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SMART ANSWERS
By Karen E. Klein

7.22.99  
Is That Foodmaker's Deal Really So Savory?
A caterer/restaurant should be wary of paying for recipes

Q: I represent a small restaurant and catering business that is negotiating with a large manufacturer of hors d'oeuvres and canapes in another country. They have agreed to sell their recipes and some basic business facts to my clients for a "reasonable fee." How do we value the package being sold? -- R.M., Usk, Wales

A: Before you can begin to value a package like this, you need to determine whether it is something your client ought to be paying for at all. Basic business facts are available on Web sites, in myriad how-to books, from trade journals, and through joining membership organizations that provide ongoing education, rather than a single dollop of assistance.

Recipes for just about every kind of hors d'oeuvre and canape imaginable are yours for the reading in cookbooks, gourmet magazines, and on the Internet. If this line of appetizers is unique and has a large following under a particular brand name that is not currently available in your country, then what your client would be paying for is not just a recipe but a license to produce the products under a legally protected brand name. If this is the case, then the business facts the manufacturer wants to sell your client may be trade secrets about how to serve or price the product line. You'll have to determine the sales potential of the licensed product, make some projections about how much your clients can sell annually and whether they can mass-produce the line, and then set a licensing fee that is agreeable to both sides. An accountant should be able to help you formulate a plan for doing this.

However, buying a license for a signature dish is an unusual practice and can get quite expensive, says Ron Gorodesky, president of Restaurant Advisory Services in Lafayette Hill, Pa. Most foods are not so unique that they must be sold under a particular brand to be popular. "Usually you steal the chef of the company that's got the recipes you like, or hire someone who has worked for them," he says, rather than buy the formula. A trained chef would probably rather taste the particular appetizers your clients want to serve and then create his or her own version of the hors d'oeuvres or canapes rather than purchasing someone else's recipes, Gorodesky says. Your client might be better served spending the money to hire a chef who has the skill level required to create some new appetizers. Small, artistically presented canapes and hors d'oeuvres take a lot of skill to prepare, experts say. There's often a pastry involved, and that's a specialty.

"Even if you bought rote directions and ingredient lists, if you don't have a skilled chef they probably won't come off right anyhow," Gorodesky says. A chef with a certain skill level will also have contacts at culinary societies and restaurants that will serve your company in the future. There is more help available to you at the Web site of the National Association of Catering Executives, www.nace.net, an industry group with 3,169 members in the U.S. The site hosts an online forum where your client can post questions and get responses from industry professionals. Its Web site also features articles on catering topics such as retaining staff and menu pricing, a recipe of the month, and links to many other resources. Another catering industry group is the National Caterers Assn. (800 622-0029). If your client needs recipes, try www.digitalchef.com, a Web site sponsored by the Culinary Institute of America. A search of hors d'oeuvres and canapes turns up nearly 200 recipes that your clients may wish to try.

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