Developing a Request For Proposal

Introduction

• In order to provide a complete and comprehensive proposal/bid process, the liaison must collect the data on the current food service operations.

• This is important in the evaluation of the responses whether you provide the information to the bidders or not.

• It is also important for you to share the business philosophy of your food service operations. Is it treated as a benefit or a convenience to the employees?

• Timing: Should begin this process at least 6 months before current contract expires.

Glossary of Terms

1. Sales: sales less applicable taxes

2. Contract Expenses: food, beverage, labor,

operating expenses, management fee (if

applicable)

3. Management Fees: Amount paid to Contractor

for providing the services, in a management

fee account. (Risk largely resides with Client)

4. Commissions: Amount paid to Client in a P&L

Account (Risk largely resides with Contractor).

5. Subsidy: Amount by which total expenses

exceed total sales. Typically in a management

fee account

Glossary of Terms Continued

6. Profits or Losses: Amount by which total

expenses exceed (loss), or are less than (profit)

sales.

7. Participation rates: Total customers divided by

total site population, expressed as a

percentage. Typically tracked by meal period.

8. Food Production and Waste: Food production:

System used to forecast amounts to be

produced each day, and then prepared.

Waste: The amount of produced foods not

purchased in a given meal period.

9. HACCP (Hazard Analysis Critical Control

Points): Program developed to ensure food is

safely prepared and held in storage; tracks the

flow of food throughout its processing at the

foodservice facility, from purchasing to serving.

Information To Be Collected

• Sales- separate by type. Cafeteria, Coffee Shop, Office Coffee, Vending, Catering, etc.

• Expenses- track by type. Labor, food, direct (it is helpful to know what you and your contractor are paying for in detail- benefits as a % of labor, computer expenses, facility related expenses, small wares, equipment)

• Contract Expenses, Management Fees, Commissions, Subsidy or Profits or Losses

• Building Populations by month and also projected changes

• Average checks (“transactions”) by meal period

• Customer counts and participation % per meal period

• Type of building- operation center, manufacturing, corporate office, other

Options for Disclosure

of Company Information in RFP

• Full disclosure- you provide all the current data that has been collected on the current operations. This approach gives transparency and makes the bidders tell you why they are providing different results and how they will get there. It is more likely that you divulge the major cost center totals in a management fee contract. Caution- if things change, and they will over the contract term, successful bidder may want to renegotiate. Especially important with Catering Sales as this can shift the profitability so you should have parameters in place to address.

• Very little information is provided. You just provide the basic building populations, facility layouts, sales and customer counts. Caution- if you do not have a thorough understanding of Dining operations, you may not be able to evaluate all of the responses and understand which is the most realistic.

RFP Table of Contents(This is a sample table of contents)

1. Scope of Services

2. Overall Foodservice Requirements

3. Management of On-site Foodservice

a) Cafeteria, Catering, Kitchen

b) Office Coffee

c) Vending

4. Kitchen Equipment & Maintenance

5. Personnel

RFP Table of Contents-(cont)

6. Sanitation & Safety

7. Key Performance Indicators

8. Contract Basis

9. Accounting

10. Insurance

11. Terms & Conditions

12. Bid Submittal Requirements

1. Scope of Services –

Outline contract by service type

• Management of the Cafeteria and Kitchen Operations

• Management of Office Catering – is this exclusive or will other companies be able to provide the service?

• Office Coffee

• Vending Machines

• Company Store

• Conference Services

• Reception Services

2. Overall Requirements –

Summarize Expectations of the

Contractors Responsibility

• Understanding of Company Service and

Quality

• Quality, Service and Cost Management

• Safety

• Technology

• Sanitation

• Vendor Management

• Surveys and Audits

• Training

3a. Management of On-site

Foodservice

• Cafeteria, Catering, Kitchen– Describe expectations for each segment

and facility area - site specific information required

– Price/Portion guides: to be agreed and reviewed how often (Once a year, once every other year)? Are there limits on increases by %? How does this compare to the outside retail market? Are Market Basket comparisons done and how?

– Menu Expectations (rotation, seasonal menu’s, employee preferences)

– Participation Rates- Expectations

– Food Production and Waste

3a. Management of On-site

Foodservice

– Procurement (food, beverage and

supplies purchasing)

– Survey Metrics- who administers the

survey

– Nutritional Labeling, Healthful Food

Choices

– Support Team- registered dietician,

accounting, management structure,

marketing, i.e. resources

– Environmental/Sustainability Initiatives

3b. Management of On-site

Foodservice

• Office Coffee

– Ordering procedure for coffee and

supplies

– Equipment, (new/used, leased/owned)

– Cleaning of equipment

– Billing, part of P/L or separate?

