Insider Tips for Finding Hidden Food and Beverage Savings

Hi there, I'm Bari Baumgardner, founder of SAGE Event Management, and today, I want to talk to you about one of the big mistakes event hosts make every single day when it comes to their live event food and beverage costs. Now, I have recently shared two other videos on common myths and misconceptions about live events, and today we're going to talk about one that I think costs many hosts money every single day. Let me tell you a quick story to give you an example.

A Common Host Theory Regarding Live Event F&B Costs and Minimums

So, recently we took on a brand new client, and we were analyzing her event food and beverage costs, her hotel bill, and how she was spending money at her live events. And one of the things I immediately noticed was she was paying rental on her smaller events, and when we talked about it, she said well I've always thought if I could just pay rental, it really saves me on not having to spend anything on our event F&B costs, so I gladly pay the rentals so I have zero liability on food and beverage.

I said, okay, that makes sense. Are you spending anything at all on your event food and beverage costs? And she said, oh yeah, well, I do host a reception, and I like to give them breaks during the day to keep their energy up, but I don't have to because I'm paying rental.

The Myth and Misconception Between Food and Beverage, and Room Rental

So here's the myth and misconception. If you pay even a little bit in your food and beverage, you can almost always offset that room rental. And think about it, would you rather pay room rental, which no attendee can see, no attendee has any idea that you've spent money with the hotel and room rental? Or would you rather spend your money on food and beverage, which allows you to wine and dine the attendee while giving them something they'd really enjoy?

As she was rightly thinking, it does keep the energy up and, it does, I think, involve some reciprocity with the attendee, which I always think is a good thing. So if you can do that in a way that allows you to make your attendees happier and saves you money, why wouldn't you do it? I think it's because most of our event hosts do not fully understand how live event food and beverage costs work from the hotel's standpoint.

How to Save Money on Your Live Event F&B Costs

So let's take a quick look at how you can save money on your live event food and beverage costs. So first of all, if you are not spending any money on food and beverage at your event, whether it's a mastermind, a group program, a three-day event, and if you are adamantly opposed to spending any money on food and beverage, then yes, you probably are going to spend some room rental, and yes, it may be better for you to do that. But if you're considering spending any amount of money on food and beverage, then you are going to come out ahead by going ahead and committing to that in advance. You'll eliminate the rental, you'll get better service from the hotel, and you'll get better concessions.

A Little Secret No Hotelier Will Tell You

Here's a little secret that no hotelier will tell you, but it's the truth. Hotels like to keep their staff working, so when you pay rental, they do make more money on it, it's 100% profit margin, which every hotel is delighted to get, but it's kind of a bummer for them if you don't do any event food and beverage, because all of these team members they pay, don't come to work, don't get paid, and don't accrue hourly hours if they're not on the floor helping to serve the food and beverage. Hotels like to keep their people happy, and part of how they do that is food and beverage. And there is actually a pretty good profit margin on food and beverage, so it's a nice little offset, which is why they're willing to swap it out in place of rental in almost every case.

Deciphering Event Food and Beverage Minimums Based on Your Audience

So if you're going to go this direction, I want you to think about how to do it. You may be thinking that an event food and beverage minimum means you have to serve breakfast, lunch, and dinner, three squares a day, but I'm not trying to convince you to serve them every meal. I think you can be really selective. Think about your audience, think about your event, the pacing of your event, and what you think would give you the most return on your investment for that event food and beverage minimum, etc.

What Counts Towards Your Event Food and Beverage Minimums?

Each of following items counts toward your event food and beverage minimums: A coffee break, even if it's just coffee and tea. Coffee break snacks for attendees, whether it's cookies, whether it's fresh fruit, whether it's bagels in the morning. All of those things count towards your event food and beverage minimum. There's also a hosted bar and, think about this, a cash bar.

How Does a Cash Bar Contribute to Your Event Food and Beverage Minimums?

A cash bar means that the attendees are buying the drinks, but every drink they buy counts towards your event food and beverage minimum. That means the attendees are actually paying for your event food and beverage minimum. So whether it's a hosted bar where the drinks are free or a cash bar, both of them count towards your event food and beverage minimums.

