How much profit share to offer...

[JD McGee]

I'm thinking of partnering with a local restaraunt/pub owner to sell bbq at his place. I plan to offer a share of my profits from the bbq and sides that I prepare and sell in exchange for the use of the prep, storage, and serving facilities and am looking for a fair cut to offer. I'm thinking 25% of everything sold at the restaraunt and 10% of my catering...too much..too little...what say ye...

Thanks,

JD

[Bbq Bubba]

2 words.

Flat rate.

[BigJimsBBQ]

JD - Why not just pay a set cost per month and sell him your Q to sell seperate. I tend to not work with % cuts as never goes good. I recomend set a cost for your product and a price you will pay for using the kitchen only.

[JD McGee]

I can understand how the flat rate/established price would work well for the business owner...he/she will be getting their share regardless of sales. I am just starting out without any clientèle or future gigs in the near future and will be depending on the pub's customers and advertising (banner, website, menu, word of mouth, etc.) to help establish myself in the community. If I don't have sales...the cash comes out of my un-employed back pocket...and mama ain't gonna have none of that!

If I offer profit sharing...at least there will be incentive for the pub owner to advertise and sell instead of not caring because he/she is gonna get paid regardless...I see it as a win/win situation for both sides. The pub owner is not out a cent for start up...I provide all the meat, rubs, sauces, sides, etc. If the pub sells a plate for 10.00...he just made 2.50...If I do an off site catering gig for 500.00...the pub just made 50.00 just for letting me use the kitchen and refrigerator for a couple of hours.

[landarc]

JD, the way I would do it if I was looking to share an office is this.

1. determine what it would cost flat rate.
2. estimate how much you think you will sell for the first 6 months
3. determine how much you need to reinvest into the business
4. determine if $0 pay is acceptable, if not, determine what you need. (hint: $0 is the right answer)
5. base your percentages on the above numbers.

I have seen these types of arrangements work out well for people, it is not the best way, but, it works. In the end, you should want to get out of this arrangement after one year. It is always easier to manage a business with fixed overhead. AMAP

[JD McGee]

Originally Posted by landarc

JD, the way I would do it if I was looking to share an office is this.

1. determine what it would cost flat rate.
2. estimate how much you think you will sell for the first 6 months
3. determine how much you need to reinvest into the business
4. determine if $0 pay is acceptable, if not, determine what you need. (hint: $0 is the right answer)
5. base your percentages on the above numbers.

I have seen these types of arrangements work out well for people, it is not the best way, but, it works. In the end, you should want to get out of this arrangement after one year. It is always easier to manage a business with fixed overhead. AMAP

Not gonna argue with that point... For now as a part-timer still lookin' for a day job I'm hoping for some sort of low overhead arrangement with an established business that would like to add bbq to their menu. If it doesn't happen...I'll keep doing the private gigs on my own...perhaps one day I'll go with a brick-n-mortar myself.

[lazybonesmoke1]

Who's going to pay for the waitstaff? Are you going to use his plates, silverware? Who is paying for the dish washer? If all you have to do is cook the que, serve it and count your money then that is not a bad deal. I would start out with 15% of sales and 10% of catering sales though. Then see what happens.

[JD McGee]

Originally Posted by lazybonesmoke1

Who's going to pay for the waitstaff? Are you going to use his plates, silverware? Who is paying for the dish washer? If all you have to do is cook the que, serve it and count your money then that is not a bad deal. I would start out with 15% of sales and 10% of catering sales though. Then see what happens.

I will be helping him/her pay for everything with the profits he/she makes from selling my que...

[HBMTN]

Not a pro here, but I like the idea of paying the owner rent and him buying Q from you. That way you know what you are up against from the beginning. Could get touchy 1000 ways otherwise. Lots of what if's could happen. Had a friend who is a sherrifs deputy, he came across one of these good deals renting a home frome an elderly couple. The agreement was no rent payment if he would keep the grass cut and a little maintenance he and there. The elderly couple lived on this farm as well, before it was over he was bailing all the hay tending farm animals and even ( no lie ) cutting the old mans toe nails. He would get home at night and the old man had a three page to do list every night.

[TN_BBQ]

Offer him a little less and see if he'll take it. He'll let you know what the right amount is.

[landarc]

Hogback, you make a good point, but, this gets to the fact that you should always have a good contract. Always have a good detailed contract. I have seen other folks use the kind of deal JD is talking about, it is not uncommon. Just go slow and make sure you discuss all possibilities.

