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Concessions: How to Charge a Fair Price

Catering concessions are an essential part of a successful event both in terms of feeding and watering your punters, and also raising vital revenue for your event. Often this can also mean a timely boost to cash flow.



But how do you charge a fair rate that will keep your concessions happy while also maximising revenue? One option is to put it in the hands of the caterer by asking the businesses to tender for the work. This way the business offers you what they believe to be a fair price to trade and you take the best offers.

Tendering can work well, but is reliant on the trader being able to reasonably accurately predict the sales they will make and therefore the potential value of the event to their business. One issue faced over the past few years is inexperienced traders tendering way above the market value for shows which can lead to unrealistic pitch fees being paid and traders losing money.

The best way to avoid such a scenario is probably to work with experienced caterers who offer the market rate as opposed to an inflated price. However, even experienced traders need accurate information to work out their tender.


Understanding Caterers


One of the biggest misconceptions about food businesses is that they make significant profit margins. Sometimes people assume that a burger patty can be bought for £1, a bun for 20p and some onions for 10p and 10p for packaging. If a caterer then sells that burger for £7 they’d be making £5.60 for every burger sold.

However, most event catering businesses work to a 1:3 ratio of food cost to price with many street food traders working to a ratio closer to 1:2. When 20% VAT is added to the cost of the food, alongside a rent of around 20%, you can see that the business’s costs are rising to 65%. And for street food nearly 75%, before they’ve even paid any wages, transport costs etc.

Unlike a restaurant which can manage its stock on an ongoing daily basis by offering ‘specials’ to clear older items, event caterers often have to throw away uneaten or uncooked food. The less food they sell the more needs to be thrown away - and dealt with by the events waste contractors. Therefore, assisting caterers to get their stock levels and staffing numbers right by providing helpful and timely information on attendance as well as other variables will help your traders to stay profitable and happy.

Just as event organisers take calculated risks when putting on a show, traders do the same. They understand that things can and do go wrong and therefore must factor this into their pricing. It’s rare for a caterer to experience a full summer of great shows. There are likely to be a couple of good ones, several average ones and a couple of poor ones. If they have too many bad shows in a row they can really suffer with cash flow and some good businesses go out of business. That’s why caterers like to return to the ‘good’ events and even the average ones; they like to go back year on year to the same events as it reduces the risk, enables them to refine their offering to the show and helps them to develop repeat business.


Attendance and Competition

The more accurate you can be with attendance figures and with the number of caterers on site, the more likely you are to get a fair tender offer. Traders need to know what the potential market is and what competition they’ll face. From that they can work out roughly what percentage of the market they are aiming for. Ten caterers at a 10,000-capacity event will likely do close to twice as well as 20 caterers for the same number of punters.

The more information you can give on attendance, the better. Ideally, you should include accurate information covering questions such as:


• Did you run the event last year or even for several years?
• What attendance figures have you experienced?
• What is the capacity of the event?
• How well are tickets selling?


Traders tend to halve the projected figures provided by promoters as they are often considered optimistic. So if you know you sold 8,000 tickets last year and hope to sell 9,000 next year, let the caterer know and they’ll be able to tender more accurately.

Try to avoid direct competition for types of food where possible. Depending on the size of event, having two traders selling the same food could well cause problems as it is likely to halve each of their potential sales and can even lead to businesses competing on price rather than product and service. If traders start to compete on price for business they will all lose out.


A Trader’s Capacity


A great trader can lose money at a great event; sometimes due to a lack of experience, sometimes due to mistakes in scaling up their business – but often due to over-tendering.

Successful street food businesses may be able to sell 150 portions in a day while an experienced event caterer may do the same numbers in a lunch service. Higher volume caterers can sell more food and potentially make more money and, as such, they can pay more money to attend an event. If you want high end food at your event, you may well have to accept lower tenders.

Experienced traders with an experienced team behind them will know what kind of capacity their business has, whereas less experienced traders may not. One way for a trader to work out how much to tender is to work out the capacity of their kitchen to produce food. If they can produce a maximum of 50 meals in an hour, the most food they could produce in a 12-hour day would be 600 – no matter how long the queue.

If they charge £7 a meal, their maximum daily take would be £4200. If they paid a reasonable pitch rate of 20% of their takings, the most they could pay you would be £840. But don’t forget that they’re unlikely to be busy all day, which would result in a lower fee than this.


Opportunities to Sell

It is worth noting that caterers will factor in the number of times per day that customers are likely to buy food when deciding what to tender. At a multi-day camping event with limited access to the outside world, punters may buy food two or even three times a day, increasing a trader’s potential revenue and the amount they can tender. Equally, one day events with other potential competition such as nearby high street restaurants, takeaways or even picnics will eat into a caterer’s revenue and the amount they should tender.


Location

Location can be the difference between a great and a bad event for a caterer. Prominent positions in front of stages and next to bars will create greater footfall and should mean more business. Being out of sight means being out of mind in event catering. Some locations actually spell disaster for profits too; being sited next to banks of porta-loos, for example. Offering and accepting different pitch prices based on location will help you to avoid unhappy caterers.


Demographics and Food Types


Providing traders with details of the crowd’s demographics can ensure that your punters get the food they want and that the traders tender fair amounts. We recently had an organiser of a rave contact us to ask for a burger van, adamant that they didn’t want any street food. They told us that their customers wanted a cheap burger rather that a lobster roll and that they had dealt with lots of unhappy street food traders the year before who just hadn’t sold enough food. The event wasn’t the problem; the mix of food was. Explaining to the traders what sort of customers to expect will help them to tailor their offering and their tender accordingly.


So What is a Fair Price?

At NCASS we believe that a tender should come to 15-20% of the projected turnover. This is the amount that restaurants aim to pay on rent and is really the most catering businesses can afford to pay to work at shows and events. While some may pay more, they significantly increase their risk of losing money.

If you are unsure of what to charge for a pitch fee and are wary of tendering, why not try charging a percentage fee instead? By offering a percentage and deposit deal you share the risk with the caterer. And if it goes well you’ll earn more.

Traditionally, percentages have been based on a degree of trust. However newer technology, such as RFID, has enabled organisers to manage this process far more effectively and there is now some evidence to suggest punters spend more in such conditions.



If you would like further information about running an event, promoting fairness to traders or sourcing caterers, please contact the NCASS Support Team on 0121 603 2524.





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