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<br /> <br />July 6, 2005 <br /> <br />To: Mike Downs <br />Deputy County Manager <br /> <br />From: Ken Robinson KtC. <br />Accountant <br /> <br />RE: SMG Food and Beverage Proposal <br /> <br />The May 26, 2005 proposal from SMG to operate the food and beverage service at the Arena looks to be a <br />better arrangement for Cabarrus County than the current agreement with Eures!. In addition to the probable <br />financial improvements, the SMG proposal should remedy the major issues that have persisted throughout <br />the Arena's relationship with Eurest including: I) Lack of incentive for the food and beverage operation to <br />run as efficiently as possible. 2) Poor coordination between Eurest management and Arena staff to provide <br />services requested by many clients. 3) Frequent problems balancing the Arena's overall business <br />objectives and with Eurest's method of servicing large events. <br /> <br />, <br />SMG's proposed five percent of gross sales management fee with an additional five percent performance <br />incentive seems fair to both SMG and the County. One concern I have with this arrangement is that food <br />and beverage costs could be charged to other areas of Arena operation and skew the performance data of <br />the food and beverage operation. Because of this, I would like to see the food and beverage operation be <br />treated as a separate department in SMG's financial reporting. <br /> <br />One of the topics not specifically mentioned in the proposal is equipment needs. While touring the facility <br />with Chris Reynolds, SMG Mideast Regional Food and Beverage Director, he mentioned that some food <br />preparation areas were over-equipped while others were lacking. I would be interested in knowing SMG's <br />plan for acquiring or redistributing equipment and the costs involved. <br /> <br />As presented, the SMG proposal is a better arrangement than the current Eurest agreement. In the next <br />three years, I expect food and beverage revenue to near $500,000 and remain there with little additional <br />growth. tfthis occurs and SMG is able to successfully control costs, the Cabarrus Arena's food .and <br />beverage operations should evolve into a profit center and further reduce the County's subsidy to the <br />Cabarrus Arena operational budge!. My reconunendation is to use the current proposal as a starting point <br />for serious discussions with SMG to allow them to provide food and beverage service at the Arena. <br /> <br />C-6 <br /> <br />~ <br />Cjj!r!!~Mgm!y <br />NORTN CAROLINA <br /> <br />Cabarrus County Finance Department <br />65 Church Street SE ; PO Box 707. Concord, NC 28026-0707 <br />Phone: 704-920-2409 Fax: 704-920-2881 . www.cabarruscounty.us <br />