ELV note: One of our “friends in food” (and high finance) forwarded this tidbit to us from the quarterly SEC reporting of a publicly traded company. Read it closely (preferably with a real estate attorney/accountant by your side) and you’ll get a feel for just how much $$$ these food factories rake in on a monthly basis. FYI: the “third party” mentioned in the first sentence is The Cosmopolitan Hotel and Casino:
“In January 2010, STK Vegas entered into a management agreement with a third party for a term of 10 years, with two five-year option periods. Under this agreement, STK Vegas shall receive a management fee equal to 5% of gross sales, as defined (“gross sales fee”) plus 20% of net profits prior to the investment breakeven point date and 43% of net profits thereafter (“incentive fee”). In addition, STK Vegas is entitled to receive a development fee equal to $200,000. The Company has elected to receive a credit against a portion of its obligation (estimated at approximately $387,000) to fund the build-out in lieu of receiving the $200,000. Management fees amounted to $1,321,430 and $1,240,408 for the three months ended March 31, 2015 and 2014, respectively.”
Now you ALSO know why many of these places don’t give a rat’s ass about your complaints of high markups and excessive pricing.
P.S. This is pretty much the standard deal that most celeb chef joints make with the big hotels (5% of gross sales + a nice % of net profits thereafter – after the hotel covers all of its costs, labor, equipment, etc.)….although the numbers for these big-ticket, always-full, beef and booze emporiums dwarf those of the non-steakhouses.
P.S.S. How’d ya like to be Jean-Georges Vongerichten or Gordon Ramsay and have a $1,000,000+ check waiting for you in Vegas every quarter? No wonder these guys are smiling all the time: