The case for the proposed redevelopment of the forecourt and the Olympic Room is underpinned by a solid business plan.

Transcription

1 Business plan for redevelopment of Royal Brighton Yacht Club 2016 Introduction The case for the proposed redevelopment of the forecourt and the Olympic Room is underpinned by a solid business plan. The scenarios in this document and the accompanying financial spreadsheets are based on yacht club and hospitality benchmarks and draw on relevant precedents. The Club must take advantage of the opportunity to grow membership across all categories but especially sailing membership, to expand catering offerings and opening hours, and to do so profitably. Key Considerations Over the last two or so years the following trends have become obvious: 1. Membership is ageing and growth has stagnated around the 1500 mark. 2. Annual revenues from catering are running at around $1.5M. 3. Marina occupancy has improved from a low of around 82% in 2015 to a present level of 90%. Membership, catering and marina profits are the key variables that to a large extent determine overall Club profitability and sustainability. Membership Clubs that redevelop their forecourts commonly experience a membership spike after development, examples include: 1. Royal Motor Yacht Club Broken Bay on Pittwater membership up by 1,000 members over 2 years after redevelopment of their forecourt (source: Graham Chatfield GM at the time) 2. Royal Prince Alfred Yacht Club and Royal Sydney Yacht Squadron experienced a large increase in patronage from Members and their friends and families when developing their forecourt hospitality venues. RPAYC s Suzanne Davies reports that trade on traditionally quiet days and times has lifted significantly, and that a take of below $5 $7k on a Friday or Sundays signifies a bad day It follows that with the right plan membership at RBYC will improve by redevelopment of the forecourt and the Olympic room. 1

2 Marina 1. At this point in time marina occupancy has bounced back up to a high of 90% which is pleasing as we have also experienced a dip as low as 82% last year, due to the big increase in supply of wet-berths around the Bay. Catering 1. Tight cost control over labour and purchases (both food and beverage) has proven to be critical in securing an adequate profit over the last two years of managing the catering in-house. 2. Opening hours for Members and non-members have over time had to be curtailed to keep labour in check, given the existing constrained revenue streams, and high penalty rates for labour on, for example, public holidays. 3. Members pay $100 as a food and beverage prepayment, to encourage them to use the food and beverage facilities. 4. The primary revenue contribution within catering stems from functions, predominantly from private non-member functions. 5. The redevelopment of the forecourt and Olympic Room present the club with key opportunities to generate new revenue streams, and to extend opening hours. 6. The profit contribution from catering (before depreciation and amortisation) is sitting at around $250k, an acceptable level but one that can be improved on considering the high value location of the Club. Some further trends are affecting the Club as a whole: 1. An ageing membership (average age of 54 plus), which means we must make the Club attractive to attract families and younger Members. 2. A membership profile with two peaks (showing junior / youth and senior bias), and a gap in between represented by year olds. 3. Anecdotal evidence that our current spaces do not appeal to a younger / more family-oriented clientele. Objectives Following the closure of the slipway and the yard in 2015, the redevelopment of the Club needs to: 1. open up the Club to attract new Members, both pedestrians on the walkway on the beach-side and motorists on the Esplanade. Conservatively 350 new members over all social and sailing membership categories is thought achievable. 2

3 2. optimise the appeal, offering, and financial performance of the Club in terms of catering catering revenue of $2.5M per annum and a profit contribution of above $350k would reflect benchmarks set by similar-sized yacht Clubs. The current configuration, design and vibe of the Club s food and beverage spaces shows some real weaknesses and it is essential that fundamental change is planned and implemented to: 1. drive membership growth in both sailing and non-sailing memberships; 2. expand catering hours and offerings for Members and their guests; 3. appeal to a younger clientele; 4. attract non-members with casual food & beverage, catering and non-catering (sailing etc) offers; 5. optimise the return from events and functions held on the newly redeveloped forecourt for Members and non-members alike this can involve regattas, weddings, celebrations, dinner parties, and product launches and the like; 6. Bring more life and vitality to the Club in hospitality success feeds on success in this regard. During this time of redevelopment, it will be essential to maintain strong satisfaction levels for existing Members through effective service, through all contact points. Scope of redevelopment, exterior and interior Structural downstairs plans by Club architect Scott Shelton for 2016 and carried forward by General Committee include and cover the following plans with a direct impact on these business models: 1. Removal of slipway and redevelopment of forecourt 2. Building of a large new deck 3. Remodelling of Olympic Room into an indoor-outdoor flowing space 4. New redline area for our Club liquor licences 5. Expansion of the main downstairs kitchen and service modes There is a masterplan for other areas of the Club for future development stages. The structural capital cost for 2016 is approximately $2M excluding fit-out (see below) as per Scott Shelton. This figure will be verified by a bank-approved Quantity Surveyor. 3

