.MIDDLESBROUGH COUNCIL

EXECUTIVE REPORT

DRAFT

INDIVIDUAL EXECUTIVE DECISION

Sport and Lleisure – Bars and Catering Review

Executive Member for Public Health and Sport: – Brenda Thompson

Director of Environment: Mike Robinson

22xxxxx December 2010

PURPOSE OF THE REPORT

  1. 1 To report on the outcome of a review on the bar and catering facilities in the Rainbow Leisure Centre, Municipal Golf Centre and Southlands Centre to make savings to address the current ssport and lleisure budget deficit.
SUMMARY OF RECOMMENDATIONS
  1. 2 That the Executive Member agrees in principle to:;
  • The conversion of the main café facility in the Rainbow Leisure Centre to a smaller Council managed themed coffee style bar and vending machine service with a view to attracting a commercial tenant to use the main café space in accordance with the findings in Appendix 1.
  • Continuing to operate a bar and catering service at the Municipal Golf Club with the deletion of two part time vacancies and the creation of a cover / casual budget to cut costs in accordance with the findings in Appendix 2.
  • Reducing the opening hours of the Southlands bar to open on Friday nights only and when functions are booked in accordance with findings in Appendix 3.
  1. 3 That officers continuewith consultations to achieve savings in the region of £50,000 to help tackle the current ssport and lleisure budget deficit

IF THIS IS A KEY DECISION WHICH KEY DECISION TEST APPLIES?

It is over the financial threshold (£75,000)
It has a significant impact on 2 or more wards / X
Non Key

DECISION IMPLEMENTATION DEADLINE

  1. 4 For the purposes of the scrutiny call in procedure this report is

Non-urgent / X
Urgent report

BACKGROUND AND EXTERNAL CONSULTATION

  1. 5 A series of reviews are underway in the sport and leisure service to tackle the ongoing budget deficit. In 2009/10, the sport and leisure service reported a year-end deficit of £237,000 and in 2010/11 the projected deficit is £177,000. The reviews underway with associated expenditure savings, additional income and with budget adjustments (included in the 2011/12 budget proposals) are expected to eliminate the current overspend and provide a basis for the service to move towards an operational surplus.
  1. 6 This report considers the bars and catering service at the Rainbow Leisure Centre, Municipal Golf Centre and Southlands Centre. Details of each review are in Appendices 1, 2 and 3.
  1. 7 In summary, the review has concluded that is it possible to make an estimated saving of £50,000 pa through the following interventions;

Rainbow Leisure Centre.

  1. 8 Three options were considered to tackle the current projected operating loss of £30,000 against a revenue budgeted surplus of £13,858, which results in a £43,8584,000 budget pressuredeficit from bar and catering services. based on an income surplus target of £13,858. The preferred option is to modify the main café facility to create a smaller themed coffee style bar and vending machine service to make the main café room available to a suitable commercial tenant. This option would reduce staffing running costs and produce a new income stream of approx. £15,000 up to £20,000 from a commercial tenant to cover the £13,858 revenue surplus requirement. The estimated saving is £45,000 in a full year.

Municipal Golf Course

  1. 9 The bars and catering service has in previous years run at a budget deficit. In 2010/11, the service is expected to make a £4,000 revenue surplusoperational surplus. However, the budget requires the service to make a £22,2514 operational surplus. The proposal is to continue to manage the service and cut two part time vacancies to create a cover budget, which would then be cut by between £3,000 and £5,000 in 2011/12. There would be a reduction in winter bar opening hours and other golf centre staff would assist with bar duties. The position would be reviewed in 12 months time as part of a continuing review of the Golf Centre, in particular on potential Leisure Trust status and potential private sector involvement in the longer term. An Action Plan is in place to reduce the overall Golf Centre deficit and produce a revenue surplus in 2011/12.

Southlands Leisure Centre

  1. 10 An external contractor provides catering services for booked functions. Bar services are provided by the Council. The proposal is to close the bar on Monday to Thursdays when there is minimal custom to increase the revenue surplus, and to only open on Friday nights and when there is a booked function. The projection is that this will save approximately £2,000 in staffing costs and increase the operational surplus from £3,500 to £5,500. but it There would still be approximately £45,000 shortfall on the £9,63910,590 budgeted surplus which would have to be adjusted in the 2011/12 budget setting form leisurefrom leisure service wide savings in other areas.

