The Caterers Corner
referrals/kickbacks Caterers Corner: referrals/kickbacks
By Claudia (Claudia) on Tuesday, February 17, 2004 - 09:43 am: Edit

Hi, it's been a while since I have been here. I am an off-premises caterer who works at a variety of venues - private homes, historic sites and local wineries. One winery owner has been highly recommending me and just asked for a kick-back. I haven't done this before so I was wondereing how to handle the request. She mentioned 10% but that would be 10% of what? I don't itemize out when I price a job, although I figure in my estimated costs, overhead, profit margin, staff etc. My prices are per person inclusive of all of these, and yes the staff too. Then I add a gratuity and sales tax. If it is 10% of food costs does that mean my actual shopping bill? I will be meeting with this woman on Sunday so need some guidelines.

By Chefspike (Chefspike) on Tuesday, February 17, 2004 - 10:26 am: Edit

she most likely means 10% of your total take.
why don't you do a deal with her in which you give her a big break the next time she has an event, or just do something for her for free to say thank you, rather than just giving her money.
i have always felt that you put yourself into a position where you are beholding to her.
next she might want 15% or she might just start bad mouthing you.
wonder why people always want something, its sad they just can't do it to be nice.

By Chefmanny (Chefmanny) on Tuesday, February 17, 2004 - 11:39 am: Edit

If she sends you business, it's only fair she should be compensated for it, just like a sales person would be. Only; if she regularly sends "you" the business, not the individual business or person who gives her the highest amount of $$$!!!
You may need to jack up the prices of the events at that location to cover her expense, does she charge you rent by the way? If so maybe ask her to lower the rent to cover her $$$!
It's a very open ended issue, customary in this business as much as people would like to deny it!
It might be a little more discreet now since the technology to trace it has become more advanced but non the less still practiced, whether it is taking a client to dinner, sending them a case of whatever, a little cash slipped in the hand....and so on!!!
Like I said, you have to look at it as a cost of doing business if you get enough business from them!
Good luck

By Claudia (Claudia) on Tuesday, February 17, 2004 - 11:50 am: Edit

The Winery owner said she didn't want 10% of the staff costs - only the food costs. To me that means my shopping bill! Also, she charges a $3,000 site fee to the bride and requires that they purchase all white wine to be served at the wedding (between $12 and $15 per bottle) so she is already making money by booking the wedding. Brides often purchase champagne from her and sometimes even their cassis or dessert wines. (they don't make red wine) I agree that she should be compensated; I want her to recommend me but not to be greedy at my expense. Wouldn't a simple referral fee be a reasonable way to go? This just came up with another venue who also refers to me. If the clients decide they want me, but not the referring venue, I will give them $1 per person for the referral.

By the way, I did a private dinner party for her at cost and this, I suppose is the payback?!!

By Chefjohn8711 (Chefjohn8711) on Tuesday, February 17, 2004 - 12:11 pm: Edit

Why dont you give her a dinner party at her home, not only will that make you look good to her, but will help you get even more business

By Chefmanny (Chefmanny) on Tuesday, February 17, 2004 - 12:27 pm: Edit

That dinner party, you should have absorbed that you did for my opinion!
Yes, she may be getting greedy by asking you for 10% but, she's probably doing the same with all caterers going in there.
It's a personal and business decision, are you willing to not have the business from her referrals at a cost of 10%, and pass it on to the customer anyway or can you live without the business and the use of the site?????
My personal practice has been to always share the wealth because, the more I did share it; the more I got!!!! Some people think it's unethical and it may be, but you pay a commission to a sales person, I don't see any difference, other than she is also charging the guest for the use of the facility.
What about when you have a customer and they want touse the winery, how much does she charge you????
Maybe you can ask her for 10% of the rental fee if you brin in the customer!!!

By Chefspike (Chefspike) on Wednesday, February 18, 2004 - 12:41 am: Edit

but when you pay a commission to a sales person that person is working for you, where is it written that we have to give money to someone just for a referral ?
where does it stop ?
why does this women expect anything, other than shes trying to make money from everyone.
and as far as "ethical", are all kick backs ethical cause thats the way biz is done these days? is this right?

