Last year about this time, I wrote about whether Food & Beverage (F & B) at private clubs should lose money, as is often the case. Opinions vary on this topic, and as noted previously, some consider it a choice.
Just this month, Club Director Magazine, the publication of the National Club Association (NCA) devoted much of the issue to F & B with several suggestions from a variety of industry experts on how to be successful (not necessarily profitable) in a club’s F & B department.
In his article “Banking on Food & Beverage as an Amenity”, author Mike Morin presented data that F & B gets more usage and is of primary importance for current members, and follows close behind golf as the impetus for joining and providing member satisfaction. These are somewhat surprising to me. While I realize that most clubs have social members (who may not care about golf) it always seemed to me that the mere existence of the club (golf or country clubs) depends on the existence of golf. Data from Club Benchmarking suggests that the median large club F & B operation loses 11%. Mr. Morin suggests that golf loses in excess of 30%. I’m not sure how the golf loss is calculated but often wonder if it’s the golf that we pay dues for while F & B is generating revenue for each use, and is often subsidized by minimums. Maybe not a perfect comparison?
NCA’s Phil Mike, in his article “The New F & B Outlook: Challenges and Opportunities” profiles the eating out habits with restaurant industry data on consumer behaviors and how they’ve evolved. It would be interesting to study the habits of club members to see if the data are consistent with restaurant goers and also analyze the impact of large menus versus limited menus at clubs. McMahon & Company’s Bill McMahon notes that F & B (like the rest of the club) requires strategic planning and should be regularly updated. With “change” often a dirty word at many clubs, this can be a challenge to achieve.
In their article “5 Tried And True Best Practices for F & B Programs” Annette Whittley and Lawrence McFadden list the following suggestions for club F & B operations:
- Authenticity – “Make the member feel as though they are actually visiting the location and sharing its culture.”
- Consistency – an overused term but knowing what to expect and getting it means a lot
- Repeatable Learning – users learning how something is made
- Simplicity – Maintaining club classics (familiarity)
- Timeliness – Waiting forever is never satisfying.
What’s particularly interesting about club F & B is that in most cases, it’s subsidized through periodic minimums. One would think this would be calculated in such a way to avoid losses. In many cases, some members eat at the club only to use their minimum. Some clubs have eliminated their minimum and simply added the amount to the dues. It’ll be interesting to see if F & B revenues decline at clubs employing that model, and how much.
The best things clubs have to offer in F & B is familiarity with not only “signature” items but also staff and other club diners, their fellow members. I’ve always wondered if “competing” with local restaurants makes sense and why clubs try. They have a somewhat captive (though limited) audience of those who’ve used the club that day and don’t need to go anywhere. It’s often been suggested that clubs, in an effort to be available, open during hours with few users. That can be remedied.
It stands to reason that if a specific club’s F & B is a consistent loser, adjustments will be made, especially as the economic fortunes of those clubs evolve. Whether from fraud or theft, inefficient operating hours, menu choices, food quality or staffing or service issues, club F & B has challenges. As some say, clubs make an often difficult choice in establishing their goals and defining their culture. A review of the many clubs we’ve analyzed shows that roughly 50% of those private clubs are profitable in the F & B department. The goals can be either financial or otherwise and can impact not only the club’s finances but also its character and culture.
Remember Mr. Dedman’s (founder of ClubCorp) comment that “Clubs are run like nobody’s business because they are nobody’s business”. Sometimes, that’s a choice.