Food & Beverage is a Critically Important Amenity, Not a Profit Center
Membership Satisfaction, Food & Beverage Service and Profitability
With the availability of comparative data from professionals at firms such as Club Benchmarking Inc. and Condon, O’Meara, McGinty and Donnelly, CPA’s, it is hard to believe that some boards still strive to break-even or turn a profit on member Food & Beverage activity. That’s not the expectation of any other amenity. F&B touches all members and quality suffers when too much emphasis is placed on financial results. Overall membership satisfaction is closely linked to the F&B experience because whether you engage in any one of the many activities that clubs typically offer (golf, tennis, pool, fitness, etc.) the one feature that applies to ALL members is the food & beverage operation. Club Benchmarking studies have proven that clubs with the highest initiation fees and highest dues (reasonable indicators of successful clubs) often suffer the greatest losses in F&B. The better the experience, the costlier it becomes. It is all very rational.
Members often question why F&B is not (more) profitable. “If public restaurants make money, and they pay rent, why can’t we?”
Those of us who have served on Club Boards have come up with our anecdotal responses, but a most thoughtful analysis was recently offered at a meeting we attended with Whitney Reid Pennell, the Founder and President of RCS Hospitality Group and a noted expert in her field. In her presentation, she focused on three major areas that explain the “why” of unprofitable F&B centers: Audience, Menu, and Hours of Operation.
The customers in Clubs are members. They are a captive audience looking for continuous variety. Clubs also must balance the needs of a multigenerational membership with appropriately appealing menus, prices, and multiple venues. Clubs typically have too few members to operate at profitable levels through volume alone, or cannot offer enough variety to attract multiple visits each week. The addressable audience is just too small to operate at levels generated by successful public restaurants.
Special orders, multiple menus, and a high number of offerings are typical in Clubs for a variety of reasons as dictated by the members. These combine to increase required skilled kitchen workers, inventory levels, and waste. Serving to the multiple venues expected in Clubs, and the need to provide variety adds to inefficiencies. In contrast, public restaurants limit their menus, offer just a few specials, and train their staff accordingly. They also typically operate only one venue with one menu and with only limited substitutions allowed. In simpler terms, they are capable of and do operate a more efficient model.
Hours of Operation
Whitney reminded us that clubs operate at sporadic, unpredictable, and unprofitable levels that would not be acceptable in public restaurants. In the private club setting, members expect a certain experience and level of personalized service regardless of location, menu, or time. That is why they became members of a private club—because you cannot find that kind of experience anywhere else.
We’ve come to accept the “what” of F&B results, but now we are better able to explain the “why” thanks to Whitney and her team at RCS Hospitality Group.
Club Board Professionals is a strategic financial consulting and training firm. The Principals, Dave Duval and Joe Abely, assist clubs achieve excellence in three areas: governance, financial sustainability and membership satisfaction. Contact us for a complimentary initial assessment of your club.
© 2017 Club Board Professionals. All Rights Reserved