I have the oportunity to take over the catering facilities in our downtown arts center. What would be the normal percentage to kick back to the facility? I will not have any electric, gas etc.. bills pretty much will be taking full responsibilty for future bookings and events and supplying all food and service, they will still handle beverage and also be getting a hall fee. Do you kick back a percentage of gross or add on a per person amount.
Taking over Catering Facilities in Downtown Arts Center, What percentage to give back?
Large contract management companies offer between 6 and 12%, depending on the terms of the agreement. The rule of thumb for a food service is that you can afford to spend about 10% of your sales on occupancy costs which include rent, equipment leases, property insurance, trash collection, grounds upkeep and common area maintenance. In a contract management deal, the client often covers utilities (which can account from 2-4% of sales for some restaurants), equipment maintenance and purchases and capital improvements among other things.
From that rule of thumb, you can reasonably deduce that you could probably afford to give up 14% to the client if you have a concept that uses a lot of utilities. I would try to keep it under 12% though, or even lower if the client is expecting you to give special pricing to their staff or provide free parties or other subsidies of any sort.
It is also customary for contract management companies to get a commitment in writing from the client saying that the client will spend a certain portion of the money paid them to improve the property itself or to buy equipment.
Each facility differs. Regardless of how you must add a certain amount to your per person or dish charge to cover the charge. You must have a contract that SPELLS OUT THEIR RESPONSIBILITIES AND YOURS. It must be clear and defined. Dont wait till after you get in that you are responsible for lets say parking lot cleaning and maintenance. You Must know all your cost factors prior. You are not getting the liquor end and thats the most profitable. DO NOT enter into this without a competant attorney for your own good. Also ask yourself why are they chosing you when there are many etablished food service companies that have been doing this for years, Example Sage ,ARA,HMS, Interstate caterers,.Deleware corp.and Servico most do a good job. good luck to you.