Supply Wizards

Of the many challenges hotel managers face, one of the most difficult tasks is keeping up with the ever-changing expectations of guests. Instant gratification is (and has been) in high demand across all industries. Consumers want what they want when they want it, and services like Uber, Amazon Prime, and others have set the bar pretty high.

Hotel guests are no different.

In fact, a recent study shows that 61% of business travelers want free WiFi access. In other words, they don’t just want access to information…they want it now!

How does this translate to hotel pantry management?

In two ways: convenience and profits.

Convenience

While vending machines are still a viable option for many locations, your hotel pantry provides these bleary eyed travelers with more variety and ultimate convenience. Think about it, how many times have you had money stolen from you by a vending machine? A pantry eliminates that hassle. After traveling all day and (sometimes) being away from family, guests can simply walk into the market, pick an item or two, and pay for it just as they would in a convenience store. This added convenience leads to more sales.

Profits

A hotel pantry can be an excellent source of revenue, but it has to be managed well. It has to be a priority. That means pricing items effectively, merchandising, and keeping the pantry well-stocked and clean. An attractive pantry filled with guests’ favorite snacks and treats will influence impulse purchases, which will lead to higher profits.

One aspect of managing a hotel pantry that initially gets overlooked is theft. Shrinkage from your pantry is unavoidable, whether it’s due to stealing or reduced prices for employees. So it’s important to take the proper measures to prevent guests and employees from stealing or abusing the pantry. Here are four tips to help reduce theft from your pantry.

1. Surveillance Cameras

Some suppliers will have security cameras installed to monitor the pantry. If you don’t work with a supplier that can install cameras, we suggest investing in them. While it might seem like another expense, the money you make (and save) from the pantry will quickly cover the costs.

2. Maintain Physical Presence

Managing a hotel can be like juggling  glass bottles while running full speed across a balance beam. It gets hectic. But being able to maintain a physical presence near and around your pantry as much as possible will help deter would-be thieves.

3. Inventory Monitoring System

Knowing is half the battle. Without having a firm understanding of what your pantry inventory looks like at any given time, it’s much more difficult to keep up with shrinkage. Having a solid pantry management system to keep track of inventory that you have can help reduce theft and shrinkage. If you know certain items are likely to disappear, you can limit the amount of product you put on the shelves.

4. Monitor Employee Use

It’s well-known in loss prevention circles that employees steal more than customers. Knowing this, it’s incumbent on managers to make sure employees understand that the pantry is–first and foremost–a convenience for guests. It’s not a break room. Some managers choose to not let employees use the pantry at all, while others decide to let them purchase items at a reduced price. Whatever your approach, stick to it and monitor employee use of the pantry.

One of the most difficult aspects of managing a hotel pantry is determining the prices for the items. It’s an exciting yet challenging element to successful market management. Price the products too low and you run the risk of losing money. Price them too high and you might scare off guests from purchasing anything, which also leads to losing money.

If you’re in this predicament, don’t worry: you’re not alone. Many hotel managers struggle with pricing products in their pantry, because–after all–they’re hotel managers, not retail professionals. So what do you do?

Ultimately, it comes down to perspective. It’s essential that you view the pantry as a both a convenience for guests and a way for your hotel to make an extra profit. Why put in all the time and effort in managing the pantry if you don’t stand to benefit from it?

Determine Your Profit Margin

Before you price an item, you need to understand two important factors: your guests and the labor involved.

If you’re charging $300/per night, your guests won’t be as price-conscious as guests of a low-budget hotel where rooms go for $59/night. Likewise, if you’re managing an economy hotel, guests will be less likely to buy items that are marked up 50% or more.

Once you understand your guests’ pricing expectations, think about the labor you put into managing your market. Even when using a hotel pantry management program like Supply Wizards, there’s still work involved like stocking the shelves and keeping it clean and organized. You should earn revenue from that work.

Use a Pricing Formula

Now that you know what your profit margin will be, you can use this simple formula to determine the price:

Price = [(Cost of item) ÷ (100 – Markup Percentage)] x 100

So for example, let’s say you wanted to price a candy bar that costs you $1.00 at a 40% markup. Here’s how you would calculate it:

Retail Price = [(1.00) ÷ (100 – 40)] x 100

Retail Price = [(1.00 ÷ 60)] x 100 = $1.67

It might seem like a lot to manage a hotel pantry. To a certain extent, it is. But with the right understanding and perspective, the market can be a great amenity for your hotel. Guests like the convenience of them, resulting in more sales and extra profit for you.

Hotel managers are increasingly embracing the pantry system as a way to provide drinks, snacks, and a variety of items for their guests. And for good reason: pantries (also called markets) offer a much better user experience for guests while benefiting hotels in several ways.

Traditionally, vending machines were the go-to way to provide snacks and beverages for hotel guests. But with vending, you’re limited to what kind of products you can sell, and the equipment can be quite fickle, requiring regular maintenance. The pantry system has opened a whole new world for both hotel managers and guests.