EQUALITY IMPACT ASSESSMENT

  1. 11 An EIA is not required for this bar and catering review.

+

OPTION APPRAISAL/RISK ASSESSMENT

  1. 12 The attached Appendices are the outcome of a review undertaken by sport and leisure managers. For each of the three venues, three options have been considered to reduce costs to achieve a projected saving of £50,000 pa in 2011/12 to contribute to eliminating the overall £177,000 sport and leisure deficit projected for 2010/11. The additional savings required will be achieved through parallel reviews to increase prices, adjusting budgets, closing crèches, new management arrangements, early retirements, and extended marketing work.
  1. 13 The recommended options are subject to further consultation withconsultation with staff and the trades unions and would be subject to a 90 day consultation period, and if confirmed, an additional period for redeployment list status and statutory notice requirements.
  1. 14 The main savings are centred on the Rainbow Café and are dependent on the conversion of the main café and bar to a council managed smaller themed coffee style bar and vending machine service linked to the existing kitchen area. In addition, there is an assumption that a new commercial tenant would produce a rent of £1520,000 net income pa to cover the current £13,858 revenue surplus target. The £1520,000 sum is based on a firm enquiry from a prospective tenant and discussions with the Valuation Service.

FINANCIAL, LEGAL AND WARD IMPLICATIONS

Financial

  1. 15 The projected savings under this review areisapproximately £50,000 in a full financial year. This is made up of £45,000 Rainbow Leisure Centre (£30,000 staff savings and £15,000 commercial rent income), £3,000 staff savings at the Municipal Golf Course and £2,000 staff savings at the Southlands Leisure Centre. These are outlined in paragraphs 9, 10 and 11 and detailed in Appendices 1,2 and 3.
  1. The redundancy costs are dependent on the outcome of a selection process under the Council’s redeployment and redundancy policy and the willingness of employees to work different shift patterns at the current and other venues. The anticipated staff reduction level is approximately 1 fte Grade D (for budgeting purposes) at the Rainbow Leisure Centre resulting in a saving of approximately. at a cost of up to £20,00019,000. A 0.99 vacancy would also be deleted. There is already an outstanding 0.46 fte Grade D early retirement application under the current ERVR scheme which is currently deferred pending the results of this review, which would create a saving of approx. £9,000 p.a. with a projected redundancy and pension fund cost of approx. £1111,000, 000 to progress. This therefore leaves another 0.54fte staffing reduction to find which could be a compulsory redundancy if the cut cannot be achieved through the early retirement / voluntary redundancy process subject to completing staff consultations. Priority would be given to offering staff facing redundancy the opportunity to work at other leisure venues within the limited funding in casual and cover budgets. A 0.99 vacancy at Rainbow Leisure Centre would also be deleted. An overall staff saving of approx. £30,000 would be achieved by this proposal.
  1. There may be a potential redundancy issue and cost relating to the proposal for Southlands Leisure Centre if the current 0.47fte does not agree to revised working patterns. This will be subject to staff consultation

16 The above staffing cuts amount to a £30,000 saving at the Rainbow Leisure Centre. This together with a commercial rent up to £20,000 will achieve the £45,000 planned saving

Ward Implications

  1. 17 The venues are within or very close to the following wards;
  • Rainbow Leisure Centre, Coulby Newham
  • Southlands Centre; Beckfield,
  • Municipal Golf Centre; Ladgate, Kader, Acklam.

Ward Councillors have been briefed on the proposals.

Legal Implications

  1. 18 There are legal implications relating to potential redundancies and redeployment issues
RECOMMENDATIONS
  1. 19 That the Executive Member agrees in principle to;
  • The conversion of the main café facility in the Rainbow Leisure Centre to a smaller Council managed themed coffee style bar and vending machine service with a view to attracting a commercial tenant to use the main café space in accordance with the findings in Appendix 1.
  • Continuing to operate a bar and catering service at the Municipal Golf Club with the deletion of two part time vacancies and the creation of a cover / casual budget to cut costs in accordance with the findings in Appendix 2.
  • Reducing the opening hours of the Southlands bar to open on Friday nights only and when functions are booked in accordance with findings in Appendix 3.
  1. 20 That officers continue with consultations to achieve savings in the region of £50,000 to help tackle the sport and leisure budget deficit
REASONS
  1. 21 The bars and catering review is one of several reviews underway to tackle the historic sport and leisure budget deficit, which is currently projected to be £177,000 in 2010/11. The sport and leisure reviews underway in 2010/11 are projected to remove the deficit in 2011/12.
.
BACKGROUND PAPERS

24.None.

