Contracting out the club's catering - things to consider before you negotiate a deal with a caterer
21 March 2017
It goes without saying that there is an increasing focus on the type and quality of food offered by clubs. The decision on how to best provide the right food at the right price is clearly a very important one. What it comes down to is whether it wishes to engage an external caterer.
If the committee decides that is wishes to engage an external caterer to provide catering, the committee and management of the club need to decide what the club requires from the caterer. For example, how will the caterer fit in with other club activities such as functions, special club events etc?
Okay, so your club has decided that it wishes to appoint an external caterer - what is the first thing you should do?
The first thing to do is have a catering agreement prepared that reflects what the club wants from the external caterer. Often clubs will seek expressions of interest and then decide on a caterer before the agreement is prepared. There is nothing wrong with this process, but you'll be in a better position if you have decided what you want upfront and put that in an agreement that can be offered to potential caterers.
Catering agreements are complex commercial and legal agreements. It would be very unwise for a club to prepare a catering agreement itself because there is a risk that important matters may not be included or addressed. Accordingly, clubs wishing to engage an external caterer should instruct a lawyer who is skilled in the drafting of catering agreements for clubs, and who is familiar with the provisions of the Sale and Supply of Alcohol Act, the Incorporated Societies Act, The Food Act and relevant employment legislation.
The club will need to provide a variety of information to the lawyer for the agreement to be prepared. The sort of information the lawyer will require includes;
- For how long is the agreement to operate?
- Is there to be a probationary period?
- Is there to be any renewal or extension of the term of the agreement?
- Is the caterer to pay any fee for being given the right to provide catering services to the club?
- What equipment will the club be providing and what equipment, if any, will the caterer be providing?
- Who is to maintain, repair and, if necessary, replace the equipment?
- What standards for food and service need to be included in the contract?
- What types of insurance is the caterer to provide, for example public liability insurance, workers compensation insurance?
- What indemnities are to be provided by the caterer?
- What areas of the club will the contract caterer be operating in?
- Who is to be responsible for cleaning the catering area?
- Will the caterer be required to seek the club's consent before changing menus and increasing menu prices?
- What will be the minimum trading hours of the restaurant?
- Will the caterer have the right to provide the catering for all functions held at the club or only specified functions?
- What services and utilities (for example water, gas, electricity) will be provided to the caterer and who will be responsible for paying for the services and utilities?
- What rights to terminate the contract are to be included? Can the club terminate the contract by giving a set period of notice, for example six months notice?
- Will the caterer be able to transfer the contract and if so what conditions must the caterer meet to obtain the club's consent to such a transfer?
- Is the catering contractor a company, and if so who are its directors? Does any director or top executive have a pecuniary interest in the contract? Is there any director who has a material personal interest in the contract? Does the club require a guarantor?
- How will disputes be dealt with under the contract? Will they be referred to expert determination prior to any court proceedings?
Once the draft contract has been prepared it should be closely reviewed by the committee, or a separate committee delegated that task by the committee, before calling for tenders or entering negotiations with potential caterers.
(SOURCE: Bruce Gotterson, Pigott Stinson, ClubLIFE Feb 2017)
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