But what about the hassle of setting up a pantry? Not to mention managing one.

While it might seem like a lot of work–and even more headaches–it’s really not. If you approach it equipped with the right knowledge and a plan, you can’t go wrong with installing a hotel pantry.

7 Steps To Installing A Hotel Pantry

1. Determine Your Needs & Estimate the Cost Of Installation

The first step towards setting up a successful market for your hotel is to determine what your budget will be for installing it. The average cost for installing a pantry is about $8,000-$10,000. It can be done for less if you choose to install it on your own.

If you go that route, the main Items needed to install a hotel pantry include:

• Shelves & fixtures
• Drink coolers
• Shelf organizers
• Microwave

The shelf organizers and microwave can easily be purchased at any local big box store like Wal-Mart or Office Depot, and a drink cooler can be purchased or rented from Coca-Cola or Pepsi.

In the case of having a supplier install the equipment, make sure you take time to discuss what your needs and expectations are for the pantry with your supplier of choice so they can provide an appropriate quote for installation. Tips for choosing the best supplier in your area are discussed in more detail below.

2. Decide on Where to Put The Pantry

Once you’ve determined the cost for installing a pantry, the next step is to decide where to put it. An empty wall in your lobby or near the lounge are good locations. If you’re concerned about theft, install the pantry behind the front desk if there’s enough room.

Keep in mind that, much like vending machines, you want the pantry in a high-traffic area. If it’s tucked away in a dark corner where guests rarely pass through, sales will be low and theft–most likely–will be high.

You’ll also want to be sure that electrical outlets are available to plug in the coolers needed for beverages and other products that need to be refrigerated.

Pro Tip: If you’re going to install the pantry on your own, be sure to keep shelves and other hardware in line with the decor of the hotel. For example, if the interior design of your hotel consists of a lot of dark brown or mahogany, you should select shelves of the same type. Not something like oak, which would only clash with the design of your hotel.

3. Research & Decide on a Supplier

This step is important, and it’s best not to rush through it. When you’re searching for a supplier to install a pantry and routinely deliver products needed for it, you want to choose one you can trust. But just as important is keeping the supplier source simple, meaning you don’t want too many suppliers delivering products.

Having multiple vendors deliver different products just to save a little money will only lead to headaches and make managing the market more of a hassle than it should be.

The best way to choose the right supplier is to thoroughly research a variety of companies and evaluate them based on certain criteria. Things to look for in a supplier include:

• Reliability
• Responsiveness
• Communication
• Years in service

These are important characteristics that need to be evaluated closely before deciding on which supplier to use. Take the time to properly assess the company you choose.

4. Set Appropriate Pricing

Pricing items in the pantry is a sensitive area for some hotel managers. There’s a fear of setting prices too high, leading to guests not purchasing items and/or complaining about it. While you don’t want that, you also don’t want to lose money from setting prices too low.

So what do you do?

It’s important to understand that your hotel pantry can be a source of ancillary income. In other words, you stand to make a nice profit from the market if managed correctly.

It’s also important not to approach your pantry with a fixed monthly budget for the products you sell. Let the sales dictate how much you spend. If your budget falls short of the demand for items, the result will be empty shelves, which is unsightly to guests.

For example, if you budget $300 per month for sweets but they’re always selling out, you should spend more on those items since you know they’ll sell and make a profit. Hotel pantry management software like Supply Wizards makes this process simple. It calculates all of your par levels and will tell you when and how much product is needed.

5. Choose the Right Products

While it’s tempting to purchase generic brands for items in order to save money, name brands ALWAYS sell better. There’s a reason why companies like Coca-Cola, Nabisco, Campell’s Soup, and Band-Aid spend millions on branding and advertising.

Because of the brand, you’ll be able to set higher pricing and capitalize on the trust and loyalty consumers have with those brands.

In short, you should take advantage of the effort those companies put into branding to help profit from your hotel pantry.

6. Organize Items Logically

Retailers spend a lot of time shelving their products for both profit and appearance. You should do the same with your hotel pantry. Not only is an organized shelf appealing, but it helps your guests find what they need faster, since they’re usually in a rush or tired from a long day of travel.

There are four main categories of items that you want to group together:

1. Sweet
2. Salty
3. Healthy
4. Sundry

Remember, the whole purpose of installing a hotel pantry is to improve the guest experience. Items scattered throughout the shelves without any order will only make it more difficult for them to find what they need.

7. Take Pride In Your Pantry

The final step in setting up a hotel pantry is to be proud of it. When you walk into a bakery or local family-owned deli, the owners are proud of their business. You should view your hotel pantry the same way. Don’t treat it as a side project that gets worked on in your spare time. It will show and guests will not be compelled to use it, thus wasting any time and money you do put into it.