contracting with entertainment center

we are talks with a entertainment center that host birthday parties for kids that does not have their own kitchen and wants to get into a contract with us where were provide X amount of pizzas for X price. They can not guarantee any amount of pizza because it depends on how many parties they book and if the party even wants food!

They will provide us with a order the night before and will be delivering through out the day about every 1.5 hours and we will invoice ever week for what was purchased through us. The party may add food the day of the party but they are on our delivery schedule BUT WAIT…she wants 20% of this business

any one doing this now? thoughts/concerns/problems/headaches/advise/warnings???

here are our concerns…
1)20% of same day orders is a lot and whats the incentive to not tell customers to order same day
2)what happens when she forgets to get us the order the night before
3)can she guarantee that our pizza/food get right to the party and are not going to sit around
4)what if someone gets sick…who is at fault especially if it did sit around
5)the place is 13 miles round trip from us and she does not want a delivery charge
6)she is going to sell these pizzas above what we offer to her…can’t that price us out of future business
7)what happens if her customers are upset and want a refund…who pays for that?

  1. 20% for the advertising and exposure? why not?

  2. If they forget to order you just do the best you can, no different than any other customer

  3. Not your responsibility, their customers are not yours per say

  4. not sure of the legalities here, but not sure its any different if any other customer buys your pizza and handles it improperly

  5. Depends on sales: 10 $500 deliveries or 10 $20 deliveries? How about no delivery charge over a certain amount? that seems fair and puts incentive on them to increase the orders. On their menu they could state there is a service charge for anything under a certain amount so they can pass the cost off and the customer can decide if they want to spend more or not.

  6. I don’t think so. Most people know there is a premium charge in captive audience situations.

  7. Unless you made a mistake, its on them as their customers are not yours. You are making the delivery to the business, not their customers so if they sign off on the delivery you are good. Important thing to set up in contract here. Make it understood that once they sign for a delivery they are assuming responsibility for it. That way when a customer complains and says there were no olives on her pizza you have a signed delivery receipt so that the business cannot call you on it. Really emphasize this point because its going to happen anyway.

  8. Put a clause in the contract that says you can get out of it if they do not hold up their end of the bargain. Meaning they don’t order enough to make it worth it, they don’t make timely payments, they don’t take responsibility for the orders, “they don’t handle your product properly”.

I think we are too expensive for these types of things but I would jump at something like this if the quantities are enough (assuming you are delivering already).

I have an arrangement with a local arena concession stand. They sell the pizza to their parties at my price. I give them a 25% discount. These orders are usually called in a day or two ahead but there are times when it is the same day. I figured the business is extra that I would not otherwise get (the contract the arena has with the concession states all food must be purchased through them) so if I cover costs and make a buck it is worth doing.

I sell to one of those party/play places - about $1600/week worth of pizzas.

We do both party and on-the-fly orders (when their walkin customers want pizza) - we deal only with the party place - not with the end customer.

We have an agreed upon price per pizza and bill the party place once a month. They charge their customers almost 3 times what we are charging them. I make what I want on our end, so I’m not worried about what they charge.

They are only about 3 miles away from us, and we do charge for every delivery. On saturday and sunday we probably average 25-30 deliveries there per day.

You will also need to compensate your driver for these run - over and above their normal comp - because the party place isn’t going to tip.

By the way - there is no need to write or sign any sort of contract for this business. There is no way you will think of every little thing to include. Plus, you want to be able to walk away or change prices any time you want.

to respond to this and not directly at pizzapirate but to analyze this to make sure it is good for us here are my thoughs

1)she is already getting 50% off our menu price for a pizza
2)still has our name associated with it
3) same responce a #2
5)drivers are not going to use 3/4 tank of gas for nothing!
7)it still has our name associated with it even if it is their mistake

it is a franchise company so they have a legal team to put the contract together and we can not make any changes. this just worries us that they want to get the best deal for them and screw it if they throw us under the bus!

We are not in the cheap pizza business but thought it might be a good opportunity to make some money but…

What “franchise company” is it?

I don’t see any reason for their to be a contract involved. What could it cover? And more importantly, what could the damages be if there were a breach of any kind? Sounds silly to me.

There are so many variables - you will spend all of your time making sure you CYA.

The business about wanting a 20% cut of on the fly doesn’t make any sense to me either. It’s better to just become a wholesaler to the place - and let them sell the pizza themselves. You set your price to them - they set their price to the customer - party order or on-the-fly order.

  1. This was not in your original post. I don’t know what your margins are but I would not do 50% plus 20%. If 50% is acceptable to you then do that – not the 20%. They may just be asking for more thinking you will not agree to everything.
  2. That’s the risk of these types of ventures. Evaluate who you are dealing with. Tell them of your concerns and that you will discontinue service if this negatively affects you.
  3. same response as #2
  4. Point is, if you are making $500 deliveries I’m sure you can compensate your drivers. If not, they can. Since I did not know that you are giving them 50% off the pizza, I would tell them there “will” be a delivery charge no matter the order size. Explain you cannot give them a 50% discount “and” absorb other costs at the same time. There are local organizations we do pizzas for at 50% off from time to time. They have to pay extra for plates, napkins, cheese packets etc. You have already eliminated the wiggle room.
  5. refer to #2

In the end only you can decide if the money is worth it to you. A one time thing, or annual, or something like that is one thing, but I would not do something like this unless I was making money – good money. This sort of thing will just wear on you otherwise.

I don’t know the legalities of the contract, but I would not sign one unless I had an “out” under the pretenses of what I already posted. They have a responsibility to process orders correctly and handle your product appropriately.

thanks pizzapirate! I should have been more clear on the discounted pizza in the original post. It seems like there is some money to be made but our gut instinct is tell us to run, FAST!

Wow. I must be on ignore or something… :frowning:

Oh well.

Registered Guest thank you too!!! Not knowing your name makes it hard to thank you personally though…

That whole contract created by their side gets me itching. I would not sign it without an attorney reviewing it for liabilities and holes. I would be afeared that it would give you all the responsibilities and the other party all the benefits. What is the accountability for the 50% off? Can you raise menu prices and they gotta pay more just because? What happens when food prices go up, or labor prices, and the 50% off deal starts hurting you prime business?

That whole 50% off thing catches me every time I think about wholesaling the pizzas here. It seems like not a lot of gravy for all the sweat, food and labor costs. I’ll be glad to hear from you how it all works out so I can get a feel for doing something like that for our shop. Little League Concession stand is opening next Spring.

But that is my name “Registered Guest” :slight_smile:

Can you say who is it? MJ or PIU? I might be able to help, as I do both of those places.

it is “KK” for short and we have a meeting tomorrow at noon. will let y’all know

kangaroo kids…and the contract is one sided. want the business but any help would be nice…any one??

When I was in college I took a course called Cost Accounting. One of the assignments was to determine if a venture was worth doing. The things we were to look at included: if you were doing your regular business would you sell to this customer? If no continue with the evaluation. Would selling to this customer disrupt your regular business? If no continue. would you make money even one dollar if you did business with this customer? this is where things got tricky because this is totally outside the realm of your normal business you must eliminate the standard costs of doing business that your normal business covers such as cost of your lease, insurance, administration that is not dirtctly related to this project and so on. The costs you would look at are the food costs, any incremental labor, utilities etc. At the end of the assessment if you can correctly answer all of the questions then go for it.

I hope my rambling helps.

What are the details?

How long (round trip) does it take to make a delivery there? (rush hour and non-rush hour)