How to maximise the return of your catering agreement

As featured in the September Edition of Bowls Queensland’s Queensland Bowler magazine.

As hospitality businesses look to explore alternative revenue opportunities in the wake of the COVID-19 shutdown, there are a number of factors to consider when entering into third party catering agreements. It is common for bowls clubs to enter into an agreement with a third party to take up the catering responsibilities for a venue, often in the form of a restaurant or catering services within the venue. Alternatively, there are agreements whereby a caterer is contracted to cater specific events and functions.

Financial Considerations

First and foremost, it is important to carefully consider the financial nature of the agreement, both in regard to rent or leasing costs, as well as any kind of profit-share arrangement. Venues will often look to enter into a profit-share, or turnover based rent arrangement to allow the club to retain a portion of profits, maximising the financial return of the arrangement. In this instance, it is important that your agreement considers who is responsible for the payment of operating expenses such as electricity, gas, water, the maintenance of plant and equipment and other outgoings. It is also important for you to ensure that your venue is protected during the tenant’s occupancy. This can involve the payment of a security bond to assist in covering the costs associated with any breach of the agreement (such as property damage or failure to pay rent), as well as an obligation on the caterer to maintain appropriate and adequate insurances.

Staffing & Management Considerations

Closely aligned with the financial aspects of entering into a catering agreement, it is important that all parties are clear on which staff are employed by the broader club, as opposed to the caterer. This is particularly relevant to any wait staff. The OGLR expects that all staff involved in the service of liquor, including those employed to clear tables (‘glassies’) are required to hold a valid Responsible Service of Alcohol (RSA) certification. Additionally, while the licensee can ‘subcontract’ food & meals services to a third party, the same cannot be said for service of liquor. Accordingly, the caterer cannot be involved in the service, or collection of payment for, alcohol. Practically speaking, this would see patrons order their meal at a separate counter before purchasing their drink from the bar. In turn, it should be the responsibility of the bar staff (holding valid RSAs) to clear finished drinks and glassware from the tables. Lastly, given the potential adverse bearing on the reputation of the venues, licensees should consider general contractual controls over the caterer, such as the imposition of minimum standards in terms of the quality of food, trading hours, menu offerings and pricing.

The items outlined above are just a few of the contractual mechanisms venues should consider. Clearly there is no “one size fits all” approach when it comes to catering agreements, and it is important that any agreement is tailored to the licensee’s and caterer’s various requirements.

If you would like to explore the catering requirements specific to your venue, or find out how you can maximise the financial return of your catering arrangement, please call me on 07 3224 0353.

“The content of this publication is for reference purposes only. It is current at the date of publication. This content does not constitute legal advice and should not be relied upon as such. Legal advice about your specific circumstances should always be obtained before taking any action based on this publication.”
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