My favorite topic. What I have seen time and time again is that the bulk of F&B expenses are hidden in two significant line items. The first, and most traditional, is General & Admin expense. Receptionists exist to make reservations. Assistant GM’s exist to run F&B events. Clubhouse Managers exist to run F&B events. In many cases, GM’s exist to run F&B events. Some clubs allocate these correctly to F&B, but most allocate a large portion to G&A. The second, and most recent strategy to prop up F&B is to put an “F&B Surcharge” on the financial statements. This is a $30 - $60 monthly charge that is supposed to make up for a “no tip” policy. This is NOT the F&B minimum. It is a separate line item and, in my opinion, simply moves Dues Income over to F&B Income. I have seen them range from $30 to as high as $60 at certain clubs. It doesn’t sound like a lot, but if you have 300 members and your F&B Surcharge is $40 per month you are moving $144,000 into F&B per year. I do agree, however, that charging a monthly surcharge to ALL the members is better than tacking on a % to every dollar spent on F&B. I don’t agree with anything that penalizes the heavy user at any facility.
Furthermore, to comment on the esteemed Mr. Hutto’s statement, “I also think the fact that social members can pay a guest fee and play up to a couple rounds a month on the golf course is a crucial element.” I disagree, but only because our social dues are 33% of our regular dues for the small number of social members we have left. We have 500 golf members and do 22,000 rounds per year (we have a lot of young, working families and a small number of retirees). This means each member plays an average of 3.67 rounds per month. I would say 100 of my members play around 10 times per month so that makes the other 400 play 9,600 rounds which is about 2 times per month. We discontinued social memberships a few years ago but still allow existing golf members to downgrade. The social dues are 33% of the regular dues but a social member, “may not set foot on the golf course, even as the guest of a golf member.” We have very few other amenities (no tennis or fitness). If that rule didn’t exist, I cannot imagine how many of our regular members would downgrade since they already play so infrequently. On the flip side, the other 4 successful clubs in our city deal with social members as follows: two only have golf members, two have social members who are allowed to play limited golf, but the social dues are exactly one guest fee lower than their regular dues. Our “social/no golf” policy is one I have to explain over and over again. It took me a long time to truly understand it but I attribute a lot of our success, especially during 2009 and 2010 (post recession), to this unique statute.
A large population of social members will also render a club very inflexible when the economy or competition causes F&B revenue to start sliding. Because you have to cater to social members by keeping your traditional non-revenue generating venues 100% staffed and open (tennis, pool, fitness, dining), you are forced to cut other expenses (golf course maintenance). Even worse, you are forced to generate higher dues revenue by artificially increasing your dues through lower initiation fees and/or trial memberships.
Our Strategic Plan dictates we focus on offering what you cannot get in the outside world... great (fast and close) golf, great practice facilities, a great social pool (no swim team). As long as you can join a fitness center, play tennis at a local park for free and experience any level of dining at any number of places… we will most likely stick to our strategic plan. So far so good!