By Terry O’Halloran | Director, NSW
Most of us in the Club industry have not only seen Clubs close their doors, but are also very aware of some venues in our midst who are not long for this world. A common metaphorical term for this is ‘Dead Man Walking’, a comment made on death row for those Clubs undertaking their last walk before they close their doors. What are the signs, and more importantly, what are the common mistakes Boards and Management make to end up being another statistic? Here are the 6 most common mistakes by leaders of failing Clubs.
- They relied too heavily on a formula for success – what works for one venue won’t necessarily work for another. Copying another venue’s plan for success without taking into account the context of the demographic area will only solve half the equation.
- They misread or alienated their customers. They forced their personal preferences on customers – is the TAB area reflective of the business it generates? Do you solicit feedback from Members for changes in menu? How do you determine the beer and wine offerings? Look at the gender and age breakdown of your membership and see if your offerings are aligned.
- They were physically or emotionally removed from the Clubs operations – walking the floor, speaking to staff and engaging Members and customers is the best method of taking the temperature of your Club’s ‘stakeholders’. If things are on the down, you will pick it up through ad hoc conversations long before its written in a Management report.
- They learned only from the recent past – George Santayana once said ‘Those who cannot remember the past are condemned to repeat it’. Our industry is littered with many a failed venture, and while these are not documented, there are plenty of Managers who know these potholes to avoid. Seek out experience.
- They failed to adopt to tectonic shifts in their industries – increased quality expectation for quality coffee and food, credit conversion convenience (CRTs, Cashless, TITO), changing food outlets and communication technology are but some of the big changes in our industry. Adapt and change, or perish – the equation is simple.
- They fell victim to a mania – like point one, copying another Club’s offering out of context is fraught with danger. Gyms, Nightclubs, bowling alleys and other non-core pursuits succeed in Clubs who undertook a feasibility study and found local demand.
Internally, what are the signs that indicate your Club is in trouble? Below are some red flags to look for.
- Revenue deceleration – when revenues start to plateau, you have to ensure it doesn’t then become a decline. Has reinvestment slipped? Has your food offering become stale? Your business is a sum of different parts, and they all must be considered.
- Declining margins – one of the hardest things to do is raise prices. If sales are going well at low margins, then a downturn in volume will expose this frailty. 60% GP in the bar must be the minimum goal, provide the customer service and offering that justifies that.
- Blamed macro or external factors for internal failures – this is where Benchmarking is important. How does your performance compare to the average? If low/high interest rates are to blame, are your competitors affected too?
- A long excuse list to justify deteriorating fundamentals – customer service, property reinvestment, staff engagement, Member amenities and food quality are but a small number of areas where you need to be in tune with customer feedback. Using external forces for their deterioration is often ignoring the core issue.
As we become a diversified industry evolving into sectors such as building, aged care, retail, commercial and entertainment, we continue to improve our skill set and qualifications. This sets our industry up for the future, but not without some growing pains. With that said, remember what got us here and ensure you keep track of the Clubs vital signs. If you need assistance with your venues future planning please contact Terry O’Halloran, one of DWS Hospitality Specialists expert consultants on (02) 9223 7564 or firstname.lastname@example.org.