Consigning Desserts to a restaurant, 50% too much?

Reply Mon 2 Oct, 2017 12:03 pm
I'm a small at-home bakery. I am currently making small desserts for a local restaurant and selling them for $1.50 each. This is not very much profit for me because they cost me $1.00 to make. Recently I talked to the manager of the restaurant and she said the owner loves my desserts and wants to put me in charge of the entire dessert case, he wants me to decide want I want in it, make everything, throw away things as needed etc. He wants to pay me a percent of the profit, not pay me per dessert like before. I have not spoken to the owner yet, and want to give him an answer soon, is asking 50% of profits too much or too little? I would basically be consigning desserts out so I would have to just eat the profits from desserts that didn't sell or need to be thrown out. Is this even a good idea?
Reply Mon 2 Oct, 2017 12:20 pm
Here's an idea. Get a friend (several friends, if you can swing it) to go to the restaurant and hang out a bit. As in, they get a coffee and they linger, or even have a full meal. What you want is someone to be there near or at closing time.

They need to do this several days in any given week. Hence it's easier if it's several people.

You might need to sweeten the pot and offer something for their troubles.

Anyway, the concept I've got (and I am not in your line of work) is to get a look at the demand for your products. Is the restaurant sold out of cupcakes by noon? Are they throwing half of the lemon meringue pie out at the end of the day? Is Sunday a great day for croissants? You get the idea.

The reasons for this are: (1) you want to get an idea of demand so you know what to bake on any given day. If Sunday is croissant day and you supply twice as many croissants as on the other 6 days of the week, then you might be able to sell that much product.
(2) You want to really see what they're tossing at the end of day. If you supply, say, 100 items per day (to have a round number), then currently you are making $50 (e. g. 50 cents per item), and you are making that irrespective of how many items of those 100 are sold. If you take this deal and start making 75 cents per item but are only selling 50 items, your take would be $37.50. As it stands now, you're paid whether an item sells or not. Under the newer system, you're stuck if you can't move product. Hence this is why I am suggesting what is essentially an analysis. You want to know if you're just going to flush all of your bear claw money down the can if no one buys them.
(3) I am suggesting you bring in friends, etc. to observe so that you get an honest assessment.

But you also need to contact the restaurant and ask them if they have any records of sales, broken down by day, if they have data that's that granular. If they don't have data, at least have a conversation with them, but not just with the owner. Talk to the hostess or cashier, whoever is the one to take the desserts out for someone who requests them. Find out from them what moves, and when.

Do this (or something like it) before agreeing to anything.
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Reply Mon 2 Oct, 2017 12:55 pm
It may be too little, depending on what each of you is bringing to the table. You are bringing the product and management of the inventory. The owner is providing a good location and utilities. Who is paying the workers to staff the counter? How is the money collected? Are the servers adding desserts to the bill or is your little stall responsible for collecting dessert money. Who does the accounting and allocates money to each side? Who eats the cost for desserts not sold (likely you)? If you are responsible for all of that and the owner is just essentially renting you a booth in a good location, you should get the lion's share, perhaps just paying a fixed rent. If the owner is doing everything and you are just providing food and managing the product line, then probably less. A fair question to ask is "how much money does the dessert counter take in?" This is part of due diligence on your part. You don't want to do more work and get less money. If you sell this restaurant 100 desserts a day, you make $50. If you put in an hour extra a day to manage the counter, you better be making more than $70/day and make sure your other customers aren't impacted. (As a skilled manager, you should bill out $20+/hour.)
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Reply Mon 2 Oct, 2017 01:27 pm
What are they currently charging for your desserts? how many do you provide a day?
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Reply Mon 2 Oct, 2017 01:38 pm
He will expect you to "build" his business, but it's not clear how things would be split. Especially if you are providing wholesale to his restaurant AND handling the take-out or catering counter sales.

Your own profit margin was not high enough if it costs you $1.00 per unit. So, he paid you $1.50 per unit- to sell for how much in his restaurant? Bet it was anywhere from $3.25 to $4.50 per unit.

Now he wants you to pick up the cost of labor and product cost. Any discussion on rental space and other costs?

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Reply Mon 2 Oct, 2017 04:06 pm
When you are talking about a percentage of profits, it is a good idea for all parties to understand how profits are determined. I would prefer staying a vendor and selling each item for a fixed price.
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