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F&B management company numbers

post #1 of 5
Thread Starter 
My restaurant and I have been approached about the opportunity to be the official manager for a banquet facility and grill at a club. My question is does anyone know what kind of percentage of sale we should look at get for our pay? They are purchasing the for I have to supply the body's, and the sales person would also come from my staff, and carry the payroll until the pay the company back. This would be a 3 year contract. Also are there any additional fees I should concerned in the negotiations?
post #2 of 5
I've done contract management in the past. The structure the way you describe isn't similar to any of the common contract management structures used. The big contract management companies use two primary contract structures, profit and loss or management fee.

In the profit and loss structure, all the staff works for the contract company. The contract company pays a percentage of sales as a lease to the facility, anywhere from 4-12% depending on the situation, sometimes on a sliding scale. 8% would be the norm. In exchange for the lease, the facility pays for equipment upkeep, property insurance, trash and utilities, basically all the occupancy costs. The leases (contract company) pays for staff, product, and all other overhead including maintaining the stock of smallwares provided by the facility. They make money by turning a profit and keeping it.

With a management fee contract, all the employees, including the managers, are employees of the facility. The facility pays all the expenses and keeps any profit or absorbs any loss. They pay the contract company a management fee that can vary from 4-10% depending once again on the particular situation. This situation is mostly used in food services where a profit is difficult or impossible. Private clubs often fall in this category. The average private club food service operates at around a 15% net loss according to the Club Managers Association of America. It is supplemented by membership dollars.

I have 10 years experience in private clubs myself, and have run a club food service for a contract management company and as an employee. Profit is possible in private clubs, but its rare. Personally, I wouldn't bother doing another one. I ran profits at the two I did, but it was an unusual feat, even for these same operations before and after me.

Brandon O'Dell

 

Friend That Cooks Home Chef Service

www.friendthatcooks.com

O'Dell Restaurant Consulting

www.bodellconsulting.com

 

Reply

Brandon O'Dell

 

Friend That Cooks Home Chef Service

www.friendthatcooks.com

O'Dell Restaurant Consulting

www.bodellconsulting.com

 

Reply
post #3 of 5
I have to second what B ODell said about private clubs. They are a beast with no comparison to the restaurant business and the cliental can be a tad unreasonably demanding on occassion. In addition to a very tight margin you will need an especially thick skin and hard head. I did many years in private clubs, it can be fun but for me it would be a never again proposition. Good luck to you.
post #4 of 5
Thread Starter 
Thank yoh guys for the input. I have too also worked at a private country club and agree about the think sick and the slim porfit line if any.

However this is not a private club. This is a public event center with one large room that can be split into four. A club style grill, a workout gym (cross fit), and indoor/outdoor gun range. And has a hotel being built across the street.

If I am understanding Brand O'Dell correctly I should be paying the company that ownes the property about 8% of the net sales and my company keeps the rest. For the simple fact that we are taking on all the risk (ee, food, and liquor). Or the other option is to figure out my cost of putting my managers over there with their ee's and give them a set fee for the year with maybe some incentives built (like a bonus structure)?

Is there something wrong with the other option I mentioned in my first post? Why could you not make that senerio work? They assume the risk on the food and liquor. I own the ees and i take like 60% of the total sales.
post #5 of 5
Not a CC, makes a big differenge. Sounds a log more doable but Id have to look at numbers and conditions. Say you did the take over with the 8% royalty on net( after sales tax) who would be responcable for repair and maintance of the physical sight? Utilities? Trash disposal? Insurances? Are you open to the general public? What its the traffic flow of people? Current and past sales performance, trdnding steady, up? Down? Total access? Can you do outside catering from there? 1 large room that can be split, how big? Are you required to have miminum hours and do you have price point limitations? There are of course other questions but you get the jist of it. If you gave good answers to these issues then 8% would be a good deal.

Im not sure if you could sell the 60/40 plan to them. They assume a lot of risk in that the get a set amount but you control the expence. On your end you would get constant hassel to lower the food cost. It coild be precieved that you lower your cost by using more expenssive convience foods while putting the burden on them. That plan could be a nasty can of worms to be honest.

The idea of putting management there to reset abd supervise, for a fee could work. However the have to be well seasoned, have a clear goal and focus, anz have the power to take whatever corrective measures are needed, including firing people or they wont have the tools to get the jobb done.
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