Editorial

Food & Beverage Profitability

Food & Beverage Profitability

Some years ago I wrote an article for Club Management Magazine tiled, “What Happened to Food & Beverage Profitability?” I believe I hit a nerve because after the article was published, I began to receive calls and emails from managers throughout the country agreeing with my conclusions. To this day I continue to receive an occasional call from a manager requesting a copy of my original article to help them fight the food profitability battle with their Boards.

At the time, the article focused on the following factors that I thought negatively influenced Club F&B
profitability. They included;

  • Multiple Venues – A private club caters to the tastes and desires of all of its members. Unlike an independent restaurant, the club f&b operations are diverse. Public restaurants are geared to serving only one menu on a repetitive basis. This narrow focus allows public restaurants the advantage of operating more efficiently.
  • Insufficient Revenue – A good public restaurant turns its tables several times in an evening. At a club all the members tend to eat at once – at 7:30 p.m. less turnover… fewer sales.
  • Customer Base – The clubs potential customer base falls short in comparison to the restaurant down the street that is able to draw from a much greater population. Thus, a private club actually has limited support for its dining rooms.
  • Give A-ways – Is everything that leaves the kitchen or bar accounted for? Exact portion control and eliminating the extras is a difficult decision. It sounds good in theory at the committee level but theory does not satisfy the members.
  • Cost of Food – Largely due to the paying of dues, pricing in a private club dictates a better value than can be had at a comparable operation. For example, a 12oz. Steak is often priced far less than a similar quality steak served at a fancy steak house restaurant.
  • Employee Benefits – Compared to the public sector, private clubs maintain employee benefits and public restaurants rarely offer them. To compensate for the lack of tips that are found in cash house type restaurants, clubs are forced to pay higher hourly wages.
  • Privacy Issues – Generally, a private club is very selective in the type of business it allows through the door, and it should be. However, clubs pay a high price for this exclusivity. Now…there is even more! Since my
    original article additional roadblocks have surfaced that further limit a Club’s F&B profitability.
  • Lifestyle Changes – Although members continue to love their clubs, the reality is that member’s lifestyles are much broader. Family time, second homes and travel have all consumed a greater portion of a typical member’s time. Limited time equates to limited sales.
  • Less Alcohol Consumption – It’s no secret, focus on healthier lifestyles; driving while intoxicated and other factors has meant a loss of profitable bar revenue. Decreased alcohol sales further add to loss of profitability.
  • Higher Cost of Goods – Wine has replaced Vodka or Bourbon as the drink of choice. Four to five glasses out of a bottle of wine fails in profitability compared to twenty drinks out of bottle of Vodka.

    The price of wild caught fresh fish has increased dramatically due to availability. Increases in the price of
    petroleum have caused other prices to sky rocket.

  • Low Check Averages – Leisurely high check average meals have been replaced by low check average “fast
    food meals”. How many members are asking for fast meals such as salads and sandwiches as compared to
    actually dining at the Club?
  • Eat In Mentality – City Clubs especially are having a difficult time getting members into their dining
    rooms. Business luncheons have been replaced with a common eat-at-your desk practice.
  • Supermarkets – Dinner at the Club has been replaced by pick-up dinner on your way home family meal! And why not, many supermarkets have become a clubs stiffest competition with their beautiful displays and wide variety of choices.

The bottom line is it doesn’t get any easier…so what is a manager to do? My advice is to continue to educate your Boards and House Committee’s. Include an in-depth F&B profitability analysis at your next Board Orientation program. Demonstrate how dues are used to off set expenses in other departments throughout the Club…The ultimate question is; Why should the F&B department be treated any different than the golf course?

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