Small and medium sized clubs are in a unique position to thrive. But boards and managers must act today to plan and secure a future that could be different from today's 'business as usual'.
I saw a post the other day on clubs’ planning coming up to 2020. It was a classic Sydney-centric view. Carparks, wow factors, tiered loyalty, day spas. This is fab is you’re big and/or are situated in Sydney’s Golden Gaming Bowl.
Many of the clubs for whom I work are cash strapped. Managers are incredibly time poor, clubs are landlocked, and/or are in regional or difficult areas.
Research shows that large clubs increased in number while medium and smaller clubs continue to close or cede to amalgamation. It was eloquently stated in the 2015 Club Census;
Differences in financial viability are a result of differences in the capability and capacity of clubs to respond to a challenging operating environment. Larger clubs, with the advantages of scale have been more successful than smaller clubs in improving their financial health.
How should small clubs be planning?
Unfortunately, many small clubs do not plan. I’m busy surviving, they tell me.
That’s a shame, because clubs are very complex businesses that are reliant on each business unit’s positioning and success, psychology, and well-negotiated supply chains. Plus we have those pesky future aspects to consider – the big ones being tech, people, and cost of goods.
Let's look at some sacred cows and why planning is important.
Betting at the TAB
The TAB isn’t subsiding; it’s already gone. But, like the fourth green or the golf fundraiser, many boards, managers, and members just don’t know it yet.
I understand there are massive industries with often troubling ethics tied to racing animals around a track that keep the punter’s dream alive in clubs. Yet, you can’t rip out a TAB and replace it with a cocktail lounge tomorrow.
Planning here is complex with a long roll out. It requires strategic member communication, research and development in agile technology, plans on walls for many months before a panel is removed, and using the savings from TV subscriptions in a clever way that resonates with the punters who may feel disillusioned.
It's not something that will be resolved in a single board meeting.
It’s important to consider how you plan for this once-thriving business unit, which is now a significant drain on small and medium sized clubs, with deep analysis on player activity, threats to the business unit’s viability (like mobile apps), and potential size of the market for your product. The betting market is massive, and I’m not doing a big-reveal when I say just not in the way it used to be (again, like mobile apps).
What does your research show about the group who support your TAB area? Are they responsible for keeping the prices low at the bar? Do they behave and treat others like it is 1960? How will these profit and psychological aspects affect your business in 2020?
I wrote briefly last week that a shiny new restaurant isn’t the only pathway to profitability… there are other ways.
However, as I gaze into the crystal ball is see these momentous issues facing our catering businesses;
Significant increase in cost of goods
Significant people threats
Increase in wages
Increase in the contingent and casual workforce
Harder to secure chefs, even more difficult than today, as well hard to get competent FOH staff
Increase of constant in-house training
Fussier and more destination driven menu design
Pick up and delivery culture
If you have not planned for profitability in menu design and back-of-house operational standards that decrease labour costs, you are planning for financial pain. It’s not about cutting a menu down, although there is an argument for that if your menu is trying to please everyone on the planet.
Planning here will be around commercial kitchen design matched with operational service management enhanced by an on-going induction and training culture. Train often and lightly rather than over days and intensively. In-house training that is specific to your club, not a generic seminar that might be aimed at a cash-happy large club.
I spoke to a very switched on General Manager of a small club recently and she said her catering GP was 60%. While we try to position our clients at 70%, in that 10% is the difference between creativity, taste, and presentation. Therefore, it is very important that your kitchen profitability plan is tied to your bar profitability.
A kitchen that runs at 60%GP must be balanced with a bar that makes at least 65%GP for small and medium clubs that cannot rely on gaming (since they have less than 60 machines). This is where that group of old men at the TAB complaining about paying a sustainable price for the tap beer impacts… you’re starting to see how planning in integrated.
My general manager friend runs an excellent wine list to balance her exquisite casual dining restaurant. “Women in our target market don’t care that they pay $14 a 250ml glass, just as long as they have a delicious Verdelho. It walks out the door selling 2 to 1, and sometimes even 3 to 1 to the Tooheys New.”
