# Commission



## elhirba (Nov 9, 2007)

Hi everybody !

A friend who owns a gourmet catering company asked me if I wanted to be a freelance sales rep for him. Their is no salary, just commission. Two questions :
1-How much should I be paid ? What's the minimum percentage on the profit should I ask ?
2-Could somebody give me some ideas to get new customers and get through the cold calls ? 
Thanks


----------



## kuan (Jun 11, 2001)

Catering is customer service. We're not selling used cars here.

There's too much room to fudge the numbers. Don't do it by profit. Even at the corporate level with standard procedures about how we did the PNL we could never totally agree.

He's looking for a way to take advantage of you wihtout investing anything in his sales team. This way he has nothing to lose. Actually I take that back. By not being an employee you can do almost anything and get away with it and he'll be stuck with trying to appease the customer. What are you going to do when you find out two minutes before the speech that the PA system isn't set up the right way? That's a surefire way to drive away repeat business.


----------



## elhirba (Nov 9, 2007)

Thank you Kuan for the advice. I know we are not selling cars here but it's still a business, and a business needs constantly new customers if he wants to survive in the jungle out there. You can still taking care of the customers like they were Kings but you have to use some marketing techniques to attract them. So many catering companies are on the market, you have to find a way to be the one that potential customer is going to peek ! Every company thinks that they are the best on the market, nobody pretend that they sell bad products and services. The reality of the business world is different than Barney's world.


----------



## lentil (Sep 8, 2003)

Cold calls? How does that work exactly? Do you actually call on the phone or drop in with a sample of the food?


----------



## foodpump (Oct 10, 2005)

Catering is a pretty broad term....

First there's "bread and butter" accounts: Big law firms and the like, always need sandwich platters, party platters, dessert platters, etc. Not exactly glamorous, but very steady, and you can usually weasel a christmas party out of them too.

Then there's the "one timers": Weddings and other one time events. A lot of time and energy will be spent hashing out the details, drafting quote after quote, the on-site baby-sitting, and when the event's over, it's over, no repeat business.

There are many other categories in between, but these are the basic groups.

Before you start asking for compensation, your employer has to provide you with some tools to do your job effectively. By tools, I don't meant a compuker or phone, (actually you'll need these) but:

A menu and price list of services and amentities 
A contract form
Inkling of the size of party the kitchen is able to handle. This takes into account the manpower and equipment on hand but also the "know-how" of how to get extra manpower and equipment easily and quickly

Going on 100% commission is a two-way sword: From the Caterer's point of view you are expendable, no payroll costs or other headaches if and when s/he decides to turf you. From your point of view, your time has been spent fattening up your "little black book"--your contacts and customer base, which you can take with you.


----------



## lentil (Sep 8, 2003)

I would also suggest extensive knowledge of not only the menu, but (if that kitchen is anything like mine) what the chef is willing to do. My menu is very fluid; I'd actually prefer to offer suggestions but let the client come up with thier own vision of what the food should be. I find that to work well for my small company.

That said, I had an employee who thought she knew much more than she actually did and would tell potential clients anything they wanted to hear. She always quoted high, but her menus were unworkable. That left me to spend even more time with the client menu planning, and by extension, cutting into my profit.

In my opinion, you should know not only sales, but food and costs to make it work unless you're working from menus that are etched in stone. But that's just me.


----------



## longfellow (Jun 11, 2008)

If it was I who was in your situation. I would ask for some sort of base pay. If your friend can not afford or was unable to pay this then I would open my own company either a corp,llc or doing business as. and your would book the clients and then out source the events to him. 
THis will protect your business book and if you were to be come succussful and need more people to cater you could enlist the aid of other companies.
This would put you in a position of power and give you the uphand in dealing
with your friend. Because if you build up a client base under his company then he can cut you out at anytime. Its sad to say but in business you have no friends. I say this with lots of exprience. And make sure everything is in writing and you controll the money and write the checks. I have seen sales commissions sliced and diced by the owner of companies. Their justifactions were " thats too much money to pay someone to just sign up a job we are doing all the work" Be smart the road to failure is littered with the trusting and the stupid


----------



## ginamiriam (Feb 25, 2005)

Commission can be paid in different ways but is usually based on a percentage of food and beverage sales.

Because there are different levels of catering, there can also be different percentages paid based on those levels. For example, we do both on and off-prem catering. We pay a different percentage of food and beverage sales on each.

How to get new business - leads on line, cold calling, warm calling, networking, joint ventures, direct mail pieces are just a few.

Good luck. Gina


----------



## elhirba (Nov 9, 2007)

Thank you all of you for your advices, you were very helpful. I'm new in the business as you know. Whatever the method I will use, I will always respect the customer, treating him/her the way I'd to be treated.


----------



## kyheirloomer (Feb 1, 2007)

I'm curious, Gina. If you're paying commissions based on % of F&B sales, why is it different for on- vs off-prem catering?

Let's posit an event for 100 people, in which the F&B sales represent $2,200 of the final fee. That is a constant, because it will be the same food & drink no matter where the event is held. 

You may (likely will) have different cost elements, depending on where the event is held. But they shouldn't effect the sales commission. 

Reminds me of the magazines with sliding freelance rates. An article done on assignment pays X dollars. But the same article, done on spec, pays X minus Y dollars.

How come? It's the same story, by the same author, filling the same space in the magazine?


----------



## foodpump (Oct 10, 2005)

Don't know how Gina'll respond, but this is how we explained it to our customers

For on-site we have to inspect the place first (this takes time, MY time): Enough washrooms, hot and cold water, power, how far to schlepp stuff, is there cooking infrastructure available?

If not, how much equipment do we have to supply? If it's alot do we need a second vehicle to transport the stuff?.

