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THE AMERICAN CLUB
JUL / AUG 2016
goes on. With our discerning membership and time-pressured
lifestyles, it’s natural for Members to want to explore new
offerings. In April 2016 our Club’s usage rate was 81.6%,
compared to 84.8% in April 2006. The slight decrease may
appear insignificant, and though overall the usage rate is a
very high figure compared to other private social clubs, the
decline still represents a considerable loss, thousands in fact,
of transactions in The Club each month.
Our number one Gross Operating Profit (GOP) contributor
10 years ago was the Jackpot Room, netting over $800K. 10
years later, at present day, this outlet has fallen out of our
top 10 contributors, with last year’s contribution being a mere
$40K. Our decision to close this service was a very heavy-
hearted one as it represents a significant part of The Club’s
history, but the decline in usage and revenue is significant
– and so is the lost opportunity of this valuable space. Today
our top GOP outlet is sên Spa. Again, the spa service was not
in our top 5 earners 10 years ago, and wine, retail and dry
cleaning have continued to grow to support operations and
cover the gap left by the decline in Jackpot profits.
In FY05-06 we had over 360 full-time staff delivering an income
(excluding Jackpot and Membership) of $17.2M. At the end
of the last fiscal year we had reduced staff count almost 20%
to just over 300, delivering a total income of $24.1M. There has
been a concentrated effort over the years to adopt efficiency
Martin Rudden
General Manager
measures, to enable our staff to be more productive,
against a backdrop of declining Foreign Worker ratios
and a tightening of the hospitality workforce due to the
growth spurt in hotels, restaurants and other entertainment
venues. Of course, the competitive employment market
has driven up payroll costs considerably. Annual payroll
has grown by almost $5M in 10 years. The levies for ‘Work’
and ‘S’ passes for foreign staff have grown to $656K per
annum compared to $280K back in FY05-06. Other related
expenses such as insurance premiums, dental charges and
employee CPF contributions, to name a few, have seen
periodic to steady increases.
Singapore is now the leader in terms of being the “most
expensive city in the world”. While payroll has been
keeping in line with inflation, the costs of many of the
products used in our extensive menus have aggressively
increased too. Even though we do 6-monthly tenders for
our fresh food items, the upward price adjustments to
some produce is amazing. As an example, Red Snapper
cost The Club $18/kg a mere 2 years ago. Today, the
same item costs $23/kg, a 22.3% increase. In the same
time period, garlic we procure has seen a whopping
102.4% price jump from $3/kg to $6.07/kg. This steady
hike has affected almost every food item we source in
the past years.
As much as some Members feel that our prices are
expensive compared to other alternatives, I keep
referencing our Classic American Burger at the Eagle’s
Nest as a great example of the strong value upheld at
The Club. Priced at $14.95 (inclusive of the 7% goods and
services tax, and with no 10% service charge), based on
market comparison and in consideration of the quality of
the product, it represents excellent value. This price has
been unchanged for the last 5 years.
The breakeven mandate for The Club (+/- $500K) has
remained intact throughout this time. You can see that
while cost pressures have been immense, prices have little
elasticity. Adding to this pressure is the fact that over 30%
of our membership, who qualify as niche group members,
enjoy privileges and discounts at The Club monthly,
shrinking an already tight profit margin.
In recent times, I’ve frequently had discussions with long-
term Members who reminisce about The Club in the
good old days and wish it still offered the same or similar
experiences they enjoyed back then. I simply remind
them that Singapore has seen massive changes and
improvements in a very short period of time, and The Club
is no exception. Although there is a real commitment to
retain the strength and character of this community,
the challenges are increasing. The need for innovation,
coupled with that of staying relevant in our Members’ lives,
will continue to drive our business model in the years to
come. It’s all about looking forward…
AND now...