April 23, 2013: Thank you to all those who attended the recent EYC Town Hall Membership Meeting. The lively conversation was both candid and informative and helped lay the foundation for the upcoming presentations and the club’s way forward.
Much of the conversation was centered around the club’s finances as well as discussion about menu preferences. As you might imagine these items are closely related and the guiding decisions can often seem subjective.
The reality is that while there is a fair amount of subjectivity involved in these type of decisions, the objectivity cannot be denied. At the end of the day a solid bottom line and member satisfaction is reality. This is the goal and how we get there can certainly be argued … and was!
One of the more difficult challenges in all clubs is meeting the wants and desires of a diverse membership. How one member views his or her club can often be the polar opposite of how another member may feel. This is particularly challenging when a club such as ours undergoes a significant change such as a renovation or expansion. Some will see the change as an opportunity to expand the services of the club while others may want to do whatever they can to maintain the history and culture of the club that brought them to this point. Striking a balance between these two is where the rubber hits the road.
Club services such as dining may be approached in a variety of different ways. When the initial planning commenced for the opening of the new clubhouse the Board challenged the management team to improve the dining services of the club and be prepared to provide for record member usage.
What this means can be interpreted in a variety of different ways. We understood it to mean the food would be fresher and prepared in a fashion that would highlight the ingredients while taking advantage of local merchants to support of our local economy. It also meant that we should be staffed in such a manner to ensure that a lack of personnel would not affect expected levels of service.
At this juncture both of these items are a reality. The club is experiencing record sales and the membership seems to be voting “with their feet.” Our food and beverage numbers are exceeding expectations and what we believed to be very optimistic income projections all while expenses and labor are tracking very close to preliminary projections.
So what is the problem, you may ask? The services we are offering come with an associated expense that takes more from the bottom line than what was the case prior to the renovation. If we stay close to the budget projections this would translate to a close to breakeven year. This is potentially not an operating model that most feel comfortable and therefore the desire to either increase income or reduce expense is being addressed.
There are a number of ways that this can be achieved and those will be presented in the upcoming Town Hall Membership Meetings. For the purposes of this article I am simply going to address the menu component which has a cost of goods component as well as a labor component.
The Finance Committee and Executive Board task the management to operate within certain margins approved annually. The pricing of the menu is simply the result of a formula that takes the cost of product and places it into an equation with the desired percentage of markup and the result is the price that appears on the menu.
This is a somewhat simplified version of the process because it must also take into effect the cost of submargin specials such as Burger night, Taco Night or the free wings we give away on Wednesdays to factor into an overall “menu” equation. In other words if you give something away you need to compensate for that expense somewhere else in order to achieve the targeted margins and remain financially healthy. This process is entirely objective.
In the Town Hall Meeting members reiterated what we had previously heard. Members wanted more of the “old style” menu in the bar and deck food offerings and that they wanted it at a lower price. Voices heard, and changes are forthcoming. The Galley Menu will soon have some old favorites while being enhanced by some of the new offerings that have been vigorously selling over the last five months.
Offering some items at a value will become one of the priorities of this menu. To do so we will need to use ingredients that cost less while at the same time attempt to offset the aforementioned specials that have become a staple to the club. According to those who have requested these changes they anticipate an INCREASE in volume and therefore labor will need to potentially be increased depending on the volume of business generated. Generally speaking greater volume means more work which can translate to more labor. We will continue to challenge this basic formula with creative solutions that maintain service while controlling costs.
The local dining outlets that we are most often compared don’t operate in this model. I am sure they do have a target margin but the “overall menu cost” is derived nearly exclusively from the items on the menu. To stay competitive they obviously try to keep prices as low as possible while still covering their expenses and hopefully making a few bucks. We can choose this model or we can continue to offer specials that require the rest of the menu to offset their expense. Therein lies the subjectivity of menu design and the choice to attempt to address a wide variety of tastes and desires. Of course how all of this factors into a broader financial dialogue about labor expenses, dues, initiation fees, assessments and other income streams are topics for another day.