I have been working at golf courses now for 28 years; the first part was in high-end public facilities and the last part at private facilities. Prior to this, I was in the restaurant business, so what I am about to say may come as a shock.
Stop trying to run your food and beverage operation like a restaurant! Do you want to know why? It’s simple – because it’s not! Here are all the reasons why it’s not the same.
1) You have a fixed client base (members and their guests)
2) You charge an automatic gratuity
3) You levy an annual food and beverage minimum
4) Members have a vested interest
5) Members expect more service
6) Member expect cheaper prices
7) Members expect larger portions
In order to see success in your food and beverage operation, you have to first stop looking at your restaurant as a business. Look at it as what it is really meant to be, which is an amenity or service. This rings true for both private and public facilities, but for this article I am going to focus on a private club.
Strangely enough, the most used amenity at any club is the restaurant, slightly edging out the golf course itself, according to a US study. Which I don’t think would surprise a lot of us if we would sit down and think about it for a while. After all, a member could eat before the round and then have drinks after the round.
It is also the most scrutinized department at the club. Everyone seems to know someone that owns their own restaurant and has done well for themselves, so it is thought that there has to be a lot of money in food and beverage.
Well, those of us who are, or have been in the business, know that there isn’t necessarily a lot of money to be made and competition is fierce. Two big reasons that explain why: the closure rate on restaurants is still very high and it’s a tough business to make a dollar in. I guess that should be the first rule we need to remember – that you put dollars in the bank, not percentages.
At a private club we have a fixed customer base, which is the members, as well as their guests, and at most 18-hole properties, the member count is in the hundreds. This is a vastly smaller customer base than a public restaurant. On an average Friday or Saturday night, over 50 per cent of the customers in that public restaurant are eating there for the first time. This puts into perspective how a limited customer base can affect the business.
When you look at the food and beverage operation as a business, we then manage it as such, and that is where things start to go wrong. As industry professionals, we are taught about food cost percentages, yield, waste, cover counts, revenue per seat, table turnover etc. All are valuable information when you are running a restaurant – but we’re not!
We have a fixed, small customer base (the members and their guests), we serve all meals (breakfast, lunch, dinner and snacks) with long hours, mostly on a seasonal basis, which is largely based on weather. Recognizing these differences is the first step in realizing why we have to stop managing the restaurant operation like a standalone restaurant and stop comparing prices to the independent guy down the street, or the national chain restaurant.
It’s like comparing apples to oranges. I am not saying that we can’t have a financially successful food and beverage operation at the club, however, what I am saying is that maybe we need to define success differently. Let’s start by throwing the use of percentages out the window when managing our business.
Percentages are a great equalizer and allow for easy comparison, but as previously stated, we shouldn’t be comparing ourselves to the rest of the restaurant industry.
Although we are open for all meal periods, they are not all created equal. Another major factor to consider is when and where the revenue is coming from. For any establishment that is open all day, breakfast and dinner are the most profitable meal periods. At a club, although we are open for all three, most of our revenue comes from lunch – the most competitive and least profitable of all meals.
Although we are taught that low food cost is good and high food cost is bad, we also know that the most expensive thing in the restaurant is an empty seat. So, what is more important: low cost of sales or a full restaurant? This is where what is known as “the cost plus” formula comes into play.
To help explain this concept we will start by using men’s night as an example. Rather than working within a food cost objective of 30 or 40 per cent, which may equal $7-$8.00 that you can spend on the meal, let’s reverse that and say that you need to make $10.00 per plate. With this formula all you have to do is add the cost of the meal to the money you have determined you need to make in order to get the selling price.
So, if a 10oz striploin steak this week has a plate cost of $12.00, you sell the dinner for $22.00, and next week if it is beef tenderloin and lobster tail with a plate cost of $20.00, you sell it for $30.00.
I look at this the same way I look at gratuities. If I order a $40.00 steak or a $10.00 hamburger, the server is still bringing me one plate, so should the gratuity be four times higher for the steak? I’m not sure everyone would agree with that philosophy.
At the end of the day, the club still has to turn on the lights, use gas, wash the plates, napkins and cutlery etc. All the same operating expenses exist, so why do we have to mark-up the steak two to three times as much as the burger just because the cost of the plate is double when the operating costs are the same?
Calculating what you need to mark-up each dish in the restaurant can be difficult in the beginning but will become easier over time. If you do this I think what you will end up seeing is an increase in overall revenue.
Another thing I am confident you will notice is that the members will see the greater value in the more expensive dishes, and as a result of this end up dining more often, and possibly bringing more guests.
You may be surprised to see that your greatest expense – that empty seat – becomes a thing of the past, making your new definition of success a full house rather than a cost of sales percentage.
