Country Club Food/Bar Costs

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pscott2268
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2006/03/06 21:21:50 (permalink)

Country Club Food/Bar Costs

I was recently selected to the Board of Directors of our local Country Club. We have recently determined that our expenses are out of control. Not being familiar with the restaurant business, I have come searching for answers. Our food costs last year were 43.7% and are bar costs were 36.8%. Both of these numbers seem really high to me. Am I out of line?
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    Poverty Pete
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    RE: Country Club Food/Bar Costs 2006/03/06 22:19:56 (permalink)
    quote:
    Originally posted by pscott2268

    I was recently selected to the Board of Directors of our local Country Club. We have recently determined that our expenses are out of control. Not being familiar with the restaurant business, I have come searching for answers. Our food costs last year were 43.7% and are bar costs were 36.8%. Both of these numbers seem really high to me. Am I out of line?

    Actually, those numbers are well within reason. You don't have a restaurant trying to make a profit. You have an amenity for your members. Your targeted food cost should be 40-45%, and your liquor cost should be around 30%. As long as your members are satisfied with the price of f&b, as well as the membership dues, you're in good shape.
    #2
    V960
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    RE: Country Club Food/Bar Costs 2006/03/07 09:58:35 (permalink)
    Poverty Pete is correct...but don't believe your numbeers...your food costs were 45% and your bar costs were 40%. Round up.
    #3
    jeepguy
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    RE: Country Club Food/Bar Costs 2006/03/07 11:22:17 (permalink)
    After my Dad passed on i was able to use Pawleys Plantation (Jack Nicklaus course) in SC for a couple months.I never golfed there,in fact i never even had a sandwich or a beer back by the beach in their restaurant.Not my scene,but some pretty spectacular oceanfront homes are in there.Gated,but you can get in with almost any guy that does any work around your house.I've not been in there since '95.
    #4
    Jimeats
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    RE: Country Club Food/Bar Costs 2006/03/08 06:52:15 (permalink)
    pscott are your members reguired to spend X amount of dollars a month in the club house? That is the case where I belong. We hold the liquor licence but lease out the food operation. The monthly script as it's called helps to defray our costs and keep the prices in reason. I'm not sure but I heard at one time that our beverage costs were somewhere around 40%. A bottle of domestic beer is only $2.00 shot of Makers Mark $2.75 pint of draft $1.25. The prices are much higher for non-member funtions. Chow Jim
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    bassrocker4u2
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    RE: Country Club Food/Bar Costs 2006/03/08 07:42:10 (permalink)
    pscott, i cannot tell you what numbers you should run without have much more data. you must do the hard labor to reach that conclusion.
    price everything out by cost, and profit of each item. make sure each item is in line percentage wise. sometimes, vendors creep up the prices of some items, requiring you to either shop around, talk down your vendor price, or raise you retail price. sometimes you will find that you are buying much more of a few items than you are selling. that opens another can of worms. the only thing for sure, is that your job wont be easy, and will require some hard data.
    good luck, and ask away if you have more info.....
    #6
    garryd451
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    RE: Country Club Food/Bar Costs 2006/03/08 09:01:50 (permalink)
    quote:
    Originally posted by Poverty Pete

    quote:
    Originally posted by pscott2268

    I was recently selected to the Board of Directors of our local Country Club. We have recently determined that our expenses are out of control. Not being familiar with the restaurant business, I have come searching for answers. Our food costs last year were 43.7% and are bar costs were 36.8%. Both of these numbers seem really high to me. Am I out of line?

    Actually, those numbers are well within reason. You don't have a restaurant trying to make a profit. You have an amenity for your members. Your targeted food cost should be 40-45%, and your liquor cost should be around 30%. As long as your members are satisfied with the price of f&b, as well as the membership dues, you're in good shape.


    Alot of country clubs are trying very hard to make profit, just like any other establishments, being cause they are trying to pay for so many other things from there food operations. They are trying to pay their heat bill, water bill and electric bill for the whole building from this operation. Some even try to fund their social events from their food profits.

