Managing Minimum House Charges

Club managers and members alike can debate the effectiveness of their club’s minimum house charge policies.  On the one hand, those in favor of the minimum concept argue that members who do not support their club’s restaurant through regular use should pay what amounts to an additional dues charge to help defray operating costs.  On the other hand, members rushing to meet their minimum requirement at month end can overwhelm the club and its staff resulting in an unsatisfactory experience for all concerned, both members and staff alike.

If your club has a minimum house charge policy, consider the following suggestions which might have some applicability in your case:

  • For monthly minimums, try staggering the dates that the minimum billing period closes to avoid the month end rush.  Members could be assigned closing periods on an alphabetical basis.
  • Convert to a quarterly minimum, allowing members up to three months to meet their food and beverage obligation can allow for more flexibility for everyone’s schedule.
  • Minimums should apply to food only.  This could help the club avoid the unnecessary liability exposure that could result if alcoholic beverages are included.

From a sales tax standpoint, some states have attempted to impose sales taxes by arguing that minimum house charges somehow “replace food sales”.  The prevailing view however is that because no sale or exchange has taken place, such taxes are generally not applicable; the minimum charges are in essence additional dues.

The accounting treatment of minimum house charge income varies.  Although historically, the “Uniform System of Accounts for Clubs” has included income from minimums in the food and beverage department, it is acceptable instead to treat them as miscellaneous income to avoid distorting the results of food and beverage departmental operations.

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