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2007-08-07 The Dorn Group Hospitality Newsletter

Welcome to the Summer Issue of The Dorn Group’s Newsletter. In this issue, Charles Dorn writes about F&B purchasing and how GPO (General Purchasing Organizations) can potentially save you money. While looking at Strategic Planning, Dorn takes a “Global Perspective” and shows the importance of expanding your thinking. Finally, this issue wraps up with a few recent “customer service” issues and speaks about looking at the subject now. As always, your comments are welcome. Please fell free to e-mail Dorn at charles@thedorngroup.com

  1. Food & Beverage -- Can You Save Money?
  2. Customer Service -- Who Said itís Okay To Be Rude?
  3. Think Globally in Strategic Planning.

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Food & Beverage -- Can You Save Money?
By: Charles D. Dorn, CCM

As many managers throughout the country begin to clean their desks, read those piles of unread magazines and think of the year ahead, there is no better time to look for new ways of saving money. The Food and Beverage Department is often the toughest department to cut expenses due to the potential for a perceived loss of value or service. However, a few avenues may exist for unexplored savings.

General Purchasing Organizations (GPOs)
GPOs have been around for a long time. Conceptually the idea is simple; Hotels, Restaurants and Clubs buy together giving you more buying power. Organizations like VGM Club, PAPC and Avendra specialize in the hospitality industry. Each organization has a different emphasis, cost and many have required levels of required purchasing (compliance).

Non-Food Purchasing
The largest area for potential savings comes in the equipment and supply area. These items can be easily compared, shipped and delivered from anywhere. Your facility’s ability to save money is based on your success in finding the lowest price. If you need to buy smallwares for the beginning of your season, you would be best served were you to consolidate the order into one large order and competitively bid the order. By using a GPO, you obtain the benefit of national account pricing and the leverage of a larger organization buying in bulk. Manufacturers and distributors  affiliated with GPOs often have their own distribution network and can save money regardless of your location. Edward Don and Hubert are two of the larger F & B supply houses shipping throughout the country who work with GPOs.

Food Purchasing
Although often your largest expense, the ability to save money in food purchasing is limited by the quality of your food. If your Chef buys from many small specialized sources including individual farmers and artisan vendors, you cannot save much money. However if you buy the majority of your food from a Broadline Distributor (Sysco, FSA) there may be some savings available to you. Discounts from these Broadline distributors are often available for drop size, delivery scheduling and quick payment. Having larger deliveries on the days benefiting the distributor often may result in discounts for you. GPOs have relationships with distributors which often can result in additional discounts as due to contracted lower pricing.  

Food Rebates
As you may be aware, food manufacturers pay rebates to distributors for food subsequently sold to you. If you are not receiving a share of these rebates you are leaving money on the table. Many of the GPOs will collect the rebates for you since the individual tracking per Club would be economically impracticable. As an example, VGM Club’s Cash Back Advantage Program collects rebates from more then 300 national manufacturers and is included in their annual fee. This program does not require any specific compliance.

As you begin to investigate GPOs, make sure you ask what is expected of you. What will it cost you, what savings are guaranteed, what compliance is required? After receiving this information, carefully evaluate if the program works for your facility and if there is a viable return on your investment. Some facilities have found multiple GPOs to be beneficial and have joined more then one.

Isn’t 2007 the time to see if a GPO works for you?
To learn more about what you can do now, please contact Charles D. Dorn, CCM at charles@thedorngroup.com or via phone at (914) 921-3150. Dorn believes growth and change are a necessity. See how he can help you and your business move to the next level.

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Customer Service - Who Said itís Okay To Be Rude?

By: Charles D. Dorn, CCM

We’ve all heard it ourselves, the “customer service representative” who is rude to us, does not care or is poorly trained. Consider the following incidents…

  1. We request a year-end printed summary from one of our credit card companies because our first one never arrived. We are told six weeks for delivery. At some point after six weeks it has not arrived and is holding up filing our taxes. We call again and are told they will order another one. We are not willing to wait another six months. We request it be faxed and are told, “I am sorry but we do not have access to that type of equipment.” No access to a fax? OK, how about sending it via FedEx? Of course we learn the person we are speaking with is in another part of the world.  We request a supervisor. After 45 minutes of arguing, she reluctantly agrees to email it to us.  So we received it after hours of wasted time.
  1. Fast Food – I admit it, I do not eat at many fast food restaurants, rarely in fact, but I like the fries at one chain in particular. So when my kids were young we could take them to a local drive through. This particular property is not their newest but is always clean. The staff? Not nearly that good… During a 2 year period, they would make mistakes at least quarterly.  At a certain point we began calling the corporate “customer service” department. Each time we received a form letter from the franchisee and a few coupons. When did we stop calling and going there? One night when we received a hamburger which had a bite taken out of it. This time I called and told them I did not want a form letter or coupons, I wanted to speak with a representative of the franchise company. Needless to say, no one called us back and we followed up with a call a week later... still no call and therefore no business from us
  1. A friend who worked in the hospitality industry as a General Manager for years, trained the “old school” way wrote me recently to discuss the demise of “customer service”. He noticed at his local supermarket (a well respected national chain) how no one uses the phrase "you're welcome" to customers' most frequent comment to staff (“thank you”).  The current answer the staff favors seems to be: "no problem".  Amazing how no line or district managers seem to have a problem with the answer.

