Is the Hospitality Business Model Broken?

With Cafe and Hospitality Businesses posting 5-15% profits PA. if they are lucky. I have been pondering whether I think the current business model is broken for the hospitality industry.

We see amazing innovation in other industries like technology, yet we seem to think hospitality can’t be innovated because it relies on a bricks and mortar premises, actual human beings who are paid regulated wage rates to serve food and be hospitable, ( no Virtual Assistants here) plus we need to turn actual fresh produce into amazing edible delights that sell before they deteriorate!

It might be a hard ask but I have started seeing signs of innovation in the hospitality space around the globe. Crowdfunding has changed the way people think about raising the capital to start out and I have even seen a cafe in London use a membership system to secure steady income from its VIP clients who get unlimited cups of coffee for an annual membership fee.

My advice is that you need to really think outside the current  business model at the moment and be a gamechanger or you will risk missing the boat.

I found this cool article on  Dinner Lab  in the U.S., they have mashed up 3 business models to great effect. They are using the  pop –up store model for overhead cost savings, a membership model for income, guest celebrity chefs to reduce staff overhead and to top it off they also collect client feedback about the guest chefs dishes and sell that data back to chefs to help with their menu development.

I know it’s a bit wild, and innovation will never replace great food and service – but in this day and age where good food and service is the minimum required for basic business survival how are you planning on getting ahead, and moving from survive to thrive?

My take is that you will either be one of these businesses or be competing with them….

We use two great templates when we are looking to innovate or articulate our clients businesses models Business Model Canvas and The Value Proposition Canvas both by Strategyzer.

The Canvases are pretty self explanatory to use but for tips on how to get the most out of them check out Stratgyzer’s cool videos Business Model Canvas video and The Value Proposition video.

What’s your thoughts… is 10-15% profit enough or is it time to innovate?

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