HomeMy WebLinkAboutCSD-06-090 - Bingemans Inc Food Services Agreement Extension
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Community Services
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Report To:
Date of Meeting:
Submitted By:
Prepared By:
Ward(s) Involved:
Date of Report:
Report No.:
Subject:
Community Services Committee
June 26, 2006
Keith Baulk, Director, Enterprise
Kim Kugler, Manager, Kitchener Memorial Auditorium Complex
All
June 15, 2006
CSD-06-090
BINGEMANS INC. FOOD SERVICES AGREEMENT
EXTENSION
RECOMMENDATION:
That approval be granted to extend the current food and beverage supply agreement at
the Kitchener Memorial Auditorium Complex for an additional two year period as
permitted in clause 2.2 the current food services agreement with adjustments as outlined
in CSD report CSD-06-090; and further
BACKGROUND:
That the Mayor and Clerk be authorized to sign the amended agreement subject to the
satisfaction of the City Solicitor.
In August 2003, the City entered into an agreement with Bingemans Inc. to provide food and
beverage services for The Aud. The agreement was for three years with an option to renew for
an additional two years. The established licence fee in the agreement was for 23% of gross
revenues for food and beverage sales and 12% of gross revenues for catering with an annual
minimum guarantee of $340,000 plus annual inflationary increases.
The annual gross revenues for food and beverage including all catering for the past 3 years is
as follows:
Year
Total Revenue
2003-04
2004-05
2005-06
$1,374,367.52
$1,510,222.52
$1,367,003.36*
* (estimate to contract year end)
The City received the minimum guarantee for year one and two and will receive the minimum
guarantee for year three. Annual payments to date paid to the City are as follows:
CSD-06-090
- 2 -
Year
Citv Guarantee
2003-04
2004-05
2005-06
$340,000
$348,000
$357,212
REPORT:
Bingemans Inc. has provided an excellent service to the patrons and organizers using the
facility. They have been able to improve the quality of food and increase the speed of service
during their three year term operating the Aud food and beverage services.
As per the requirements of the agreement, Bingemans Inc. sent a request to the City to meet to
discuss two year extension of the food services agreement. Items of discussion during several
meetings between the City and Bingemans Inc. focused around event attendance along with
revenues and payments. Bingemans Inc. Management wanted to continue providing food
services for the Aud but they wanted a way to secure and grow revenues during the next two
year period of time. Event scheduling and attendance is out of the control of Bingemans Inc.
and so is the length of the hockey season for the Kitchener Rangers Hockey Club so they were
looking for a way to reduce their risk and grow their business.
City staff and Bingemans Inc. agreed that the two year extension would be beneficial for both
parties with the following amendments to the financial terms of the agreement: no inflationary
increase on the minimum guarantee of $357,212 for the two year extension period and a 20%
capital administration fee be paid to Bingemans Inc. to administer food and beverage capital
project (the fee is not to exceed $9,600 per year).
In addition, a minimum overall event attendance clause will be developed and included in the
agreement.
FINANCIAL IMPLICATIONS:
The City would receive no inflationary increases in food and beverage sales for the additional
two year agreement term but the annual warranted payment for the next two years would be
$357,212 for a total of $714,424. Capital purchases would include an administrative fee to an
upset limit of $9,600 to offset the administration fee paid to Bingemans Inc. to implement the
food and beverage capital purchases program.
CONCLUSION:
By exercising the option to renew the food services agreement with Bingemans Inc. for the next
two years the City is able to continue to provide an excellent service and product to the
customers utilizing the Aud in addition to meeting revenue targets. Staff are recommending the
agreement be extended for two years with the financial amendments outlined in report CSD-06-
090.
Don Chapman, Acting Director
Enterprise Division
AP