Club Management - January/February 2008 - (Page 15) Accounting & Financial Management Fine-Tuning Organizational Structure Can Increase F&B Profitability By Bill Schwartz, CHTP ost clubs are not primarily in the food service business. As a result, their organizational structure is not typically optimized to provide the checks and balances needed to reduce some losses associated with the food and beverage business. This is especially true with regard to purchasing-related functions and can result in food and beverage costs as much as 3 percent higher than necessary ($30,000 per million in F&B revenue). Changing that structure by redefining departmental responsibilities builds in critical checks and balances and better positions the club to obtain optimum results from its F&B operations. To properly integrate F&B into club environments, virtually every department is affected in some way. But focusing on the role of the food and beverage, accounting and purchasing departments with regard to all aspects of the purchasing function provides the best opportunity for immediate benefit. M Structural Challenge 1: Purchasing is a Separate Department that Reports to the General Manager Assuming inventory levels are similar at the beginning and end of the year, the club’s entire annual food and beverage cost is equal to its purchases. One theoretically could add up all the year’s invoices and arrive at a number very close to the one on the year-end profit-and-loss statement. But who is responsible for those purchases? Large clubs typically set up a formal purchasing department. Smaller clubs may not feel they have the resources and allow department managers to do their own purchasing. Ideally, purchasing should be a separate department that reports to the general manager. This way, correct purchasing policies and procedures can be defined and executed, providing a consistent procurement approach for the entire club. Separating purchasing functions from operational departments provides a central, disconnected point for vendor selection and price negotiation that significantly reduces collusion-related losses and keeps department heads focused on managing. And the purchasing department can be held responsible for cost control and budget conformance at point of purchase. Smaller clubs might consider using a clubhouse manager as a purchaser or expanding the duties of a department head that doesn’t have much to order for his or her own department. All clubs should avoid using anyone from the F&B (collusion) or accounting departments (checks and balances – see receiving) for purchasing. Of course, this means the F&B department will JANUARY/FEBRUARY 2008 • 15 ©Dreamstime.com
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