Oh, JD, up in Humboldt, they have a junior college that has a program for restaurant and food services, and that program has a building that start up food businesses can rent the commercial kitchen on an hourly basis, they even offer a business address and storage space. Just a thought as things evolve, you could look into that.

[JD McGee]

Originally Posted by HogBack Mtn Comp BBQ Team

Not a pro here, but I like the idea of paying the owner rent and him buying Q from you. That way you know what you are up against from the beginning. Could get touchy 1000 ways otherwise. Lots of what if's could happen. Had a friend who is a sherrifs deputy, he came across one of these good deals renting a home frome an elderly couple. The agreement was no rent payment if he would keep the grass cut and a little maintenance he and there. The elderly couple lived on this farm as well, before it was over he was bailing all the hay tending farm animals and even ( no lie ) cutting the old mans toe nails. He would get home at night and the old man had a three page to do list every night.

I don't mind bailing hay...but I draw the line at toenails!

Originally Posted by landarc

Hogback, you make a good point, but, this gets to the fact that you should always have a good contract. Always have a good detailed contract. I have seen other folks use the kind of deal JD is talking about, it is not uncommon. Just go slow and make sure you discuss all possibilities.

Oh, JD, up in Humboldt, they have a junior college that has a program for restaurant and food services, and that program has a building that start up food businesses can rent the commercial kitchen on an hourly basis, they even offer a business address and storage space. Just a thought as things evolve, you could look into that.

Nothing like that around here...(that I'm aware of)...we have a lot of wineries and micro breweries though...and they like to serve good bbq. Steve Raichlen was cooking at one last summer...I'd like to get a few of those gigs! I'm putting together a portfolio of SouthPaw BBQ to hand out to prospective partners...we're talking reputable places here. No dives...I'll leave those for Guy...

[txschutte]

If i get my building, I'll let you in for 51%, and you buy the beer....oh, and the pretzels.

JD, you are a good guy and a great BBQ'er. You have 95% of the stuff to do a temp site market (If your HD allows it).

Excite the senses of your future clientele. Wanna know how I got the bars to buy my Q? I gave a free plate from the vending site to the drunkest farker I seen coming out of one, as long as he went back in gnawing on a rib...

I sold 15 rack that night at $18/ea.

Put your face, your BBQ into someone else's face. Cards flyers and evry bulletin board you can find.

And then, get your temp 3 day license and advertise ribs or whatever for 3 days only! Create Hysteria...it works everytime!

[Jerk Pit Master]

JD, you mention share of profits, but you calculated share of sales. Share of profits covers you better, but calculations can get tricky and sticky.

Here's my take. Offer 10% of all sales for rent For everything else that the owner is throwing in (staffing, utilities, equipment) or doing have him charge you for that. Charges not to exceed another 10% of sales. You maximum outlay is 20% of sales.

Good luck!

[JD McGee]

Originally Posted by txschutte

If i get my building, I'll let you in for 51%, and you buy the beer....oh, and the pretzels.

JD, you are a good guy and a great BBQ'er. You have 95% of the stuff to do a temp site market (If your HD allows it).

Excite the senses of your future clientele. Wanna know how I got the bars to buy my Q? I gave a free plate from the vending site to the drunkest farker I seen coming out of one, as long as he went back in gnawing on a rib...

I sold 15 rack that night at $18/ea.

Put your face, your BBQ into someone else's face. Cards flyers and evry bulletin board you can find.

And then, get your temp 3 day license and advertise ribs or whatever for 3 days only! Create Hysteria...it works everytime!

Now THERE'S a plan that just might work!

Originally Posted by Jerk Pit Master

JD, you mention share of profits, but you calculated share of sales. Share of profits covers you better, but calculations can get tricky and sticky.

Here's my take. Offer 10% of all sales for rent For everything else that the owner is throwing in (staffing, utilities, equipment) or doing have him charge you for that. Charges not to exceed another 10% of sales. You maximum outlay is 20% of sales.

Good luck!

Thanks for brainstorming with me folks...I'm just tossin' out ideas to see what sticks. I'm not used to being idle...(no day job)...once I knock out all my wife's honey-do's I'm gonna be goin' apechit lookin' for something to do. If I can get in to a decent relationship with a pub or restaurant that would like to add bbq to the menu it would keep me off the streets and out of the unemployment line!