Thursday, April 26, 2012

Exclusive Catering Contracts, an exploration begins...

Battleship NJ, once exclusive, now semi-exclusive. Contact me for details
The concept of exclusive catering contracts is a topic I have planned on writing about since I began this blog last June. It is a very interesting subject, the pros and cons are numerous and the consequence of exclusivity can make or break a catering company. My personal feelings and analysis of exclusivity has evolved over the years, and I will mostly withhold my own thoughts until I have covered the topic a bit more thoroughly. I would like you, the reader, to draw your own conclusions.

Sigma Sound Studios, an iconic Philly venue, exclusive to Feastivities
I would like nothing more than lively, spirited feedback on this and I will include good comments in the coming posts on this topic. This one will be short and sweet with only a brief exploration of the topic. I have a very busy day culminating in a very exciting dinner in DC with the Creative Coalition.

Why do public and private special event facilities seek exclusive catering partners? There are a number of reasons and here are some of the most relevant.

Revenue. Many institutions feel that the amount of receipts they can collect from their special event business will be greater if they bid out the exclusive contract and balance the selection decision with the best operator that has the best financial offer. Since an exclusive building essentially becomes a mini-monopoly, if a client needs to have their event in that facility, the caterer is not concerned with bidding against a competitor and will almost always charge more than they would if they were bidding on an event against others. Because of this, caterers will typically offer a higher percentage commission to the venue when they prepare their bids to become exclusive.
Electric Factory. Not exclusive, but a preferred list. Contact me for booking.

Facility protection. Museums especially, often prefer to deal with one food service operator when there are concerns about damage to their building from the wear and tear of frequent events. If you have a week where there are three events and three different caterers and damage is not discovered until a week later then it is very difficult to figure out who did the damage. Also, the exclusive caterer takes ownership of the venue and is usually more careful and respectful of the building and its contents.

Restaurant requirement. Many cultural institutions have in house restaurants and these are very often difficult situations for an operator to be profitable. By requiring the caterer to also operate the restaurant(s), the profits from events can be justified to offset the potential loss for the restaurant. Another rationale is that multiple operators in the same facility cause operational headaches, especially due to many venues having precious little space devoted to back of the house area for food service.
The new Barnes Museum, an exclusive venue opening Mid-May.

What can you add to this discussion? Comment on the blog, email or Facebook message me. I really want to hear what you have to say, especially if you are a planner of major events. The next post on this topic will explore some of the arrangements that are not exclusive, short lists, open sites, and everything in between.

Have a wonderful day.
Harry

12 comments:

  1. This is a great post. And, there are pros and cons to this issue. I would say the biggest downfall to exclusivity is that it creates a void for some to use a favorite venue due to that exclusivity. If the exclusive caterer is too pricey for a client, they may be disappointed to find they can't have an event where they would like. I have also found that I will not recommend a venue if I know that the exclusive caterer is mediocre or difficult- of if the food is not what it should be. I can't wait to read your next post about this. It is a sticky wicket! But, it can be a good thing for a venue such as a museum.

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    1. Do you like the option of bringing your own caterer?

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  2. Great post.
    i agree w many of your points.
    check out our fb or you tube. By searching Garden Vista Ballroom.
    Its a historic ballroom. Contracts protects us. Having contacts helps out.

    ReplyDelete
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  5. I got the idea! Very bright idea. I want their services too.

    caterers

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  6. This is a very interesting topic. I am working pro bono with a non-profit that rents its historic facility for events and has an exclusive deal with a caterer. Currently they do not share in the catering revenue (which is often 3 to 4 times more than the rental revenue) with this exclusive caterer. How would a typical contract or revenue sharing arrangement for this type of situation work? Thanks.

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  7. This comment has been removed by a blog administrator.

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  8. This is really a great service that most of the catering companies are giving to organize a schedule party to enjoy the event.
    Villa Woodbine Wedding Catering Miami

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  9. I am interested in your opinion or advice regarding how to structure our business partnerships. We are restoring our historic family home and see its best use as an venue for weddings and a variety of other events. However, our family does not want to go into the event planning or catering business. We are exploring options about partnering with caterer(s) and deciding the best business plan. Hire a Property Manager/Event Coordinator to oversee a select group of Caterers or partner exclusively with one who leases the home from us and pays us a percentage of the revenue. I'd love to "pick your brain" or hear the pros and cons of these scenarios.

    ReplyDelete
  10. I am interested in your opinion or advice regarding how to structure our business partnerships. We are restoring our historic family home and see its best use as an venue for weddings and a variety of other events. However, our family does not want to go into the event planning or catering business. We are exploring options about partnering with caterer(s) and deciding the best business plan. Hire a Property Manager/Event Coordinator to oversee a select group of Caterers or partner exclusively with one who leases the home from us and pays us a percentage of the revenue. I'd love to "pick your brain" or hear the pros and cons of these scenarios.

    ReplyDelete