Clubhouse Subsidy – A Strategic Cornerstone?


Editorial Submitted by Mike Doscher  Camas Ct

There was a recent posting on the Wildwood Association website authored by the Liaison to the Clubhouse Committee regarding the Clubhouse subsidy.  I am sure many people didn’t see this article (full text below).  If you are engaged or even just following the Clubhouse rebuild or replace discussions, you need to understand the implications of the food and beverage service model.  It is a strategic cornerstone for planning any major investment in this facility.  There are some important facts in this document and some misleading information that requires elaboration.  As the article clearly states we are subsidizing the food and beverage operation.  Said another way, we own a restaurant that looses $200,000 a year and each of us chips in about $70 a year to keep it afloat.  It should be no surprise that the bar does not lose money.  We are not a country club where the members must spend money at the clubhouse as part of the membership.  With our Association rules and the financial impact on the members this situation is not likely to change.  Our restaurant must compete with outside alternatives to serve the dining needs of our residents.  However, our current business model does not allow the restaurant to compete for patrons from residents outside the gate.  This limits the market and demand for our facility.  Think of your own dining habits and you will agree that a variety of food styles, pricing, and ambiance is more appealing than going to the same place for your dining needs.  We have a built in market demand problem and the results are clear in the article.  What is misleading in the article is the notion that we can’t open our facility for outside use.  That is not correct.  Our corporate structure and tax status for the Clubhouse area could be changed and the impact on individual members would be minimal. Looking for outside demand to help support our food service facility is a reasonable alternative that could be pursued.  Remember that doing nothing different is a decision and that has been the strategy for some time.  In fact, the design requirements the Board has given the architects bidding on doing the new Clubhouse plans asks for 25% more capacity in the dining room.  The implied assumption, supported by this Association article, is that the current service model will be used and the subsidy will “hopefully” improve, with a new building and parking.  If it doesn’t improve the implication is that the members are willing to subsidize the risk of an even larger facility.  Is that true?

Planning for a major investment in our Clubhouse must open the discussion on our food service business model.  We have no obligation to manage a full service dining facility so the option of moving away from that service model is a reasonable option.  Many believe that a move to a service model more aligned with the major users of the Clubhouse would lower cost and increase demand.  The notion of a bar grill operation has been on the table for many years.  Doing away with full service dining, moving to a bar grill model, opening to outside patrons, or any other service model would have a major impact on the design of a remodeled or rebuilt Clubhouse.  This brings us to the cornerstone issue….Wouldn’t you want to agree on the food service model before you start paying an architect to draw plans?  The article basically says don’t worry about it, but it sounds like the same old plan for subsidy, only on a potentially larger scale.  Please share your views on Wildwood Interactive (lwwa.net).

Our Restaurant and “The” Subsidy (Copied from the Lake Wildwood Association website)
Homeowners Associations often choose to support a restaurant as an amenity available to all residents by assessing themselves in the form of a subsidy. While we can hope to reduce our subsidy, it is likely that we will always need to subsidize any restaurant within the gates. Our present subsidy for our clubhouse restaurant is approximately $200,000, or about $70 of the $1624 that we pay for our annual homeowners’ dues. The restaurant subsidy has increased considerably since FY 2002/2003.
Efforts by the staff and the Board to solve this daunting shortfall in revenue have included hiring a parade of managers, study by a Hospitality Committee, and advice from a consultant. Prime issues have been quality of service and consistency of meals. With the hiring of our current restaurant manager, service has improved, the quality of meals is better and more consistent and controls are in place to reduce costs.
However, the fact remains that the restaurant is not supported by a majority of residents.
Increasing patronage, easier access to the restaurant, a business plan for the restaurant that is suited to our community, marketing efforts, and hopefully a more robust economy may contribute to more revenue and less subsidy. As we look at what needs to be done to our current clubhouse facility, current usage data will be a consideration as we evaluate various options and adequate sizing. Options not open to our Association are assessing a monthly fee or open the gates to non-residents to compete with outside the gate restaurants.

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2 thoughts on “Clubhouse Subsidy – A Strategic Cornerstone?

  1. I think before spending anymore money we need to reflect on our goals.
    Do we need all this?
    We were told of the one time fee.
    Now we are exceeding that fee.
    By over one million dollars.
    Many of our residents are on fixed incomes.
    Why do we care to attract folks from the bay area?
    How about lets serve the folks who live here.
    Downsize .

  2. I agree.

    As a small business owner – I find it amazing how money is spent without having a documented and agreed to “business plan” with clearly defined objectives.

    I think that we should approach any new direction not only with a clear understanding of the community’s desires but also with what is “affordable” and provides a “reasonable” service level to the community.

    We all are witnessing the cities, counties, state and federal governments struggle with trying to balance their spending – increasing taxes (I love it when they use the word “revenue”) to maintain the status quo, continue to provide entitlements, etc. We have the same issues within our community. Are we spending the money we already have wisely? Do we need to preserve status quo or should we make some tough choices and change the way we do business? I think change is in order.

    I also agree that improvements need to be made to keep LWW a desirable place to live – one that doesn’t exist with “rotting” amenities. I think we can do that without having a multi-star dining facility on site for the the “minority” that are using it or “say” that they want to use this type of amenity.

    How many times have we have requests for amenities and petitions are brought forward saying they will “pay” to use it and when the amenity is delivered they don’t show up?

    I believe that the current level of usage supports the position that what we are providing isn’t what the community wants to support.

    The statement above is substantiated by the “dining” that occurs outside our community on a regular basis – not only at New Moon, Friar Tucks but even at the local Penn Valley Grill. They chose not to dine regularly at the “club” and are providing what I think is a “clear message” to the board that they will not support this amenity at its current “delivery” level. So why are we going to spend more money to increase space for the “same game” and add more costs to deliver a product that most do not want to buy?

    Do we really need more than a grill providing breakfast, lunches, snacks and the occasional “meat loaf special”? Could the clubs and organizations bring in outside services to handle their “once a year” special parties in our new community center? Do we need to pay annual salaries for management and maintain staff that handle these “annual” functions?

    What I think the board needs to do is to provide the community what I call a “reality check”.

    What does it cost in payroll and “all other related expenses” to have the current management structure? Would these level of skill sets be required to manage a grill or could an “executive chef”…who works delivering product to the customers along with his staff suffice? Could the entire “grill functionality” be contracted out further reducing our costs? I think a good business person could not only run the “grill” substantially reducing the subsidy but could possibly be profitable due to the “captured” nature of existing demographic provided within the community. I would think that the GM could manage the “supervising” chef or the contract services requiring no other paid management and significantly reducing existing costs.

    I think before we continue to spend money “proceeding” with a facility to support the current model – that I would like the Board to provide a “chart” that simply lays out the new proposed costs to continue doing business as “usual” versus providing a grill with “appropriate” staffing levels to manage operations required for that level of business whether or not that staff was provided “in-house” or by “outside services”.

    Then a decision can be made as to what is required versus desired within “feasible” (reasonable) funding. Then and only then – should we proceed with architectural designs and plans for a facility to meet the “defined” objectives.

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