Stop asking us for free food.
Within the past month, we’ve had a couple large, Fortune 100 companies reach out to us, highlight our mission and importance in the community…and ask for free food.
So we’re trading a shout-out that we’re “sponsoring the meal”…for a hit to our bottom line.
Unfortunately, as honored as we are by their acknowledgment, goodwill and pats on the back don’t pay the bills – for us, nor the vendors we represent.
Everyone knows that small restaurants need much more than mom’s classic recipes to survive. According to a frequently cited study by Ohio State University on failed restaurants, 60% don’t make it past the first year, and 80% go under in five years. Restaurants pop up in New York like a game of whack-a-mole and they disappear just as quickly. But why? There are of course the usual suspects: crowded market, subpar food and service, bad people management, or a lack of accounting skills.
But we tend to overlook another critical factor: a small business owner’s individual lack of negotiating power.
Big businesses – like the ones who reached out to us – have power, and power means they’ve got leverage. They’re in a much better position to espouse the same beliefs as us, but still dictate the terms.
For small businesses, it’s much harder because they’re truly at the mercy of of consumer spending. When a large company knocks on their door looking for a favor, there’s a fear that they need to compromise in the short-term to please the customer and lock-up the business long-term.
But it never seems to work out that way. That initial discount, that early favor, becomes a permanent part of the business, and often acts as a gateway to other favors or special requests. The big company – which may in fact believe its furthering its mission of investing in the local community – instead exerts greater leverage over the small business. Instead of trading equal value for money, each special request turns into an implicit threat – “help us, or else…”
Don’t these small businesses deserve at least the consideration of full price, just like any other company for their services. Would you even consider asking Apple for a free laptop? Hell no! Would you ask a lawyer for a free session when you know they need to invest a good amount of their time researching and reading about a specific case? Of course not.
Then why should you ask that of someone who’s working minimum wage? The chef works just as hard as the developer making your iPhone, or the lawyer researching your case. They’ve also spent years training and perfecting their skills and techniques.
We certainly applaud the increased focus in the past 12+ months on diversity, inclusion, and corporate social responsibility. But to do proper justice to any of these efforts, companies need to focus on the “responsibility” part. It’s not just about voicing your support for various causes, or shifting budget around to still hit your CSR goal while keeping short-term profits in check.
If you want to truly want to invest in diversity, inclusion, and CSR, you need empathy. In this case, where either you’re coordinating a meal with a small local vendor or asking FoodtoEat to curate it, you need empathy for your supply chain. What truly goes into the food that I’m ordering and how does it all come together?
Empathy for the supply chain
While a couple (sizeable) requests triggered this post, far more common are the requests for severely discounted options. A typical day at FoodtoEat involves explaining that there really is no respectable way to feed 250 people at $3 per person (seriously), or that no, entrees in NYC are not typically priced at $10 all-in (including tax and tip).
On one hand, we know that sometimes budgets get set at a higher level, so that’s all you have to work with. But on the other, if your job is to source diverse, delicious food that will truly elevate the experience of you and your coworkers, your budget can’t be fitted for the traditional “salad and sandwich” combo.
In the food business, asking for a really tight budget means you’re taking money out of someone’s pocket. To get a sense of what restaurant operators go through, here’s a list of the myriad costs they’re juggling. This is the full supply chain of your catering order:
- Rent: notoriously high for even the smallest shoebox. Restaurants can expect to pay $120 per-square-foot in Manhattan and trendy Brooklyn.
- Utilities: water, electricity and gas. At peak efficiency, this – along with rent – comprises total occupancy, and should come in around 10 percent of monthly revenue. So if you’re paying $10k a month on occupancy, you need to be doing $100k in revenue.
- Equipment: ovens, refrigerators, fryers, freezers, and dishwashers can cost from $100,000 to $300,000 or more. This is not accounting small devices like spatulas, pots, pans. storage containers, cutlery, thermometers, etc.