An Often Overlooked Food and Beverage Opportunity

And the last one, and this one people often forget, staff meals. I'm a big believer that a well-fed, well-hydrated staff is a happy staff, they'll work far harder for you if they're well-fed and taken care of. This doesn't mean putting out a massive display of food for them, but even simple snacks in the staff office that they can grab and go, or coffee and tea, or a scaled down lunch buffet to make it easy for them to grab lunch. All of that counts towards your live event food and beverage minimum.

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Steps for Allocating Your Food and Beverage Spend

So here are the steps I recommend to stay focused on how to spend your food and beverage, and how to negotiate a minimum. First, you want to look at the hotel's menu and get a good sense of their pricing, per gallon, per piece, per person, per item, per plate, etc. You want to get a sense of all their pricing, per hors d'oeuvres, all that good stuff. Then, you want to lock in the menu prices at the contract signing, so they can't change on you between the time you sign the contract and the time you have your event.

How to Negotiate Your Event F&B Minimums

Now you can do some basic negotiation. Hotels will often give you a flat fee discount, like 10% off of all pricing, or locking in this year's menu, plus a 10% discount, or even locking in a discounted rate for select items you know you want to serve. But that needs to be done at contract signing. Once you've looked at the menu, you've locked in your pricing, and you've thought through the number of people you realistically expect to have at your event. This is not your wish list, these are true goals, what number you really think are going to attend for each of those meal functions, multiply it out, do the math, and come up with a collective number.

How to Do the Math

Let's say that you're going to do coffee breaks every afternoon and you're going to host a welcome reception. You multiply all that out, look at the combined amount of food and beverage you would spend, and then I like to recommend, especially if you're new at this, subtracting 20% just to give yourself a comfortable buffer between what you realistically think you're going to spend, and what you're going to have to spend in that event food and beverage minimum.

When to Choose a Flat F&B Minimum

Typically hotels are going to charge you the difference if you don't hit your event food and beverage minimum, unless you negotiate profit margin in there, which is essentially saying if I fall short, I'll pay you your profit margin, which tends to be 35 cents to 50 cents on the dollar. That's a high-level move, don't feel like you have to do that one, but if you have a hotel willing to give you profit margin, it can limit that liability even further.

Even if you can't get profit margin, you're still going to be in a better place committing to this flat F&B minimum. And what I mean by a flat F&B minimum is you've ganged up all of your expected meal costs into one flat fee, that's what you have to spend at the hotel. Don't let the hotel force you into saying you will serve a reception at this price point for this number of people. That's a no-go. You want to combine it all together into a flat minimum.

The Benefit of a Flat Food and Beverage Minimum Option

Here's the benefit of a flat food and beverage minimum. You can choose to spend the money however you want. So let's say you change your mind and decide not to do a reception. Instead, you want to do a lunch on the first day. That's perfectly fine. When you have a flat F&B minimum, you choose how to spend the money. It doesn't matter whether you want to do coffee and tea, add snacks, cut snacks, it's totally up to you until the last 72 hours before the event. So it gives you a lot of flexibility to navigate how you're going to spend the event food and beverage costs based on the number of people you have so that limits your risk and your liability, and it allows you to provide a really awesome experience for your attendees as well.

Where to Access More Videos

I hope you've found this information valuable. If so, you can access more of my videos, including the last two in this series that covered common myths and misconceptions. The ones that occur when hosts are planning their events and the ones that cost them lots of money, for example, rooms, room attrition, and ordering food per person. You can access those videos on my blog at blog.poweredbysage.com.

The Bottom Line

Here's a quick recap. I just want to remind you, if you're thinking about planning your next event, you haven't yet committed to the hotel contract, and you're not going to be paying rental, you want to really negotiate a flat F&B minimum. It really can pay off for you, not only in spending less at the hotel, but providing a really extraordinary experience for your attendees as well.

Much like the other risk in live events, you do want to do the homework before committing to the flat F&B minimum. So do the math, be conservative, but commit in advance, and know that part of this commitment is part of being a real host and running a real live event. It does come with risk, but with careful and proper advance planning, you can mitigate those risks and save yourself a ton of money. Trust me, you can do this. Go, team, go. We'll see you next time.

What's Next?

Hosting a wildly profitable live event requires years of experience. So don't take live event planning advice from just anyone. SAGE Event Management has more than 25 years of proven experience helping their clients host profitable events while avoiding the most common pitfalls that cause them to lose money.

If you would like more information about sponsoring live events that will make (and save) you money, please request our free 3-part mini-video series now. Let us show you just how profitable hosting a live event can be.