Electronic Edition - March 1997

The Private Club Advisor (PCA) is a monthly business letter for directors, officers, owners, and managers of private clubs. The PCA focuses on club policy issues, member relations, and legal and legislative developments affecting the club industry.


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TOPIC OF THE MONTH: THE HEALTH OF CLUB FOOD OPERATIONS

HOW ILL IS THE PATIENT? The average club restaurant operation of the mid-1990s continues to lose money, according to figures released during the recent World Conference on Club Management sponsored by the Club Managers Association of America. The latest figures are more dismal than those of a year ago.

Clubs in Town and Country, the annual study conducted by the financial consulting firm PKF Worldwide over the past four decades, shows an average 10 percent loss in country clubs and 5.5 percent loss in city clubs for fiscal years beginning in 1995. PKF analyzed the performances of more than 250 clubs nationwide. A year earlier, the average losses were 3.3 percent for country clubs and 3.1 percent for city clubs.

Two exceptions to the losing trend: Eastern country clubs managed to hold their own, recording an average net income of .2 percent; and city clubs with membership of 1,500 to 2,500 showed food and beverage profits of 1.3 percent. The PKF figures are corroborated in both cases by a similar report from the accounting firm Condon O'Meara McGinty & Donnelly (COMD), which focuses on clubs in New York, New Jersey and Connecticut. All country clubs in the COMD study and city clubs in the 1,500-2,500-member range reported net F&B profits.

FIRST STEPS TOWARD A CURE. A question raised at the conference: If the typical club food and beverage department is losing money, what can be done about it? That depends not only on the club philosophy, but the club capability as well, responded Daniel T. Condon and Thomas F. Blaney of COMD.

Clubs with extensive banquet operations have the best chance of breaking even or making a profit in F&B. A club must have the facilities to handle banquets without inconveniencing members who are using the club at the same time. To set high expectations financially for F&B without the facilities, or without general member acceptance of party and banquet business, is to make unfair demands, the COMD representatives said.

They added that some clubs expect losses in the F&B department because they are willing to pay whatever it takes for quality food, service and ambiance. One COMD client club budgets for a $300,000 loss, covered by dues income.

Some conference speakers said it is time clubs "back off" F&B operations instead of making them "whipping boys" for all club problems. "Golf course maintenance costs can climb $2,000 per hole in a year, and no one questions it," one speaker said. "Food cost can go up two points and management is called on the carpet."

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OTHER TOPICS IN THE MARCH 1997 PAPER EDITION

Generation gaps: The private club's main challenge.

Can your members afford to be active in the club?

An endorsement for the Audit Committee.

The value of a construction manager.

Rising concern about caddies…are they club employees?

Closing the golf course in bad weather: Who says so?

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COMING UP IN THE APRIL PCA, PAPER EDITION

Reevaluating minimum spending programs.

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DO YOU HAVE AN OPINION?

Some club executives say a minimum spending policy is justifiable for the recreation-oriented club wanting to maintain quality food and beverage service. Others say minimum spending is nothing more than supplemental dues by another name, and shows a club has no confidence in its ability to develop a food and beverage operation that can stand on its own.

What is your opinion? (Names of those responding will be treated confidentially.)

Or, Please respond in writing to the Private Club Advisor. (See mail and electronic addresses below. Please put RE: PCA, if you let us know by e-mail!!)



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Take care,


Eldon Miller,
Editior


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