It’s time … time to put the service back into customer service, time to stop accepting mediocrity from our staff and our managers and to begin to show our customers why our establishments are better then the rest.

It’s time … time to review those training programs, policies and procedures and  make sure your staff has the resources needed to be the best they can be.

It’s time … time to look at how your operation does things, asking if there is a better way to them. Does your competition do them better then you? Steal their ideas; find better ways to get the job done.

It’s time … time to re-evaluate your core competencies and make sure everything you are doing is what you do best.

What are you waiting for? Every day you delay, you may be losing customers, alienating employees and as a result losing opportunities to make money…. Now is the time!!

To learn more about what you can do now, please contact Charles D. Dorn, CCM at charles@thedorngroup.com or via phone at (914) 921-3150. Dorn believes growth and change are a necessity. See how he can help you and your business move to the next level.

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Think Globally in Strategic Planning
By: Charles D. Dorn, CCM

Jack Welch, former chairman and CEO of General Electric once wrote, “Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.”

How do you, as your club’s leader, manager, and “Chief Image Officer,” create vision in this ever-changing world?  By “thinking globally.”

Visionaries like Jack Welch and Bill Gates realized long ago the necessity of looking outside their specific businesses for the best and most creative ideas. To think globally means to think outside your traditional boundaries and take the best of everything from all available resources.
This idea of thinking globally is especially important when addressing strategic planning at your club.

Strategic Planning 101     
Strategic planningis, by all accounts, a process. While it varies from club to club, it is fundamentally the same. Simply put, it is a means by which data is compiled, analyzed, and used to make informed decisions about the future of your enterprise. Think of it as developing a plan to determine what your club should be as it evolves and grows.

First, a quick thought about strategic plans. A strategic plan is not a short-term fix or annual event. No manager or officer should expect a club’s strategic plan to be completed in a month, implemented in three, and successful in six. Building a strategic plan is a major undertaking that begins when you and your team are prepared to chart the direction and future of your club.

As you begin the process, a number of changes can affect your club and the strategic plan. Internal changes, such as membership demographics, can change over time simply by the addition or deletion of a member. Another type of internal change occurs if you add new athletic facilities or modify a menu. Each change will have an impact on your strategic plan.

External changes are societal changes. As baby boomers age, America’s eating habits change; as we consume less liquor and more wine, your club is affected. In building the vision of the club, your job as one of its leaders is to think globally.

As we look at some of the components of a strategic plan,we need to evaluate how change affects the club today, tomorrow, and, more importantly, in the future. Let’s look at how thinking globally plays a vital role in your planning.
 
Data Collection
In evaluating your club, research, and data collection are critical. Data can come from many sources. For example, looking at internal demographics, who are your club’s members? Age, gender, job profiles, interests, social affiliations, and geographic relevance to the club are some of the important demographics at which you can look.

Data on club usage is also important, considering usage plays a significant role in determining the future needs of the club. Examine the frequency and times that members use the dining room. Perhaps more importantly, when don’t they?  Many clubs stop here, at the basics.

However, thinking globally, in order to gather data on the club and its membership, you might consider the value of data mining. PCMag.com defines data mining as: “Exploring and analyzing detailed business transactions. It implies ‘digging through tons of data’ to uncover patterns and relationships contained within the business activity and history. Data mining can be done manually by slicing and dicing the data until a pattern becomes obvious. Or, it can be done with programs that analyze the data automatically.”

How does data mining apply to clubs? Many of the trends seen in clubs are obvious. If members and guests use your athletic facilities and have a beverage afterward, this is an obvious trend. However, if many of the members went to the Grill Room after their work-out, could you accurately profile their eating habits? Would you know what they ate? You might think you know, but without data mining, you could not be sure. With data mining, you might find members eating lunch after working out prefer cold soup. Although this example might seem extreme, there are patterns that cannot be seen each day. Data mining is a tool that could help identify those patterns for you.

Other forms of internal data include member and guest surveys, employee input, and facility evaluations. A critical mistake often made by committee members or evaluators is how to deal with member issues or concerns. What makes an issue relevant? Does it require five members mentioning an item to make it an issue?

