Make Or Buy: A Qualitative Analysis Of Food And Beverage Programming In Full Service Upscale Hotels

Abstract

The author's goal in this paper was to propose a framework for resolving the "make" versus "buy" dilemma for food and beverage operations in upper upscale, luxury, and boutique hotels. By examining the historic precedence of food and beverage in hotels, the rise of the celebrity chef, and the increasingly visible and culturally relevant role of restaurants, chefs, and dining in the American landscape, the author sought to establish a context in which this decision has become increasingly important. The decision whether to "make" or "buy" signature restaurant concepts and operations is critical to the success of upscale hotel brands. As hotels have transitioned from purely lodging operations to lifestyle brands, dining has become a key tangible representation of positioning and differentiation (Rossant, 2004). In the second half of the twentieth century, food and beverage grew into a significant cultural force in America; from the birth of celebrity chefs to the establishment of an entire segment of the media devoted to it. This has had a direct impact on hotels, which have increasingly segmented and differentiated themselves by providing high quality and unique signature restaurants. One of the pioneers was Wolfgang Puck and his relationship with Kimpton Hotels. This paper seeks to establish what criteria are used to determine whether a hotel creates and operates internally their own restaurant concepts or license or lease their restaurants. The author proposes a framework defined as The 5 Cs (Core Competencies, Competition, Costs, Culture, Co-branding) that can been used as a qualitative framework by which these decisions can be made. The research seeks to determine whether or not this framework is used by today's industry leaders. The author conducted interviews with key industry experts to understand the methodologies used in resolving the "make" versus "buy" dilemma in some of the industry's leading organizations. Interviews were conducted with both hotel operators and restaurateurs using an open-ended questionnaire. Ultimately, the author found that key elements of the 5 Cs are important components of many of these decision makers' processes, but an industry-wide core framework was not prevalent. However, there was qualitative support that the considerations outlined by the 5 Cs are relevant and important to the resolution of the "make" versus "buy" dilemma, and that the proposed framework could provide a baseline framework for the development of a rational analytical model for organizations to make these important decisions.