Food for thought

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Pre-pandemic, there was a consistent move towards the contractor taking on financial risk as site populations were mainly static. The caterer had to provide an on-trend and appealing catering proposition to maximise uptake.

Nowadays, hard-to-predict site populations have caterers moving back to a cost-plus management-fee style contract.

Although this type of contract is often anathema to many FM professionals, it can – if managed correctly – reduce risk and maximise efficiency.

1Agree on how your

supplier charges you

The contract must set out how the caterer earns their income. Typically, this is a mix of management fee and income from their suppliers. This is the main area that is not a pass-through cost. Our recommendation is that all purchasing income should be returned against the account and all the contractor’s income should come through the management fee. This ensures transparency over how the caterer is performing and will enable effective business modelling and cost control.

Our typical inclusions in the management fee – especially important when benchmarking fees – are back-ofhouse stationery, computer software costs, payroll administration, training, insurance, they can agree to a 45 per cent return from their suppliers and just give their client 20 per cent, retaining the balance.

and health and safety auditing. It is crucial to benchmark ‘like for like’ to safeguard against anomalies or hidden costs.

2Ensure that you benefit

from your caterer’s purchasing power

Your caterer is able to purchase better than you can. It’s not unreasonable to expect to benefit from their purchasing power across their entire business as opposed to what just relates to your site.

Caterers use all sorts of expressions when talking about purchasing income, including volume-related or early payment discounts, loyalty bonuses, royalties, overriders, and contribution to cost.

The easiest way to verify that you’re getting the best prices is to set a weighted baseline list of the top 50 items your catering team purchases (including nonfood goods), verifying either as part of a tender or through independent purchasing specialist such as Quenelles to ensure you are starting with the lowest-achievable prices. Your caterer can update this every three to six months and justify any price changes.

It’s almost meaningless to ask them to return a percentage ‘discount’ from their purchases as they can set their return from suppliers at almost any level they wish. For instance,

CATERING CONTRACTS

Food for thought

Unpredictable workplace numbers are affecting catering provision but a cost-plus managementfee contract will help FM professionals to manage the uncertainty, argues Chris Stern

CHRIS STERN is managing director at Stern Consultancy Additional levers to pull

● Ask your caterer to guarantee a gross profit percentage, regardless of sales volumes. Obviously, this should be set at a realistic level using net food costs as discussed above. ● There are potentially other areas where contractors are passing on more than what it costs them to provide services such as for deep cleans and equipment purchases – so price check where possible. ● Once contractor income is open and clear, link it to practical KPIs designed to drive quality. This is essential if cost isn’t to end up dominating everything. It does, however, require confidence to discuss perception of quality to align your and the caterer’s understanding. ● Simple but thorough and meaningful management information should be agreed to each month, especially when business volumes are a moving target. This information is a foundation to you and the caterer to move the business on and set goals.

Getting a real handle on what income caterers are deriving from the contract is the main area for misunderstanding. The above pointers will help clear up confusion.