One of the biggest problems faced by event caterers over the past few years has been the inflation busting rises in pitch fees for events. This is usually due to tendering processes which, if not thought out properly tend to favour the event organiser and push up costs for caterers, often to a level that can make it difficult to turn a profit.
On this page we’ll take you through NCASS’s golden rules for tendering for catering pitches at events. Give yourself the best chance of turning a decent profit and read on.
1. Understand the game: everyone is out to make money.
In the events industry, everyone is out to make money, from the organisers to the concessionaires to the traders. It makes sense for all involved to be friendly, but don’t mistake this for what it is not. If an organiser is putting an event out to tender, they are looking to maximise their revenue from the traders. It is up to you, the trader, to work out what a fair price to pay for the work is, which will give you the opportunity to make a profit.
If you pay more than the fair price, you are risking your money and you only have yourself to blame. If you lose out on a job because you did not offer more than the event was worth, then you have avoided disaster. Don’t worry, you haven’t “lost a job”. Now some other poor trader will have to work their socks off in the hope of breaking even, not you.
2. Do your research
You cannot even begin to think about tendering for an event if you don’t know all the facts. What will you base your tender on? Just because an event organiser tells you what he wants for the pitch it doesn’t mean it is worth that money, or that risk, to you.
Make sure you get all of the information that you can in order to make an informed decision. The three key pieces of information here are:
How many punters are expected at the event?
Bear in mind that event organisers tend to be optimists when it comes to attendances, and a good rule of thumb is to simply halve the figures mentioned.
Often a phone call to the local licensing office will give you a far more accurate figure on past attendances and what to expect at the show. Just because a venue is licensed to hold 10,000 people, doesn’t mean that many will turn up. How many events actually sell out?
How many traders will be at the event and what are they selling?
This will directly affect your potential to make a profit and the amount you offer as a tender. Imagine this: 5,000 people are due to attend the event and the organiser tells you there will be 10 units selling hot food. You share of the potential trade will be 500 customers (depending on what you are selling and the type of event). If the same event only has five hot food units, your potential revenue doubles.
If you do not know how much competition you will have on the day then how can you make an informed decision on the tender?
How many people will spend money on food?
What will they spend and where will they spend it? If you do not understand the audience you will struggle to turn a profit and may end up at shows or events where you have no chance of making money. Experienced caterers will get a feel for an event and will be able to make a decision on instinct as to whether there is potential for them. However, newer traders will have to be as scientific about it as possible to understand what their potential to make money is.
A good place to start is to ask yourself what type of event it is and work out how many times over the course of the event are people likely to buy food from one of the hot food vendors. For multi-day music festivals the traders often have a captive audience who are stuck in one place with limited alternatives. On the other side of the coin, the audience of an evening concert in a town centre have the option of either eating at home or at an alternative food outlet before or after the event.
While crowds at outdoor events recovered somewhat from the 2012 lull, research shows that people are spending at only 80% of their pre-recession levels. You need to consider how many times a day people are likely to eat and what they are likely to spend when they do so. Be realistic – your chance of making a profit will depend on it.
You should also bear in mind that different demographics of people are likely to have different spending patterns. This will quickly become apparent when you get to the show, but by then it is often too late. Any trader that has worked at dance music events will tell you that the kids are often more interested in eating pills than food, but that they go through bottled water like you wouldn’t believe. You need to understand what type of people will be going to the show, if they will want to buy your food and how much they will buy.
3. Don’t gamble what you can’t afford
If you can’t afford to lose the money, then you can’t afford to do the show.
Cash is king in business. If you can’t afford to buy stock for your second event until you have made a profit at the first, then you are gambling at a level beyond your means and could find yourself out of business after only a couple of shows.
Just because the stakes are higher, it does not necessarily mean the rewards are. Don’t forget, if you are the only trader at an all day horse show with a thousand people at it, you are likely to make more money than a trader at an 80,000 capacity event with 100 traders.
4. Do the sums
There is no point in working at an event, show or market if you are not going to make any money.
For all of that hard work, planning, stocking, staffing, driving, setting up, working your socks off, then breaking down and getting home, you want to make some money. It is therefore essential that you work out whether the event is for you – before you tender.
Some simple sums can help you to get an idea of whether you can make money, and whether it’s worth tendering, let alone working at the event.
We have put together a general guideline as to how many people attending an event are likely to spend on food. Please be aware that this is a guideline not a guarantee, and your experiences may well lead you to make different assumptions on spending.
A reasonable guideline for spending at events is:
Pop concerts: 75 – 85%
All-day shows: 50%
Local fêtes and carnivals: 35 – 45%
Bonfire Night: 35 – 40%
Fireworks and music events: 25 – 30%
Part 1: The optimistic version
Using the above guidelines for our example event, we will look at a 20,000 capacity sell out 1 day show. For the sake of this example we will use an average spend of £6 for those who buy.
20,000 visitors, of whom half are likely to buy food throughout the day, gives us 10,000 potential meals sold at the event.
Working on the premise that these 10,000 customers will spend £6 each this gives us a total event spend of £60,000.
We have spoken to the organiser who has confirmed that there will be 5 general purpose units and 10 special purpose. General purpose (GP) is the name given to traditional fast food or burger units, while special purpose refers to more specialist niche products, like Caribbean or paella.
In event catering, GP traders tend to take the lion’s share of the business. This is dependent on the event and area of the country, however, burgers are still the most popular food at events. GP units generally take around 60% of the business. They also pay more in pitch fees for the privilege.
So, total spend with the GP units will be 60% of £60,000 or £36,000. This works out at £7,200 per GP unit in potential sales. Similarly, the special purpose units will share £24,000 between 10 of them, or £2,400 each.
This is one way to work out your potential to earn money, we would always suggest that in terms of rent, you should be looking to pay between 10-25% of your potential takings on rent, obviously the lower the better. Any more than 25% and you will struggle to turn a profit.
Part 2: The pragmatist’s version
This approach is based on your ability to turn out food when you need to, and requires you to honestly work out how much food you can actually turn out in a day. You then base your tender on the average spend, multiplied by your capacity to deliver. For example, if realistically you can serve 500 portions per day, then your potential earnings would be 500 x £6 or £3000. In that case, offering between 10 – 25% of your potential earnings as your tender, you would look to be paying between £300 and £750 in rent.