Planning here involves designing a beverage menu that entices your target market as well as holding some back for the core market and mixing the GP% to an average 65%.
If your target market and core market are very different groups of people, then you’ll have to make a difficult choice – who is more viable in the long-term and what will the plan look like moving from one identity to another?
Small clubs have done this – Graphic Arts Club started this trend over 10 years ago.
Car Parking - the 2020 Myth
While comprehensive self-driving vehicles are "some decades" away, Australian authorities must start preparing for a "significant" impact on employment, transportation, and other industries. That's the expert view offered by representatives from the Department of Infrastructure and Regional Development who gave evidence to a Parliamentary Committee inquiry into the social issues relating to driverless vehicles in Australia.
For many small clubs in regional areas, car parking isn’t a problem at all. It’s getting people to come to the club in the first place. For other small clubs that are in metro areas, landlocked, or on crown land, it’s a problem often with no immediate solution.
Research shows parking is more an issue for boards and managers than it is for customers. Most of the time, customers believe they will get a park.
Research also suggests that customers who travel by car also bring in less revenue than venue managers think. The biggest portion of income can come from customers who walk or take public transport.
Before you blame the car parking or lack of it, planning involves creating a destination that is worth walking to or jumping on the bus and train to visit. Mostly, that’s going to be a lot about the people, the quality of your food and beverage, and the vibe of your venue.
Before that big spend on a car park, maybe there's some deep analysis that needs to happen.
Community Engagement in 2020
As part of planning, I believe it is very important to really define what community engagement means to you. Many take the view that community is giving outwards; like supporting programs. I believe it could mean more than that.
Community engagement is about helping with resources, often cash, but it can be access to networks, education, and your attitude to benefits.
What about creating opportunities in the workplace for those who need a break – people getting back on their feet after a disaster like homelessness or crime, older workers who have lost their job and need specific retraining, disabled people, refugees with hard-to-pronounce last names.
What about your attitude to your education and training commitments, beyond mandatory requirements or the usual rounds of seminars and meetings? I heard several directors refer to their attendance at a recent conference as their ‘holiday’. How would your community feel about that attitude to public money?
For me, and many club members like me, community engagement isn’t about the crafted stories and well-edited videos. Community engagement is about your values and principles. It’s how you live them every day. It’s about how they manifest in leadership and management. It’s the attitude to and aptitude for planning. How you regard the voiceless or muffled in your community.
The gaming dollar is a tough dollar to make outside the golden bowl, and while I can’t see gaming machines declining any time soon, reliance on gaming is untrustworthy.
I’ve run out of time to talk about what diversification means in small and medium clubs, how planning for the workforce may need to change, how the value chain in your business models may make or break your future.
I’ve run out of time to talk about use of assets in clever ways, the changing way the rest of us work, loss of safe jobs, the myth of retirement, and reality of the 100-year-long-life.
I've run out of time to talk about poorly trained boards who are far too involved in operational matters and jobs-for-the-boys.
Small clubs, if they plan well with vision and sense could find themselves in a better position because of their smallness and ability to be more agile, their lower reliance on gaming and a bravado approach to creativity and community.
Medium sized clubs that once did well may now be struggling with a culture of entitlements and expectations that can no longer be fulfilled, plus a footprint that is too big and too outdated to manage effectively. Planning is VITAL, especially in cultural change.
Large clubs have the edge, and everyone loves to work with big, comfortable budgets. In fact, the 2015 Club Census admits that the 2010 Memorandum Understanding with the NSW Governance may have improved the viability of larger clubs and boosted their financial capacity to invest in income generating assets.
Shayne Leslie and Abigail Jones are specialists in small and medium sized clubs. Talk to us to arrange a meeting to begin planning for an independent future.
SHAYNE LESLIE | email@example.com | 0412 241 773
ABIGAIL JONES | firstname.lastname@example.org | 0438 649 952