Golf Courses Profits Will Be Hard to Achieve Until This Happens – Unfortunately, Golf Course Owners Have No Control

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Labor expenses as a percent of gross revenue vary by type of golf course facility from 44% to 56% depending on the data source accessed as detailed below:

Type of Golf Course

Labor Percentage

Data Source
Daily Fee

44%

PGA PerformanceTrak
Municipal

49%

PGA PerformanceTrak
Private Club

52%

PGA PerformanceTrak
Private Club

56%

Club Benchmarking
Resort

48%

PGA PerformanceTrak

Note 1:  PGA PerformanceTrak statistics for 2017.  Club Benchmarking statistic provided to JJ Keegan+ by a client in February 2019.

Note 2:  We suspect that the labor for private clubs as reported by Club Benchmarking may be more accurate as their sample size of clubs is larger and the detail input is far more detailed.

Golf is one of the few service industries where staff interaction with the customer is required to consummate every transaction.  By default, that creates a labor-intensive process.

Who is Responsible? 

The fault lies, not with the golf course owner, but with the companies that provide software to the golf industry as they have failed to provide customer-centric solutions to facilitate a golfer efficiently and quickly serving themselves while assisting the golf course owner build a meaningful database of customer transactions.

The Answer

What is missing?  The answer is check-in kiosks and apps for the golfer to register and pay either in the pro shop or via their cell phone.  Further, an ordering system in which the golfer enters the beverages and food they desire from a table kiosk that is directly tied to the kitchen is the second missing component at a golf course to accelerate the reduction of labor expenses at a golf course.

Other industries, with their own inherent complexities, have successfully addressed this issue to reduce labor expenses and boost profits.  Here are five examples:

Industry Company Technology Illustration
Airlines United On-line reservation systems and check-in kiosks Download
Banks Stock ATM Machines Download
Car Rental Companies Hertz Check-in kiosks Download
Restaurants Chili Food ordering and payment system Download
Restaurants Sonic Food payment system Download

While the answer is simple there are some significant hurdles that must be addressed for the golf industry to embrace this change.

The Challenges

Golf is a small business of over 14,000 owners each focusing on their individual needs with the vast majority being small entrepreneurs. In defense of the golf software firms, they too are mostly small businesses handicapped to secure the capital investment required to provide the optimum solution for what a golf course is willing to pay for the said solution would be daunting.  Also, the employed at the golf course embrace the status quo.  Most enter the golf industry in love with the game and not necessarily, the business.

Beyond the owners, the employees and the software firms, the golf industry does have unique challenges that other service industries don’t.  Most service industries provide a very vertical offering a singularly product, i.e., an airline seat, a hotel room, a meal.  The golf course industry can easily be made to be horizontal by offering many varied services:  golf, food, banquets, corporate conferences, weddings, pool, spa, fitness, etc.

Golf, particularly on the public stage, is vastly different as individuals with diverse skills, varying styles of play and a myriad of assorted paces to which they play, render the delivery of a consistent experience difficult.

If the focus is even narrowed to merely purchasing a tee time or ordering food before, during or after round, some hurdles are obvious:

  • Booking tee times is often by one individual who is usually not financially responsible for paying for the entire group.
  • Only one name is entered into the reservation, not all players. The names of other golfers in the group are rarely identified. Airlines require each person to purchase their own ticket for security reasons.
  • Members at private clubs expect a high level of personal service.

Work Arounds

The installation of kiosks and apps is not the end-all solution for every transaction.  We speculate that it might be used perhaps only 40% of the time but, as technology evolves, that is a good start.  The implementation of a loyalty rewards program to incentivize golfers would accelerate adoption.

With respect to food and beverage, the experience might actually improve.  Rather than waiters/waitresses, a restaurant ambassador, particularly at a private club, might circulate the room engaging patrons in conversation and building a rapport to enhance the experience.

Like any solution, it evolves over time.  Perhaps it is time now to start evaluating how this labor saving idea can be implemented.

That is my thought.  I would like to learn yours.  I am confident the software firms will have many opinions, that when shared, will help the industry move to a more solid financial foundation.

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5 comments

  1.    Reply

    Club Prophet Systems is also another company that has had a check-in kiosk for quite some time actually. The pushback has been from golf course management simply not embracing it because they feel their customers would not embrace it.

  2.    Reply

    JJ

    When I think of the labor processes in the many clubs I spent time at, belonged to, and played across the country; it’s clear to me that labor costs are mostly impacted by poor process design and poor execution of that design. I believe if the industry simply mechanizes labor, only a small part of cost reduction will occur. Process errors could account for as much as 50% of the effective cost of people attempting to execute their work. For example, I sat though an owners meeting with staff that was so full of process errors that 30% executed the wrong initiatives, the rest chose to wait for the next meeting.
    The golf industry is among the worst at optimizing it’s labor investment. Head count reduction will not solve this problem.

  3.    Reply

    While I do agree with what you’re saying, golf is simply a people business. I have used automation at my golf course and can often function on very bare bones staffing to save on costs. A kiosk wouldn’t eliminate the need for a starter and at least one person in the snack bar. I think automation on maintenance might have a bigger impact if there was affordable technology such as a roomba-like mower for instance that could mow greens or possibly a self driving cart to pick up range balls.

    I’ve spoken on marketing all over the country and have found that the greatest thing that influences golf course revenue is lack of planning.

    During many presentations, I have asked for a show of hands of operators who have a marketing strategy in place at their clubs. Out of the maybe 500 people that I’ve asked, I have seen the hands of less than five clubs. Golf operators tend to make excuses that it’s hard to plan because of the seasonality and weather conditions. It just isn’t true.

    Over the years, I have found that the better planned I am, the more successful my club is. I’m not constantly scrambling to fill the tee sheet because I’m consistent in my marketing. It makes a bigger difference than anyone realizes.

  4.    Reply

    The article was insightful for sure.
    The challenge is that as a small business, human interaction (greeting, conversation, assistance, sale)can be an important attribute to the success of the business and the customer experience.
    The question then becomes; is it a better use of human resources, or a reduction in labour cost?
    For sure , it is a challenge however while I think technology has an important role, I think golf operators have to set their pricing more based on their costs than on their competition an d ride out some challenging times until we get the consumer educated as to what they want in value for their dollar.
    An equally significant issue is for golf businesses to be able to generate sufficient revenues to hire the calibre of employees they need and be able to retain them.

  5.    Reply

    Hi JJ,

    This an excellent article and I agree that the industry is falling behind because many of the software companies that serve it are way behind the automation curve.

    However, the company I work for, Chronogolf by Lightspeed, is rolling out the features you describe regarding automatic check-in and kiosk ordering.

    Keeping with our goal of being at the forefront of technology, you can expect to see those features be available in Fall 2019. So stay tuned for that!

    We hope that operators can use this technology to help tackle the issues that come with long lines in the pro shop and rising minimum wages.

    Our parent company Lightspeed also offers restaurant kiosk ordering that integrates seamlessly with our entire management platform.

    I wrote about this cool feature awhile ago here: https://pro.chronogolf.com/blog/now-serving-self-order-golf-pos

    So, not all tech companies in the industry are behind!

    You can learn more about what we do at Chronogolf at pro.chronogolf.com!

    Cheers, Alex