Just read an article in a local business magazine that said restaurants in the Mpls-St.Paul area are really struggling. Not only struggling … but quite a few are closing.
The big reason is that they can only operate at 50% capacity. That doesn’t mean that they’re making 50% less profit … they aren’t making a profit. The cost for them to open the doors and operate depends on at least 75% capacity. So, it’s not worth opening if it means losing money.
Most things work like that. Golf courses sure do. But, it’s not just capacity … it’s capacity at a certain green fee. We could be packed with $10 green fees … and lose an incredible amount of money.
That’s where it gets tricky … how many rounds at what price is enough to stay afloat? You need to know the revenue number that’s needed to pay the bills.
The rounds/green fee combo works like this: more rounds at a lower fee means more wear & tear on the course. But, if you’re going for fewer rounds, obviously you need a higher green fee which probably depends a lot on the condition of the course.
Either way … course maintenance expense is a big number.
But if you choose to be a course that is not in good shape … hopefully your cheap green fees will bring in enough rounds so that you can pay the bills. But if it’s really bad, no one will play even if it’s cheap. And, it’s still risky, because no matter how bad the condition, you still need labor and machines and fertilizers, etc. Also maintaining greens – even bad greens are expensive. You know how expensive it is to maintain your lawn … think about a golf course!
So, to try to make these numbers work … some golf courses offer a variety of rates … and try to get maximum at peak times and less at weak times. That’s tricky too. That means the peak times are basically subsidizing the weak times. Sort of like flying on an airplane – the first class seats subsidize the coach seats.
I fly coach. I’m glad to have people subsidize my fare. For me, flying is just a means to an end … not an experience. And, I’m sort of narcoleptic … so I’m already asleep by the time the plane is in the air. So the first-class experience would be wasted on me.
However, we can’t have some people subsidizing other people at the golf course. Can you imagine the vibe if we had “first-class players” and “coach players”? It’d be a nightmare. Talk about a disrespectful atmosphere. People would cut in front of people at the counter, etc. Think about it.
So, our goal is to have everyone pay a fair price (the necessary price) and run a nice friendly place that can pay the bills. Everyone is “special” … not “more special”.
I’m very sorry that restaurants are closing. That’s not a good thing. And it would be really terrible if more golf courses were closing. Unlike a restaurant, a golf course needs a lot of land. If that land goes to development … golf keeps shrinking.
Most privately owned golf courses are providing a public service. They are not gouging the customers to make money. Any profit, is reinvested.
We all love golf and want to see it survive. The reality is that it costs a lot of money to operate a golf course. We all have to face reality to make it work.
GM/Head PGA Professional