Transport for staff, transport for food.

Time involved to organize and pack the stuff needed, time needed to re-pack all the stuff on-site, put back in the truck, and unload from the truck at home base.

Time needed to plan and organize all the above....

In a hall, it's easy-peasy, grab the suff from storage, toss it on a trolley, and the reverse for clean up.

Catering. It's not about the food, it's about the logistics....


----------



## kyheirloomer (Feb 1, 2007)

Foodpump you're just proving my point.

All those extras are legetimate cost elements, and will effect the total cost of the job. 

But if I brought you the job, and the deal was I get X% of the food & beverage income, none of those additional cost elements apply. Doesn't matter whether the event is on-site or off-premises; the portion of the total represented by F&B remains the same. 

Your time & travel to inspect the place, for instance, has no bearing on the amount you charge for F&B. Nor to any of those other costs. If, to use my earlier example, F&B income is $2,200, and my piece is, say, 10%, then I should get $220 no matter where the event is held. 

Far as I'm concerned, if you only pay me $200 because your non-F&B costs are higher, then you're asking me to subsidize the event. In short, ripping me off.


----------



## david jones (Jan 15, 2000)

Let's try this - How does your friend want to pay you? That's a great leaping off point. Force the issue, so at least they will have to live by what they say.


----------



## foodpump (Oct 10, 2005)

Yes, I see the point, and it makes sense.

Granted, with my own business either my partner or myself did all the sales. In the hotels I've worked in, we always had f/t staff for that. I've never seen a "hands off" straight commission when it came to catering/banquet sales, the sales person was always involved until the last guest left. 

What I'm saying is, I find it very hard to conceptulize getting the contract, then drop it off and then walk away from it. Every place I've worked in (including my own) the sales person was responsible for getting the last portion of the bill--which according to contract can be anywhere from 10% to 40% which is collected at the event. For me, the sales and the babysitting go hand in hand--as well as collecting the final bill installment.


----------



## kyheirloomer (Feb 1, 2007)

You're absolutely correct, Foodpump. And there is more than one reason why the sales person _should _be involved through the whole process.

But we were given certain criteria, and all I was doing was posing a question within the rules of the game. And I'd still like an answer, because I don't understand the difference.

Like you, I can't imagine a situation where an agent solicited the work, and then walked away. But that was exactly the deal presented.

Getting back to the original issue, I'd like to make a couple of comments.

1. Commission sales can be a great way to make a living. But anybody who bases his commission on anything but percentage of the gross has a fool for an employee. Need proof of this? Check out any of those high-grossing movies. Amazing how not one of them makes any money. You could have 25% of the net, but if there is no net then you have nothing.

2. As an outside contractor you are between a rock and a hard place with your friend. You have all of the drawbacks of being an employee, and none of the benefits. You can be screwed at anytime given the circumstances as presented.

Somebody suggested setting up your own company. To me that makes the most sense, and it's how party planners of all stripes work. You are the person/company the client deals with. You are the one who determines costs. You are the one who bills and collects the fees. And you are the ones who get referrals from successful events.

The fact that you are not a caterer, not a tent supplier, not a wedding cake baker is all irrelevent. Your job is to make sure that those specialists are available.

Were it me, that's the route I would take.


----------



## foodpump (Oct 10, 2005)

A big "Amen" to all that KY. 
I might also add if commission were based *only*on F&B sales, there is no incentive for the salesperson to "upsell" on other services like rentals, better grade of china/glassware, dance floor, PA systems, --basically all the extras that can bring in just as much--or in some cases --even more than the F&B.


----------



## kyheirloomer (Feb 1, 2007)

In some cases, Foodpump?

With a lot of those line items we're talking as much as 45% margins. I don't think anyone is getting that out of F&B. 

But I do wish Gina would come back and explain further. 

Unless she's talking strictly about referrals, in which she's paying sort of a finders fee, the whole deal doesn't make sense to me. And even then, there should be a uniform commission.

What I especially don't understand is this: Who is the client working with? From the little info provided we can conclude that I'm the contact point. You come to me to book an event. But I'm just a food & beverage sales rep. Do I then send you to a different person to do the actual planning
and implementation? Or am I expected to serve that function, but not get recompensed for it? As you say, my incentive would be to up the F&B costs, so as to maximize my income. But what do I care about the plates, and the decorations on the table, and the PA system, etc. 

Is a puzzlement.


----------



## ginamiriam (Feb 25, 2005)

When my company was small, I hired an outside firm to cold call businesses for me and to get me appointments with the decision makers. I would then go on the appointments with a menu and sample and pitch our services. 

They were paid per qualified lead. I was able to limit the amount of leads I got per week so I could control my costs. 

This is just another way to do it. 

To answer your question KY, we do both social and corporate catering. When one of my sales people brings in a new corporate client, their commission is ongoing (kind of like the residuals an actor gets every time one of their movies is played) so that commission is less then if they were to bring in a wedding. The wedding commission is a one shot deal and is higher. 

Is it fair? It is to me. And my sales staff has no complaints. It is a nice steady source of income whereas social catering is not so steady. Gina


----------



## ginamiriam (Feb 25, 2005)

One other thing. Our sales staff are not just paid commission only. They are paid an hourly rate when they are in the office or on the road, are compensated for gas, and when they work the event (and I am talking social events like weddings), they are paid a flat rate - a very good flat rate - to run the event. This is all on top of their commission. 

We also give bonuses for planning special events or for an especially good job.

What motivates them to upsell? Upselling is part of the job. So if they want to keep their job, they upsell. We compensate our staff well and we treat them well because we value their services. In return, I expect them to do the job they were hired to do. And btw, I have a great staff!!!! Gina


----------

