The Pellucid Perspective - November 2015 - (Page 11)

Golf course operations Beverage cart really a goose laying golden eggs? By Jim Dunlap a recent column on Golf Course Industry magazine's web site described the course beverage cart as "the goose that lays golden eggs" for the golf course and the cart operator. The author went on to compare the beverage cart to a rule of thumb in the steamship industry, namely that the first load pays for the ship, stating that the beverage cart's first month's revenues pay for the cart and every month thereafter is "pure profit." While the word "pure" may be misleading, given that the cart only becomes profitable after the cost of labor, fuel, maintenance, insurance and product are deducted from monthly revenues, it is not unreasonable to expect that a well-run beverage cart operation can and probably should be a significant profit center for both the course and the cart operator. While beverage cart revenues vary widely depending upon factors such as location, number of carts in use, hours of operation, administrative efficiency and the zeal, sales skills and, let's face it, appearance and personality of the operator, there are some general guidelines according to Bill Zaruka, president of Z-Golf Services, which operates in California and several neighboring markets. "From a profit standpoint, in states with lower labor costs, $30 an hour is probably a reasonable number to expect," Zaruka said. "I would say the low to high probably ranges between $20 and $40 an hour, although that can vary depending on whether the course has the clubhouse or a snack bar at the turn. There is obviously also some variation depending upon the market, where average spend per golfer might be $5 per golfer in Las Vegas but only $1 per golfer on a Wednesday at a lower tier course in other places. It can also depend to some degree on whether the club or course considers the cart a profit center or merely an amenity as at some private clubs, and sometimes there's a lack of diligence on people bringing in outside food and beverage. Some courses don't want to challenge people who bring their own." The author of the Golf Course Industry article cited figures of $1,000 in revenue per day on an average golfer spend of $10.80 per round as typical for the average beverage cart operation, although there was no source cited for those figures. If we assume those figures to be accurate, understanding that individual course revenues may vary widely, a typical profit margin after expenses would be somewhere in the range of 50 percent, according to Billy Casper Golf Senior Vice President of Hospitality Frank Denniston. As a major multi-course operator with properties in 29 states, Billy Casper Golf strives to maintain a consistency in its beverage cart operations, while viewing them as an extension of www.PellucidCorp.com the Casper brand inside the clubhouse and looking at the cart as another F&B outlet, Denniston said. He added, however, that offerings on the cart vary significantly according to the region of the country where the course is located. "We try to offer both hot and cold food," Denniston said. "We've abandoned the idea of cold deli sandwiches only, and we do try to offer regional nuances. For instance, in New England we might offer lobster rolls, while in the South and Southwest, we might offer barbecue or brisket sandwiches. We've even offered sushi in California, believe it or not. One thing we've seen is that we see a revenue lift of several dollars per player a round when we offer those kinds of items. Hot items are prepared inside the clubhouse and we use insulated bags which retain heat for quite a long time to keep things warm." Despite its size and diverse types of facilities, or perhaps because of those factors, Casper does not maintain a corporate benchmark for beverage cart revenue and profitability. "Actually, what we do is benchmark against ourselves," Denniston said. "We see trends at each of our courses over a period of time, and benchmark by average dollar per round. That varies considerably. We have Southern California beverage carts that do $125,000 per year and carts in New England that do $16,000." One figure that also plays a significant role in computing beverage cart profitability is the cart operator's wage. Some states, primarily in the Northwest, California and Nevada, require that employees receive the full state minimum wage before tips. Others require that workers be paid above the federal tipped minimum wage of $7.25/hour, while still others require only that workers be paid the federal tipped minimum wage of $2.13. As in many businesses, inventory control is critical for golf course F&B operations. Too much inventory on hand ties up operating capital or can lead to spoilage losses, and inefficient inventory tracking can lead to theft losses. "Management of inventory is key," Denniston said. One technique for both maintaining quality and regulating liquor costs that Casper courses have utilized, Denniston said, is a vendor relationship with a company called Innovative Dispensing Services, based in Los Angeles. The company provides pre-mixed cocktails which, Denniston noted, "provide a perfect pour every time." The service pays off - Denniston said courses pay $1.30 for the cocktails "and sell them for $8 all day long." So, while the beverage cart may not be "pure" profit after its first month of operation, if done right it can be a significant line item in the black portion of the course P&L. n The Pellucid PersPecTive 11 http://www.PellucidcorP.com

Table of Contents for the Digital Edition of The Pellucid Perspective - November 2015

TOC
Payment processing again – Have you inserted your chip card?
Members lose club over gender discrimination suit
NGF Suggests that 30M Golfers Was “A Bubble”
IBM buys parent of The Weather Channel: Why you should pay attention
Beverage cart really a goose laying golden eggs?
October golf weather impact: Neutral nationally, tough for Texas
Boston needs some ‘deflation’ in supply
Singing the blues in Memphis

The Pellucid Perspective - November 2015