By Chefmanny (Chefmanny) on Wednesday, February 18, 2004 - 07:56 am: Edit

And when you pay the kickback, that person sent you the business without having to have them on your staff, so what's the difference?????
Now kickbacks are desensitized by calling them rebates!!!!!

By Catergreat (Catergreat) on Wednesday, February 18, 2004 - 08:46 am: Edit

I would simply ask the owner of the winery to continue to send you all her business. I would happily pay her 10% of the food bill. This is not just like a sales person, this is practically being her exclusive caterer for 10%.

I would suggest to her that you will do her private parties at no charge and deduct it from the "referral fees", this saves her income tax and she knows it. The advantage to you is her party is billed at full rate and deducted from the cash you owe her. The party costs you less than half of that. It would be a nice negotiation tactic.

By Claudia (Claudia) on Wednesday, February 18, 2004 - 11:26 am: Edit

thank you all for your ideas - this is very helpful. I am happy to pay her 10% of the food bill, not of the entire bill.(well, I'm not really happy but I think it is prudent - this winery only does 6 weddings a year and only allows a few caterers on their property.)

So it looks to me like you all agree that I am paying 10% of the food bill - That really is my question - how much of what to pay. To use an example I looked at a small wedding I did there last summer for a little more than 100 guests. Billed $6400 before tx and grty. My staff and incidental costs were about 50%, so if I had to give her 10% of the remaining 50% we are only talking $320. Is this the "food bill?" my cost and profit??

I can live with that.(face it -she's not looking at my books.) The wedding I am meeting on for next Sept. will be 250 guests.

She asked me to do that dinner party and offered to pay me. I charged her very minimally, letting her know that I was giving her a break in appreciation of her recommendations. She paid me in cash- no tax.

By Chefmanny (Chefmanny) on Wednesday, February 18, 2004 - 11:52 am: Edit

The 10% of which number, you have to work out with her!
Some ask for 10% of the total food and beverage, some for 10% of the food bill, "all is negotiable"!
Since she is getting a rental fee from the customer, she should not want a % of the total bill, the food bill may be the selling price or as you stated the food cost; I think the selling price is what she might be referring to. (I don't know), you have to find out before you make any financial commitments!!!
Maybe for the 10% you can be the winery's exclusive caterer!
Also, never mention in a public forum, "I was paid cash, no tax"!!!!!...that sort of stuff rarely happens in this industry Uncle Sam; really!!!!

By Claudia (Claudia) on Wednesday, February 18, 2004 - 08:50 pm: Edit

of course, thank you... I paid the tax when I filed my quarterly.!! I always pay my uncles.

By Chefspike (Chefspike) on Wednesday, February 18, 2004 - 10:36 pm: Edit

kick backs are crap!!!
so what is it now days, the guy with the most money wins cause he can put out more kick backs??
more money!?, is that how you guys do it now?
real the guy with the most TALENT, does not always win.
kick back there, kick back here, why don't you put that money in advertizing, local paper?, city paper?, how about the state wide chamber of commerce?, ad in a magazine?....some place where the money will help someone keep a job.
instead of the pockets of greedy pricks.
this has been a spike moument.......

By Catergreat (Catergreat) on Wednesday, February 18, 2004 - 11:14 pm: Edit

no, the guy with the most money AND the best food wins...

welcome to america

By Chefmanny (Chefmanny) on Thursday, February 19, 2004 - 08:03 am: Edit

You know what they say, it takes money to make money!
Besides advertising is gambling with your money, "rebates" are a sure bet!
By the way the greedy pricks fuel the fire, by charging way too much for their products!!!

