January 27th, 2006

Report: Golf course needs restaurant to make a profit By Ernestine Bousquet / The Bulletin Published: January 27. 2006 6:00AM PST PRINEVILLE - To make the city-owned, 18-hole golf course financially sound, consultants told Prineville officials they need to increase golf rounds and keep the restaurant open, yet profitable. The Prineville City Council held a work session Thursday to review a financial health report prepared by consultants Andy Parks, Bend's former finance director, and Mark Amberson, the general manager of Awbrey Glen golf course in Bend. The city of Prineville built Meadow Lakes Golf Course in 1993 to dispose of treated wastewater as part of a sewage facility expansion. The golf course complex also includes a 7,000-square-foot clubhouse that houses a pro shop, locker rooms and Meadow Lakes Restaurant. Since it was built, the golf course has received city dollars each year, and the restaurant has been backfilled by general funds or money from the city-owned railroad. The city council commissioned the report after funneling another $200,000 in railroad dollars to keep the restaurant afloat in July 2005. Parks and Amberson told the council that increasing golf rounds would be the key driver for making the golf course complex more profitable. The consultants determined that the golf course complex would need to net at least $150,000 a year to be financially viable. Saving the restaurant Meadow Lakes Restaurant has lost anywhere from $22,000 to $287,000 a year since 1993, according to financial audits. It is projected to lose another $31,000 in the 2005-2006 fiscal year. The restaurant is overbuilt and underutilized, but the city should keep it open because it helps attracts golfers, the consultants concluded. If the restaurant closed, the consultants estimated that the golf course could lose up to 20 percent of its rounds. To make the restaurant profitable, the consultants recommended that the city increase banquet business and attract more golfers and local eaters. The city should also advertise the restaurant, something it is not doing right now. If the restaurant is not generating revenue daily, staff should close it for the day, scale back the hours or cut staff, especially during the winter, the consultants said. The consultants said the restaurant staff also needs to do monthly inventory counts and cost of sales reports to closely track the restaurant operations, the report states. Amberson and Parks told the council that the goal should be controlling the restaurant's expenses and costs, not turning a huge profit because the restaurant isn't the focal point of the complex. Wayne Van Matre, Meadow Lakes' director of operations, said staff has already implemented many of the recommendations in the report. "We're looking at everything. The marketing package ... the youth incentive. We're trying to do more corporate business and outings," Van Matre said. "We're going to try to do anything that we think might bring more bodies through the door." Bolstering the golf course The golf course needs to increase its rounds from 23,000 a year, which it averages now, to at least 30,000 rounds a year, the consultants said. The golf course also needs to sell more annual passes. Van Matre said Meadow Lakes' golf rounds have stayed stagnant because there is more competition in Central Oregon and golf play is on the decline all over. Central Oregon now has 22 golf courses, which includes 15 public courses and seven private ones, the report states. The number of rounds played in Central Oregon slipped about 2 percent in 2005, according to the Central Oregon Visitors Association Economic Impact Golf Survey. "We've stayed flat, but at least we haven't lost ground," Van Matre said. Van Matre also noted that Meadow Lake's rounds were up about 8 percent to 10 percent so far for this fiscal year over last fiscal year. Citing golf downturns, City Councilor Brenda Comini and Mayor Mike Wendel wondered how realistic it would be for Meadow Lakes to increase its rounds when golf is on the decline nationally and more courses are on the horizon in Central Oregon. Amberson said he and Parks projected a 4 percent annual growth rate in rounds, which was not an unreasonable target for Meadow Lakes. A lot of that can be done just through better promotion, he said. In the report, the consultants said the city has to carve out a niche by playing up what is unique about Meadow Lakes. For instance, Prineville has better winter weather than other places in Central Oregon. Meadow Lakes should capitalize on that by beefing up advertising in the winter, they said. Meadow Lakes is also a walkable, senior-friendly course, so the consultants suggested the city offer a senior annual pass. The city should also target youth golfers more by working with the local schools, they said. Becoming self-sufficient Up to now, both the golf course and restaurant have survived, in part, with the help of city dollars. The city's public works department pays the golf course $300,000 to $500,000 each year to dispose of treated wastewater. The money comes out of fees paid by residents and goes toward maintaining and irrigating the golf course. The consultants said the city should try to reduce the money it puts into the golf course to about $200,000 to $250,000. That amount would still cover the disposal fee costs that the city has to pay regardless of where the treated wastewater ends up. Lastly, the consultants suggested that the city borrow $450,000 to pay off its debts, including the railroad loan, and build up a reserve. Right now, the complex has $33,000 in capital, Parks told the council. Taking out the loan isn't necessary for carrying out the recommendations in the business plan. But Parks said wiping out debts and building capital would give the golf course complex a better financial cushion and ensure the business plan's success in the long run.