I met with a person who is a caterer and we spoke about me renting his kitchen.
Basically he wants to partner up and I will do cakes for some of his wedding he caters at a discounted rate. For cakes that are made for for other customers he will get 25% of those. He has great connections in our town and a few people that I have mentioned his name to say oooh he is great and has a very strong customer base.
So do you guys think this is a good deal? If I rented per the hour I think I would spend more, I am still a little slower than most I think and if it were per day, with baking (day 1), fill crumb coat (day 2) and decorate (day 3) so that would get expensive too.
I just need opinions of some experience decorators.
So, let me get this right--
You use HIS kitchen--you PAY HIM for the use--he gets a % of PROFIT and you provide HIM with discounted wedding cakes?!!
Who is really coming ahead here?
Looks to me like your getting the lower bargin
Maybe I wasnt clear enough... I will not be paying him in addition to giving him a percentage that is instead of paying him per hour/day.
If he has a bride that orders a catering package from him that includes a cake I will do that cake at a discount rate of 25%.
If you discount your cake by 25% then you have to pay him another 25% of cost (did I read that right?) you are only making 50% from the order, which would cover what, your costs? Because it wouldn't be enough to really cover any hourly wages or profit to yourself?
Or are you saying there will only be 25% total take off your orginal (not discounted) price on cakes you do for him?
The way I interrupted what we talked about it would be a 25% discount and no more.
So if he does a package and the cake the bride wants would normally cost $300 I would get $225 for that cake.
If it were a bride that I found myself and the cake was $300 I would get the $300 and I would pay him $75 for use of his kitchen.
It sounds a little too much to me.
The only other place I have found is $35 an hour and $125 a day which seems very high to me. If you rent a kitchen you pass those fees onto the customer right?
So you would pass $375 (3 days rental) on to the customer on top of the cost of the cake? Too rich for my blood.
so if you could do one of HIS cake orders and one of YOUR cake orders at the same time.......he just gets the 25% of the one cake and nothing from the other?
Still seems expensive!
No he doesnt get only the money from one cake it would get it based on the amount I charged a customer.
So I am doing one of his cakes and it is $300 less 25% so $225 and then I have my own cake to do he would get 25% of that also.
Our choices are so limited in Florida. I really want my own business but how do you all pass those fees on to the customer?
Well the 25% is better than the 50% I read it like the first time.
Question for you, minus the 25% of the price, how much does that leave you after you pay for the ingredients and such? Is it leaving you enough profit that you would be happy with?
Are there other conditions to using the kitchen? Like certain times you can use it or is it open to you 24/7?
We havent sat down and completely figured out the profit but there will be some.
As far as hours go he is there from 630 am to atleast 11 he says and once he is comfortable with me he will give me a key (or so he says)
The rental kitchen is open 24 hrs a day. Based on their website.
When you say we haven't figured it out, who do you mean?
I mean I haven't figured out the exact cost of cakes therefore the profits for each cake. I did figure some of the less complex ones and I will have to raise the prices a little bit higher than I first thought I was going to charge. The only bakery in out area charges $4.25 per serving so I think the market will support me being higher than the $3 I was going to charge. I did calculate the costs of my cupcakes and know what to charge to make. A profit for the basic cupcake... I just need to convert that into cakes and figure the fondant.
If the going rate is $4.25 then why are you charging $3.
I would sit down and figure up your costs for doing cakes, your hourly wage and how much profit you want to make out of the deal before you meet with him again. Because that would factor in to how much I am charging and how much of a 'discount' I would give him.
Thank you for the advice I will do just that, I was going by $3 based on what I see on this site and my own wedding cake shopping but that was years ago. I will re evaluate and meet with him again
I would suggest making a practice cake (it can be just a thought experiment if you have a really good idea about how long things take you). Make the cake, total the time it took to make it, and then compare how much it would cost you to rent a commercial kitchen at an hourly rate vs. how much this guy would take based on percentage of the total cake price.
In fact, I'd do it for at least a two or three different designs (an elaborate wedding cake & a simple 8" round, for instance). You may find his way is cost effective for one type, but not for another.
