An Interesting Opportunity

[Pita]

My partner and I met with a fellow restaurant owner last night. He owns three restaurants in a nearby summer resort community. They cater to the weekly vacation crowd. One is a store that sells scoop ice cream, coffee and sandwiches. He met with use to see if we were interested in selling our crepes in a section of that store.

We talked with him for a while thought it was an interesting idea but we still have reservations. It gets us into that resort area, which is part of our long term plans, without having to pay for a storefront. But we lose our branding as we would simply be making crepes as part of his larger restaurant. We asked him why he wanted to work with us? Why not just buy some crepe pans and train his employees to do the work? What do we bring? He told us he had enough headaches with his three businesses and did not need more, but he thought that selling crepes would complement his current products. He knows my partner from previous businesses and trusts her so he thought we could take on that aspect of the business without him having to manage it.

He has a staff already and a kitchen along with storage and refrigeration. We would simply set up our operation in a kiosk area of the store, and possibly buy the needed equipment and hire more staff. We kicked around how we might split costs, equipment, rent, labor, etc. This was our first meeting and was only the preliminary spit-balling of how we might work together.

My question to you all is how would you suggest we divide the costs, equipment and revenue? Any examples where this has worked? Any pitfalls we should look out for? I'm already considering a contract where we are assured a % of revenue from crepes for a certain period of time regardless of whether we are the ones actually making the crepes or not, so that he can't just take our menu, recipes and equipment and start doing it all himself after have spent the time and money to set-up the operations. What else should we be considering before we agree to move forward with this? Any thoughts would be greatly appreciated.

[Harold Mansfield]

I don't have any thoughts on the costs, that can be figured out with some standard equations and example agreements.
But I do have opinions on the execution.

I think you need to keep your branding or you really aren't getting into a market. Merely cooking a product for someone else may make some extra cash, but it's your recipes and expertise that he wants, not merely a crepe cook. To me this should either be a licensing deal, which it doesn't sound like he wants, or a deal where you provide this new offering but you keep your branding.

It's done all of the time. Every restaurant sells other people's products whether it be on the soda gun, the coffee they serve, the liquor shelves, or the condiments on the table.

With that you should be in control of the quality and execution of your products in that location or it's worthless to the expansion of your business and getting more recognition of your brand. You either need to be the one making it, or training the people who do...your way. Everything from creation to presentation.

Also, I think it adds to the offering. To have a sort of artisan approach to a traditional food that isn't always done correctly or with any distinction.

This needs to be an opportunity for you to grow too. Not just solving one of his problems. Otherwise all you're doing is cooking crepes for someone.

That's my 2 cents.

[Pita]

Thanks Harold. Your 2 cents are appreciated and help to add focus and clarity to the offer. We have been engrossed in the tiny details of this partnership that we have not appreciated the bigger picture that it is a question of branding.

[WaltFair]

If you set up a kiosk, you should be able to keep your branding. I would prefer he charge a set fee yfor your use of his space. That way you have something predictable and can evaluate the needed sales and pricing, etc. Perhaps you could also make crepes into cones for ice cream, that might be a nice novelty that works out well for the icecream sales as well as your operations. I would be worried about your access to the store and the security of your equipment. If stealing your recipes kills your business, then you really don't have a viable business, because someone will start scouring the internet for crep recipes, etc. and will become your competition, un;essd you offer sopmething else this unique, like partnering with ice cream sales, etc.
Whatever you decide,
Best of luck!

[SocMediaMaven]

I'm in arguably the most popular tourist destination in the world and I have to say, I've never seen this sort of set up. Quite frankly, having a crepe kiosk in the corner of someone's store doesn't sit well with me. It just doesn't sound very appealing as it relates to bringing in more business.

I could be wrong, but just ask yourself why you would want to do it and truly understand your 'why'. Listen to your gut.