How F&B in golf has changed in the last decade

Tania Longmire
By Tania Longmire May 27, 2019 13:05

The average golf club’s food and beverage operation has changed significantly in the last 10 years. Here, Steven Brown, describes that transformation and explores what else the industry still needs to do to maximise profitability.

I have been working in food and beverage for over 40 years and for 20 of them in the golfing community. As I reflect upon those 20 years I have arrived at the startling conclusion that while a lot of progress has been made, we, as an industry, have much to do to keep pace with the progress of high street food and beverage outlets.

I have never found a club that is delivering, controlling and maximising its food and beverage operation to a point where improvement, however slight, cannot be made. This is not a criticism of clubs and their approach to their food and beverage units, merely an observation from an independent, interested party with practical experience of advising clubs on how to maximise their potential, and hopefully their profits.

Since joining the industry I quickly realised that I needed to relearn everything I knew about managing, controlling and operating a golf club’s food and beverage unit when compared to the high street retailing units I had previously worked with.

Common control processes such as the setting of viable wage levels, the correct calculation of overall gross margins (not guessed at), the control of wastage levels and the critical importance of yields had seemingly not figured greatly in golf clubs’ list of prioritising actions. I discovered very quickly, understandably, that the main driving force for clubs was the generation of new memberships and, in many cases, the driving of green fee revenue, leaving the food and beverage operation to hopefully make a positive contribution to the club’s bottom line.

Then the world changed in 2008/9 when pressure was put on every business to ensure that every unit of their business strove to make a positive contribution to their overall business. Golf clubs were no exception.

What has changed in the last 10 years or so?

I thought it might be of interest to highlight some of the changes that have occurred in golf club’s food and beverage units that are now becoming the norm, as managers strive to control, restructure and redirect their food and beverage business, some, it must be said, with great results, turning around once unprofitable units into positive, profit centres in their own right.

Here is a summary of my voyage of discovery in food and beverage in the golfing community:

In-house versus external contactors (franchising)

In all truth this subject, even 20 years later, forms the most oft-requested use of my services and my consultancy time with my clients.

We still have a slight bias towards in-house services versus the external supply, but more and more clubs are now reviewing the process and in particular the terms of their agreements.

Twenty years ago the external contractor paid little or no rent, utilities were paid for by the club, equipment was owned, serviced and replaced by the club, telephone, rates, laundry and uniforms were funded by the clubs and even in some cases there would be a retainer during the winter months.

What has changed? More and more clubs are recognising that these terms are not in the best interest of the club and its members, and that the entire trading model needs to be reviewed. Many clubs are now beginning to access their client’s turnover (and even expenses) and are able to justify a ‘commercial rent’ based upon their declared trading figures and certainly, from my own experience of providing golf clubs with this important data from my consultancy visits, I can categorically state that I am recommending a complete review of the rental terms to some 80 per cent of my clients who still operate on what I consider to be inequitable terms.

The right document is a must, as failure to identify the total nuances of how the partnership will operate can, and often does, lead to complications. You must maintain control of these operations and not simply abdicate responsibility to them as was the case 20 years ago.

The use of external contractors should provide you with some financial reward to help defray your club’s outlay (such as utilities)  but, just as importantly, a level of expertise at operating a complex foods’ (and / or bars’) unit.

I have no favoured course of actions when recommending what clubs should do (such as take the food and beverage back in-house or the reverse of giving it to a contractor) and for one simple reason – every club’s circumstances are both individual and unique.

For some clubs it’s all about retaining the profits, or replacing the contractor who is not complying with terms or supplying an inferior level of service. Whichever route you choose, remember this – get the best return for the club, reduce risk wherever possible, keep control and choose a trading model that acts in the best interests of the club and its members.

Employment wage costs

I recently visited a client where the wage percentages were 121 per cent.

In normal circumstances this would have left me speechless. It wasn’t until I quizzed the client as to why they had such an extraordinarily high figure (the highest I have ever seen) that he informed me that the standard of service at their club was of the highest possible standard as demanded by the membership and he recognised that that comes at a high price. He then informed me that the staff wage cost paled into insignificance when compared to the amount people paid to join the club (in excess of £60,000) and the amount they then paid in annual fees (in excess of £10,000).