By Chefspike (Chefspike) on Thursday, February 19, 2004 - 11:08 am: Edit

what are you guys thinking about??????
what part of your mind thinks this is a good idea?
this kind of stuff does not last, and if you relay on it for a portion of your income, then your setting yourself up for a fall. who are you going to blame then?
good biz is started and run on a good product, a good reputation and good customer relations. after that you get the word out and then you maintain the standards.
i don't think telling younger people this stuff on these threads is good for the biz of food as a whole. i could be wrong, God knows I've been wrong a couple times before.

By Chefmanny (Chefmanny) on Thursday, February 19, 2004 - 11:24 am: Edit

I'm not saying it's a good or bad idea; I'm just saying it happens!
It's been happening for years, in the old days the meat guy would drive by your house and drop off a box of beef tenders, later on cash was more prevelant, now to make it more legit for the owner operators they give you a rebate; you know buy 10 boxes get 1 free type of deal!
Hey look at G. Bush, who did he get in Iraq to head up the new oil contracts there....hid buddies!
It's not a source of income, it's gravy!!!!
I work for a public school system, some teachers have no chalk, paper or other supplies, then the board goes out and buys pieces of land under water, or in a dump for millions and guess who the buyers are????....buddies of the board member who approve the purchase. You think they're not getting a cut of those millions??????

By Chefspike (Chefspike) on Thursday, February 19, 2004 - 09:50 pm: Edit

I'm not talking about chaulk, or land or even Iraq.
I've never had the "meat" guy drop off anything to my house or car. Or for that matter, I don't remember taking anything from anyone for any reason.
It's a bad habit to get into. It's compition on a cash basis. No one wins with that. The only people that get screwed are the owners and/or the customers.
As far as teachers not having any chaulk, well they should start saying something before they open the last box. Like maybe the 3rd to last box.
If I didn't order until I was on the last box of something I wouldn't have any chaulk either.
and I like Pres. Bush, can we please keep him out of this.
Does anyone know if Flor-e-da has broken off yet and started to float away???????

By Chefmanny (Chefmanny) on Friday, February 20, 2004 - 08:42 am: Edit

It's not that they don't order, it's that there is no $$$$$ available to the schools to buy the chalk!!!!!!
You pastry Chefs are so out of it!!!!!!!!, stop sniffing that high glutten flour!!!!!
Hey, enough of the Florida humor, you have the Terminator as gov.!!!!!

By Claudia (Claudia) on Friday, February 20, 2004 - 10:33 am: Edit

a little off the track, guys. How about this: I'll offer her 10% of the food costs, making that as low as possible (40% of my pp price). I will also ask her for a deep discount on wine that I purchase from her; after all I want the food that I serve at her winery to highlight her wines and need to be able to use them in my food. And, let's face it, she also asked me to give her a good price on a boxed lunch deal for a tour group= I'm not inclined to go so low now (maybe I can get a kick-back on my own food!)

I agree- this is unethical, but the price of doing business. I personally don't take kick backs from other vendors, or mark-up when I handle rentals...The newleyweds are already spending a down payment on a house for their wedding anyway. And I still make money. I don't see the point of being greedy everytime some other vendor walks by.

By Chefspike (Chefspike) on Friday, February 20, 2004 - 10:58 am: Edit

the above sounds good.
and good for you!

and we do go off topic sometimes, but i think its only been twice in a couple of years.

Manny, Manny, Manny.....Florida asks for it. They always have, always will. You can say what you like about that Lib. Gov. we have out here. I didn't vote for him. Liberal in Conservative clothing.............(is that how that saying goes?)LOL.

By Chefmanny (Chefmanny) on Friday, February 20, 2004 - 11:56 am: Edit

Claudia, marking up the rental stuff is a given, after all you will be either putting it in place, removing it, or washing it, a 5-20% markup on rental is used by most caterers.
If the newliweds were smart they would use that wedding $$$ for the down payment on the house, in reality the parents wind up paying about 50% of the time.
Also, if you are an owner you would not want kickbacks because you are paying for them!
A kickback is usually used as an incentive given to an employee in a position to help produce business for the company providing the kickback!, if a vendor offered an owner, say like me, a kickback I would probably never use him again because he will try to get an employee of mine in a position to help him to take it!....If my business was large enough!!!
Generally speaking though owners are not offered kickbacks!

