The Reinhart decision: Why Thompson had to act
Commentary by Tom Stauss
The decision by OPA General Manager Bob Thompson to fire Yacht Club Food and Beverage Manager Joe Reinhart could not have been easy or pleasant. Reinhart is affable and well-liked, with a devoted following of barflies and casual diners, many of whom have informed Thompson in person or via email just how much they opposed his recent decision.
Two years ago, under a different general manager, Reinhart managed the Yacht Club operating deficit down to $11,000, about as close to break-even as has ever been achieved in Ocean Pines’ 40-plus-year history. That’s quite an accomplishment, and it’s something Reinhart can feature prominently on his resume in his pending job search. To critics, it was accomplished with levels of service and hours of operation that were unsatisfactory, but to others it remains the gold standard of Yacht Club financial performance.
The proximate cause for Thompson’s personnel change rests with the Yacht Club’s financial performance in August. It managed a scant $2,931 surplus, a substantial $47,926 negative variance from budget. Moreover, net revenues, which previously had been a relatively positive feature of Yacht Club financials since Thompson's "open for business" push began last fall, fell substantially short of budget ($33,804). Expenses were higher than forecast ($14,122).
Cumulatively, the Yacht Club’s net operating surplus through the end of August of $19,620 contrasts unfavorably to the $117,165 surplus for the same period in 2010. With the expectation that September numbers probably won’t look that much different than August's, the writing on the wall seems to indicate that the typical summer cushion of surplus will not be available to offset traditional operating losses in the pending fall and winter months.
After a decent July in which the Yacht Club produced a $30,000 or so surplus and performed very close to budget forecasts, both on the revenue and expense sides, August’s backsliding was troubling.
Particularly troubling is continued weakness in the club’s banquet business, which isn’t all Reinhart's fault but was his job to remedy. Recall that the board of directors early in 2010 announced that the Yacht Club was closing for renovation or reconstruction, a decision rescinded in the fall but well after substantial previously booked business was wiped out, never to return. It’s not too difficult to imagine how crestfallen Reinhart must have felt when that initial decision was made.
That business relocated to competing venues, no doubt generating some good word-of-mouth promotion for those venues if clients had good experiences. Ocean Pines may no longer be the default "go-to" location for weddings and similar events in the area. To some extent impossible to measure, Reinhart paid a price for a decision made in good faith by a previous board of directors but which, ultimately, proved to be a self-inflicted wound that has not yet healed.
Since that decision was rescinded, banquet business has not migrated back to the Yacht Club to the degree needed or anticipated by OPA's budget forecasters. Economic conditions have not been favorable, either, hardly Reinhart's fault. In the current climate, it’s not realistic to expect that the banquet business will simply walk back through the door in the way it once might have. If the OPA wants that banquet business to return, it's simply going to have to aggressively compete for it.
There been little apparent effort to market Ocean Pines' best venues for banquets, the Yacht Club and Beach Club, and that’s going to have to change in the coming months to help banquet revenues recover. Was Reinhart at fault for that lack of marketing? To some extent, probably, as there’s no evidence to suggest he lobbied for additional marketing funds to promote banquets or developed a plan to do so. Perhaps he thought that task lay elsewhere, since he had no authority to advertise on his own.
Troubling financial performance often leads to personnel shake-ups in corporate settings, and that no doubt was at the crux of Thompson’s decision. But there is reason to believe that more was happening behind the scenes at the Yacht Club that made Reinhart's departure more or less inevitable.
Shortly after assuming the role of general manager late last fall, Thompson announced with much fanfare his new "open for business" plan for the Yacht Club. Among changes he implemented was the Java Bay Café coffee house that opened for business at 6 a.m.; beginning this month (October), that time moves forward to 7 a.m. But "open for business" remains Thompson’s operating philosophy, an approach that, by every indication, Reinhart had some difficulty in implementing, perhaps because, in the end, he didn't really believe in it the way that Thompson did.
There were indications – hints, leaks, comments to friends and supporters – that he was never really on board with the "open for business" philosophy as envisioned by Thompson. Given that attitude, it's hard to imagine any other outcome other than the one that has just played out.
One of the few new positions proposed by Thompson in the current fiscal year that made it through the OPA budget process was for a Yacht Club chef. One was hired by Reinhart but was fired shortly after Memorial Day weekend, after a memorable service and wait-time debacle that Yacht Club patrons won’t soon forget. That position, despite being authorized in the budget, was never subsequently filled, despite Thompson’s earlier push for it.
Of course, filling the position with a competent, but costly, chef may have made the bottom line even worse; we'll never know for sure. By every indication, Reinhart was not enamored with the idea of having a chef on staff; there’s no evidence to suggest that he wanted the position filled. And so it wasn't.
The general manager also had publicly mentioned his desire to try crab feasts out on the new Java Beach on the west side of the Yacht Club this past summer, but those never happened, either. Indeed, there are anecdotal reports to the effect that the Java Beach, introduced with much fanfare early in the summer season, was subsequently rarely used, even when Yacht Club patrons wanted access to it.
Why go to the time and expense of building Java Beach if it wasn't put to use? Palm trees do look nice during the summer, but we all know what happens to them during winter in the mid-Atlantic climate.
Mid-summer, there was an incident discussed at a public board meeting in which it was reported that the upstairs dining room at the Yacht Club was closed to patrons on a Saturday night to allow for preparations for the next day's Sunday brunch. During the budget process earlier in the year, Thompson had publicly admonished Reinhart when the upstairs was closed on a Saturday night to prepare for a Sunday wedding banquet. The message was clear: The general manager wanted the Yacht Club, all of it, open for business, both upstairs and downstairs dining rooms, consistent with his "open for business" vision.
Imagine how that summer Saturday night upstairs closure went over with Thompson once he learned of it. Those who recalled the incident from the budget meeting wondered whether he would tolerate a repeat occurrence, this time involving not a one-time banquet but preparation for a regular Yacht Club feature, the Sunday brunch.
In the end, Reinhart was the wrong fit for Thompson, and in the end the lack of synchronicity between the two had to result in Reinhart’s departure. There's no shame in that for Joe.
Going forward, it remains to be seen whether Thompson's open-for-business approach is a workable business plan for the Yacht Club. Reinhart under former General Manager Tom Olson proved that an alternative approach – open for business but with fewer hours and days of operation, especially during the colder months of the year – could reduce operating deficits and subsidies close to zero.
The Thompson approach is a work in progress, showing positive revenue increases generally but with employee expenses that are still too high relative to revenues. To replace Reinhart, the general manager has asked Beach Club Food and Beverage Manager Linda Huebner to fill in on an interim basis. Thompson hopes her new duties will include a revitalized effort to bring back banquet business.
He's introducing a new fall menu this month and plans to continue being open for business seven days a week for coffee and danish (Java Bay), followed by lunch and dinner. By fall of last year, Reinhart had already cut days and hours of operation. Thompson's plan of attack for this fall in comparison adds more hours and potentially more expense to the bottom line. Will there be increases in revenues to justify the added fall hours of operation? Perhaps so, but that will matter only if expenses are consistently controlled.
So far, "open for business" has not translated into consistent cost control; that is Thompson's challenge going forward, along with maintaining the general increase in general food and beverage revenues at the Yacht Club that has been evident since last winter.
– Tom Stauss
Uploaded: 10/5/2011
