My Last Editorial on F&B (Probably)

By | February 27th, 2018

William Donohue, Publisher Emeritus, Club & Resort Business

In the commercial foodservice arena, fear-based decisions rarely result in positive outcomes.

For six months of the year, I live in Northwest Michigan, about 25 miles south of the Mackinac Bridge. It’s a beautiful area unlike any other part of the Midwest, and home to some of the best golf courses in the country, quite a few of which are annually listed in “the best courses in America that you can play.”

I discovered the area 34 years ago, when I was visiting a friend in the winter to go skiing. On the last day (a Sunday morning) I was having breakfast at a very charming restaurant, with about two feet of snow on the ground, and I remember thinking, I want to live here! The town looked like something in a Norman Rockwell painting, and we made the decision then and there.

Why am I telling you this? The reason is simple. That very same restaurant is still there, thriving and going strong. And through all of those years, it has had no automatic gratuity, a stable workforce (wait staff and chefs), quality food and consistent service, and a welcoming atmosphere. In short, its successful and continued existence (for at least the 34 years I have been there, and probably longer) has been based solely on the customer satisfaction that it has continually reinforced.

In my previous editorials on this subject, I have received quite a bit of criticism about my position on two major issues: monthly minimums and automatic gratuities. I have posited that a monthly minimum is nothing other than a tax on the entire membership to subsidize the food-and-beverage operation.

While there are examples of great F&B in a monthly-minimum environment, overall it is inevitable, for both human and economic reasons, that it will become mediocre over time. In essence, the club is saying that it is not willing to charge enough for its menu items to cover costs, much less make a profit.

This attitude was baked for years into club culture across the industry, yet happily the trend finally seems to be turning away from monthly minimums. But when I think of that restaurant, I can only think that if there are still clubs that are unwilling to charge enough to cover their costs, and/or raise quality to justify higher prices, then in some way they must be afraid of their members.

The thinking seems to be that if they charge more and operate with higher food costs, then possibly the members won’t come or dine regularly at the club. This is strange and counter-intuitive, in that club demographics indicate that if anyone can afford a higher meal price, it is the club membership.

The second issue, automatic gratuities, gets a little dicey, especially given the current job environment. One can’t go through any commercial area of a town without seeing help-wanted signs, especially in the foodservice sector. So the argument goes something like this: We need the automatic gratuity to attract and hold wait staff.

Once again, this is nothing other than a tax called by something else, to subsidize the cost of wait staff when you are not willing to pay a competitive wage. Like all forms of socialism (which this is), it drives the good out, and rewards mediocrity. It also takes out of the members’ hands the ability to make a choice to reward good service, or not reward bad service.

It seems to me that both issues are driven by something we don’t want to talk about: fear. In the case of monthly minimums, it is fear of pricing to cover costs. In the case of automatic gratuities, it’s fear of driving away or not attracting suitable wait staff, while hiding true costs by calling it something else.

In the commercial foodservice arena, fear-based decisions rarely result in positive outcomes. And meanwhile, that restaurant in town continues to deliver value, and charges for it. It will probably be around for another 34 years.

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