Consultant Anna Sebastian leads the delicate business of tender agreements for her clients. We asked her for some careful advice.
I remember the first time I heard the phrase ‘going out to tender’. I had no idea what it meant, even less how I might go about doing it. Now, when I look back at my past 10 years in the bar industry, a big proportion of my time has been spent doing just that – doing deals with brands for house pours, cocktail listings and the back bar.
Over the years, the landscape has changed. Brexit, Covid, inflation and the cost of living have all played their part in reducing budgets, tempering marketing spends and making golden handshakes that bit less golden. In their place is a more structured, formal agreement with decisions based less on hype and more on hard numbers. Over the years new considerations in the bar and the brand relationship have emerged. Sustainability is increasingly playing a part, with bars wanting to work with partners who share their values around working practices. The human element feels more important than ever too – working with pleasant, competent account managers and brand ambassadors can make the process smoother.
So how do we navigate this ever-evolving market and ensure we have a great, diverse and creative menu, a good back bar that sells with an overall offering that suits the venue and keeps the guests and the business happy? Taking in the views of some expert opinion, alongside my own, this is how you go out to tender.
Take the time to do an audit of your competitive set and beyond. What is everyone house-pouring? What brands are listed on their cocktail menus, what is the split between brands and what are the price points for spirits and mixers, signature and classic cocktails? Put all this information together in a format that makes sense to your business and helps you to understand the process.
Gather your sales data for the past five years (or as much as you have), to give you an idea of growth (making allowances for the likes of Covid). Data is important to lay the foundations for negotiation. It tells you what your customers are actually drinking – not what you’d like them to be drinking. Look at the price of the product versus profit versus volumes.
Take the time to think what the business not only wants but needs. Liam Davy, head of bars at Hawksmoor, works with both big and small brands to find the pricing balance but says it’s important to be “super aware of the worth of your business and what you want to be aligned with”. Personally, knowing how hard it is for new brands to compete, I now tend to keep 20-30% of the menu and back bar for small, independent brands starting out to give them a platform and opportunity to grow. Smaller brands tend to be creative in other ways. As Maya Tarrant at Airmail Collective says, working with smaller brands means you often “get to work directly with the founders to create more meaningful activations, while listing small brands also gives balance and credibility to an offering”.
Going out to tender
Giving brands a clear brief, with a timeline and goals of what you want to achieve, helps them come up with better proposals, with clear guidelines on listing fees, marketing budget and retros. You need to consider how long the deal lasts too. Considering some tenders can take up to six months to sign off , longer deals can make more sense, but Liam Davy advises to be cautious about signing anything more than two years due to economic changes in the market.
Outside of volumes, think about what value you can bring to the brands you work with, what activations you can do to enhance your venue and the brand in the most collaborative way, anything from takeovers, partnerships, events and social media content creation. Amy Ferguson at hotel group Accor adds: “It’s crucial to defi ne from the stakeholder what their objectives and requirements are. We liaise with F&B, marketing, operations and partnership team members to really understand what they want.”
Michele Mariotti of Gleneagles values deals in which brand profi ling is less overt: “I believe that partnerships work best when the branding is cleverly integrated and discrete, as it allows guests to feel that the partnership is organic and not forced.”
Evaluation and negotiation
A key part of the process is to review proposals, comparing them side by side. At this point you will have a clear idea of the landscape of what is on off er, how brands see future drinking trends and how they are organising their budgets. When comparing, consider the following:
• Are the volumes achievable?
• Is the money distributed in a way that you can benefit, ie between listing and marketing?
• Realistically, how much can you activate throughout the year? Usually this is in the form of takeovers or events which means time away from the business.
• Do the proposals allow for a balanced and appealing menu?
• Is it worth picking the best bits from each deal and creating several partnerships instead of just one?
Once you have decided the brands you want to use, I recommend final meetings with the wider teams, which allows the opportunity for any last questions. This could be an opportunity to involve someone else from the team who might pick up on questions you hadn’t thought of.
Cross-check contracts and read the small print before signing. Next, I always create a timeline of events and volume goals leading up to the end of the contract to keep track of progress. I would set up a volume tracker to ensure you are reaching your targets receiving payments for retros. Quality, price, synergy, sustainability – there are many considerations in a tender deal, but a clear, transparent process, allowing for accountability on both sides, is the best way to ensure success, for your partners, your bar and ultimately the customer.