- Hi there, I'm Bari Baumgardner,
founder of Sage Event Management,
and today, I want to talk to you
about one of the big mistakes that event hosts make
every single day.
Now, I have recently shared two other videos
on common myths and misconceptions about live events,
and today we're gonna talk about one
that I think costs even hosts money every single day.
Let me tell you a quick story to give you an example.
So, recently we took on a brand new client,
and we were analyzing her food and beverage cost
and her hotel bill, and how she was spending her money
at her live events.
And one of the things I immediately noticed
was she was paying rental on her smaller events,
and when we talked about it,
she said well I've always thought
if I could just pay rental,
it really saves me money on not having to spend anything
on F&B, so I gladly pay the rentals
so that I have zero liability on food and beverage.
I said, okay, that makes sense.
Are you spending any money at all on food and beverage?
And she said, oh yeah, well I do host a reception,
and I like to give them breaks during the day
to keep their energy up, but I don't have to
because I'm paying rental.
So, that's the myth and misconception,
because here's the deal.
If you pay even a little bit in food and beverage,
you can almost always offset that room rental.
And think about it, would you rather pay room rental,
which no attendee can see, no attendee has any idea
that you've spent money with the hotel and room rental,
or would you rather spend your money on food and beverage,
which allows you to wine and dine the attendee,
to give them something they'd really enjoy?
As she was rightly thinking, it does keep the energy up,
it does, I think, involve some reciprocity
with the attendee, which I always think is a good thing,
and if you can do that in a way
that allows you to make your attendees happier
and save you money, why wouldn't you do it?
I think it's because most of our event hosts
do not fully understand how food and beverage
with the hotel work.
So let's take a quick look at how you can save money.
So first of all, if you are not spending any money
on food and beverage at your event,
whether it's a mastermind, a group program,
a three day event, if you are adamantly opposed
to spending any money on food and beverage,
then yes, you probably are gonna spend some room rental,
and yes, it may be better for you to do that.
But if you're considering spending any amount of money
on food and beverage, then you are going to come out ahead
by going ahead and committing to that in advance.
You'll eliminate the rental,
you'll get better service from the hotel,
and you'll get better concessions.
Because here's a little secret
that no hotelier will tell you, but it's the truth.
Hotels like to keep their staff working,
so when you pay rental, they do make more money on it,
it's 100% profit margin,
which every hotel is delighted to get,
but it's kind of a bummer for them
if you don't do any food and beverage,
because all of these team members that they pay,
don't come to work, don't get paid,
don't accrue hourly hours if they're not on the floor
helping to serve food and beverage.
Hotels like to keep their people happy,
and part of how they do that is food and beverage.
And there is actually a pretty good profit margin
on food and beverage, so it's a nice little offset,
which is why they're willing to swap it out
in place of rental in almost every case.
But if you're going to go this direction,
I want you think about how to do it.
You may be thinking that a food and beverage minimum
means that you have to serve breakfast, lunch, and dinner,
three squares a day, but I'm not trying to convince you
to serve them every meal.
I think you can be really selective.
Think about your audience, think about your event,
the pacing of your event, and what you think
would give you the most return on your investment
for that food and beverage investment.
Know that all of these things count
toward food and beverage:
A coffee break, even if it's just coffee and tea.
A coffee break, snacks for attendees,
whether it's cookies, whether it's fresh fruit,
whether it's bagels in the morning,
all of those things count
towards your food and beverage minimum,
a hosted bar and, think about this, a cash bar.
A cash bar means that the attendees are buying the drinks,
but every drink they buy counts towards
your food and beverage minimum,
so the attendees are actually paying
for your food and beverage minimum.
So whether it's a hosted bar where the drinks are free
or a cash bar, both of them count
towards your food and beverage minimum.
And the last one, and this one people often forget,
staff meals.
I'm a big believer that a well-fed, well-hydrated staff
is a happy staff, they'll work far harder for you
if they're well-fed and taken care of.
