The 2006 Referendum Brochure — a Roadmap for TAC`s Recovery?
I just happened to look at the 2006 Brochure that decided the fate of the 34 year old debt-free TAC buildings, forever wiping out member legacy value. One page displays the P&L forecasts for a new TAC (see photo). Surprisingly, the Impaired (worse case) Revenue forecast is strikingly similar to TAC`s 2020 Budget (see photo). When compared: Total Revenue for both is Y50 Oku; Dues & Ent. are Y 2.3 Oku vs. Y2.5 Oku; F&Bs are Y22 Oku vs. 18 Oku for the 2020 Budget.
On the Expense side: Payroll is Y20.1 Oku vs. Y25.8 Oku for the 2020 Budget, an eye-opening difference. As a % of OR this translates to 48% vs. 59%. As regards F&B COGs, 42% vs. 32% for the 2020 Budget, a big gap.
The 2006 Brochure Impaired Case forecast can and maybe should serve as a guide for payroll and F&B metrics. Payroll would fall below 50% of OR and F&B COGs at 42% would bring TAC back to the historic early 1980s COGs and maybe spark consumption.
It is no easy or pleasant task to reduce payroll by 5 or 6 Oku. But that is the reality and challenge. In 2010 at the temporary Club the payroll was Y20 Oku. A large club like TAC should reap economies of scale. TAC has not but now must.
Outsourcing and reducing dept. expenses is important. The Repairs & Main. Dept. is a big target and its Y3 Oku payroll seems excessive. It should be Outsourced which it once was. Ditto for IT.
All the above must be validated in the marketplace and by benchmarking the Reciprocal Club network, an unmined resource. This can be done by one-to-one agreements, if required. Disintermediate by not involving the CMAA et. al. Direct is best just like a Swiss trade agreement. I suggest benchmarking with 4 recip. clubs: HK American and HK LRC; Sing. Amer. and Sing. Tanglin.
I am an absent member of the LRC. It has about 2000 dues paying members who are a close profile match to TAC, albeit half the size which I believe is capped. Its 2018 F&B COGs were 46%, there is a min. spend policy, per member sales are similar to TAC about Y350,000. Banquet sales are neglible at 5%, payroll at 53% of OR, staff:member ratio 1:10.
It appears that TAC dues are in line with clubs in the region. However, elite H Kong clubs have high entrance fees of $50,000+. Amer. Club $65,000 ( Americans get low fee) LRC is $ 52,000. TAC should consider Y3 million and Y6 million for Japanese.
New TAC went big on Banquet space and ended up going outside to non members for over 40% of its business. At old TAC the self-service Mixed Grille Buffet became the go-to outlet, hitting the American Room hard. New TAC did not replicate that success story although there are salad bars.
According to Reuters, the majority of Japanese companies are cutting pay, costs and staff.
Perhaps the biggest unmined/under-promoted asset, (staff excepted) the Club has is the Reciprocal Club network. This resource can yield gems if not gold for management and for member — join one (TAC) and get 200 free. Apropos, thousands of Life members can be a source of ongoing income: the LRC H Kong two years ago introduced a service charge for Life members. Louis XIV`s minister Jean Baptiste Colbert, famously declared that “the art of taxation consists in so plucking the goose so as to obtain the maximum amount of feathers with the minimum amount of hissing.”
Page 19 of the 2006 Referendum Brochure