fighting colleagues—that we lack the energy to shift direction.

“But with the right strategy, we can move the boulder. In Reset, Heath explores a framework for getting unstuck and making the changes that matter. The secret is to find ‘leverage points’: places where a little bit of effort can yield a disproportionate return. Then, we can thoughtfully rearrange our resources to push on those points.”

Place your pre-order for this book today.

Cocktails and Consoles: 75 Video Game-Inspired Drinks to Level Up Your Game Night

At the end of August, I shared some interesting information from a Datassential report. According to the intel agency, close to 200 million Americans are gamers, and that interest in gaming spans all ages. Further, gamers spent well over $50 billion on this particular hobby in 2023. Datassential also found that 45 percent of gamers have made F&B decisions after consuming video game-related ads or content, so this info is relevant to restaurant and bar operators.

From Amazon: “Created especially for video game fans, this cocktail book features controller-friendly recipes that all offer playful homage to favorite games and characters including The Oregon Trail Buck (The Oregon Trail), Pom of Power (Hades), The Miles Edgeworth MarTeani (Ace Attorney), The Cake Is a Lie (Portal), Stardrop Swizzle (Stardew Valley), Miriel, Pastor of Vows (Elden Ring), Ether (Final Fantasy XIV), Liquid Snake (Metal Gear Solid), Lady Dimitrescu Fizz (Resident Evil Village), Sardegna Simulator Spritz (Gran Turismo), Falcon Punch (Super Smash Bros.), and more. Cocktails and Consoles has the perfect drink for every player and every video game!

Click here to order your copy.

Malört: The Redemption of a Revered and Reviled Spirit

So, perhaps I’m a bit odd, but I like the taste of Malört. Strangely, even though I grew up outside of Chicago and began my journey in bars and nightclubs in the city, I didn’t try Malört until I moved to Las Vegas. If you haven’t tried it, and you have a distributor who can get it for your bar reliably, you, your staff, and your guests are in for an experience.

From Amazon: “Author and beer expert Josh Noel unpacks a uniquely American tale, equal parts culture, business, and personal relationships—involving secret love, federal prison, a David vs. Goliath court battle, and, ultimately, the 2018 sale of Jeppson’s Malört, which made Pat Gabelick, a 75-year-old Chicago woman who spent much of her life as a legal secretary, into an unlikely millionaire.”

Grab yours here!

Bar Hacks: Developing The Fundamentals for an Epic Bar

Yep, I’m taking the opportunity to recommend Doug Radkey’s first book. Radkey is, as you may know, the president of KRG Hospitality. In his this book he explains the importance of nailing the fundamentals in order to:

  • start your operator journey in the best possible position;
  • stabilize your business; and
  • scale when the time comes, if that’s what you want.

From Amazon: “This informative and conversational book is the perfect read for aspiring or seasoned bar, pub, lounge, or even restaurant owners, operators, and managers looking for that competitive edge in operations! If you’re looking for both fundamental and in-depth planning methods, strategies, and industry focused insight to either start or grow a scalable, sustainable, memorable, profitable, and consistent venue in today’s cut-throat industry–Bar Hacks is written just for you!”

Click here to get your copy today!

Image: Mikołaj on Unsplash

KRG Hospitality Contact Request for Proposal 30 Minute Discovery Session

Book Below to Setup a 30-Minute Complimentary Discovery Call and Request for Proposal.


by David Klemt David Klemt No Comments

Program for Unique Holidays: October 2024

Program for Unique Holidays: October 2024

by David Klemt

"Think about things differently" neon sign

Do you want to stand out from from other restaurants and bars in your area? Change how you think about your October holiday programming.

Several holidays are set against every date on the calendar, and this month is no exception. These holidays range from mainstream to esoteric.

Pay attention to the “weird” or unique holidays to raise eyebrows, carve out a niche for your restaurant or bar, and attract more guests. Why do what everyone else is already doing? Why program only around the same holidays as everyone else?

To provide a handful of examples, October boasts celebrations of the cheeseburger, the double cheeseburger, cheese pizza, pepperoni pizza, beer, and guacamole. Those are fantastic F&B holidays sure to appeal to your guests. However, you can still celebrate some “out there” holidays to get people’s attention and draw them to your business.

Of course, you shouldn’t try to celebrate every holiday, strange or otherwise. Focus on the days that are authentic to your brand; resonate with your guests; and help you grab attention on social media.

You’ll find suggestions for promotions below. However, the idea behind our monthly holiday promotions roundup is to inspire you and your team to get creative and come up with unique programming ideas.

For our September 2024 holidays list, click here.

October 1: The New National Taco Day

That’s right; National Taco Day has changed! You can read my article addressing this change here for more details, but what you need to know is that from today onward, National Taco Day will always fall on a Taco Tuesday.

October 2: Walk Your Dog Week

If your venue is dog friendly, and you operate in at least a decently walkable city or town, this is a great week to invite your guests to pop in for a dog treat, a bite, and a drink with their best friends.

October 4: Plaidurday

This day is dedicated to plaid. Plaid shirts, plaid pants, plaid shoes, plaid hats, plaid coats, plaid scarves, kilts featuring a tartan… If it’s plaid, encourage your guests to come by your place while they’re wearing it.

October 11: It’s My Party Day

Okay, this is an odd one. Really, it’s all about nostalgia. Technically, it’s about people revisiting their sweet sixteen parties, which is incredibly specific. Personally, I’d tap into your understanding of your guests and come up with a nostalgic theme that will appeal to them. After all, October is all about dressing up and themed parties.

October 12: National Motorcycle Ride Day

If your venue is motorcycle friendly, encourage your guests who ride to organize a ride, with a stop at your business to relax and refuel.

October 15: National Chicken Cacciatore Day

Recently, we addressed the importance of putting your spin on classic comfort foods. Chicken cacciatore, a recipe that’s about 600 years old, certainly falls into this category; it’s a classic comfort food, and your kitchen team can certainly put their own take on it.

October 21: Apple Day

We also addressed applejack, America’s first native spirit, just yesterday. Sure, you can do caramel apples or apple pie to celebrate this day, but I think you should bring your bar team into the mix, and create an LTO menu featuring applejack cocktails.

October 24: National Food Day

It sounds like this holiday is incredibly open ended, doesn’t it? A blank slate for any cuisine or food item you want to program a holiday promotion to leverage.

However, it’s specifically focused on featuring natural foods. For tips on how to build a natural, farm-to-table menu, check out KRG Hospitality chef consultant Nathen Dubé’s article here.

October 25: Chucky, the Notorious Killer Doll Day

I’ve included this because, wow, is it specific. It’s also a great day to play the Child’s Play movies and Chucky television show, within the confines of the proper licenses, of course.

October 30: National Candy Corn Day

Candy corn sucks, and if you agree (which means you’re correct), you’ll use this day to campaign against this food crime against nature.

Image: Ivan Bertolazzi on Pexels

KRG Hospitality Contact 60-Minute Impact Session

Looking to Start, Stabilize, or Scale? Book Below to Setup a 60-Minute Result-Driven Impact Session.


Top