- Technology: monthly subscriptions, installation and licensing fees for point of sale, the reservation system, online ordering / delivery, in-store wifi…each of these are essential pieces of the restaurant tech stack, but can quickly stack up to thousands of dollars in monthly recurring fees.
- Seating, Renovations and Decorations: each restaurant never knows exactly how much of these items will cost them. There’s always the risk of leaks and electrical complications. Oh, and that’s after you’ve already paid up for chairs, tables, lighting, art, etc.
- Salaries: The biggest line item – aside from rent – squeezing restaurants right now with minimum wage in NYC moving up to $15 an hour. Between front of house, back of house, delivery, etc., the costs here continue to rise.
- Sales, Marketing and Advertising: with so much competition, restaurants have to start spreading the word before their doors even open. These expenses vary, but mainly include web design, menu development and social media.
- Licenses, Permits and State/City Requirements: restaurateurs looking to operate in New York city are subject to a number of permits and licenses like food protection, gas authorization, waste removal, food service establishment, etc.
- Food Expenses: last but not least, at least 30% of the restaurant’s revenue gets eaten up on food and beverage costs given that it costs a week of produce around $600 for just 30 items.
Restaurants are mini factories – each one as numerous moving pieces that need to work in harmony to serve a great, consistent product…and any wrench in the works throws off the process and costs valuable time and money.
We’re not saying don’t have a $10 budget all-in. That’s totally fine. That’ll work for pizza or more cost-effective fast food options. But asking your local vendor – or a concierge service like FoodtoEat that coordinates everything for you – to satisfy a below-market request adds further pressure to a business that’s already dealing with its fair share.
Understanding the supply chain will deepen your empathy for a key aspect of the local community. And more importantly, emphasize the importance of paying a fair price for a high-quality product.
Collectively, we need to start valuing other people’s work and understand why it’s simply not acceptable to routinely ask for someone to provide their services for free. You can’t realistically say you invest or believe in social impact businesses, and then turn around and ask for an >80% discount on their services.
We’re not saying that discounts are flat-out bullshit. Rather, there always needs to be an equivalent value of exchange – fair pay for fair work.
Luckily, there are a few ways you can make this happen while still asking (and receiving) a discount.
Putting your money (or effort) where your mouth is
So now that we know the dynamics of why smaller businesses are at a disadvantage, what can we do about it? Here are some actionable tips to still achieve your CSR goals on a reasonable budget while not hampering the vendor.
To mitigate adding pressure to already thin margins, companies can instead exchange services. When there is a clear exchange of services, small restaurants/catering services can provide some services at cost or discounted. Some examples include:
- Speaker opportunity for the vendor at the event catered
- Provide the vendor with the contact information of attendees
- Create a dedicated post-event email
- Market the vendor through a dedicated social media post
You won’t get that 250-person catering for free, but maybe in-line with a more acceptable budget.
We already see this dynamic play out in personal dining – with influencers. When an influencer asks to eat at a restaurant at a discount, it’s a completely valid request, since they’re actively marketing the food and experience to their following. Because the influencer exposes the restaurant to potential customers, they in turn receive a tangible benefit.
New York City is a culinary mecca, made up of so many of the small businesses that make our city so vibrant. And FoodtoEat loves promoting them. They are a part of our city’s culture, shaping us as global citizens and reminding us of the hard work and determination that comes with running any business.
In our current social climate, supporting your local food community is more important than ever before. When so many factors divide us, food is a common denominator – a reason to come together and share different parts of ourselves, our cultures and our identities.
So from the bottom of our hearts, as part of the community of small businesses, stop taking advantage of our lack of power in the market. We’re not the biggest companies out there, but we’re a vital part of our social fabric, employing more people in this city – and country – than are larger counterparts, entrusted with sustaining peoples’ hearts, minds, and stomachs.
How will you start utilizing your purchasing power to improve local communities around you?