November 27, 2012

Up For Debate – Holiday Open Houses

One reader contacted me the other day with a conundrum and wanted to know if I’d ever run into similar issues.  Truthfully, I hadn’t, so I’m throwing it out to all of you to see if this is becoming more and more common these days?

This reader told me that she’s been getting an increased number of requests from other small businesses to basically come and feed people at their business holiday open houses.  The catch is that these small businesses are asking her to do it for free with the idea being that the exposure will be beneficial for her.

I’ve never actually run into this issue myself and while I always want to help other small businesses, my knee-jerk reaction would be to tell the other businesses that as a small business myself I can’t afford to do.  I might, depending on the company and their clientele, be willing to ante up for their open house but would request that they cover my basic food costs for the event.

Of course there is one other thing to consider.  By doing these open houses for free or near-free you are also essentially taking money away from small caterers for whom the holiday season can be one of their biggest money makers.  So you may be helping one small business but hurting another.

What do you think?  Do you get a lot of businesses asking you to provide food for their holiday open houses?  How do or how would you handle these requests?

2 comments on “Up For Debate – Holiday Open Houses

  • chrispalmberg on said:

    The bottom line reason these organizers want to shave expenses in this particular area is pretty simple. I’d be willing to bet that most catering entities they’ve spoken to quote fees based on a standard concept, “How many people do you want me to be prepared to feed?” The problem with this is that if I pay a caterer $1000 for light appetizers for 100 guests, and only 25 people show up, I’m still on the hook for $1000.

    Consider this as an alternate billing model: the Min/Max.

    I charge a company based on their projections of the minimum number of guests, and the maximum number of guests, over a base hourly fee (to make sure constant costs like labor are covered.) I come to the event prepared to feed a minimum of 25 people (and have the prepared products for those 25 ready to serve.) I also show up with prepped components so that I can produce more food on the fly as required by demand. Granted, if the night is a bust for your employer, the extra assembly personnel you brought are going to be bored, but their wages are paid by your base fee, so you’re not losing money with them idle.

    Now the tricky part is to sell the min/max aspect. If I’m charging $20 per person at 25, with a per diem cost reduction of $1 per 50, the bill for 250 guests is going to end up at $15*250=$3750. If you come prepared for a max of 250, and 300 show up, you’re going to be sending people to find proscuito and honeydews at the last minute. Thus if the attendance exceeds the maximum, you will need to charge your host an overage fee, something like $25 per extra person, probably with a minimum of 25.

    In essence its a rather equitable compromise. The client doesn’t have to pay for people who don’t show up, yet has the means to accomodate for extras that do. The catering employees get paid regardless of whether they’re standing around or running around like headless-chickens (consider a profit-sharing style tip structure on these as well.) The owner doesn’t get screwed over by a host that low-balls their estimates, nor do they have to worry about not moving those $14.25 light hors d’hourves plates and getting stuck with the left-overs.

    It will likely take some fine tuning and data bashing to get good algorhithms in place so that you know that you will need 1 tray of bruschetta for every 33 people served, but that people consume crab puffs at a rate of 1 tray per 25 attendees (this permits the prep projection of 3 bruschetta & 4 crab puffs for every 100 people expected, making the prep job easier.)

    Just a thought, and I know that it’ll be fairly simple to take this model and beat it into a viable shape. The numbers are purely theoretical, and I know that most catering deals are based on the plate count and the food type, so the numbers are there simply for show.

  • David Siter on said:

    For someone who is just starting out i think this is an Excellent way to get your name/product out there,i would definitely have them cover all costs asscoiated with the party , and also seek permission to Advertise (small sign) and hand out business cards at the event-im sure there will be many opinions on this,this is mine. Cheers,