Regardless of where you host your banquet, you’re going to be faced with having to sign a food and beverage (FNB) contract that may not be in your best interest. Knowing what to look for is the key to understanding the contract.
We have listed the most important parts of a food and beverage contract below along with advice from event planners.
Assuming that you have decided on a banquet house or a hotel to host your dinner, one of the first questions that will be asked is about your booking guarantee.
So what is a booking guarantee?
This is the number of people that you are guaranteeing to attend the banquet.
Why is this number so important?
For one thing, your menu pricing will depend on a number of people you are guaranteeing to the hotel or banquet house. The larger your event, the greater the discount.
Another reason why an accurate booking guarantee is important is due to the attrition rate. If you guarantee a 100 people and your attrition rate is 80%, then the hotel (banquet house) will expect payment for at least 80 meals.
But I don’t know exactly how did people attend?
Most events are planned at least a year in advance so this is a common problem to have. If the event has been organized before, then have the previous planner provide you attendance details. If this is your first event, then estimate a 50% attendance and let the hotel know that you will adjust the guaranteed number as you get a better idea of attendance.
Make sure that you are able to increase or decrease booking guarantee at least one month before the event without any penalties. In fact, if your event is less than 100 people, then you should be able to change the booking counts up to two weeks before the event.
Your food and beverage contract should include all agreed-upon details in regards to your banquet set up, full menu, pricing per person before tax and gratuity, and estimated final bill. If you selected specific colors for your linens, these should be included as well. Here is an example of what the details should look like in the BEO (Banquet Event Order) section.
Deposit and Cancellation Amounts
There should be a section of the contract that explains the deposit amount and the payment schedule for the banquet. Most banquet houses and hotels will require full payment at least one to two weeks prior to the event. They also require a deposit (usually 10% of the estimated final bill) at the time of contracting.
You should also look for a cancellation clause in your food and beverage contract. This clause should explain how late you can cancel the event without any penalties or loss of deposit. It should detail what the penalties would be should you cancel the event without enough notice. Most cancellation clauses require a 6 to 8 week time frame.
if you’re going to have audiovisual needs (projectors, microphones, speakers ), then make sure that every equipment required is included in this contract along with pricing and any associated set up fees (Most hotels or banquet houses will waive this if you ask).
Make sure the contract states that you will receive the equipment in working order. Should the equipment failed to perform, hotel will have the problem rectified in less than an hour. Should the hotel not rectify the issue, a penalty will be assessed as a percentage off the bill or a set amount.
While many hotels will not let you bring your own audiovisual equipment, it pays to just ask if this is a possibility. Bringing in your own projectors or microphones is far cheaper than renting anything from the hotel.
Tax and Gratuity
Your menu pricing will not include the tax or gratuity. Make sure you know what the percentages are for both and remember that the gratuity is taxed as well. Have the hotel provide you and estimated bill before taxes and after taxes so you can budget accordingly.
FYI – gratuity has been hovering around 20% and sales tax around 8% nationwide so you can expect to pay 28 % above your menu prices once these are added.
Discount Due to Hotel Rooms
Menu prices can be discounted anywhere from 10 to 20% if you are blocking hotel rooms for your event.
Many hotels will use a sliding scale discount that bases the discount on the number of hotel rooms paid for. This can make a significant difference and you should absolutely take advantage of it.
Here is a sample of what a sliding scale discount will look like if you are planning a banquet at a hotel.
Paid Hotel Rooms: 40
F&B Discount : 10%
Paid Hotel Rooms: 40-80
F&B Discount : 15%
Paid Hotel Rooms: 80+
F&B Discount : 20%
Their functions space details should be part of the hotel contract as well and should include specific rooms, dates, and times that you will have access. The contract should state that room changes will not happen without your approval.
Many hotels will charge a set up and/or a breakdown fee. This can be waived so long as you ask. In addition, you can expect a discount on the function room rental if you’re blocking hotel rooms for your event.
If you’re hiring a hotel recommended DJ for your banquet, then make sure the times, dates and pricing are included in the contract.
If you’re bringing in your own entertainment, make sure the the food and beverage contract specifically states that you are allowed to do so without any penalties.
As long as you look for the details above in your food and beverage contract, you should get no surprises during your actual event. As always, it is prudent to get to the hotel or banquet house a few hours ahead of time to make sure the banquet details are being observed. Getting there ahead of time will also allow you the opportunity to finalize your bill.
What should you do next?
Since you are planning a meeting, learn how the secret to getting the lowest group rates for hotel rooms. You’re guaranteed to save money!