3c. Management of On-site

Foodservice

• Vending

– Type of machines, (new/used,

leased/owned)

– Cash/Cashless

– Repair & Maintenance

– Product Requirements, (Brands, Wellness)

– Bottle vs. Cans, (Coke vs. Pepsi)

– Price Increases

– Commissions- what % and how are they

returned? Part of the P/L or separate?

4. Kitchen Equipment & Maintenance

• Preventive Maintenance and Inspections-contracts, financial responsibility

• Repairs- process and financial responsibility

• Cleaning of Equipment

• Replacements- who selects, bids, purchases, pays. Who owns the asset and how is it depreciated? If the vendor purchases, what is the buy back agreement? Or, do they own?

• Tracking and monitoring repairs, maintenance and replacements

5. Personnel

• Management and Staff

– Organization chart

– Responsibility of contractor/supplier

• Employees must be a US citizen or must have

current work permit

• Employees must adhere to company/facility

code of conduct, and security regulations

• Health standards and drug screening

• Client can have an employee removed from

premise for any reason

6. Sanitation & Safety Requirements

• Space will be maintained with the highest

industry standards including applicable

federal, state and municipal laws, codes and

regulations.

• OHSA Requirements will be maintained

• Copy of contractor’s safety training material

will be submitted

• Food Safety – HACCP procedures followed &

documented

7. Key Performance Indicators

• KPI’s: Expectations need to be specified and

mutually agreed upon, such as:

– Operational KPI’s

– Customer Satisfaction

– Financial

– Others

• Examine Current stats

7a. Key Performance Indicators

• Examples of KPI’s

– Participation (for RFP submittal and also after

award)

• Breakfast, Lunch, Dinner

• Check average / Meal period

– Other KPI’s (for later—after award)

• Transactions per hours worked

• Costs per hour worked:

– Labor cost

– Product cost

– Total operating costs

8. Contract Basis

• Determine and fully explain what type of

contract your firm is willing to enter into.

– Management Fee

– Profit/Loss

• Once your firm has accepted the principles of

each of the contracts, then you can

determine and express the particular

– Management Fee

– Fixed Fee

• Fee with Incentives / Penalties (Service

Level Agreements)

– Subsidy Cap

– Profit /Loss

• Commissions

• Profit – who retains, split %

9. Accounting

• Describe the firm’s expectations of how the

overall accounting and reconciliation will be

conducted. Also, include who will bank

funds, use armored service, pay taxes, etc.

• A period/monthly operating report will be

furnished by contractor to client liaison with

14 days of close of period/month.

9a. Accounting

• Period / Monthly Operating Statement/Report

• Net Revenue

– Include Revenue from each

operating segment

• Food Cost

– Detail of Food Categories (Meat,

Groceries, Beverages, etc…

• Labor Cost

– Management, Hourly,

Benefits/Taxes

• Supply Cost

– Include a Detail of Accounts (Paper,

Cleaning, Small wares, Advertising,

etc….

• Management Fee

• Subsidy

• P/L

• Action Plans – last month’s results, next

month’s plan

9b. Accounting

• Weekly Operating Report

– Provided within 3 business days after

close of business week

• Daily Revenue – Each Category

• Catering bookings recap

• Customer Counts

• Labor Hours

• Weekly Food Cost

• Weekly Supply Expense

• Unusual events (weather, holidays,

equipment problems)

10. Insurance

• The following insurance requirements should

be supplied by vendor. Requirement

amounts will vary by Corporate Standards.

– Employers Liability and Worker’s

Compensation

• $ per Accident

– Product Liability

– Comprehensive General Liability

– Automobile – (for multiple location sites,

or off-site Catering)

11. Terms & Conditions

• Prior to entering into a contract, a list of

what is expected should be clearly written,

defined and submitted to the contractor.

Sufficient time through good knowledge and

a partnership / entrepreneurial spirit should

drive the process of finalizing the contract.

11a. Terms and Conditions

• Term

– Date and Length of Contract, renewal

procedures (avoid automatic renewal),

maximum term

• Termination

– Either Party __ Days (60 days minimum),

Cause or No cause

• Payment Terms

– Payment terms of __ days (30 days

minimum) from the date of invoice,

discounts for early payment, electronic

funds transfer

• Notice

– Written (Registered Mail) and contacts.

• Confidentiality

– Information provided/received is strictly

confidential

• Proprietary Information

– Both Parties

12. Bid Submittal Requirements

• Typical Sections

– *Bidder References and Company

Information

– *Concept Descriptions and Menus

– *Unit Staffing and Organization Chart

– *Cost Information and Financial Projections

– Labor and Training Practices

– Food Safety and Sanitation Practices

*Note: These are critical sections; others can

be requested from the awardee.