dreamsville Posted 23 Oct 2012 , 2:02pm
post #1 of

HI all!

Was at an event this weekend selling cupcakes. The owner of the most popular restaurant in town approached us for cupcakes and then mentioned that his place has been looking to start a partnership with a local bakery to sell their desserts in the restaurant. (it's a pizza/italian food joint in a small town so EVERYBODY knows about this place).

So how do I go about continuing (or restarting) this conversation with this guy? I REALLY want this to happen because it would be fantastic for my business!!! But I don't have tons of experience with the business side of things in this capacity (if that makes sense). Have any of you done these types of partnerships and know what I can expect?

18 replies
MHRobson Posted 23 Oct 2012 , 2:21pm
post #2 of

That would be a hard one for me too...I LOVE baking/selling cupcakes, but like you I have no eye for business. But, I would just call him and try to arrange a meeting...ask him what he is looking to do and try to let him take the conversation form there. Good luck! thumbs_up.gif

Dayti Posted 23 Oct 2012 , 3:22pm
post #3 of

If he is always at the restaurant, or you know what time you can find him there, I would drop by with a few samples, and a price list. Otherwise, make an appointment.

Beforehand, go through everything you know how to bake/make, and write a list of possible items to offer him - preferably ones that are easy for you to do and aren't a 2 day process from start to finish. Work out the cost for everything on that list, see which ones are more profitable for you to make, and set your prices. You might want to increase them a little as he may be the negotiating type, and it will give you room to come down in price.

When you get to the restaurant, make sure you get to see him and tell him that, since he mentioned the other day he was looking for a dessert provider, your thought it would be a good idea to drop by with some samples for him to try. Or something like that.

I have 2 regular clients like this...one orders twice a week, the other once a week. Between the two of them they pay my rent. I do different things for each place, but items include cupcakes, cookies, carrot cake, banana bread, brownies, blondies, cheesecakes and the occasional really simple birthday cake. One client pays for delivery, the other comes and picks their stuff up. Hope this helps, good luck!

BakingIrene Posted 24 Oct 2012 , 6:21pm
post #4 of

DO NOT just show up. Call him back, say you had the cupcakes at the event, and ask to set up a meeting.

Ask him what kinds of goods he had in mind and make samples of those and a few others that you would like to see in his restaurant.

Prepare yourself for asking about quantities, delivery schedule, holding time, seasonal changes to your selection, special diet orders, any certification requirements, and ask if he does private parties with custom cakes.

Then ORGANIZE ORGANIZE ORGANIZE. You could make more $$$ with one of these contracts than you think.

cakegrandma Posted 24 Oct 2012 , 6:52pm
post #5 of

I think this may be a wonderful opportunity for you however, do you bake under a Cottage Food Act or are you licensed? If you bake under a Food Act you will need to check the rules that are part of this law and determine if you are able to sell wholesale to businesses. If not, then you could potentially be in a lot of legal trouble.
Hopefully after checking out all the laws and you are legal to do this, then good luck. Do call the manager of the restaurant and make an appointment with him, have some samples for him as well as pricing. I would also find out if you can get some free advertisement by a sign in the display stating they are baked by you along with business cards.

dreamsville Posted 25 Oct 2012 , 5:45pm
post #6 of

THANK YOU all soooo much!!!! I'm soo excited to hopefully be able to make this happen icon_smile.gif

LNW Posted 25 Oct 2012 , 11:13pm
post #7 of

Im super excited for you! Id do like the others have said and call first to make an appointment. Then Id just bring in some of my best selling flavors with a rundown of what else I can make and a price list for those things.

My favorite restaurant in this little hole in the wall place called The Barn. Its in a tiny little town where everyone knows everyone. They have a bakery case that they keep filled with the best made from scratch goodies youve ever tasted. The gals that run the bakery arent part of the restaurant; they just use the restaurants kitchen to prepare their baked goods and sell them in there. It seems to work really well. The food the restaurant serves is amazing and their dessert menu is just the things the bakery gals offer. So their partnership works beautifully. Plus the bakery gals make homemade bread that the restaurant uses in some of its menu items.

I read on the bakeries FB page (they both have separate FB pages btw) that they come in before the sun is up to start baking and preparing the goodies for the bakery case. I guess they do all their baking for the day early in the morning. And when things sell out they are just gone. Ive tried to order things before that were already sold out and had to opt for something else. Thats worked in their favor though because it makes me have to try something new and of course I love that too lol. You also have the option to contact the bakery gals and special order cakes and pies and other goodies for parties and such.

