Managers are graded on the performance in the food and beverage area much more than seems to be warranted when looking at the club as a whole. There are a whole lot of reasons that impact the performance of the F&B department but it is important to be able to discuss the information with the Board. Our annual publication, Clubs in Town and Country provides valuable information in this regards. Another source of information is Club Benchmarking.
This chart from Club Benchmarking, shows F&B labor cost as a percentage of F&B revenue for all clubs nationally. Clubs with higher revenue from membership dues have the ability to support a higher level of service in their F&B operation and even lower prices of food relative to cost. F&B deficits tend to be larger at clubs with higher dues revenue and the excess cash from the dues revenue is used to support the F&B deficit. This Chart depicts very clearly the level of service expected in clubs with higher dues revenue as the percentage of F&B revenue at such clubs going to F&B labor is higher. Clubs with lower membership dues revenue must run “tighter” F&B operations as there is less free cash in the club to subsidize an F&B deficit. How does your operation compare to the distribution in the Chart? Does your club benchmark as you would expect? Contact Club Benchmarking now to find out! firstname.lastname@example.org, http://www.clubbenchmarking.com/
Usually this question comes up around the holidays but I have had it asked of me several times over the last few weeks. While the answer is clear, clubs still have a tendency to try and get around it and questions continue to be raised. The question comes up at this time of the year when a favored or long term employee retires. However, it is more widespread than that. Many, if not most, private clubs establish holiday or vacation funds for employees soliciting donations from members. Alternatively, a member may wish to recognize a particular employee for services above and beyond the normal call. To fund these programs, clubs often will solicit funds from members to make the payment to employees. They assume that since these contributions are voluntary, they should not be treated as normal wages and do not need to be reported to the Internal Revenue Service.
Unfortunately, unless very specific rules are followed, these contributions would be considered taxable wages and subject to withholding of income and social security taxes. To avoid this designation, the club must stay out of the solicitation. The club cannot organize, advertise or solicit money. It cannot maintain an official accounting, nor determine the amount of payment. The employees may establish the fund themselves, or a member may take responsibility, as long as the club does not sanction it. The bottom line is that if the club solicits donations, the reporting of the amount given to employees belong on Form W-2, along with regular wages. It is not treated as a gift or reported on Form 1099.