The marriage of golf courses & clubs and their food and beverage (F & B) operations is often anything but tranquil. While there are some that make money, many do not and some in the golf industry either don’t know why, don’t care why or simply seek to focus on the golf and other aspects of the club. We’ve encountered numerous purchasers of golf facilities that seek properties with F & B revenues at no more than a certain percentage of overall revenues. Golf Property Analysts is currently working as part of a team on an assignment in California seeking to identify and help ownership implement improvements and practices to enhance the club’s economic performance. Among the members of our team is F & B expert extraordinaire Tim Brown of Soundvue Development.
This was a great opportunity for us at GPA to become more knowledgeable about this aspect of the golf business that often gets “shoved under the rug”, relying on historical performance rather than doing an analysis of how the club can actually improve performance. I posed some questions to Tim, the first being the most obvious: Why do golf courses and clubs so often lose money on F & B? “Golf courses (GC’s) and country clubs usually lose money for a variety of reasons. They almost never generate enough business from golfers to cover their payroll and cost of goods sold. They are not destination restaurants. When was the last time your significant other suggested a golf course restaurant for a night out, never, unless you belong to a course that has a minimum F&B spend? Golf course affiliated restaurants are also rarely in the most convenient locations, and less than 10% of the population plays golf. GC restaurants are usually managed by the club manager, probably someone that has only GC management experience, little to no restaurant experience. GC’s do not focus on banquets and weddings, meaning they probably don’t have a good sales manager. GC’s typically have some of the best landscape, views and settings for weddings and events. Hire a great salesperson and push banquets hard.“
Brown went on to say that golf and club facilities employ some inefficient practices, such as no “recipes”, no standards of service and no group purchasing agreement (GPO). He also mentioned waste and the lack of “menu-costing”.
One area that’s always been a point of discussion is the size of golf and club clubhouse facilities and the impact on the club’s economics. Brown observes that clubs often oversize their restaurants in order to accommodate golf tournaments, outings and other events. He recommends smaller facilities for normal dining and separate banquet or pavilion areas for these events.
One area I’ve often heard concern about is theft. According to Brown, “Every restaurant has a theft problem!” It is incumbent upon management to establish strict rules about employees eating food, bartenders giving away free liquor hoping for a higher tip, and food not being rung up in the point of sale system. The first way to detect theft is to track cost of goods sold percentages. Spikes in liquor or food cost percentages typically signify theft. Theft is almost always restaurant staff, particularly bartenders and servers. Since cash sales are limited in the restaurant business anymore, the theft of cash is negligible. Suppliers can steal from you by “shorting” your delivery and substituting inferior products but charging for the higher cost item. A good chef will catch on quickly IF they inspect every delivery to ensure consistency with orders. At private clubs, there have been instances where members involved in club leadership have managed to steal and sometimes even consultants hired to assist clubs have arranged for “kick-backs” from suppliers that add to a club’s food costs.
Guidelines, according to Brown, for restaurant cost of goods sold are typically 18%-20% for liquor and 30%-35% for food. Most restaurants, not just golf courses, do not have negotiated contracts for all F&B and supplies, these are commonly called Group Purchasing Organizations or GPO’s. GPO’s can save you 5%-15% depending on the category of goods.
Club menus receive lots of scrutiny. Brown says: “Golf course menus typically are either burger, dogs, fries and sandwiches or in higher end clubs they try to sell more of a fine dining experience. Your menu should be built based on the demographics of your guests, primarily golfers. You have to ask the question, why are there so many people golfing at the course but so few actually eating? The answer is either price, quality of product or service or lack of food that you want to eat. ASK YOUR CUSTOMER/MEMBERS what they want.“
Private clubs have a unique dilemma with staffing. They have to pay their employees enough to make a living and retain them. With limited business the only way clubs can keep people is to pay them too much, which obviously affects the bottom line. Typically club restaurant employees are not motivated to sell, are sometimes seasonal and often lack any significant training. Automatic gratuities are going to be universal in the near future. This is likely to cause menu prices to increase significantly to account for the automatic gratuities. If done right by restaurants, it can actually add to the gross profit of the business.
Lastly, I asked Brown if there were one or two things he consistently sees at golf/country clubs that he’d change. He gave me 3. First of all training. The staff must understand how to be profitable and be motivated to care. He emphasized the importance of being part of a GPO and creating recipes based on food costs. He sad there were at least 10 things but these are the most pressing issues. He emphasized that employees need to be trained and held accountable to maintaining consistency and lower costs. Excessive member influence, often from club leaders can interfere with management and staff is often inexperienced and not well trained.