DWS

From John’s Desk: It is Not Rocket Science

Whilst we are all excited at the excellent results we have had for the last two months, most clubs will face the prospect of losing Job Keeper after the end of September and will be back to some degree of normality.  Most clubs are showing no growth in alcohol, and food has been soft in most clubs; traffic is down and that could have longer term repercussions.

There is no doubt the government and the banks cannot sustain the current financial support indefinitely and we would be naive to suggest that a wind back of financial subsidies across the board over the next 12 months won’t have any impact on the club industry, as it will on most other industries.  Whilst now there is a surplus of disposable income exemplified by the record increase in Australian savings, I doubt this will be the case by the middle of next year.

It would be sensible over the next 6 to 12 months to get back to basics in running any business particularly the club industry as we are so reliant on disposable income.  Driven largely by females who are known to be more financially conservative in challenging times, the club industry has been extremely buoyant in the last 20 years; just look at the investment in capital development the industry has committed to in recent years and is still committing to, however I think we should take a pragmatic approach to the future of our industry in the next few years.

When I say back to basics I am talking about the proliferation of services and facilities we have inherited over time that when thoroughly researched, make no contribution to the profitability of our business.  Profit is quite often a dirty word in the club industry, but people forget to link profit with service to community.  What service to veterans are unprofitable RSL clubs making?  Basically none.  We cannot deliver our community ethos without the profit and I would argue, growing profits.

If as I believe business will get tougher for the club industry in the next 12 months to 2 years, then looking to increase our profitability should be a priority that means getting back to basics.  What are the basics?  I remember more years ago than I care to, when I was managing my first hotel on the Gold Coast for Bernie Power, he reminded me that the “hospitality industry is a simple business built on courtesy and cleanliness made complicated by governments, managers and accountants”.

Our industry is littered with monuments to brain snaps by managers and committees in pursuit of “they’ve got one, we’ve got to have one and mine will be bigger” with little research or a full understanding of our rapidly changing demographics and market needs.

So, what is getting back to basics.  It is not rocket science, there are numerous tools that can help you to get back to basics.  The first tool you need to get hold of is the club industry benchmarks (CQ Benchmark Report) and look at your performance, are you still giving food away and for what benefit? Do not fall further for the old trick that it drives gaming – it does not. Have you analysed what it costs to run a bus and what business it brings?

When did you last analyse your loyalty program and measured its benefits; are the biggest benefits being provided to the people that provide the benefit to the club?  Some of the best performing gaming venues in Queensland do not run loyalty programs.  These can be another example that the club down the road has one, so I must have one and mine must be more generous, and this becomes a race to the most stupid.

Are you costing your rosters every week and making your duty managers and department managers accountable for the performance?  As an industry we are notorious for excessive wage costs and lack of accountability from management staff, there is a simple reason why pubs perform far better financially than clubs and that’s because generally it is the owner’s or investors’ money and he worries about what happens to it.  Regrettably, a few committees and some managers do not exhibit the same degree of worry.  I was talking to a hotel manager who is now running a club and they indicated they could not believe the degree of waste of money and resources that happens in the club they currently manage.

So, it is not rocket science. Don’t employ people who can’t smile at customers, set non-negotiable customer service standards, set a budget, manage your costs, check industry benchmarks, make managers accountable for costed timesheets and cost of goods, (if you’d like a copy of my free Excel menu calculator drop me an email) measure your marketing, is it working? by that I mean are you getting bang for your buck?  The mantra for good marketing is if it can’t be measured, you can’t do it! Review your donations policy – can you afford it, and are your donations making a difference to people’s lives or just sponsoring the same organisations because that’s what you’ve always done? Seriously look at why you might be doing members draws, running a courtesy bus, advertising on radio or newspaper; conduct your own internal operation review.

If you sense I am being a little agitated in this article you’re right, I’ve spent 50 years in this business and I get frustrated at seeing the same mistakes made time after time, mistakes that cost some clubs their existence.  Committee and managers forget when a club fails, or is in a difficult financial position, it is the very people they were created to serve and support who pay the cost of failure. Let me know your thoughts john@dws.net.au

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