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GMCD Private Management for Public Fac/llties Martin Thorson Vice PresIdent FoOd &: Beverage Services May 26, 2005 Mr. Michael Downs Cabarrus Deputy County Manager Cabarrus County 65 Church Street, SE P.O. Box 707 Concord, NC 28026-0707 Dear Mike, We have reviewed the food and beverage operations at the Cabarrus Arena and Events Center as our recent management contract had required of us. The current financial and operational performance of the existing third party contractor was reviewed. In addition to the review, an extensive tour and operational needs assessment was conducted by Chris Reynolds, Mideast Regional Food and Beverage Director, whom you may have met when he was in town. The financial performance of any food and beverage operation is an integral part of a facilities economic success. The following shows the last two years revenue and profit/loss as well as the current year to date. Table I Food and Beverage RevenuelProfit Actual Actual Actual FY 2003 FY 2004 7month2005 REVENUE EXPENSES PROFIT/CLOSS) $309,119 $284,648 $466,913 $454,508 ($157,793) ($169,860) $195,989 $239,031 ($43,042) The above figures represent a struggling food and beverage operation. We recognize the low revenue as a factor in the ability to generate a profit. We understand that a facility such as the Cabarrus Arena and Events Center requires a concerted sales effort and a cost conscious operation that keeps the fiscal health of the facility as a top priority. We believe that the current third party food and beverage operation is not providing any of these efforts. It is our recommendation that food and beverage be assumed in the scope of service of SMG. Our recommendation is based upon our review and specifically our identification of the following areas that we can improve. Stalllums + Arenas + Convention Centers + Theatres C~g 701 Marllet Street +4th Floor + Philallelphia, PA 19106 + Voice: 215.592.6616 + Fax: 215.592.6618 E-Mail: mthorson@smgworlll.com