The Centennial Civic Center Complex
The Centennial Civic Center Complex has a 16,000-seat arena and a convention center with 500,000 square feet of exhibit space, 40,000 square feet ballroom, and 25 meeting rooms. The complex is public property operated by Centennial Civic Center Commission. The complex is in the eastern United States, which has a population of 1 million people.
The commission has approved an annual operation budget. The commission expects to correct a minimum revenue of $1 million from food and beverage. The commission has estimated the cost for the fixtures, furnishings, and equipment (FF&E) for food and beverage service to be $1 million. The commission expects the new food contractor to pay this $ 1 million as capital investment. The commission also requires the contract to be no less than five years and should not exceed ten years.
The central tenant for the arena is an American Hockey League (AHL) team. It plays about 40 home games. It has been playing at the old stadium and having an average of 6,000 fans per each home game. There was no alcohol sale at the old stadium, and the F&B per capita averaged about $2 at hokey games. There were eight concerts, and the attendance was between 6,000 and 12,000 depending on the act. It generated an average of $4 per capita. The university’s athletic director wishes to move the men’s basketball program to the civic center complex, where they will play their 16-home game schedule. Their condition is to have a percentage of concession sales made during their home games. Each of their fans spends an average of $1.25 on F&B at all home basketball games. However, the Civic Center needs to come to an agreement with the university and to decide whether it will allow the sale of alcohol.
Top producer of touring family shows has shown interest in the new Civic Center Complex with a condition to sell novelties and unique food items. It also will not pay any commission. The hotel owners in the city say they will not abandon their hotel business when the Centennial Civic Center opens. For that reason, the Civic Center commissioners want the foodservice operator who wins the bid to build from scratch its clientele and banquet events. The CVB will hold eight regional conferences the first year when the complex opens, and the Centennial Civic Center Commission is about to sign a contract with the CVB. It will have six shows with an average of 6000 attendants. Although the commissioner requires the foodservice operators to generate their banquets, I am confident that the food service provider chosen will establish a business of not less than 20 feasts with average attendees of between 600 and 800 in the first year.
Analysis
Premier Food and Beverage Company
This company has been in business for 20 years. It means that the enterprise is at its maturity stage, and a slight change will increase the loyalty of its 85 avenue client base. Many people must have heard about the hotel, and they will be more than happy to receive a service they have experience with or one in which others have had an experience at the Centennial Civic Center complex. The chances are high that the attendees will want to receive service from a hotel that has been in operation for extended than a new one because dining or drinking beverages will not be the primary reason for their visit at the civic center. Moreover, their clients are the United States, which means some of their clients will come to the Civic Center. One of the company’s conditions to the Centennial Civic Center Complex is to have a $1 million investment in FF&E. The Civic Center wants the foodservice operators to make a capital investment of $ 1 million in the form of FF&E. The ten years exclusive contract condition for the company is within the Civic Center’s requirement of between 5 and 10 years agreement. The company will pay Civic Center a 30% allowance commission and a 20% catering commission on the gross sales. Premier company will be responsible for the maintenance of food and beverage equipment. However, it requires that the Civic Center pay for all the utility bills, including electricity, sewer, water, and natural gas. The Civic Center should also pay for the removal of trash and any costs associated with it. It should also provide chairs and tables for the banquets and will provide 1 GM and one assistant of the GM. It will also offer one office manager, one head chef, and two warehouse supervisors. However, half of the company is to deduct half of their salaries from the commission the company owes the Centennial Civic Center. Premier will incorporate the cost of the wait staff in the price per person, which means that the customers will not even know they are paying the fee of the F7B team. Premier will determine the menu items and their prices, which means that the Civic Center will not have any say on the foods and beverages served and its costs.
Superior Food Service Company
The company is five years old in the business, meaning that it is in its initial growth stage. At this stage, the company may be beginning to have increased sales and have just hit breakeven or made a few profits. It has 35 venues client base, which includes arenas and convention centers. Most of its clients are in the eastern coastal states, and its headquarters are in Boston and Massachusetts. The company requires the Civic Center to invest $1 million in FF&E. It also wants to have a seven years exclusive contract, which is within the Centennial Civic Center’s conditions. However, Superior Company requires a guaranteed per person by events which include $7.50 hockey games, $5 concerts, $3 men’s college basketball, $2, family shows, $30 banquet buffet, and $45 banquets plated. It will give Centennial Civic Centre a 25% concession commission of a gross sale of up to $750,000 and a 30% of any amount above $750,000. The company will give the center 12% of the total sales catering commission and will pay all the utility bills based on the space they will occupy. The company will develop a waste/ recycling program and give 50% of its profits to the Civic Center. Superior Company will be responsible for the maintenance of F$B equipment. The company will provide and cater to the salaries of 1 GM. 1 Assistant, one head chef, one warehouse supervisor, and one administrative assistant.
My Recommendation
I think Premier Foodservice Company will generate a higher financial return to the company. First, it has a higher client base than Superior Foodservice Company and has been in operation for many years as compared to Superior Company. Although the attendees do not have many options on the foodservice companies, most would be comfortable with a company they are familiar with than they would with a new one. Secondly, the Superior Company wants Centennial Civic Center to provide a guarantee per capita on various events, which means that if, for example, if the hockey games cost $7.50 or less per person, the Civic Center will have to pay Superior $7.50 per capita regardless. Another example is that the average charge per capita on concerts at the university was $4.00, while Superior wants to a guarantee of $5.00. That means that the Civic Center may operate at meager profits or a loss if I decide on Superior Foodservice Company. Thirdly, Superior Company is giving the Civic Center Complex a 12% of the gross sale as a catering commission, which is lower than the 20% provided by Premier Foodservice Company. Lastly, because premier Foodservice Company and it is familiar throughout the United States, it can attract many attendees of the different events, which will increase sales and profits for the Centennial Civic Center.