By Catergreat (Catergreat) on Friday, February 20, 2004 - 12:36 pm: Edit

one of my favorite "kickbacks" is a mutually beneficial relationship.

Claudia, you say the wine owner doesn't have that many parties. Perhaps you could bring more business to her. I would promote the angle of "tick for Tack" or "Tit for toot" or whatever the saying it.

Promote her facility, she gets her rental fee, she promotes your catering...

Offer her a deep discount on personal catering, in return for a deep discount on wines...

That should make everyone happy, including spike... eyh?


By Chefmanny (Chefmanny) on Friday, February 20, 2004 - 12:45 pm: Edit

Spike's the Kurt Cobain of the pastry Chefs!!!!
Thank God he's not 27 anymore!!!!!!!

By Claudia (Claudia) on Friday, February 20, 2004 - 03:23 pm: Edit

thank you all for this great conversation, off topic and on! I feel in a much stronger position to meet this lady on Sunday, sign a contract on the wedding with the mom and bride and move forward. I will take your advice on all points, offer her personal discounts (as long as she extends some to me) etc. I am happy to promote her site and her wines which are really good; I can offer to promote them with all my clients.

By the way, - there is no "facility." This is a site - the vineyard, its lawns and fields, and the area around the tasting room, though not the tasting room itself. The bride can use a room in the owner's house to get ready but everything else is outside. We put up a kitchen tent, reception tent, ceremony and cocktail tent, portolets, bring in all cooking equipment, tableware, etc. It is creating an elegant wedding while camping - the site gives us use of the grounds, two electrical cords and a hose. All this for $3,000 and all the white wine served - oh, right, that is extra. It is in the mid to upper range for site fees in this area. It is, of course, very beautiful...

By Chefspike (Chefspike) on Friday, February 20, 2004 - 11:32 pm: Edit

its a lawn!!!
with bushes!!!
for $3000.00 dollars???
I need to buy some property there, build a shack,
a sugar shack, and rake(you know, like on a LAWN)in the money.

By Claudia (Claudia) on Saturday, February 21, 2004 - 10:49 am: Edit

Welcome to the beautiful hudson valley, the land of outdoor tented affairs! I told my back of house manager about this and she had a mini fit. I think I better not tell my front of house- she'll be furious as well.

I am also going to point out that if I send one of my clients to the winery to buy wine, I also "expect" 10% on the sale - as one of you said early on in this conversation "where does it all end?" I am seriously considering joing up with the rest of you on the mark-up of rentals...

Wish me luck - I think this winery owner thinks I am young and a pushover. I am neither - I look young but it is all smoke, mirrors and lots of moisturizer...!

By Chefspike (Chefspike) on Saturday, February 21, 2004 - 11:02 am: Edit

Ah.... the Hudson Valley.
I remember it well.
Got drunk there several times, in some of those big houses.
got lost too ! some of those big yards.
good luck.
so what were you?, dancer, actress, singer?

By Claudia (Claudia) on Saturday, February 21, 2004 - 02:36 pm: Edit

Dancer, choreographer and before that I was a folk-singer. Always on stage, now back-stage, no applause but I am the Stage Manager. I have even had to choreograph wedding processionals when it is clear that they don't know what they are doing! Catering is just as creative and I actually make money, most of the time....unless i am kicking it back...

By Chefmanny (Chefmanny) on Saturday, February 21, 2004 - 11:22 pm: Edit

Why do all the artsi-fartsi people get into the business?????....Must be an ego thing, name in lights.......most fail, look at Britney, latest casualty, Arnold, Bruce,.......
I guess it is a type of performance!!!!!
You know this is the only business in the world that receives the raw product, processes it, and sells it under the same roof (sort of, except off-premise catering)????
Most businesses only do one or two of the above steps.
Hospitality managers are highly sought after by many major companies, the most recognizeable is Procter-Gamble, they strictly hire hospitality people, unless they're hard up then they hire anybody!!!!!!

