Making Countertalk Spaces work for YOU
By Hussein Ahmad, our resident hospitality finance expert and Partner at Viewpoint Partners
In theory it sounds great; a hospitality venue has days or services where it is closed for business and another operator has a pop-up concept, which they need a part time venue for. Everyone’s a winner.
The devil, as always, is in the detail. Like any good partnership, for it to be mutually successful, up-front expectation setting and management, clear communication and transparency are required.
Here’s what both sides should have in mind when discussing their needs, to make the partnership work.
Host venue
For the host venue, here is an opportunity to monetise dead services and a potential opportunity for PR exposure as the location of something exciting.
1. What is the minimum (break even amount) that you will need to charge?
This figure should cover rent, rates, utilities, consumables, wear and tear and any other expenses that are incurred hosting the residency for its duration, as well as the Countertalk fee.
2. Are you providing staff?
If so, make sure you are including the employer’s NI and pension contributions when working out their true hourly cost.
3. Is service charge taken?
If service is being charged, you need to think about how will it be distributed. Service charge taken by the venue legally belongs to the venue, whereas that taken on the pop-up’s machines (in effect build by the pop up) belongs to them.
4. How is the income taken?
Pre-booked tickets are often helpful for a set-menu, but bar takings might be separate. Or will you have an a-la-carte menu with each person charged on the night for what they order? Whose till or card reader will process this and what are the service charge implications?
5. How is the drinks income split?
This will likely depend on whose stock you are using and whose staff.
6. How much do you charge the pop up?
This will likely be break even + a fixed amount OR break even plus a % of turnover OR the higher of the two.
Pop-Up Operator
Here is an opportunity to test and refine your concept with limited commitments and to build a name for your brand.
1. Aim to be profitable
Yes, it may be a marketing exercise or proof of concept trialling, but treat it like a full-blown business. Cost your menus, budget your staff costs, understand what the venue will charge you and only THEN price your menu.
2. Open trade accounts
Where possible, open trade accounts with suppliers. Even if the first orders require payment on delivery, you’ll start building a history with them which could enable you to order on credit in the future.
3. Should you register for VAT?
Even though you may not reach the threshold for earnings, it is potentially advantageous to register for VAT. As usual with VAT, it is not straightforward, but the general rule of thumb is as follows:
If your host is VAT registered and you are invoicing them for the sales income they have taken on behalf of the pop-up, then you should register. This is because you can claim on input VAT, while the host can claim back output VAT you charge them.
If you are charging the customer directly, then you shouldn’t register. This is because you’ll be able to keep all the money that you have charged the customer. However, you won’t be able to claim back any input VAT.
As always, check with your accountant before you make any decisions.