Your Food Service Contract Is Expiring – Should You Renew or Go Out to Bid?
JGL frequently works with corporate clients who are trying to determine whether to renew their food service agreement or go out to bid. While there is not one answer that fits all, here are a few elements to consider when faced with this decision.
- Employee Satisfaction: Are employees generally satisfied and regular users of the dining services operation? Employee participation is critical in this environment of decreased office population.
- Creativity and Proactive Thinking: The best relationships are ones where the vendor comes to the client with new ideas for consideration. If you, the client, are driving all creative thinking it may be time to go out to bid.
- Age of the contract: If the contract was signed more than ten years ago, it might be a good idea to consider an RFP. Industry terms, norms and operating practices change over time, so an older contract likely does not have all the bells and whistles more current contracts do.
- Current Relationship: If the current relationship with the vendor is good and generally has been over the course of the contract, a renewal may serve you both well.
- Responsiveness: No vendor is going to be perfect all the time. What matters is how they respond to challenges. If your vendor is responsive in the face of challenges, that is a positive consideration for renewal.
- Evaluate reporting: Does the vendor give you the reports and data you need to understand the business? Are the reports accurate and timely? If not, it might be time to consider a change.
- Renew with Tweaks: If you are generally satisfied on most fronts, but want to implement one or two modest changes (like including KPI’s in the renewal), use this time as an opportunity to engage in dialogue with your provider. This is the best of both worlds as you get change without going out to bid.
- Consider a Provisional Renewal: When JGL works with a client who is generally satisfied but is seeking meaningful change in key areas, we will often offer a short-term renewal while the vendor focuses on improving the deficient areas. At the end of a proscribed period, the client has a better sense of whether the vendor can effect change. If positive progress exists, the renewal is extended, and if not, the client commences a bid process.
- Consider Time and Resources: An RFP is an investment in time and resources. If management does not have the time to focus on the selection process it will not have a good outcome. Be honest with regards to your firm’s capacities at the moment.
- Identify Goals: If a bid process is elected, be clear about the goals of the process. A well-crafted RFP will garner the proposals you want while one that is poorly thought out may not result in significant change.
These ten points are worthy of consideration as contract expiration looms. We recommend clients start focusing on next steps a minimum of one year before contract expiration. If you have any questions on where your company stands, reach out to JGL for a complimentary consultation.