AUTHOR: Jeff Duffield / Paul Ayre

TEL NO: 728197

______

Address: P O Box 502, Vancouver House, Gurney Street, Middlesbrough, TS1 9FWWebsite:

APPENDIX 1

RAINBOW LEISURE CENTRE

Issues

  • The bars and catering function is projected expected to make a revenue loss of £30,000 in 2010/11 44,000 on against a revenue budgeted surplus of £13,858, a budget pressure of £43,858..
  • There is little prospect of making the business profitable given the level of budget deficit. The budget pressure has increased in 2010/11 from the level in previous years.
  • There are other catering venues close to the Rainbow Café, although some are closed in the early morning and late evening periods.
  • Employees costs are higher than private sector rates
  • There are opportunities to use the main café space for commercial or in-house income generating activities
  • There are developments planned in the Rainbow Centre which potentially impact on the viability of the café business
  • There is an opportunity to reduce the café to a smaller coffee shop format linked to the provision of vending services at quieter periods
  • The café is busy at peak periods, typically between 10.00am and 2.00pm.
  • There is a lower demand for the café in the early mornings and late evenings by leisure users.
  • The sales at the bar are extremely low. To date there are sales of only approximately £17,000 to date with a projection for the whole of 2010/11 of approx. £27,000.

Financial and employee information for 2010/11

2010/11 projected financial position
Base / Projected / Variance
Budget / outturn
£ / £ / £
Income / (151,096) / (96,000) / 55,096
Expenditure / 137,238 / 126,000 / (11,238)
(13,858) / 30,000 / 43,858
Expenditure costs do not include Mouchel scoped budgets.
2010/11 staffing budget
FTE / Grade / Base Budget
£
Bar staff / 0.19 / A / 2,774
Bar staff / 0.99 / A / 15,042 / currently vacant - post being covered by casual cover
Cook supervisor / 0.7 / E / 14,711
Catering Assistant / 0.46 / D / 8,787 / applied for ERVR - currently deferred
Catering Assistant / 0.56 / D / 10,708
Catering Assistant / 0.27 / D / 6,458
3.17 / 58,480
Casual cover budget / 10,850
69,330

Options

  1. Continue to provide a bar and catering service in the same space with improved marketing / re-branding.

The difficulty with this option is that the business is unlikely to become profitable given the level of budget deficit and the numbers of competing catering outlets nearby. Detailed consideration has been given to the provision of a healthy options café although uncertainties about the future of the café within a planned Rainbow Centre development resulted in no investment. Since then the budget deficit has increased.

  1. Close the café business in full and look for an alternative use.

There is a need to raise at least £13,858 pa to cover the budgeted surplus target. Leisure users may opt to use alternative venues / competitors if there was no catering service at all. There is a significant demand for the bar and café at peak periods.

  1. Seek a commercial tenant for the existing café space and provide a small coffee style shop in the open space nearby to open during busy periods backed up by a quality vending machine service for low demand periods.

There has been at least one expression of interest from a prospective commercial tenant compatible with the leisure centre business. This option would retain a scaled down the council managed catering service to match the peak demand periods with a projected income of £60,000 pa and projected expenditure of £60,000 pa at most using the existing kitchen facility with a small serving counter bar added. The anticipated capital cost of the proposed new serving bar using existing materials is £5,000. An anticipated commercial rent of £1520,000, 000 net p.a. is anticipated which would cover the current revenue budget surplus target of £13,85813,585. The option would remove the current projected £44,000 budget deficit (service pressure) with new commercial income and planned £30,000 expenditure savings. There is a risk that the £60,000 café income target will not be achieved, but it counters the risk of loosing leisure business if the café closed. The café / bar could be run flexibly to adjust opening hours to match demand and enhanced at low peak periods with a vending machine food products service. The coffee bar style unit could potentially be leased to the private sector once the outstanding issue around the development of the Rainbow Centre is concluded and the associated restraint on developing a café. Alcoholic sales would cease. A review would be needed after one year to assess the impact of the revised service. The new commercial tenant would be selected through an open invitation to prospective tenants.

Consideration was given to running a vending machine service only but this would be inconsistent with the needs of user groups, the profile of daily use and the risk of losing income from leisure activities. The vending machines would be filled with café left over produce each day for lower demands in the evening.