Im envisioning something like that for you. How cool would that be? Good luck and keep us posted!

dreamsville Posted 4 Nov 2012 , 2:47am
post #8 of

AOk so those of you who this, can you just give me insight into how much You charge business for each cupcake? Since they would be buying in Bulk do you lower the price? This guy said as long as the price is right he's Interested in using us company wide (3 locations!!!!) I don't want to be desperate Obviously buy I need this to work out if I can!

BakingIrene Posted 4 Nov 2012 , 4:16am
post #9 of

Well you need to learn some B2B (business-to-business) basics.  We have no idea of what business volume you are running now.

 

You will not settle all the details in one meeting.  

 

You first of all need to establish candidates for a menu--using samples would help.  Establish the general amount of decoration as well as the menu theme (such as "homemade" or "ethnic" or "local specialties" or whatever).  Ask about their preferences for seasonal rotation and custom party orders.  If your volume will have to be limited, tell them and see if they offer you any ideas. 

 

Follow up by email: Summarize these details in writing to the restaurant owner, and ask him to confirm in writing.

 

Then you go and do your calculations based on lowest and highest volume that the restaurant owner provides in meeting #1.  You sort out with your staff any details like delivery or containers or whatever, for this expanded business.  Paying overtime will to some extent affect your prices if that is how you will cover the demand. Figure out how you will cover staff if somebody gets sick because these deliveries will have to be made regardless.

 

Then you DRAFT A CONTRACT WITH YOUR LAWYER. No contract? No lawyer?  forget this whole project.  Don't bother to quote prices.

Stitches Posted 4 Nov 2012 , 7:39pm

I sell wholesale to retail businesses and I'm not willing to sign a contract with them, nor would I ask them to. That isn't how business is conducted............unless your looking at doing something exclusive.

 

If you already have a retail business, technically your wholesale price should be half the amount per item. If you sell a cupcake for $3.00 retail it would sell for $1.50 wholesale.

 

Selling wholesale to other businesses has a host of issues you need to work out.

  • Mainly, making sure the client stores your product well, rotates stock, never sells something sub-par, etc... They can ruin your reputation if they don't.
  • If your selling retail in the same market they need to charge exactly what you charge, so your not competing with each other.
  • Will you give them credit? Net 30 is standard.
  • How will you package your product to sell to them?
  • Will it be o.k. if they store your product in their freezer?
  • You'll need ingredient labels to put on the box of cupcakes you hand to them, or provide them with a written ingredient list.

 

Consider what they will bring to your business, over all. Will they bring you more clients or will you lose business because customers now have another place to buy cupcakes at. Will they label your product in their store with your business name? Will they tell customers accurate information about your product and how they should handle it?

 

There's more to think about then you realize. If it all goes well that's ideal! But there might be reasons why selling to them isn't in your best interests.

dreamsville Posted 4 Nov 2012 , 9:34pm

I firmly believe that this is the right move for my business. I've been building my business for two years, building a client base, expanding my menu and waiting for the right time. I also know that if there is ANY business in my area to have my products in, it's this one and I've been blessed to make this connection. My only weakness right now is that I'm not a business savvy person because I was a music teacher in my past life. Now, I know how to SELL a product but in this situation, I'm nervous to talk numbers etc because I've not done this before. That's why I'm asking for advice. :)

 

In the past I was selling cupcakes for $1.50 a piece or $15/dozen (1.25 each)

 

filled or fondant covered cupcakes are $2.00 a piece or $21/doz (1.75)

 

This so FAR had worked for us. Recently at an event, I raised the price of one cupcake to $1.75 and keeping with the $15/dozen

 

I bake out of the home (and yes, have all the proper legal things worked out) but with this deal, I MAY look at renting out a kitchen at my church etc if the volume is going to be huge. I don't think it will be huge at first as he is going to want to make sure that his customers enjoy the dessert as well. 

 

The average cost for us to make 2 doz cupcakes is approx $5.40 (give or take a little depending on flavor/ingredients) so we're profiting on average about $22 per 2 dozen cupcakes. 

 

So when these types of meetings take place like I'm going to have soon, is it normal to sell to a business for less than my $1.50 price? Do I really split that price in half (as someone above mentioned...the wholesale price?) I just want to know what the norm is so I have an idea of what to do so I don't go into a meeting looking like a complete idiot. 