    So alot of these establishments are trying to make a profit and they also have paid chefs and managers, just like a profit making establisment.
    #7
    dinerminer
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    RE: Country Club Food/Bar Costs 2006/03/10 10:33:05 (permalink)
    Your food and beverage costs are not uncommon for the Country Club industry. On a nationwide basis, there is a very small percentage of CC F&B operations that actually turn a profit. Most are subsidized by member dues and dining "minimums" assessed to members. Poverty Pete is right, F&B operations at CC's are operated as an amenity, just like the golf course, swimming pool and tennis courts. As a former CC manager for 10 years, it always aggravated me that "newbie" Board members were quick to target F&B operations for increased profitibility but rarely looked at economizing in other areas, specifically the golf course. Further, in my experience, most CC menu prices are artificially low to increase the competitive edge against public dining options. Organizations like the Club Managers Association of America (CMAA) can provide you with statistics for comparison.
    #8
    bassrocker4u2
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    RE: Country Club Food/Bar Costs 2006/03/11 08:13:43 (permalink)
    give the place a face lift, create a menu that will attract non-golfers, ensure perfection on every dish, and advertise. you will be suprised, people will come for a good meal, pleasant enviroment, and a great overall experience. find your target customer, and go get 'em!
    #9
    Jimeats
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    RE: Country Club Food/Bar Costs 2006/03/11 09:39:50 (permalink)
    quote:
    Originally posted by bassrocker4u2

    give the place a face lift, create a menu that will attract non-golfers, ensure perfection on every dish, and advertise. you will be suprised, people will come for a good meal, pleasant enviroment, and a great overall experience. find your target customer, and go get 'em!
    Why would you do that? Most of us join a club to limit the general public thats why we pay annual dues. It alows us to be able to go there and enjoy the facilities with out large crouds and all the rif raf that that frequent the puplic courses. When you are a member you in essence become a share holder in the operation and you have a tendancy to take an interest in all the activities of the club. You don't want people comming in that don't respect the efforts of the members. Chow Jim
    #10
    dinerminer
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    RE: Country Club Food/Bar Costs 2006/03/11 10:55:00 (permalink)
    Good point Jimeats. Especially if the "costs are out of control", why would you invest more money into facilities. Exclusivity is what drives membership in many clubs, you are right about the "rif raf". Also, many clubs are operated as non-profit entities which in some ways limits the ability to overtly advertise and recruit members or outside(the membership)business. Some clubs have taken a more agressive approach in banquet and catering business provided they can provide linkage with memeber sponsorship.
    #11
    emhahn
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    RE: Country Club Food/Bar Costs 2006/03/14 09:40:20 (permalink)
    A further note, if I may. Poverty Pete is right that foodservice in country clubs is an amenity.

    One question: Does this country club have multiple dining room or dining facilities, or just one kitchen? (Half-way houses, "Men's Grill," etc.)?

    This would make a difference in the operating costs.

    Eric
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    Sonny Funzio
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    RE: Country Club Food/Bar Costs 2006/03/15 16:16:08 (permalink)
    quote:
    Originally posted by pscott2268

    I was recently selected to the Board of Directors of our local Country Club. We have recently determined that our expenses are out of control. Not being familiar with the restaurant business, I have come searching for answers. Our food costs last year were 43.7% and are bar costs were 36.8%. Both of these numbers seem really high to me. Am I out of line?


    Pscott2268 ... The answer to your question is not simple.

    Actually, there are a few questions.
    One has to do with food and beverage cost ratios/percentages.
    The other is the idea that your "expenses are out of control".
    Possibly a third one involves problems in overall profitability from your food and beverage operations.

    I'll make a few comments on each.
    My points are not all-inclusive but hopefully some of it might prove useful.

    Regarding the idea that "expenses are out of control"
    ... this is often a strong indication that other standards and controls are missing from operations; and/or that appropriate analysis and planning is not being carried out.
    Many restaurateurs respond to a lack of profitability by cutting expenses when they haven't fixed the problems in the rest of the business. This is a mistake.
    Cutting comes later ... first you stop "bleeding out" elsewhere.

    When it comes to actually cutting anything, the two kinds of expenses ... ones that change with your volume of business and those that do not ... are handled differently ... there are separate reasons you might eventually cut items in either category ... but cutting either is *never* a replacement for having sound operations in all other areas ... unfortunately, cuts are often implemented as a band-aid to symptoms from more extensive problems.

