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| Many private clubs around the country rely on food and beverage minimums, come hell or high water. Others have opted to "ditch" them while other clubs are considering getting rid of them, or alternatively, raising the ante. Why is there such a disparity throughout the industry? |
| Kevin Kennebeck, in a nutshell, sums up why his club has a minimum. "The objective...to provide a system that guarantees income on a consistent basis to offset the consistent fixed cost of operating the dining facilities. Most of us have a core kitchen staff and a service staff that is at the club awaiting our members. This cost needs to be offset somehow, whether the members show up or not. |
| "I believe the monthly is the best, because it helps provide consistent business. All types have big rushes of users at the 11th hour. However, monthly spreads the dollars out, and the service staff benefits consistently," said Kennebeck, CCM, GM of Blythefield Country Club, Grand Rapids, Michigan. |
| "We are one of the highest around at $100 a month, food only. It drives some business, but it also drops a lot of money to the bottom line, which is good and bad. Make it for food only, for sure," Kennebeck opined, "because a bottle of wine should not fulfill a minimum." |
| Dick Haugen, GM at North Oaks Golf Club, a private club in the Twin Cities suburb of North Oaks, shares many of the same opinions and adds "while it does get members thinking of their club, obviously it isn't all the time when there is that kind of unused minimums," he related. |
| "The question is, how much less would they use the club if there were no minimum? Each year we have members who say: why don't you just double the minimum for us but let us spend it in season because we aren't here in off-season? The winter quarterly doesn't help us. I tell them to have their children, family or friends use the club and sign their name. Some do that," Haugen outlined. |
| The club's monthly minimums are $50 for golf and $35 for social members, and for food only. "Took the liability issue out of the equation with no beverage included," he stressed. |
| Sunset Hill Country Club in Carrollton, GA also has a monthly food minimum - $25 a month. "But we're considering increasing it to $40 a month," says GM Travis Branaman, CCM. |
| "For many years I was not in favor of food minimums, however, there's so much dining competition (and cheap competition) that I am now in favor…it helps make a member aware of how much their support for the club dining room is needed. Our food department receives the credit for all unused food minimum revenue. |
| "In our club, a hamburger with French fries and a coke is $9.15. It seems to me that it is not asking too much for a member to purchase at least a hamburger each week," he suggested. |
| So, do the minimums influence how members use the food and beverage facilities and does it stimulate their decision to dine at the club? "I believe it does," Branaman insisted, "although 40 percent of your dining revenue may occur during the final 10 days of the month." |
| His club operates like many others with the found revenue. The average $4,500 per month in unused minimums "goes to our food department and represents about 23 percent of our food revenue. I do not support a beverage minimum and in many states it is considered illegal," Branaman suggested. |
| So the thrust, it seems, becomes two-fold...keeping the club's food and beverage services operating consistently, and in doing so, adding to the club's revenue, whether it goes to the F &B operation, or the club's general ledger. |
| "The minimum is not necessarily needed from a monetary perspective, although we take in $45,000 in minimums annually," stressed Haugen. "This is 3.8 percent on $1,050,000 in food sales only and 2.9 percent on $1,400,000 food and beverage sales." North Oaks has 550 golf and social members. |
| Haugen says the minimums of $35 and $50 were instituted before his time at North Oaks, "but I have resisted the board raising it because I don't want members saying 'we are trying to nickle and dime them for more revenue, or that the food better get better if you are going to raise it,'" |
| "We have a house committee, we do exit comments daily and formal member comment cards quarterly when we do new menus. Our ratings are consistently very high on food quality and service. Sure, we have some members wanting more variety on the menus and others saying the pricing is only fair, but we aren't getting blasted on poor food and service. |
| "If we did away with them now I would have to figure out how to make up $45,000 bottom line revenue. That is $6.82 per month on dues for 550 members. As I said, it is not necessarily needed to operate the club but it does represent 7.7 percent of operating profit," Haugen concluded. |
| It's much the same story for Michael Mooney, general manager and COO of the Grosse Pointe Yacht Club, Gross Pointe, Mich., because he wants his members to use the club during the off-season, since the boating season in the Greater Detroit area only runs from May until Labor Day. |
| The club has a quarterly minimum of $150 for active and social members, while juniors, surviving spouses, and clergy don't have a minimum. "The income from unspent minimums is about $44K per year and is viewed as additional funds for cash flow purposes," Mooney outlined. That's about 1.4 percent of total F & B sales. |
| The final week of the minimum period is busiest when "we serve a lot of members - some of whom we have not seen in three months - and have to staff up the restaurants so we can handle the influx of members who come in to use up their minimum for both lunch and dinner. |