By Claudia (Claudia) on Sunday, February 22, 2004 - 08:22 am: Edit

don't forget you also have to be a psychologist...I just spent an hour on the phone with a distraught bride whose mother was throwing obstacles in front of everything. Then I took the meeting with mom (three hours) and designed a wedding in a monastery cloister that made Mom feel happy and involved; bride relaxed, mother-in-law all cool (I signed the rehearsal dinner too.) I even gently convinced the Monastery chef to let me use all the facilities including his kitchen and walk in, when he had already told them no way. walked away with smiles and two signed contracts.

ego, MOI????!!!

By Chefhdan (Chefhdan) on Sunday, February 22, 2004 - 02:25 pm: Edit

I'm sorry,,,
I'm a little slow,,
please clarify...
."I am seriously considering joing up with the rest of you on the mark-up of rentals... "

???You're not upselling the rentals???
Who orders coordinates counts etc. etc. etc. It's not really a mark up as much as a managment fee... Tents equipment you name it throw 20% on and enjoy the business!

By Chefmanny (Chefmanny) on Sunday, February 22, 2004 - 09:18 pm: Edit

Hello, just call me Dr. Phil of the hospitality biz...oh yeah by the way that's $250 an hour!!!!!!
You better start marking up those rentals!!!!!

By Claudia (Claudia) on Sunday, February 22, 2004 - 10:15 pm: Edit

no, no I am the one who is slow. You are all absolutely right, 10% management fee here I come.

At first I was going to go over early and talk to Mrs. Wine Owner before I met the happy couple, sister and mom. But I decided it gave too much power away, plus made it seem too important. So I show up 5 minutes early - they invite me in to the house and the clients are late. So we are schmoozing, looking at my book, chatting away, having a pleasant time and I am thinking - I hope they are not sitting in on this meeting! But they left for a walk once we got settled. When they came back they were circumspect and let me do my sales pitch, prelim menu plan, etc.

Then when the clients all moved outside to walk around, I took a moment and told her that I had been thinking about her request but was still confused (10% of what) and after all my doing a wedding at her place accrued great reputation to her since I do such a good job. I said that it felt a little like "I love what you do, but pay me to tell people about it" and where would it end - if I sent people to buy wine would she give me 10% on the sale? (she doesn't want to)

I suggested we compromise on a small per person referral fee, to say thanks. I mentioned all you wonderful chefs from around the country who think it may be a bad idea, but I suppose it was the price of doing business. (sigh) We agreed to talk further. Meanwhile, when I quoted the prices, I built in a cushion to cover the inevitable.

Couple going to talk to grooms parents before signing the contract - yes it is a 50/50 split. We are talking big here - nearly 15K. And they want the rehearsal dinner too.


By Barpro212 (Barpro212) on Friday, April 09, 2004 - 06:38 pm: Edit

For vendors, I either upcharge at least 10%, but some of mine send 2 invoices; one with quoted price and mine with a 10% discount.
Being a relatively new caterer and working with certain clients that want to see everything itemized (which I don't do all the time), this is great.

I offer all of my venues a 10% kickback OR 10% discount on pre-tax food prices, their choice depending on their relationship with the client.

I also request a 10% discount on rental of premesis if I bring the clints in myeslf.

We have actually paid a friend to urge his friend to use us for his holiday party. We produced a fantastic event, they got a good price and our friend got a little extra $$ in the end.

Competition is competition, regardless of kickbacks. It makes no difference between that and a bidding war. Selling requires persistence and being able to convince your potential client that your product IS worth buying. I do realise that some caterers will do this and not give the client what they expected, but this does not bring in repeat business.

I believe in making customers for life and don't really care how I get them to begin with.

Being in NYC where my biggest competition is corporations that have $millions backing them up, you have to be a little creative and ballsy in reeling them in.

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