 

I really appreciate all of your help! I need to make this business work for me and my family and I WANT to make it work. Life is completely different for me now from what it was 3 years ago but I know God has a plan for me and I'm rolling with it in good faith. Excited to see what happens! I appreciate your support soo much!

Stitches Posted 5 Nov 2012 , 2:56am

You need to gain confidence before meeting with this person, by understanding the basics of business. You know your costs and profits selling retail, now sit down and work those numbers for what your wholesale costs and profits will be. To those numbers calculate what additional costs you'll have, renting additional space, needing more help for your primary work, delivery costs. If you don't believe me or others posting here, then do a google search on product mark-up to learn whats ordinary and customary in business. Lack of experience is not lack of intelligence!! Don't let your head go there, be the teacher you have been and study up.

 

Don't let you mind run away with you about the numbers you might sell. Typically, the wholesale buyer will believe that they can sell far more units then is realistic. It's also a tool they'll use to bargain with you to get a better deal. Everyone bs's a little about how much they make, how much they'll sell. Don't believe it until they place consistant repeat orders, before that.....this is all hypothetical. Even though you want this account badly, if you've worked out your numbers (done your homework) you KNOW that if you don't get paid X amount per cupcake, the additional volume won't be worth the additional amount of work. You have to be smart enough not to agree to do something that isn't in your own best interest and profitable for you.........no matter how much you want the exposure or business.

 

Figure it out in your head then write it all down on paper. What is a scarie amount of business for you personally? Is making another 2 dozen cupcakes per day realistic? YES!  Is making another 8 dozen a day a problem? I really doubt it. It seems scary at first, but you learn how to make bigger batches and you do adjust. In time, no number looks too scary to tackle....because you create a plan of how to get your work done, and you do it. Not only will you learn how to make bigger batches but you'll learn that you can bake and hold a cupcake well sealed in a plastic container for many days with-out worry. You don't need more refrigeration..........just pipe you frosting on the cupcakes minutes before you deliver them. That eliminates your storage problems.

 

Remember that you have a product that's of value and if someone else wants to profit from selling it, you hold the power. You negotiate your prices, they have to meet your demands. It's not the other way around, you need to re-evaluate how your looking at this opportunity, take charge of it, you're in control.

PumpkinTart Posted 5 Nov 2012 , 3:13am
Quote:
Originally Posted by Stitches 

I sell wholesale to retail businesses and I'm not willing to sign a contract with them, nor would I ask them to. That isn't how business is conducted............unless your looking at doing something exclusive.

 

If you already have a retail business, technically your wholesale price should be half the amount per item. If you sell a cupcake for $3.00 retail it would sell for $1.50 wholesale.

 

Selling wholesale to other businesses has a host of issues you need to work out.

  • Mainly, making sure the client stores your product well, rotates stock, never sells something sub-par, etc... They can ruin your reputation if they don't.
  • If your selling retail in the same market they need to charge exactly what you charge, so your not competing with each other.
  • Will you give them credit? Net 30 is standard.
  • How will you package your product to sell to them?
  • Will it be o.k. if they store your product in their freezer?
  • You'll need ingredient labels to put on the box of cupcakes you hand to them, or provide them with a written ingredient list.

 

Consider what they will bring to your business, over all. Will they bring you more clients or will you lose business because customers now have another place to buy cupcakes at. Will they label your product in their store with your business name? Will they tell customers accurate information about your product and how they should handle it?

 

There's more to think about then you realize. If it all goes well that's ideal! But there might be reasons why selling to them isn't in your best interests.

 

I second the recommendation to make sure this restaurant will care for your product the same way you would.  Your reputation will definitely be on the line.  I used to work for a wholesale bakery and we never allowed our customers to sell a day old pastry.  To ensure this wouldn't happen, we picked up their unsold items each day when making the new delivery. 

 

I do want to dispute the statement that net 30 is standard credit terms.  While this is a common term in the business world, for small businesses, I would never recommend this at all.  You need access to your cash much faster than net 30, so I would shorten this to net 7 or 10 at the most. 

 

My last comment is that your pricing appears too low.  It is true that wholesale rates are usually 50% of your retail price.  If you're only charging $1.75 per cupcake now and you agree to accept half of this for wholesale, you will not be able to make a profit.  Also, understand that if you need to rent commercial kitchen space to honor the contract volume, you need to anticipate the cost of that rent (and other associated expenses like insurance, permits, payroll, taxes, etc.) and build that into your price from the very beginning.  You to not want to start with a wholesale price of $1.00/each and then have to bump that up to $1.50 or $2.00 each within a few months because your expenses skyrocket.

