Articles on the topic of food and beverage (F&B) losses come out so regularly they are like a bad record stuck on repeat. Sorry (I’m not sorry) to be perpetuating the trend. To put the concept simply, a club is going to lose money in F&B operations, just as it does in every other area, from golf to tennis to the pool. Even those that say they make a profit do not take into account the overhead costs not specifically allocated to the department.
Everyone knows that the bottom line rules the day. It has become hard to balance member expectations against the realities of payroll and other costs associated with maintaining a club so providing opportunities for members to spend more money inside the club is more important than ever. Merchandise bearing your club’s logo is one way to do this has and it has an extra benefit of free advertising.
Clubs are in the dues business. They are the key to a private club’s success. Dues represent approximately 50 percent of the operating revenue of country clubs and approximately 40 percent of operating revenue for city clubs. When you factor in that no direct expenses are allocated to dues, 100 percent of every dues dollar goes to the bottom line. However, clubs were reluctant to raise dues for several years – at least not enough to adequately fund club operations. Boards were reluctant to address the issue because they did not want to deal with any potential controversy surrounding it. Instead, they chose to pass the problem to their successors. And while some clubs have rebounded nicely from the economic down turn, especially the “A” level exclusive clubs, a combination of pressures on clubs has made it more important than ever to address the issue now:
U.S. District Judge Amos Mazzant, a federal judge in Texas, granted a preliminary injunction blocking the U.S. Department of Labor (DOL) from implementing a controversial rule expanding overtime protection under the Fair Labor Standards Act on Tuesday Nov. 22, 2016.
The Labor Department has issued a rule that doubles the salary threshold for overtime exemption, effective Dec. 1. This is a big change for business owners and workers alike. But why? And how big? Here’s an explanation.
What’s an overtime exemption? Is it good or bad?
It depends on which side of the payroll you’re on. Employers, generally speaking, like their workers “exempt.” Workers, by and large, prefer to be “nonexempt.” This is because to be “nonexempt” means to be protected under the minimum wage and overtime provisions of the Fair Labor Standards Act. Workers who are “nonexempt” are entitled to be paid a certain minimum wage (currently $7.25 per hour nationwide, but higher than that in most states), and are also entitled to be paid time-and-a-half for any time spent working beyond 40 hours in a week.
Two sections of St. James Plantation, The Members Club and The Reserve Club, were denied the ability to claim charitable contribution deductions for their conservation easements by the IRS.
Topics: Club Industry
Forget the political debate! Whether it is global warming, climate change, tidal flooding or just nature taking its course, from an industry standpoint, clubs are concerned about providing members with an environment that is healthy and attractive. The club also wants to manage its expenses and maximize the return to members through its services and amenities.
Your members are becoming more aware of their influence and impact on society and the environment.
Topics: Club Industry
PBMares' very own Kevin Reilly, J.D., CPA, CGMA has been elected as the Treasurer of the National Club Association (NCA). He will serve as Treasurer for a three-year term.
The NCA recently held its annual meeting in Washington, D.C., where it elected new board members and officers. For many years the NCA has served as the primary advocate for private clubs, representing their interests on Capitol Hill, regulatory agencies, statehouses and courthouses.
Kevin is recognized as a leading club tax expert in the United States. Here at PBMares he is a senior tax authority and serves as a technical resource to interpreting and applying tax law. He is active in club organizations and brings more than 25 years of experience identifying and interpreting trends, consulting on issues at the management level, and assisting clubs to run more efficiently.
Kevin is a regular columnist for industry publications and is a contributing author to The Legal Reference Guide for Private Clubs published by the National Club Association, as well as the Fourth Edition of Club Management Operations published by the Club Managers Association of America (CMAA) and the First Edition of Accounting for Club Operations. He is also a contributing author for Federal Taxes and the Private Clubs, as well as editor of Clubs in Town & Country. He was on the committee to update the Uniform System of Financial Reporting for Clubs published by the CMAA.
Kevin received a Juris Doctorate from the Washington College of Law at American University in Washington, D.C. and a Bachelor of Science in Accounting from Providence College in Providence, Rhode Island.
Previously, Kevin served as the Secretary/Treasurer of the NCA Foundation, which is the NCA’s charitable arm.
From all of us at PBMares, we congratulate you!
The recession over the last several years impacted clubs dramatically. Members left and clubs looked for new and more innovative ways to bring in revenue. The panache with belonging to a club has changed. There are so many demands and opportunities for our entertainment dollars that clubs are fighting to maintain their fair share. While the economy has improved, many clubs still are struggling to bring in new members and to get existing members to spend what they did in the past. Due to competition, many clubs, other than the very exclusive, are just looking to survive. Costs, particularly employee benefits, continue to rise. Although economist say that the economy has recovered, consumer confidence still is at a very low level and fluctuates like it never has in the past. The difference between the haves and have nots is wider than ever.
Topics: Club Industry
“Why is our food and beverage operation losing money?” “Why are we budgeting to lose money in that area?” “My buddy earns a fortune running his steakhouse so why are we struggling to break even in that department?”
No doubt the above scenario and line of inquiry is one that managers have faced numerous times in dealings with the Board or Committee members. While it might be tempting to retort that, while that steakhouse might be doing well, according to the National Restaurant Association (NRA), 59% of new restaurants close within three years, other answers are clear and apparent to club professionals who have been fighting such misconceptions for many years. However, the Finance Committee, House Committee and the Board spend hours reviewing the results of food and beverage department. The real question is why? Maybe it is because that according to the NRA more than half of all adults have worked in the restaurant industry at some point in their lives and for one-third, it was their first job. Club boards should be focused on the strategic direction of the club, not the minutia of everyday operations. However, it can still be difficult to articulate answers that the Board understands. Clubs face many problems that restaurants simply do not have, but which often are not obvious to a club member.
This article seeks to identify
- some of the reasons that a club’s food and beverage facility is a unique operation
- separate and distinct from a regular restaurant
- provide evidence that your club is not alone in its daily struggle to be profitable in that arena.
Topics: Club Industry