Conclusion.

Option 3 offers the best solution for leisure users and removes in the future the current projected £44,000 budgetservice pressurein 2010/11. The current projected operating loss of £30,000 would be removed and also Aa new commercial tenant could result in £2015,000 net income per year.and with expenditure savings, the projected net savings in 2011/12 is £45,000 for budgeting purposes, which would match the £44,000 projected service pressure. This would mean that there would be a projected surplus of £15,000 per annum against the current budget surplus required of £13,858.

There will be a £5,000 one off capital cost to create the proposed new serving bar under Option 3.

Of the 3.18 fte staffing resource, subject to detailed discussions, it is anticipated that there could be a potential redundancy / redeployment of approximately 1 fte with the 0.99fte vacancy also deleted. There is a ERVR application amounting to 0.46 fte. Employees would also be consulted on proposed new shift patterns and the potential availability of work at other leisure venues.

Of the current 3.17 fte budgeted staffing resource there is an anticipated staff reduction level of approximately 1 fte Grade D which will result in a saving of approx. £19,000. There is already an outstanding 0.46 fte Grade D early retirement application under the current ERVR scheme which is currently deferred pending the results of this review, which would create a saving of approx. £9,000 p.a. with a projected redundancy and pension fund cost of approx. £11,000. This therefore leaves potentially another 0.54fte staffing reduction to find which could be a compulsory redundancy if the cut cannot be achieved through the early retirement / voluntary redundancy process subject to completing staff consultations. Priority would be given to offering staff facing redundancy the opportunity to work at other leisure venues within the limited funding in casual and cover budgets. A 0.99 vacancy at the bar would also be deleted. This will leave approx. 1.18 fte and a casual staff budget to run the proposed operation. An overall staff saving of approx. £30,000 would be achieved by this proposal.

APPENDIX 2

MUNICIPAL GOLF CENTRE

Issues

  • The bar and catering review ties in with an ongoing review on the Golf Centre as a whole.
  • High sickness levels have impacted on historic costs but these are now resolved.
  • There are two part time vacancies of 0.30fte and 0.57 fte whichfte, which are being held, with the work funded from ‘cover ‘ budgets and the redeployment golf course wardens during the winter period.
  • Winter bar opening hours are being reduced, for example on Sunday nights and other evenings.
  • The bar and catering business does make an operational profit which is projected to be £4,000 in 2010/11.
  • The £22,2514 operational revenue budget surplus target will be adjusted downwards in 2011/12 to a more achievable level as part of the 2011/12 budget proposals.
  • Funeral get togethers and celebration functions are an increasing source of income and will be promoted more under an emerging Marketing Plan for the Golf Centre.
  • The Golf Centre has benefited from a make over in 2010/112011/12 to improve the appearance and the £100,000 operational deficit in 2009/10 is expected to achieve a break-even position in 2010/11 with an operational surplus expected in 2011/12.
  • The Environmental Health team are working with golf centre staff on a healthy options menu.
  • Promotional offers are marketed in the autumn and winter periods with ‘free’ food offers to encourage non season ticket holders to play on the golf course helps boost golf and catering income.
  • A scoping review on the benefits of leisure trust status is anticipated – the outcome will impact on the bars and catering business.
  • Autumn rainfall was three times higher than in 2009 and early snowfall insnowfall in November / early December have adversely impacted in golf income which will be offset by other income streams subject to average winter weather from mid December 2010.

Financial and employee information for 2010/11

2010/11 projected financial position
Base / Projected / Variance
Budget / outturn
£ / £ / £
Income / (236,122) / (221,497) / 14,625
Expenditure / 213,868 / 217,497 / 3,629
(22,254) / (4,000) / 18,254
Expenditure costs do not include Mouchel scoped budgets.
2010/11 staffing budget
FTE / Grade / Base Budget
£
Centre Manager / 0.5 / K / 18,438
Bar staff / 0.88 / E / 18,525
Bar staff / 0.62 / E / 12,951
Bar staff / 0.54 / E / 11,191
Bar staff / 0.39 / E / 7,905 / currently vacant - post being covered by casual cover
Cook supervisor / 0.38 / E / 7,788
Cook supervisor / 0.57 / E / 11,778
Assistant Cook / 0.57 / D / 10,982
Assistant Cook / 0.57 / D / 10,982 / currently vacant - post being covered by casual cover
5.02 / 110,540
Casual cover budget / 12,290
122,830

Options