Whatever you come up with, you may want to try to negotiate with him and try to get him to come down on his take. Know your numbers (you don't necessarily have to share the details, but you could say something like "I've been crunching the numbers, and I would be taking home less if rental of the kitchen cost me 25% of the sale than if I just went to work at Micky D's. I think 15%* would be a workable amount for me") He may stick with his #s and be unwilling to haggle with you... but if he does, you can only win, because any less benefits you.
Remember, haggling is about meeting in the middle... don't start with the most you'd be willing to pay, you want to be able to show you're making concessions, so that he will feel as if he's winning something from you.
Also, have other things you might want that he's not offering to negotiate with... "I might be willing (or able) to come up another percentage point (or 2) if..."
*Please note: I'm pulling numbers out of thin air, just to give you an example. If the deal IS a good one, asking for too much may make him re-think his willingness to work with you. You really do need to know your own current costs vs. the cost of a traditional kitchen rental vs. the cost of working with this guy under his proposed pricing structure. That does mean a lot of work on your part crunching numbers and whatnot, but it will help you in business in the long run.
It would seem to me that this option is cheaper than renting hourly, for sure. I'm in a strict state, too, and my only option will be to rent. Here it's $25 or you can do it monthly... the monthly is a better deal if you plan to make several cakes... it breaks down to quite a bit cheaper per hour and per cake.
In any case, let's say a wedding cake takes you 8 hours, baking to finish, and it's for 100 people at $4 a serving. If you take his deal, he gets $100 from you. If you rent elsehwere, you will either pay $125 at the daily rate, or $280 at the hourly!!
If you are making really big wedding cakes a lot, then that's where the percentage might not be as good. If you do a 200 person wedding, then you are paying him $200, so the daily rental rate is a better deal (but the hourly is still worse).
Now, the other thing to think of is how many wedding cakes you plan to do per week. If it's more than one, and you can find a monthly rental, that's probably going to work out cheaper than paying a percent on EACH cake you do. Since you can bake multiple cakes at once, work on accent pieces, etc, for multiple designs, you are making better use of your time. Around here I can rent space monthly for something like $500 a month. So if I was planning on several cakes a week, it would be a better deal than paying someone 25% of each and every cake.
Does that make sense? Trying my best to explain it.
I have a friend that does this and she is really happy with the arrangement. idk what her exact numbers are but she pretty much does what you are talking about. She is happy and suggested I look for the same kind of deal.
Thanks for all the information..we are going to crunch numbers and sit down with him again.
I did the Peter Rabbit cake in my pics this past weekend and my husband did a general time (he was just curious). It took my 5 hours to decorate. I'm new and I'm slow so please don't think that is what he should have taken. That time did not include baking, cooling, scultping the little veggies etc. If I had paid by the hour the cake would have cost someone a fortune because our cheapest by the hour kitchen here is 30 minutes away and $20 an hr. I actually like the idea of the percentage of the cake because I only pay when I make cakes and it's based on how elaborate they are. After you do the math and figure out how much of each cake you consider profit, don't forget to consider how much you expect to be paid per hour ,and then you may just want to raise your cake prices a bit to make sure you still make a profit. I think the setup sounds good just the % sounds a little high. Also one thing to clarify in the deal is storage and leaving stuff in the kitchen. My issue with renting space is a cake takes me more than one day. What can I leave on site, how much fridge and freezer space am I allowed to use etc. Good luck. I think this sounds like a great opportunity if the numbers work out for you.
where in Florida are you Mindy? I'm in Florida too, and $3.00 is VERY inexpensive.
Jenn I am in the Tampa Bay area. I wish I could find something else but the 2 I have been talking about are all I can find.
I grew up In St. Pete/Tampa, but now live in Ft. Lauderdale. I know the economy is a bit worse up that way than here. (My family all still live there) I wish you were closer to me. I'm actually looking for a partner who excels in buttercream. I can say, the price seems a bit high for the rental.
Jenn there is just nothing around here to rent. The next closet that I could find was Orlando and that wont work either.
A partnership would be a good thing at those costs.