    Note that I am *not* talking here about avoiding cutting brazen, obvious inappropriate expenditures ... I am talking about not making cuts such as, for example, in fixed expenses; reducing otherwise necessary insurance coverages to get lower premiums; or in variable expenses, cutting kitchen labor (or labor in the front of the house) to levels which compromise operations and quality ... or eliminating your advertising budget, and so forth.

    Cost percentages (cost per dollar of sales)
    While it's true that the country club factor might "cover" higher food and beverage costs through membership dues etc., that does not mean out-of-line costs are ok. If higher food costs are because of poor controls ... then that is not ok. Not ok in any kitchen.
    Nor does it mean that your board is relieved of figuring out whether and why those ratios are higher than they should be.
    Especially the "why" ... cost percentages are merely a tool and not a goal in and of themselves. Profitability is a goal ... and one that shows the overall health and integrity of operations.

    You will not know the appropriateness of higher food and beverage cost percentages unless you know *why* you have them. ...... And conversely, when you know you run a tight ship, well planned and managed and by-the-numbers, then you have a very good indication that your food cost percentages are in-line.

    It is true that your (Prime) cost ratios can be useful to compare your operations to other establishments with similar operations ... but that is a very careful comparison ... you must be *very* substantially similar, including in business volume ... otherwise it is comparing apples to oranges and will be misleading.

    Cost percentages will be notably valuable to compare how you are doing "period over period" (one period compared with another) ... particularly handy as you institute tighter controls.

    Cost percentages can be affected by a number of factors ... some examples of these could be: overly expensive suppliers, unusually expensive ingredients, inappropriate portion control, overproduction, spoilage, returns to the kitchen and employee consumption, theft, and many other factors.
    To put it more simply, these are mostly issues of control ... purchasing control, inventory control, storage control, and production control ... and the constant ongoing monitoring of those items
    This is the most significant thing you can do to improve costs ... and is much too involved to illustrate in this post ... but someone will have to know it well enough to affect that change.


    As far as overall profitability ...
    Correcting a lack of profitability is like constructing a house.
    You start with the foundation and build successively on top of each correction ... and they must be in an order that generally allows each correction to affect subsequent analysis and subsequent corrective action ...

    Here is a very general example of a schedule of corrections and their order of implementation ... this is not written in stone and the reality is certainly more nuanced and involved than what I've written here ... but it gives you the general idea:

    1) Correct inadequate or problem employees ... hiring and training personnel including management. Training people to follow the rules. ALL the rules and procedures ... and without exception.

    2) Re-instituting controls - rock solid purchasing, inventory, storage, and production controls. Also re-instituting sound standard operational procedures in all areas.

    3) Develop a stable period of operations (including menu mix) so that baseline numbers can be established. (necessary for factors in CVP analysis such as breakeven, covers required, turnover, and so forth.

    4) Re-do all analyses regularly and revise constantly ... particularly Breakeven Analysis (Covers to Breakeven, etc) .... understand how a desired level of profit is "plugged in" to give various profit scenarios (how to actually run all the financials is a bit too involved really for this post.)

    Also ...
    Establish an Operating Budget and do regular Budget Deviation Analysis ...

    As far as the Operating Budget, the IMPORTANT thing to understand about it is that unlike a household budget, Operating Budgets use *forecasts* of sales indexed expenses. Specifically this requires you to forecast sales and estimate the expenses that might be incurred to *get* to those sales levels.

    Consider using a Cash Flow pro-forma if you need a tighter grasp of cash flow ... cash flow problems sink more businesses than any other single factor.

    Use an Advertising Budget which allows us to determine the cost of advertising to generate a specific level of sales ... read: plugging up the slack periods ...
    A strong game of offense is just as important as a good defensive game.

    5) Next determine how badly deficient your volume actually is and why.
    There are a number of Cost/Volume/Profit calculations (as an example, those relating to the number of covers for given periods etc), that are a flag, indicating that corrective action may be effective in areas such as Sales per Cover, slack in Average Covers for a particular day/time/event/promotion/etc; and Turnover restrictions due to menu items and customer handling etc etc.

    This volume analysis is the part of the "process of elimination" that will lead you to exactly what you can do to address critical breakevens right away.
    It tells you whether you can just focus in the immediate term on modifying sales patterns or whether other things such as costs, menu mix and pricing will have to be modified so that you are meeting breakeven. (THIS is where more drastic cutting of expenses and modifying your menu comes in!!)

