The Elephant in the Club “Restaurant” – Financial Opportunities with Technology

By Richard McPhail, CCM

Club-Edge, LLC

Article 6 in “The Elephant in the Club” Series by Richard J. McPhail, CCM?-?Club-Edge, LLC

Why are we losing money in the Club restaurant(s)?

After spending most of my career managing private clubs, I have heard this question thousands of times. This probably comes up more than any other topic in “club-world” from every board, committee and from the general membership.

In answer, many private club managers very correctly point out that club dining is a “member amenity”, without the same operating parameters and goals of a public restaurant. Since private club dining is an amenity, the objectives (to serve the wants of its members) and differences between a club and a restaurant can justifiably go on and on.

I am somewhat tempering my defense of some food and beverage losses. This does not mean that losses will not be incurred, rather that the size of some of those losses can often be managed to minimize their impact on the club budget. If you consider that private club “restaurant” losses do not even include rent, utilities, taxes, insurance, capital replacements, etc. (which are included in the club master budget in a separate line items category), the real differences between a club dining amenity and a typical “for-profit” restaurant become more sizeable.

I am old enough to remember when club members used to sign a “chit” for their member charges. The “good old days” when you just scribbled your signature on a hand-written card (but sure to legibly include your member number in the designated area - the lower the number, the more prestigious).?Many managers and boards remember when the more logical POS (point of sale) technology became available and it seemed to take FOREVER for private clubs to embrace this new technology, while at the same time many restaurants were already using it for multiple years. To be fair, this is the way many private clubs have always addressed and adapted to change.?Slowly.?For many reasons, that can often be an attribute since successful clubs are all about historical culture and continuity.

Everyone knows that the restaurant business is a tough game. A mismanaged restaurant is “here today, gone tomorrow.” To tackle that constant challenge, today’s restaurants are using technology to better manage their time, staffing and to maximize their profits. New technology helps improve all facets of their operations to improve efficiency and increase profits. Technology is also utilized to reduce food purchasing costs, automatically code invoices to accounting, properly price menus, reduce revenue discrepancies, identify product losses, and more easily identify missing sales, shortages and theft. This technology is also readily available to the private club industry.

My point is that with today’s amazing technology most clubs are still ordering food through their “favorite” salesperson, using antiquated “Excel” spreadsheets to count and report inventory, still cannot tie actual bar utilization to actual member charged sales, and cannot easily show the true cost of a member menu item or catered event.

One clear difference between clubs and public restaurants is that clubs are not “for-profit”. The club staff is rightly focused on meeting the wants and needs of the membership. In a similar manner, public restaurants are focused on their customers who also “vote with their feet”. The key for private club restaurants is to strike a balance. Implementing available technology can help your management team maximize the opportunity to improve your club’s bottom line.

By Richard J. McPhail, CCM, Owner of Club-Edge, LLC offering analytics and operational technology to the private club market.?Committed to improving the two most historically common challenges in the private club industry:

1. F&B financial performance

2. Frequent and recurring employee turnover

He can be reached at 239-223-2741 or at [email protected].?For more information visit the company’s website at www.club-edge.com