| "The stimulus is not a positive one, but a negative one: 'I have to go to the club or I am going to get billed for non-use,'" Mooney maintains. "It also puts a bit of a strain on operations as those who come in expect really good service anyway, and are at the club not necessarily because they want to be, but because they have to be. So, any deviation from service standards can exacerbate the situation to some degree. |
| "I think some clubs perhaps need a minimum charge, but I view it as many others have seen...if you have a good F & B operation, you don't need minimums," Mooney outlined. "I look at them as a negative sales tax for members, who get irritated if for some reason they didn't use it all up - whether traveling or sick for a few weeks, whatever excuse or reason, and I've heard most of them. We don't need another reason for a member to be irritated with us. |
| "I do think that members need to support their club's operations when it might be the off-season, but I think dues can do that, or service charges on all members like some other clubs have done. The main thing is to have terrific food and service in your restaurant operations. |
| "Everything springs from the restaurants," Mooney stressed. "Good restaurants can begat increasing private party business and a feeling around the club that it is a 'happening' kind of place, because every time a member comes over, 'something is going on.' Minimums don't do that, and can't do that." |
| Are there any easy answers to minimums? Outstanding food and outstanding service are a start, as is creative marketing, others say. |
| "It's incumbent upon the general manager, chef and food/beverage staff to create the interest and desire in the membership to make the club the first choice when it comes to dining," believes Richard Kopplin, president of the Scottsdale Arizona-based, Kopplin Search Inc., and a former club manager. |
| "We found that when we eliminated the minimums not only did our business remain strong but we also avoided the 'spikes' that resulted from members trying to achieve their minimums. The member goodwill generated after eliminating this 'nuisance tax' was so positive that our sales increased in every area of our food and beverage operations." |
| Norm Spitzig, a principal and senior partner in Master Club Advisors, has a blunt assessment. |
| "I've always thought that a food and beverage minimum - no matter what particular form or variation it takes - is one of the all-time dumb ideas in the world of private clubs. |
| "If your club's food and beverage operation needs fixing, then fix it. If you hire the right staff, significantly improve the overall product quality and service level, and understand, meet and exceed the culinary expectations of your membership (whatever they are), the members will come and eat - and will more likely really enjoy themselves because they really want to be there," Spitzig suggested emphatically. |
| Tarun Kapoor, principal of Kapoor and Kapoor Hospitality Consultants, Pomona, CA, suggests minimums, are "often…an easy way out for an unprofitable operation. |
| "Most of the time members join a club to be part of the club community. The more active and vibrant the community, the more time the members spend in the club - the more they participate, the more food and beverage they use. We have consistently found with club clients with active communities (clubs) have profitable F & B, and inactive ones do not. |
| "I firmly believe the focus should be on creating the vibrant community and not on finding solutions to cover the costs of the failing operation, or requiring members to participate by implementing minimums," Kapoor opined. |
| "If, in fact, the lack of participation is because of reasons other than an active and vibrant club community, such as a seasonal membership or members living far away from the club, then other creative strategies can be used to fund the F & B overhead. |
| "For example, on-demand butler services for the members who want it. The high overhead of a restaurant-style operation is explained to members, and as an alternative, they can be provided with food and beverage on-demand. You can limit the number of products available, and the members...request how they want the meal prepared and served to order. This is in contrast to a club with a restaurant that supports a front of the house, a back of the house, an inventory and a menu. |
| "As radical as it sounds, this provides the service when the member wants it, reduces the overhead dramatically, orients members to responsible fiscal management, and demonstrates leadership and accountability on behalf of the paid executive, the leader of the club," Kapoor explained. |
| Publisher's final thoughts |
| Minimums at a private club have less to do with food and beverage and more to do with how clubs market themselves. Many clubs already have great food and beverage service, but they need to create greater loyalty with stronger, more focused marketing. You can say 'if you build it, they will come,' but they won't, necessarily. If you are marketing your food and beverage through newsletters, e-mail blasts, testimonials, and other creative ways for specific events, your food and beverage department will take care of itself. It's as much about internal marketing as it is about food. At least that's the way I see it! |
| What's your opinion. If you wish to respond to the Publisher's Perspective, or other BoardRoom articles, contact Publisher John G. Fornaro by email at johnf@apcd.com. |
| John Fornaro Publisher |