A mistake often made by evaluators unfamiliar with the club industry is the disregard of member complaints. A single comment by a member on a survey may warrant attention. David B. Chag, CCM, general manager of The Country Club in Brookline, MA, believes, “If a member comment or concern insinuates other members know about the issue, it sends me a message we need to address the issue before it gets out of hand.”

What’s important to remember is that the decision to include or not include information is not for the evaluator to determine. The more data included in the process, regardless of quantity or even quality, the more solid the base on which the club’s vision will be built. The types of internal data mentioned here represent a small portion of available data to consider. If it seems interesting or relevant, include it.

External data plays an equally important role in evaluating the future of your club. External data can come from many sources and is only limited by your imagination. Have you taken a look at your neighborhood recently? How has it changed—what is different than last year or five years ago? Are there needs the club might fulfill for local residents?

Perception plays a role here as well. How is the club perceived by outsiders? When did you last ask neighbors and people not associated with the club what they think? The answers may surprise you. Many of your neighbors will not know about the “Toys for Tots” program you ran last year or how your chef and manager participated in the American Institute of Wine and Food’s “Taste of the Nation” program for fourth graders in the local public school.

Another external factor to consider knowing is where your members, guests, and prospective members spend their dollars outside the club.

When asked, far too many managers have puffed out their chests and remarked, “We are the XYZ Club. We have no competition.” This comment is naive at best—of course there is competition. On a basic level, your club may have a wonderful dining room and be in competition with great local restaurants. Certainly we all know name recognition and the ability to charge a meal are club benefits, but at the end of the day, food and service are what count. If you are not doing it as well as local restaurants, you have competition. Other clubs, restaurants, and health clubs represent venues competing for your member’s dollars.

An often overlooked component is secondary competition. Finding this competition is where you need to think outside the box. What do your members do when they are not at the club? How do they spend their dollars in nontraditional ways? Can you capture some of these dollars? Consider the member who owns tickets to local sporting teams. Could the club broker tickets or even purchase their own subscriptions? Members like to join other organizations — what are they and can you replicate the services offered? What do your members do for recreation when not at the club?

Each of these questions represents an avenue for secondary competition. By evaluating these questions and others, you begin to formulate ideas and directions for your club.

Finally, one last significant area to consider has both internal and external ramifications. Where is the club economically? You should know where your club ranks in relation to other local clubs and what the current economic situation is in your area. Are the club’s financial goals realistic in today’s economy?

Data Analysis
After gathering data, club leaders are left with a huge amount of data to cull through. It’s time for the tough questions to be asked: What do we do well, i.e., identify the club’s strengths, and what don’t we do well, i.e., identify the club’s weaknesses.

These questions may represent the two most difficult challenges of the strategic-planning process. Clubs must be candid, forget about favorites, ignore the politics, and be honest about “sacred cows.” If you don’t do something well, admit it.

In today’s customer-service driven economy, we have no choice but to do things one way, the correct way—the way the customer wants it. Your role in analyzing the data requires you to learn how the service is best done. Each service you offer needs to be evaluated.  And, more importantly, now is the time to look at the competition and see what they are offering.

For example, if you run a good athletic department, but not a great one, go out and find the best one and look closely at the differences between the facilities.  Do they offer the softest towels, free sports drinks, and massages? Once you identify what makes them the best around, you have a benchmark on which to build your business. 

Equally important to identifying strengths and weaknesses is evaluating the economic picture. Are we making money on a service or losing money? Is the loss within approved guidelines? Are we using the service as a loss leader?

The need to look forward and not rest on today’s data is a vital part of thinking globally.  Time and energy must be spent looking forward.

What Will the Future Bring?       
As your Strategic Planning Committee works through the remainder of the process—clarifying and defining the club’s vision, objectives, and action plan—an open-minded mentality about thinking globally needs to be part of the strategy. After all the hard work it has taken to get to this point, the global influences must remain strong.

Clubs have been building strategic plans for years. Many of them have been produced using the same formulas and the same data.  In these cases, the resulting plan does not accurately reflect the future needs of your club and only addresses current problems.

Thinking globally extends the thought process far beyond today.  For example, what impact will today’s “sustainable agriculture” trend have on your food and beverage program in years to come? As technology improves the distances attained by a golfer through better designed equipment, what impact will this have on your course?

Today is the time to start integrating tomorrow into your strategic plan.
To learn more about what you can do now, please contact Charles D. Dorn, CCM at charles@thedorngroup.com or via phone at (914) 921-3150. Dorn believes growth and change are a necessity. See how he can help you and your business move to the next level.

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About the author:
Charles D. Dorn, CCM and The Dorn Group, Ltd. aid hospitality businesses in discovering and implementing new strategies to develop their business. Are you looking into taking your business to the next level? Contact The Dorn Group by calling 914-921-3150 or emailing hospitality@thedorngroup.com. Discover and implement new avenues to help your hospitality business flourish.

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