The Economics of Luxury Suite Catering

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Stadium and Arena Luxury Suites are a great way to host a group outing or enjoy an event in a way that creates lasting memories. A big component of the suite experience is having your own food and beverage available exclusively to your group without having to wait in lines or pull out your wallet after each beer. A common misconception is that when you purchase a luxury suite the food and beverage are included in the cost. In most cases it is not, and the process of ordering catering and understanding the pricing can be very confusing.

Why is it so expensive?

Anyone that has been to a professional sporting event or concert has had the experience of visiting a concession stand and being shocked by the pricing- $8 for a beer, $5 for a Hot Dog, $3 for a soda. The same reality exists when you order food and drinks for a luxury suite. The reason the costs are so high is because of the relationship between the stadium and the official catering company. Aramark, Levy Foods, Legends Hospitality and Delaware North are the largest catering vendors in the space, and they pay multi-million dollar fees for the rights to cater the stadium, and luxury suites. Often times in return for the right to provide suite catering the vendor will commit to fund suite remodel projects and facility upgrades. Once these upfront commitments have been made, the revenue generated by food and beverage sales is then shared between the team/venue and catering vendor. The reality is that the catering vendors are operating on thin margins, when they only get a portion of the $3 soda sale and have to recoup the upfront investment plus the overhead costs of operating the food services.

Why is it so confusing?

Suite catering can be very confusing given how the food and beverage options are marketed. The “menus” typically detail options in the form of packages or a la carte orders. The packages offerings are typically offered on a “per-person” basis, but the exact quantities are ambiguous. You could pay $59 per person for a package that includes hot dogs, chicken wings, chips and dips, a salad and cookies, but it is hard to quantify exactly what you get for that price. It gets even more confusing when there is a “12 person” minimum. It is not clearly articulated what you get for your $59 x 12 people. Even when ordering a la carte there minimum requirements, ie if you are trying to order an a la carte order of cookies, it is often presented as “$4.95 per person, minimum of 10 people” instead of $49.95 for 10 cookies.

What about the service charges?

Once you get your head around a $50 plate of cookies, you then need to consider the automatic services fees and taxes, which are generally 18% to 22% on top of the cost of the menu items. That $50 plate of cookies has turned into a $60 plate of cookies. It varies from venue to venue as to how the service charge is distributed- in some cases it is a gratuity for the suite attendant servicing your suite, sometimes it is not, and there is an implied expectation for you to tip the attendant on top of the service fees.

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