Wednesday, December 15, 2010

Food and Beverage Minimums in Contracts

Those of you who have been in the industry a while will most certainly come up against food and beverage (F&B) minimums at some pointing your career and how you have handled them will likely have been determined by your client’s needs and the particular event’s specifications. For those of you who are new to meeting planning, F&B minimums can be a bit daunting.

So what is a food and beverage minimum and why would I allow them into my contracts? Well, the term itself is pretty self-explanatory – it is the minimum amount of food and beverage your group is committing to in the contract – but does not go far enough to capture all that the clause entails.

F&B minimums in a contract will nearly always be spelled out in terms of dollars to be spent on catering for your event. You are spending at least that amount of money, regardless of what you order or how many people actually attend. If I have an F&B minimum of $15,000, then my final catering bill will be at least $15,000. It is important to note, too, that the minimum is the base price, exclusive of tax and service charges. (For more on these “hidden charges”, check out this post.)

The hotel calculates the minimum based on the meal functions that you have planned and secured space for at the property. They also look at how many people are projected to attend those events. If the number seems unreasonable to you, do your own calculations based on your best information about the group and using the hotel’s own menus, then make a counter-offer to the hotel. Remember, like nearly any other clause in the contract, you can suggest changes and negotiate terms. When I see an F&B minimum in a draft contract, I will always do my own (realistic!) calculation of what I think my group will order – and try to get a lower number in the contract. This leaves me some “wiggle room” in case my numbers are not as high as I expect or if the client reduces the size of or cancels any particular function.

So why are those clauses even in the contract? Basically, this is a bit of self-protection for the hotels that arose out of the days when planners would book the sun and fail to deliver even the moon. Hotels needed to protect themselves from the unrealistic projections of planners. (OK, not all planners did this but enough did that the trend was very disturbing for hotels.) As a result, the F&B minimum was “born”. It allowed the hotel or caterer to make the planner be realistic in their projections of how much food they would actually order once the meeting occurred – and they enforced this by making the planner put their money where their mouth was. If you tell the hotel that you are doing a banquet for 100 people, then you need to be willing to commit close to that amount as the minimum. Planners quickly learned to look at their events a little more critically so that they could be more accurate in booking those events.

Don’t get upset when you see an F&B minimum in the contract, though do check the numbers carefully. Just as we as planners want certain protections in there, so, too, do the hotels and this is one protection I agree with. Though, as I mentioned earlier, I do work to ensure that the minimum requested is a realistic target for my group to hit. If I know my group is only likely to spend $5,000 in F&B, I will not sign a contract for any higher amount. Neither will I argue if the hotel wants to impose a $2,500 minimum, especially if I know my group can easily make that level.

~ Karl Baur, CMP • Project Director, RDL enterprises