Has anyone else noticed the skyrocketing prices of drinks and appetizers at restaurants? These days, I expect to see the average soft drink price around $2.50 or close to $3. Appetizers seem to rarely cost under $10. Fancy cocktails at many places are nearing $20. My assumption is the restaurant industry has seen its fair share of increases in costs of goods sold and expenses. In order to achieve profitable margins, restaurant operators raise prices where they can. And it’s plain as day to me they have chosen soft drinks and appetizers as one pathway.
Now let’s pivot to golf. Just like with restaurants, costs of goods sold and expenses are on the rise. Minimum wage increases, new overtime rules, increases in water prices in many areas, and many other predictable increases are putting operators on the defense. One operator, who oversees nine courses, told me the minimum wage increase alone in his market will cost him $1.5 million over the next four years.
Unfortunately, though, there are many pressures in golf that are keeping revenues from climbing commensurately: rampant discounting through online tee time marketers, supply-and-demand imbalance in many markets, volatile weather patterns and not-so-dynamic price strategies employed by course operators, to name a few. This could mean leaner bottom lines for the industry—unless we (you) do something about this. From where I sit, I see a few opportunities to counter-balance the negative pressures:
• Have someone who hasn’t been working in your operations review all of your expenses for where you are overspending. Open the books and invoices. If you took over a new golf course, it’s one of the first things you would do. Why not have someone do it for you—now? You’ll be glad you did.
• One of the most experienced multi-course operators (who reviews activity at hundreds of facilities) espoused that most golfers are more time-sensitive than price-sensitive. But we often price our product to accommodate the vocal minority. With the shortening of the booking window, we fear the tee sheet will remain empty if we don’t start lowering our rates. Move away from old-fashioned price strategies so you can yield a few more bucks per round. Oh yeah, and look at your soda pricing!
• Ask any of your vendor partners—especially your tee time marketers—how they can help you raise your prices and cut costs. If they’re true partners and concerned for the success of your business, they’ll come up with viable options for you. Discuss what they’ll do for one bartered round instead of two—or maybe zero bartered rounds (putting all revenue from your golfers in your pocket). How can your F&B companies help with better purchasing and menu pricing? Imagine asking your insurance agent to find suitable ways to lower your premiums!
If your bottom line needs a boost, do something about it. Don’t wait. Share your bottom-line success stories with me at perspective.ngcoa.org.