Call us @+234 806 558 2598
Why Most Hotel Restaurants in Africa Fail to Make Profits — And the Smart Fix
Why Most Hotel Restaurants in Africa Struggle to Make a Profit
Hotel restaurants are some of the most beautifully designed spaces in Africa’s hospitality scene. They often boast top-notch interiors, prime city locations, and a captive audience of hotel guests. Yet, despite all this, most of them struggle to make consistent profits. The paradox is striking, while Africa’s hospitality sector is expanding, many hotel restaurants remain loss-making ventures. So, what’s really going wrong, and how can it be fixed?
The Numbers Tell a Story
In South Africa alone, hotels and restaurants generated about $5.5 billion in 2023, up 27% from 2022. That sounds impressive until you zoom in: higher costs, low consumer spending, and weak management continue to squeeze profits.
In Nigeria, the situation is even tougher. Many restaurants lose money simply because of unreliable electricity. Frequent blackouts and the soaring cost of fuel for generators inflate expenses, while power cuts drive away customers. Add in inflation and reduced disposable incomes, and you see why hotel restaurants are not bouncing back to pre-COVID revenue levels.
According to Conrad Gallagher, founder and CEO of Food Concepts 360, the root problem is how hotels think about their restaurants. “Running a restaurant inside a hotel is not the same as running a hotel,” Gallagher points out.
Hotel management teams often treat restaurants as “amenities”, convenient spaces for hotel guests, rather than as independent, profit-driven businesses. This leads to generic menus, slow decision-making, and missed opportunities. The result? Restaurants that fail to attract locals, struggle to innovate, and bleed cash in an already competitive market.
What Successful Hotel Restaurants Do Differently
Globally, hotel restaurants in hubs like Dubai and London are run as stand-alone destinations. They compete head-on with the city’s best dining spots, drawing in both tourists and locals.
Gallagher argues African hotels can, and should do the same:
- Create strong concepts: Restaurants need their own unique identity and character, not just an extension of breakfast service.
- Use data-driven menus: Menu engineering ensures the most profitable and popular items take center stage.
- Invest in staff training: Skilled, motivated teams enhance customer experience and reduce costly mistakes.
- Boost local appeal: Hotel restaurants shouldn’t rely only on guests. By attracting locals, they gain consistent traffic and revenue.
- Professionalize management: Treat the restaurant as a stand-alone unit with its own profit-and-loss targets, clear KPIs, and leadership separate from the hotel’s general operations.
To unlock profitability, hotels must change how they view food and beverage. Gallagher suggests bringing in external food and beverage specialists to design restaurants from the start, from kitchen layout to service flow, marketing, and financial systems. This shift is about more than cost-cutting. It’s about repositioning hotel restaurants as vibrant, competitive dining destinations. A thriving hotel restaurant not only attracts paying customers but also enhances the hotel’s overall brand.
African hotels can no longer afford to treat their restaurants as afterthoughts. The hospitality winners of tomorrow will be those that:
- Treat food and beverage as a business in its own right,
- Give creative freedom to chefs and specialists,
- And design restaurant concepts that thrive in the competitive dining market.
In short: a hotel restaurant shouldn’t just be where guests grab breakfast. It should be a destination in itself, a place where locals and travelers alike want to spend their money, time, and memories.
