Next Game: Preseason Friendly - Evesham Away on Tuesday 17th July at 7.45pm

Tuesday, November 22, 2016

Profit From Catering At Edgar Street

The revelation in the annual accounts to May 31st 2016 that Hereford FC received just £30,027 from 'share of bar profit' appears disappointing given the attendances at games along with other functions.

However when the deals were agreed with those running the catering and bars, directors of the club didn't expect gates to be so high. 

It is assumed that the figure includes the food outlets in the ground as well as the bar. It is also assumed the figure includes profit from hospitality.

In simple terms given around 75,000 supporters watched games last season (average gate of 2577 plus cup matches) then the club received about 40 pence per supporter per game.

That figure of 40 pence would include supporters who purchased hospitality deals.

Because the club outsourced the bars and catering, it's impossible to guess what the turnover of the bars and outlets came to.

However at 40 pence per supporter, the 'profit' to the club was around £1,000 per game.

It appears it is usual to make around 50% gross profit margin on drink sales. Coffee, crisps and sweets can be higher.

Below is an example:

Let’s just assume for the moment we are running a small coffee shop. If we sell 100 cups of coffee a day for say £2 each then our sales are £200. Our costs of making the coffee would include the coffee itself, milk, sugar, the cups, perhaps lids, stirrers, etc. Let’s say all that adds up to £40 for the 100 cups we have sold. Our Gross Margin is £200 less the £40, or £160. As a percentage this is £160 divided into £200 = 80%. So for each cup we sell at £2 we make 80% Gross Profit, or £1.60. Knowing our costs are £40, we also know our mark-up is 400%.

Back to Edgar Street, one question about the catering is who pays for the electric, the cleaning, heating costs etc. Is it the the company running the bars or outlets or is it the club? You have to assume it's the club as it would be difficult to split any costs.

So is the £30,000 received from 'share of bar profits' all 'profit' or are there the costs of electric, cleaning and heating to be subtracted from that figure?

If so, the £30,000 might not even be £30,000.

Food for thought.