This doesn't mean putting out
a massive display of food for them,
but even simple snacks in the staff office
that they can grab and go, or coffee and tea,
or a scaled down lunch buffet
to make it easy for them to grab lunch.
All of that counts towards your food and beverage minimum.
So here are the steps that I recommend
to stay focused on how to spend your food and beverage,
and how to negotiate a minimum.
First you wanna look at the hotels menu
and get a good sense of their pricing,
per gallon, per piece, per person, per item,
per plate, etc.
You wanna get a sense of all of their pricing,
per hors d'oeuvres, all that good stuff.
Then, you wanna lock in the menu prices
at the contract signing, so that they can't change on you
between the time you sign the contract,
and the time you have your event.
At that point, you can even do some basic negotiation.
Hotels will often give you a flat fee discount,
like 10% off of all pricing, or locking in this years menu,
plus 10% discount, or even locking in a discounted rate
for select items you know you want to serve.
But that needs to be done at contract signing.
Once you've looked at the menu,
you've locked in your pricing, and you've thought through
the number of people you realistically expect
to have at your event, this is not your wish list,
this is true goals, what you really think
are going to attend for each of those meal functions,
multiply it out, do the math,
and come up with a collective number.
Let's say that you're going to do coffee breaks
every afternoon and you're going to host
a welcome reception.
You multiply all that out,
look at the combined amount of food and beverage
you would spend, and then I like to recommend,
especially if you're new at this,
subtract 20% just to give yourself a comfortable buffer
between what you realistically think you're going to spend,
and what you're going to have to spend
in that food and beverage minimum.
Typically hotels are gonna charge you the difference
if you don't hit your minimum,
unless you negotiate profit margin in there,
which is essentially saying if I fall short,
I'll pay you your profit margin, which tends to be
35 cents to 50 cents on the dollar.
That's a high-level move,
don't feel like you have to do that one,
but if you have a hotel willing to give you profit margin,
it can limit that liability even further.
Even if you can't get profit margin,
you're still going to be in a better place
committing to this flat F&B minimum,
and what I mean by a flat F&B minimum
is you've ganged up all of your expected meal costs
into one flat fee, that's what you have to spend
at the hotel.
Don't let the hotel force you into saying you will serve
a reception at this price point for this number of people.
That's a no-go.
You want to combine it all together into a flat minimum.
Here's the benefit of a flat food and beverage minimum.
You can choose to spend the money however you want.
So let's say you change your mind
and decide not to do a reception.
Instead you want to do a lunch on the first day.
That's perfectly fine.
When you have a flat F&B minimum,
you choose how to spend the money.
It doesn't matter whether you wanna do coffee and tea,
add snacks, cut snacks, totally up to you
until the last 72 hours before the event.
So it gives you a lot of flexibility
to navigate how you're going to spend
the food and beverage based on the number of people you have
that limits your risk and your liability,
and allows you to provide a really awesome experience
for your attendees.
I hope you found this information helpful
and if you'd like to check out more of my videos,
including the last two in this series
that covered common myths and misconceptions
when event hosts are planning their events
that cost them lots of money, for example rooms
and room attrition and ordering food per person,
go to my video blog at blog.poweredbysage.com.
And as a quick recap, I just wanna remind you,
if you're thinking about planning your next event,
you haven't yet committed to the hotel contract,
if you're not going to be paying rental,
you wanna really negotiate a flat F&B minimum.
It really can pay off for you,
not only in spending less at the hotel,
but providing a really extraordinary experience
for your attendees.
Much like the other risk in live events,
you do want to do the homework
before committing to the flat F&B minimum,
so do the math, be conservative, but commit in advance,
and know that part of this commitment
is part of being a real host, running a real live event.
It does come with risk, but with careful
and proper advance planning, you can mitigate those risks
and save yourself a ton of money.
Trust me, you can do this.
Go, team, go.
We'll see you next time.
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