4 Further recommendations via the Development subcommittee with input from Hospitality design and interior design expert Iva Foschia emphasised a holistic approach to development of the Club, clarity of purpose for all spaces in a remodelled Club, and a quality fit-out optimised for hospitality success. An optimum sense of arrival, and subsequent visual appeal of all areas and clarity of purpose are critical. A somewhat simplified segmentation is as follows: 1. New downstairs Café / Bistro 2. Beach Club and outdoor functions area 3. Boat catering and take-out food for the Beach Club, seafood bar, gelati, smoothies and frozen yoghurt. Upstairs and elsewhere (as flowing from the above plans) 4. A high profile small Club enquiry and Discover Sailing Centre for promotion/admin/booking space. 5. The current cafe remodelled as bar and welcome area for functions in Bayview Room 6. The Balcony to become a unified (no longer segregated larger space for members and function clients only 7. Members Lounge to remain evening- and winter-focused member-only space, but to be a more multi-purpose day time area in summer. 8. AM Marine space and Northern sheds utilisation to be reorganised, to allow for a Discover Sailing Centre, Race Management and Training space. The Development Subcommittee foresees the need for plans to consider marketing and promotion, PR, and ongoing reporting and analysis at an early stage and not as after-thought. It is suggested a maximum budget of $500k to cover the full FF&E fitout including the kitchen fit-out for the above interior projects. Management and staff changes The Club will need to establish a new management and staff structure that optimally aligns with the redeveloped food and beverage spaces and associated member development opportunities. The Club has had a small catering team comprising of a full-time catering manager (salary), part time chef (salary), two function coordinators, barista and a front of house and back of house team employed on a casual basis. Casual employees have been maintained to promote flexibility to meet variable catering requirements over peaks and troughs of demand. The General Manager provided overarching management of the catering function, and has, if anything, had to be too involved and hands-on over the last two years. 4

5 Hourly rates for casual staff are based on the Registered and Licensed Clubs Award 2010, whilst salaried staff are generally paid above award rates. All positions are covered by at least the standards of the Registered and Licensed Clubs Award Whilst the emphasis of change will go on expanding services and offerings and on optimising revenue streams, it is envisaged that tight control over labour and management costs will remain a key requirement to ensure commensurate returns. Furthermore, as indicated earlier, there are significant opportunities for development of membership during the redevelopment phase which will be critical for the Club to capture. The idea of a Club enquiry and Discover Sailing Centre contact point in the Northern sheds would address this. Anticipated changes and expanded offerings and seasonality The Olympic Room downstairs will be revamped into a new casual indoor/outdoor space that allows Members and Non-Members alike to walk in - straight off their boats, from the beach, or from the walkway to enjoy food and beverage inside, on a new balcony, or on the forecourt. The floor in this area should be able to handle sand and seawater, and a relaxed dress standard will apply. Casual foot wear and wet weather gear, sandy kids, cyclists, parents, toddlers babies, and dog-walkers should all be welcome. Please note that our current licences do not permit the sale of liquor to casual non-members who are not accompanied by a Member. Alcohol can be served to pre-booked and approved functions to non-members. This space is to be open in two modes a regular café / bistro-style casual food and beverage service inside and outside in a beach-club environment, plus a scaled down Beach Club take-out food and beverage service to allow expanded opening hours over the high season from October to April, and reduced hours over the remaining months. Wednesday Twilight after-racing service also will move down here. The Beach Club take-away mode is likely to take advantage of the seaside setting and offer a modern but healthy grilled fish / seafood and home chips style offering, along with gelati and frozen yoghurt, and a catering to your boat provisioning service with a dedicated buggy. Opening on public holidays should be profitable in this mode with revenues from takeaways and alcoholic and non-alcoholic beverages, but not necessarily from a fully-staffed up bistro or café. The current Members Lounge needs an interior redesign to become more multifunctional but will also continue to serve as a Members space in winter and on traditional member nights such as Fridays, around the fireplace and bar. 5

6 Functional requirements for human resources It is foreseen that the changes in 2016 will necessitate an organisational structure that can handle and manage expanded opening hours, can design and implement an expanded menu offering (both full service and take-away), can manage increased outdoor & indoor functions/events and can help the Club drive membership development on the back of the increase catering patronage. General Committee initiated on ongoing review, and a restructuring is under way to reflect the following staff structure, represented in graphical format as follows (arrows representing reporting lines, simple lines representing liaison): General Manager Member Service & Function Coordinator Retail Hospitality Manager Function Coordinator(s) Executive Chef and Kitchen Brigade Barista, Function Implementation and Front of House Team Club enquiry and Discover Sailing Centre This space would need to be manned at least over the weekend by our current Discover Sailing coordinator with further coverage on summer weekdays by Club reception staff some additional hours for both would be envisaged. 6

7 Spreadsheets key observations The spreadsheets provided last week illustrated the key outcomes reflecting the text of this document, and covers projections in three tabs, namely catering, membership and financing. Key observation summaries are based on a total investment of $2.5M and a loan component of $2M: Summary of Investment Returns: 1) The project has a pay-back period of under 8 years. 2) The project has a Net Present Value based on a minimum investment hurdle of 6%, of $213K 3) The project has an Internal Rate of Return of 7.5% Assumptions: 1) Project has a 10 year life. 2) Catering has an underlying growth rate beyond year 2 of 4% 3) Membership income has an underlying growth rate beyond year 2 of 3% 4) The project has a 20% terminal value after 10 years 7