In other words, the staff wage percentage was a small price to pay compared to the income levels generated for every new member together with the annual fees.

I wish all my clients were so blessed but, back in the real world, we have to be guided by more prosaic matters – can we afford the staff we have and what should that level be?

Is there an industry norm for this by which clubs can, even at a glance, measure themselves to see if they are trading profitably?

The short answer is YES – the longer answer is a little more complex in that there are polar extremes.

If your club operates a typical golf club food and beverage snack type menu (and trust me there is such a thing), has little or no event trade and you employ a cook not a chef, then typically we look for a 28 to 33 per cent wage cost.

If, at the other end of the spectrum you conduct, say, 100 external functions such as weddings and wakes a year, then expect a wage percentage that ranges from 43 to 63 per cent, or even more.

Remember the figures are only guides and your main responsibility is to provide a level of service that will match or exceed your customers’ expectations.

One important point is to make sure that you cost additional staff costs into the price you charge per head or, if not, that you charge a room hire fee, or, if possible, both! In this way you will keep these wage costs down and pass them onto the hirer.

Dish costings

After 20 years of beating the drum with clubs about carrying out a dish costing exercise for all the products they sell, I think the message is finally getting through – and it needs to.

I have lost count of the number of clients that have no idea at all about which products they sell generate the highest cash margins. So much so, that I have illustrated, in virtually every club I go into, that the most expensive items on the bar or menu are not necessarily the most profitable. What compounds the situation is that people believe that a higher turnover equates to more profit and that ain’t necessarily so. I can make an outlet more profitable in net profit terms from less turnover! Let us not forget that ‘turnover is vanity and profit is sanity’.

If your biggest selling products are also your biggest profit earners then you won’t have a better opportunity to make a positive contribution to the club’s bottom line. If, however, your biggest seller is the least profitable, then something needs to be done to address that situation but you can only do this if you know how to cost a dish, calculate a gross profit, control waste and control all costs related to its provision such as staff wages.

There are so many handy apps that chefs and bar managers can download these days to control this dish costing so there is no excuse for not conducting this exercise, which is the first step to making a profit by control and not by accident.

Maximising your yield

The yield is a fabulous indicator for a bar’s operation to use when assessing how well the unit is performing at buying a product and selling it without losing anything (or at least as little as possible).

If you have an external stock taker they should be generating this figure for you to give an immediate, on-site indication as to how effectively you are trading.

The average yield in golf clubs is between 93 and 96 per cent. In high street pubs (managed houses) the average yield is 101 to 103 per cent, and yours can be too.

Some golf clubs do achieve the high 90s and even beyond, but is that a realistic target on a regular basis?

The answers is yes – our target yield for golf clubs with a 50 per cent-plus turnover of draught products is 99 per cent, and is genuinely achievable by careful waste management, correct measuring, heads on pints, shandy sales and various other ‘trade tricks’ that experienced bar supervisors can apply.

Yield will be badly affected by non-delivery of goods, out of date stocks, excessive waste (for example those above and beyond the accepted industry norms).

So please make sure that your bar manager and their staff are closely monitoring your all-important yield, as a low result can be the first indicator of inefficiency or even nefarious practice in the business.

There is no doubt that in the 20 years I have been advising clubs on food and beverage matters that some giant strides have been made leading to better controlled and more profitable units, but there is still so much more to be done by so many clubs, and that for me is the excitement of the challenge.

I know full well that today’s new breed of golf club manager is gearing themselves up for that challenge, because I meet many of them on the Golf Club Managers’ Association and Club Managers’ Association of Europe courses that I lecture on about food and beverage, and I can see the hunger and appetite that they have for an understanding of the dark arts of food and beverage management, because they understand that change is needed, progress is inevitable and that a food and beverage operation really can become an asset to a golf club in today’s competitive market place – and can be a standalone profit centre.

Steven Brown is a food and beverage consultant to the golf industry. Tel: 07785 276320 or 01604 843163, or email herinn@aol.com

 

Tania Longmire
By Tania Longmire May 27, 2019 13:05
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