Clarion Food Service Management Group Stands Against Outsourcing

The managers of corporate food services and related hospitality services often make a mistake when they outsource these services by accepting the vendor’s “standard contract,” says Tom Mac Dermott, president of Clarion Group, a food service management consulting firm.
“Don’t accept this contract,” he advises.  “It’s one-sided and not in your favor.  This isn’t the same situation as renting a car or buying a computer program where your options are take it or leave it.  A corporate food service contract, worth from several hundred thousand to many millions of dollars in sales, is much more important to the vendor than an individual customer is to a car rental company”

“In our practice, when we’re helping a corporate client select a food service operator, we turn the tables and present the vendor with our ‘standard contract,’” Mac Dermott says.  “We draft the contract in collaboration with our client’s attorney to ensure it’s fair to the vendor, but clearly delineates the vendor’s responsibilities and fully protects our client’s interests.”

“We’ve developed our contract format over two decades of corporate food service consulting and adapt it to each client’s specific circumstances,” he says.  “Then we negotiate the final terms and conditions with the vendor, with our client’s participation and final approval.”
Food service operating agreements used to be simple two- or three-page documents, but changing times and circumstances in the food service industry, government regulations and other factors have dictated that these agreements be much more detailed, according to Mac Dermott.

Some important points a manager responsible for the corporate food services should consider when drafting and negotiating an agreement with a food service vendor:
• The vendor’s responsibilities should be clearly defined and the vendor should agree to perform its services to a high standard, defined as clearly as possible.
• The vendor should be an independent contractor, solely responsible for its employees and for its actions and not able to act as an agent for the client company.  (If the vendor makes purchases or other commitments as the client’s agent, the client can be held liable for the vendor’s unpaid debts or other commitments.)
• The vendor has sole responsibility for the food it serves, from the farm field to the diner’s plate.  Its program for ensuring the food it serves is wholesome, healthy and safe for consumption should be clearly described in the operating contract.
• Financial terms should be unambiguous, including the contractor’s responsibility for producing accurate operating statements promptly and providing satisfactory supporting material for its claims for reimbursement of costs.  A contractor can produce financial statements within 10 days of an accounting period’s end date.
• Contractors receive rebate payments from their vendors, which they keep as additional income and do not disclose to clients.  We have negotiated for our clients to receive a share of these rebates.
• The contract should be enforceable in the client’s home state, not the vendor’s.

“These are just highlights of the terms a corporate food service contract should include,” Mac Dermott says.  “In our role as consultants, we level the playing field for our clients in their dealings with food service contractors because we know the players, their tactics and objectives.  We ensure our clients have comprehensive, fair and enforceable contracts to guide their relations with their on-site service operators.”  

            XXX

About Clarion Group

Clarion Group is an consulting firm that advises companies, professional firms, colleges and universities, independent schools and institutions in the management, operation and improvement of  their in-house employee/student food services, catering, conference, lodging and related hospitality services throughout the U.S. and Canada.

For information, contact:
Tom Mac Dermott, FCSI, President
Clarion Group
PO Box 158, Kingston, NH 03848-0158
603/642-8011 or TWM@clariongp.com
Website: www.clariongp.com