Whether you are a festival organizer, an event planner, or an office building or business, you may have been asked or disclosed about minimums or guarantees. What are they and why do food trucks request them?
Food trucks provide a wide array of services. At a minimum, they provide food for your guests, employees, or tenants. Other reasons you may add a food truck is the convenience or possibly the draw food trucks bring to your event.
Depending on the food truck’s popularity, they may have multiple requests for the same day as your event. In order to decide which event to commit, a food truck operator asks other food truck’s experience or uses their judgment. Some food truck operators use a “minimum” or “guarantee” to determine which event to choose.
A guarantee is not limited to selecting one event over others. In instances where a business will cover all meals, a food truck may request a minimum or guarantee. While festivals may provide larger amount of cash at one time, weekday lunches are the day-to-day cash flows that keep a food truck business operating. Therefore choosing an employee appreciation lunch versus parking at office park may be required. The purpose for a guarantee in this situation is if an employer overestimates their employees’ involvement in the employee appreciation lunch, a food truck may have lost revenue they forecasted by selecting the employee appreciation lunch versus a routine, scheduled lunch spot.
Another reason can be location. The Triangle is a wide geographic area. Long distances require additional expense for a mobile kitchen. The additional expenses include gas to operate the truck and generator from the food truck’s commissary to your location, additional labor hours for transit time from the food truck’s commissary to your location, and depending on your estimated attendance additional food costs. If the event’s attendance is overestimated, the labor, fuel, and food costs (that may be thrown away) are an additional cost that hits the food truck’s bottom line. Food trucks are mostly family-owned and operated businesses, which means these losses hit closer to home.
How to approach guarantees or minimums
First, when requesting a food truck, understand why a food truck is asking for one. Not all trucks minimums are the same, as each food truck has different costs and not all events have the same minimums.
As a food truck operator, make sure your guarantee or minimum is reasonable. Asking for too much and you may lose out on opportunities that were more than your minimum. Also, asking too much and under delivering, i.e. bad service, may give your brand a bad reputation.
Second, RDUMFA recommends a written minimum or guarantee. While oral contracts are legally binding, a written agreement is easier to communicate between two parties. For instance, is the minimum before taxes, does the minimum include outside sales not part of your event (if allowed), is it voided if an event ends early (either by the truck, the event planner, or weather)? While written agreements may seem unnecessary, subsequent disappointment after an event are things both parties can avoid with a written agreement.
Third, accepting a guarantee or minimum may be necessary. When searching for a food truck, you may decide to continue your search to find one that is closer to your budget. However, accepting one may be warranted if a food truck is in demand. For instance, if the event’s honoree, etc. requests for a specific food truck, they probably want that specific food truck. It may be worthwhile telling the operator when planning the event, as they may recognize the loyal fan and adjust the guarantee. The other reason may be your event’s day is in high demand due to festivals with large attendance, graduation parties, or weddings, etc.
When requesting a food truck, keep in mind a guarantee or minimum may be discussed. Before accepting or rejecting, understand why one is being requested. After the event’s conclusion, make sure the guarantee’s discussion follows the same guidelines as negotiated before the event. Keep in mind disagreements can be avoided if properly communicate prior to an event. Disagreements should be avoided, as they may lead to a bad experience for both the food truck and event organizer or business, which could result in a bad reputation. Good communication leads to positive experience for all parties involved.