    (You don't want to go the route of changing the menu and pricing right away if you can help it ... much of your "baseline" data and calculations are subject to what is on your menu ... frequent, significant changes in the menu throw off other analysis that relies on a stable sampling period.
    Basically, it's just unsound to jack your menu and prices around when the superceding problem is other stuff.)


    6) So finally NOW you can re-cost/price the menu. Profitability involves a lot of interrelated, "circular" analysis. Your calculations to this point lead you "backwards" (so to speak) to the pricing and mix for your menu.

    As you might imagine there is a lengthy list of corrections along the entire process, both to the way you handle expenses and the way you increase sales and revenue.
    The actions I've touched on are in-depth and require specific know how. People who manage to stay afloat on the basis of good revenue, without having a tight ship are missing out on substantial profitability ... and if revenue dries up for whatever reason ... they are finished.

    You mentioned that you are not a restaurant person by background ... that's OK because it is the job of either the Executive Chef and his/her staff ... or the staff and the Kitchen Manager (or the hands-on owner) to know this stuff and if they don't ... people have to be brought on board who do.

    In the final analysis ... your highest activity is to be a great employer of people ... being able to find them, verify their abilities and incorporate them into your operations. It all comes down to the employees.
    If there is one solution ... that is it.




    (Yes, I used to do this for a living)
    #13
    Jimeats
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    RE: Country Club Food/Bar Costs 2006/03/15 16:42:00 (permalink)
    There it is in a nutshell. Nice post Sonny. Chow Jim
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    Jeza
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    RE: Country Club Food/Bar Costs 2006/03/17 23:42:27 (permalink)
    Amazingly I consider those costs far too high.

    Food should sit between %25-30 forcasted for a 4 star restaurant.

    Liqour should be done on retrospective costing (ie get your turnover for the week and work backwards. If over ordered its not going to go off so don't sweat it, just reduce purchasing for hte next week.)

    Aim for %30-35 for liqour. But we have differant compliance costs to the US so maybe htis makes a difference.
    #15
    Sonny Funzio
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    RE: Country Club Food/Bar Costs 2006/03/20 13:52:21 (permalink)
    quote:
    Originally posted by Jimeats

    There it is in a nutshell. Nice post Sonny. Chow Jim


    Thanx Jim.
    Hopefully pscott2268 checked back in and found the post. His profile indicates that was his one and only post, and did not indicate an email address to give him a heads-up.
    Hopefully my little novella proves useful in any regard.
    Sonny
    #16
    boyardee65
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    RE: Country Club Food/Bar Costs 2006/07/09 01:01:18 (permalink)
    quote:
    Originally posted by Jimeats

    quote:
    Originally posted by bassrocker4u2

    give the place a face lift, create a menu that will attract non-golfers, ensure perfection on every dish, and advertise. you will be suprised, people will come for a good meal, pleasant enviroment, and a great overall experience. find your target customer, and go get 'em!
    Why would you do that? Most of us join a club to limit the general public thats why we pay annual dues. It alows us to be able to go there and enjoy the facilities with out large crouds and all the rif raf that that frequent the puplic courses. When you are a member you in essence become a share holder in the operation and you have a tendancy to take an interest in all the activities of the club. You don't want people comming in that don't respect the efforts of the members. Chow Jim
    O.K. I have a little problem with your assesment that public courses are frequented by riff-raff(the correct spelling by the way).I have worked in several C.C.s including Paradise Valley C.C. in Phx. AZ and Cheyenne Mt. C.C. in Colorado Springs CO and a few public courses. There is riff-raff in all of those places! The ones at the C.C. just have more money. Most people that I golf with on public courses are curtious and have good manners in the club house no matter the location. Also a lot of country Clubs are open to the staff and the public for exorbant greens fees. Those dollars are used to subsdidize thier other operations. I don't think that 35-40% cost is too much as that is the rough numbers that most C.C.s use. David O.
    #17
    -Tricky-
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    RE: Country Club Food/Bar Costs 2006/07/10 15:52:33 (permalink)
    quote:
    Originally posted by Jeza

    Amazingly I consider those costs far too high.

    Food should sit between %25-30 forcasted for a 4 star restaurant.


    I know nothing about country clubs, but most 4 star restaurants run food cost closer to 40-50% than 25-30%.
    #18
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