It’s Still a Tax on Mediocre Service

By | December 27th, 2017

Clubs today recognize that they have to be the dining designation of choice, not a member responsibility or tax.

The current tax debate is a good starting point to continue the discussion sparked by my most incendiary editorials (based on reader response) over my 11 years of publishing C&RB.

The tax debate is phrased as having to be “revenue neutral” and hinging on the question of “How will we pay for it?” If it has to be revenue neutral, then it really isn’t a tax cut, but rather a reapportioning of who pays—and whatever is cut at one level has to be increased at another. This is pure politics and has nothing to do with responsible fiscal policy. It is also why nothing essentially changes.

The second issue,“How will we pay for it?” implies that nothing can be cut from the budget (and nothing currently is), so the only way to pay for government is to manipulate “who pays,” and how much. Imagine if a club ran their dues and operations that way. It would soon be out of business, due to loss of membership.

Which brings me to two editorials on food and beverage that I’ve written over the last 11 years that have both generated strong response.

The first, written for C&RB’s third issue in June 2005, pointed out the fallacy of monthly club-dining minimums. My point was that with a minimum, the need to satisfy diners on the experience alone diminishes over time.

I likened it to Amtrak. Amtrak doesn’t have to appeal necessarily to its riders and satisfy them with the experience; rather, its primary motivation is to make sure that the government in Washington continues its subsidies. When this is the motive, it puts Amtrak at the mercy of specific members of Congress who want service to their constituents maintained—and it doesn’t ensure operation of an efficient, attractive rail service. In short, it means that Amtrak doesn’t have to be competitive with other travel alternatives.

With a monthly food minimum at clubs, it’s much the same thing. In essence, we are taxing all the members, and especially the ones who don’t use the club for a variety of reasons, including mediocre food, poor service, or just a lack of preference. We may not like it articulated that way, but that is what we are doing.

After I wrote that editorial in June 2005, I received a storm of letters saying that I was wrong, and each writer insisted that his or her club had both good food and a monthly minimum. I’m sure that was the case, but it is still a tax to make up the difference between performance and expectations.

This past October, I wrote another editorial (“Gratuity Socialism”) that received a similar response from angry F&B directors and club chefs. I commented that automatic “gratuities” were not gratuities in the traditional sense, but in fact a tax (or a selective dues increase or monthly minimum) just called by another name. I also accused the practice of being, in essence food-and-beverage socialism, because everyone on the wait staff was compensated the same, regardless of performance. Over time, this can only lead to service mediocrity.

The old adage that “the bad drives the good out” applies here. When motivated, hard-working staff members see lazy or non-motivated co-workers receiving the same income they do, they will go to higher-paying jobs where individual performance is properly rewarded. And the members will be left holding the bag as usual. My solution was to raise wages to be competitive and use the gratuity where it should be applied, as a reward for exceptional service.

I know I will continue to get heated response to my positions on both of these issues—but they are fact-based, using real words for what they are, and not hiding subsidies under words that imply something that isn’t.

In the 11 years since we launched C&RB, we have seen club minimums decline and club F&B improve. Clubs today recognize that they have to be the dining designation of choice, and not a member responsibility or tax.

One Response to It’s Still a Tax on Mediocre Service

  1. As consultant to the health, fitness, and recreation industry for more than 50 years, I agree completely with Mr. Donohue’s editorial (“Gratuity Socialism”) that so-called automatic “gratuities” are not really gratuities at all but, rather, they are a mandatory levy upon members not related to any level of performance to justify such payment. His solution of simply increasing wages to be competitive makes logical sense. Let the members decide whether or not they wish to add a gratuity based on their individual expectations of quality service. Don’t shove it down their throats.

    I also agree with Donohue’s earlier criticism of mandatory food minimums at clubs. In both cases, if a club is truly doing all the right things to incent members to utilize their dining facilities, members will more often respond positively when they have a choice.

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