PumpkinTart Posted 5 Nov 2012 , 3:21am
Quote:
Originally Posted by Stitches 

I sell wholesale to retail businesses and I'm not willing to sign a contract with them, nor would I ask them to. That isn't how business is conducted............unless your looking at doing something exclusive.

 

 

There is absolutely nothing wrong with having a simple contract that spells out items such as payment terms (net 7, net 10), penalties for late payment, their agreement not to sell sub par products, your refund policies (i.e. if you delivery something that is sub par and they "reject" it immediately upon delivery, etc.  Even if you don't have an attorney draft/approve it, having a formal document that specifies the rights and responsibilities of both parties just makes good business sense and will help resolve any disputes before they get too far out of hand.

 

This is ABSOLUTELY how business is done, regardless of whether you have an exclusive arrangement. 

BakingIrene Posted 5 Nov 2012 , 3:01pm

You absolutely need to get the terms of business spelled out if you are to deliver direct to three different locations.

 

You NEED to have spelled out in black and white how you will invoice triple deliveries.  Because if their paperwork does not match yours, you won't get paid.

 

So that's called a "contract" in the world of business.  If this restaurant owner doesn't want to have written terms,  DO NOT deal with him.  Find another restaurant.

Stitches Posted 5 Nov 2012 , 8:49pm

For the food industry in Chicago, your word is your contract. You agree verbally (or not), you're held to it or no one will do business with you. If you needed written contracts to cover everyday business transactions around here, your business would come to a grinding halt. We pay lawyers to read over anything we sign........... and we don't pay lawyers to over see our everyday business transactions. It would add too much money on to the cost of doing business.

PumpkinTart Posted 5 Nov 2012 , 11:24pm

I'm not trying to be argumentative here but maybe the difference of opinion is whether a lawyer needs to review it in order to consider it a contract. 

 

Documenting your agreement and having both parties sign the document is sufficient in the situation the OP is inquiring about, at least in the beginning.  This is a contract, whether an attorney reviews it and puts in all of the legalese speak or not.

 

I'm not suggesting getting an attorney to review every business transaction.  This is hardly cost effective since most business transactions will go off without a hitch and most people honor their word.  Where a written agreement comes in handy is when things don't go so well or there are disputes that couldn't have been or simply weren't anticipated before the transaction was initiated.

 

Whether every aspect of the written agreement between parties is legally enforceable is really irrelevant.  Having an agreement signed by both parties shows intent to form a business relationship and intent to be bound by certain terms and that IS enforceable.  Try going to small claims court with a he said/she said verbal agreement.  Chances are much more likely that the case will be dismissed or any reward will be denied/diminished if you don't have an agreement in writing that documents your case.  In addition, the written agreement sometimes is all you need to force the other party to honor your agreement without going to court.  I'd rather have a signed piece of paper than someone's word any day.  I've been on the losing side of a verbal "contract" dispute in court.

jason_kraft Posted 5 Nov 2012 , 11:26pm

A

Original message sent by Stitches

For the food industry in Chicago, your word is your contract. You agree verbally (or not), you're held to it or no one will do business with you. If you needed written contracts to cover everyday business transactions around here, your business would come to a grinding halt. We pay lawyers to read over anything we sign........... and we don't pay lawyers to over see our everyday business transactions. It would add too much money on to the cost of doing business.

You don't need to sign a new contract for each delivery if you have a wholesale customer, but when you start the account it is in your best interest to have a written contract indicating what you will be delivering/how often you will deliver it/liability releases/etc.

For everyday transactions you should still get a signed copy of the invoice as proof of delivery.

lilmissbakesalot Posted 5 Nov 2012 , 11:40pm

Just be careful... wholesale is different, and packaging something for resale falls under different guidelines than just selling a cake for a single event.  I know that if we want to transport any resale items over state lines it HAS to be in a refrigerated van and falls under the FDA whereas a cake made for a wedding does not.  Not that you are transporting over state lines, but even at the very basic you need labels for everything and you would be dealing with meal tax along with any state taxes involved.  You should contact your state health dept or dept of agriculture and find out the guidlines specific to your state.

 

You should have the basics of the deal spelled out to avoid any confusion.  Your word being your bond is great, but your word written down and signed by both parties will actually protect you (and your business partners). 

Quote by @%username% on %date%

%body%