Why most hotel restaurants in Africa struggle to make a profit — and how to fix it

Industry experts say this is not just because of tough economic conditions, but also because many hotels treat their restaurants as add-ons rather than as stand-alone businesses.

In South Africa, hotels and restaurants made about $5.5 billion in 2023, up 27% from 2022. Analysts say higher costs, low consumer spending, and poor management are holding back faster growth.

This hurts hotel restaurants in particular because they often rely heavily on hotel guests and get less traffic from local customers.

Conrad Gallagher, founder and CEO of Food Concepts 360, says part of the problem is how hotels run their restaurants.

“Running a restaurant inside a hotel is not the same as running a hotel,” he says. “Hotel teams often see restaurants as amenities instead of profit centres. They end up with generic menus, slow decision-making, and missed opportunities.”

“We map out the kitchen and service flow, build a strong concept, and install high-performance systems with clear KPIs,” he explains.

Speaking about profits, Gallagher explained that hotels can also boost profits by appealing more to local diners, not just hotel guests.

“In Dubai and London, many hotel restaurants are designed as stand-alone destinations that compete in the city’s food scene,” he said.

Gallagher believes African hotels can do the same. “Create a space, menu and identity that thrive in the competitive dining market while enhancing the hotel’s brand,” he says. “Treat the venue as a destination, not an extension of breakfast service.”

Gallagher added that better staff training, menu engineering based on data, and improved marketing can also help hotel restaurants cut costs and attract new customers.

According to him, hotels that want to compete globally can no longer afford to run restaurants as afterthoughts.

“The winners will be those who treat food and beverage as a business in its own right, by making sure it is chef-led and designed to stand on its own,” he says.