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Memorandum <br />Page 2 <br />June 12, 2002 <br /> <br />CAROLINA FOOD SYSTEMS: Management Fee - $72,000 Annually. <br /> County would remain responsible for financing costs associated with equipment purchases <br /> and may have to sign-off on a loan guarantee. Financing costs are estimated at $40,000 <br /> annually, <br />· Bonus program tied to performance above established goals. <br />· County directly receives all food service revenues and pays food service suppliers directly <br /> based on individual supplier accounts. Staffing charges would be paid by the County on two- <br /> week cycles. <br />· Surcharge policy identical. <br /> <br />OPERATIONAL ISSUES: <br /> <br />Compass is a large multi-divisional fn'm headquartered in Charlotte with significant resources <br />and multiple alternative support options. <br /> <br />Carolina Food Systems is a start-up firm headed by Mr. Phelps. Mr. Phelps has extensive <br />experience within the industry. However, Mr. Phelps must rely on others to support some of the <br />projected food service demand. <br /> <br />Both firms either now have (Compass) or will have (CFS) employees and operations in Caban'us <br />County. Compass now provides the County's nutrition site program and serves Lowe's Motor <br />Speedway. Mr. Phelps formerly managed all of the Speedway's food service operations in <br />several states. <br /> <br />SUMMARY: <br /> <br />Financial differences (revenue projections aside) will be in the management fee (Compass <br />$100,000/year and (CFS $72,000/year) and the cost of financing. Compass will absorb that cost <br />and CFS will require reimbursement ($40,000/year). <br /> <br />One proposal (CFS) relies on "outside" caterers for 50 percent of banquet business and derives a <br />revenue stream associated with that at no cost. CFS also proposes that any off-site catering done <br />by their firm from the Expo staffing would remm revenue to the County. (This should be a <br />negligible amount. The County does not want to compete with local caterers for non-Expo <br />business.) <br /> <br />Both proposals are viable alternatives. One (CFS) requires a more hands-on commitment by the <br />County and the County's payment of interest charges. The Expo would be CFS's first and <br />largest commitment. The underlying issues financially are start-up costs, ramping time (building <br />business) and fall-back support should Mr. Phelps become unable to perform. <br /> <br /> <br />