To Lease or Not To Lease Your F&B Operation?

Does the following statement sound familiar?

“It is nearing the end of the season and for the most part weather has been good with fewer rain days and our rounds are up; however, my greatest challenge has been my food and beverage operation with higher food costs and staff issues.”

Such a sentiment is all too familiar for many private club managers. The next question they ask themselves is whether they should continue to manage and operate their food and beverage operation or if they should find a person or entity to lease the operation and eliminate the headache.  Stephen Johnston, President and Founder of Global Golf Advisors, discusses the pros and cons of leasing a food and beverage operation and provides solutions for managers who are considering either answer to this question.

Expected Life Cycle of Golf Course Items

How long should parts of the golf course last?

No two golf courses are alike except for one thing: deferring replacement of key items can lead to greater expense in the future, as well as a drop in conditioning and player enjoyment.

The following information represents a realistic timeline for each item’s longevity. Component life spans can vary depending upon location of the golf course, quality of materials, original installation and past maintenance practices. The American Society of Golf Course Architects (ASGCA) encourages golf course leaders to work with an ASGCA member, superintendents and others to assess their course’s components.

ITEM YEARS
Greens (1) 15 – 30 years
Bunker Sand 5 – 7 years
Irrigation System 10 – 30 years
  • Irrigation Control System
10 – 15 years
  • Pump Station
15 – 30 years
Cart Paths – asphalt (2) 5 – 10 years (or longer)
Cart Paths – concrete 15 – 30 years (or longer)
Practice Range Tees 5 – 10 years
Tees 15 – 20 years
Corrugated Metal Pipes 15 – 50 years
Bunker Drainage Pipes (3) 5 – 10 years
Mulch 1 – 3 years
Grass (4) Varies

Notes: (1) Several factors can weigh into the decision to replace greens: accumulation of layers on the surface of the original construction, the desire to convert to new grasses and response to changes in the game from architectural standpoint (like the interaction between green speed and hole location). (2) Assumes on-going maintenance beginning 1 – 2 years after installation. (3) Typically replaced because the sand is being changed – while the machinery is there to change sand, it’s often a good time to replace the drainage pipes as well. (4) As new grasses enter the marketplace – for example, those that are more drought and disease tolerant – replanting may be appropriate, depending upon the site.

As published and compiled by Boardroom Magazine – all information courtesy of ASGCA

Planning Ahead

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Private clubs have made a comeback since 2008, what are the important ‘to do’ items for a club’s success today? There are at least five characteristics that separate top-performing clubs from those that are not:

Excellence in Governance – Top clubs do not have disciplinary problems. Moreover, top clubs govern with an openness and resolution on which members may rely. Matters that come before the board are addressed timely, thoroughly and within the context of a well-known and widely understood Board Policy Manual (“BPM”). These clubs’ boards deliberate as many and govern as one. Differences of opinion and priorities are kept in the board room.

Trusted Leadership – Top clubs enjoy great leaders. Servant leaders who put the needs and priorities of others – their fellow members – ahead of their own. Sometimes the great club leaders are titans of industry and sometimes small business owners; they are always servant leaders. They are trusted because they are reasonable, respectful, patient and visionary. They can see beyond the horizon.

Visionary Strategy – Boards at top clubs understand that they are responsible for three critically important matters: strategy, finance and culture. These boards rise above the day-to-day issues of the club and keep focused on the future of the club… what its values will be…how it will fund its unending capital needs…and, what steps will ensure long-term economic sustainability for the club. Clubs of this type have strategy that is big, bold and evolutionary.

Market Differentiation – Most clubs are situated in over- supplied and highly competitive markets adrift in a sea of “sameness” where one club offers much the same value proposition as the next. Top clubs are easy to spot because they are different…and everyone knows it. What distinguishes your club from its competitors? The objective of market differentiation is to make your club more attractive, appealing and successful than others within its competitive set. Typically this begins with focused brand planning and execution. Top clubs have “it” and everyone can point to what “it” is!

Revenue-Focused (versus expense-focused) – Top clubs understand the metrics of their business…fees and dues. Top clubs recognize several sources of fees:
(1) joining fees are typically used to fund capital reserves and long-range capital needs; (2) fees for non-member services such as weddings, outings and special events; and (3) usage fees for such needs as club storage, lockers and access privileges of one type or another. It is often said that “clubs are in the dues business”. In fact, fees and dues represent the most high-yield / high-margin sources of funds for private clubs. Leaders in top clubs understand that their club must consistently increase revenues from the various high-yield sources to achieve economic sustainability, which is paying all of the club’s costs and funding its future capital needs.

– Henry Delozier (GGA Partner) for Boardroom Magazine 

Top superintendents plan their communications carefully

Our firm stresses the importance of strategic planning. Our view is your club and course will never reach its potential without a plan that clearly states where you want to go and how you intend to get there. But we would be the first to acknowledge that the best strategic plans are doomed if they’re not linked to a disciplined set of actions.

That’s also the view authors Larry Bossidy, the former CEO of Honeywell, and renowned consultant Ram Charan explain in their book “Execution: The Discipline of Getting Things Done.” In fact, they say execution, long dismissed as a tactical endeavor, is a business leader’s most important function.

The obstacle in linking strategy to action is that leaders have long considered execution the tactical side of business, something they should delegate while they focused on the perceived bigger issues. To that, the authors say bunk.

Here are three straightforward actions that will help club leaders execute their strategic plans:

1. Develop an action plan that complements your strategy
A strategic plan describes the primary goals and objectives for the club. Hopefully, the plan is supported with thorough market research and a genuine understanding of the club’s needs and its members’ wants. The plan should acknowledge leaders’ primary responsibilities: to protect the assets of the corporation, ensure and sustain effective guidance, and manage the financial capabilities of the club responsibly.

But the best strategy gathers dust if not accompanied by a detailed action plan that outlines how the strategy will be implemented. Let’s say one element of the strategic plan is to improve the quality of greens to enhance the image of the club, which would pave the way for an increase in fees and dues. How is that going to happen? Not simply by writing it into the strategic plan, that’s for sure. What are the resources needed? What’s the budget? What’s the timing for the project? How will success be measured?

2. Communicate the action plan
Members want transparency. They want to know what is happening at and with their club. Members want the board and leaders to demonstrate an awareness of the expectations of their broad constituency. Communications should be:

  • Frequent. It’s hard to overcommunicate. Town halls and open-member sessions can be held quarterly so members have a chance to see, hear and question their leaders. Letters, emails, texts and social media platforms should all have a place in your communications action plan. Use each to take advantage of what they do best. If you’re unsure how members and customers prefer to hear from you – and on what schedule – ask them as part of a simple survey.
  • Easily accessed. Most clubs are a swirl of rumors, partial stories and misdirected applications of information. Create one location where members can obtain accurate information. This can be a virtual destination with clear-cut structure and rules of engagement.
  • Personal. Calling trees that assign specific board members and leaders to specific segments and small groups of members give your communications a personal touch. A one-on-one conversation is also still the best way to understand what a person is really trying to communicate. This approach is gathering new strength in clubs where many members know the effectiveness of small-group communications that keep youth sports and after-school activities running efficiently.
  • Stay on message. During an election year, this admonition is repeated repeatedly. Candidates have what’s known as their “stump” speech, and they give it time after time, customizing it slightly for the occasion and audience. Similarly, club leaders are most effective when they communicate goals, objectives and key messages in consistent language.

Golf course superintendents are often called upon to be more communicative. Often, superintendents divulge only what they must and, as a result, information flow is incomplete, sporadic and pressured.

The top superintendents plan their communications as carefully as their agronomics. They know what and when they need to communicate important issues. They deliver clear and succinct messages that are timely and authentic. A thorough agronomic plan must include a section dedicated to active communications.

This article was authored by GGA Partner Henry DeLozier for Golf Course Industry.

NGCOA Canada and GGA Partner to Provide Enhanced Business Performance Solutions

The National Golf Course Owners Association Canada (NGCOA Canada) and Global Golf Advisors (GGA), formerly known as KPMG Golf Industry Practice, have partnered to deliver a unique suite of business intelligence services to NGCOA Canada members.

On behalf of the NGCOA Canada, GGA will execute its Performance Intelligence services; an advanced system of analytics designed to help golf courses improve their performance, stay on track and maximize value. Through tangible data and clear analysis, this unique and comprehensive suite of services will enable golf courses to more accurately and successfully:

  • Review detailed and actionable intelligence about customers, market, operations, and finances.
  • Conduct customer satisfaction surveys which provide informed research to adjust operational processes and marketing tactics.
  • Evaluate, develop and adjust business strategy on an annual basis.
  • Ensure that the business is positioned for maximal competitive advantage.
  • Store all important executive level business tools and documents in one central location.
  • Educate and orient management teams on the business.
  • Delve deeply into operations and finances through the comprehensive Analytics Center.

Stephen Johnston, founding Partner and President at Global Golf Advisors, regards NGCOA Canada as the preeminent supporter of Canadian golf businesses, “NGCOA Canada has always been a leader in developing products and relationships which enhance golf course operations. We are pleased to be working with the NGCOA Canada to deliver a product which will be of significant value to improving club performance.”

“In today’s golf market, leveraging a golf course’s data and comparing to industry benchmarks is critical to a successful business operation,” stated Jeff Calderwood, CEO, National Golf Course Owners Association Canada. “Performance Intelligence now provides that solution in a very efficient platform, plus consultation to ensure maximum ROI is achieved.”

“The platform provides owners and operators with a cost effective solution to evaluate their business’s performance and ultimately maximize its value,” explains Derek Johnston, a partner with Global Golf Advisors and leading director of the Performance Intelligence platform. “The holistic service packages offer a 360-degree view of their business and have been designed to source, track and measure what matters most.”

Through NGCOA Canada’s vast membership network and position as the leading supporter of Canadian golf business, GGA will facilitate an ongoing synthesis of key metrics currently delivering successful outcomes across a range of management disciplines including customer satisfaction, competitor analysis, golf course maintenance, operational performance, financial management, and strategic vision. Only through Performance Intelligence will NGCOA Canada member courses have analytics, resources, and insights at their fingertips.

It is said that a rising tide lifts all ships. This suite of services not only provides invaluable performance measurement, but is among the first to offer industry-wide context and nation-wide clarity for golf businesses seeking to enhance their value.

2016 European Private Club Leaders Symposium Survey Results

In September 2016, GGA, in collaboration with the Club Managers Association of Europe (CMAE), hosted club executives and leaders from Europe’s most esteemed private clubs for a symposium to identify and discuss emerging trends and best practices within the private club business segment. The first European Private Club Leaders Symposium explored topics relating to the continued development of Europe’s most elite clubs including current trends, research, key performance indicators, and top issues facing clubs now and in the future.

In advance of the Symposium, participants were sent an initial survey which asked several questions relating to factors currently impacting their club as well as factors that they believe will impact their club in the future. This initial survey also extracted high-level information about strategic thinking and perceptions regarding Britain’s exit from the European Union.

After the Symposium, GGA solicited feedback from attendees on key topics and discussions raised during the symposium via a post symposium survey. This secondary survey gathered information about club profiles, club governance, capital, membership trends, methods of intelligence gathering, and Brexit. This report highlights the results from each survey.

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