Is it Worth Participating in Food Festivals?You might not make a profit, but there are still plenty of positive reasons to set up a booth.
With summer upon us, community calendars are chock-full of food festivals. These gourmet events attract thousands of people, providing ample opportunity for exposure of your business and products. But becoming a vendor requires up-front fees and lots of hard work – is it worth it? Here’s the essential info to consider before you participate in a food festival.
The reality of profits
Don’t go into a food festival expecting to get rich – even breaking even is tough for many restaurants, bakeries and other vendors.
“It requires an understanding of labor, ingredients, set-up and other costs relative to revenue sources,” said Vijay Goel, a catering company owner and founder of Chefalytics, a start-up that uses data to help restaurants improve their operations. “Some [festivals] allow you to potentially make a lot of money, others treat it like a good marketing opportunity.”
Before you start crunching the numbers, learn about the two common types of festivals.
One festival model involves charging attendees a high entrance fee for a set number of tasting tickets. Often, vendors then earn a set fee based on how many tickets they collect. This helps eliminate variability in pricing and makes it easier for vendors to predict revenue.
Another common model sets a low-price or free admission to attendees. Food vendors determine the price of their products, and festivalgoers are free to purchase as much as they’d like. This requires more pre-planning on the part of the vendor, who needs to estimate how many of each product will sell and the top dollar that people are willing to pay for each item.
“You have less control of traffic [at this type of festival],” said Goel, “So you have to consider the number of attendees, your competitors and the costs of your food to set prices.”
Marc Schulman, president of Eli’s Cheesecake bakery and café in Chicago, has participated in Taste of Chicago since the festival started in 1980. He said that it’s a huge challenge to make a profit.
“Our goal is to break even,” said Schulman. “People get into these things thinking they’ll make a lot of money, but actually they lose money.”
The reason it’s difficult to make a profit is a compound issue. On the one hand, you have high start-up fees, which include the cost of renting a space at the festival, purchasing (or renting) portable cooking and serving equipment. Don’t forget the labor to set up and take down the space — periods when no revenue is coming in.
“In a lot of ways, you’re doing all the same things you need to do to open a restaurant, but it’s only going to last a day or a weekend. It’s a lot of work,” said Schulman.
Then, there’s the cost of staffing the event, taxes on food purchases and commission paid to the festival one every sale.
“At Taste of Chicago, the tax on food is 11.5 percent. Let’s say we do $100,000 in sales. After tax, we really did [less than] $89,000. Then you have other costs, like staffing, licenses, ingredients and equipment. It’s really challenging to make a profit,” said Schulman.
Money isn’t everything
If it’s so hard to make a profit at food festivals, why do some vendors continue to set up booths, year after year? Simple: Food festivals offer massive marketing opportunities.
“If you’re going to market to a new audience, you might be OK with losing money if you meet new customers who come into your place [after the festival],” said Goel.
Many food festivals offer exceptional visibility for vendors. Thousands of attendees will be exposed to your restaurant’s logo, staff and products, so it’s important to make a good impression.
“Focus on a product that highlights what you do best,” said Goel.
For an Italian restaurant, that might mean meatballs doused in homemade sauce. A burger joint might whip up some sliders with fries. And for a bakery, that means tastings of your most popular treats.
“We cut up tons of biscotti,” said Connie Bailey, owner of the Hudson Valley Dessert Company in Saugerties, NY. “Put out samples and people will line up. The line itself then attracts even more people [to your booth].”
While her bakery doesn’t participate in food festivals anymore, she said that the exposure from participating in upstate New York’s famous Hudson Valley Garlic Festival yielded loyal customers.
“When we did the garlic fest, people came back for years after,” she said. “It’s a good marketing opportunity if you’re just getting started, and if you’re smart, you can get [customers] to come back to your brick-and-mortar space.”
Another surprising benefit food festivals offer is the ability to experiment with minimal risk. Because you’re not testing the item at your restaurant, you don’t have to worry about confusing or alienating your current customer base.
“Looking to test a new product? This may give you an opportunity to do it outside the core brand,” said Goel. “Have researchers near your booth to get people’s reaction [to your new product].”
Find the right festival for you
Choosing a festival that fits your strengths is the best way to maximize success. The first thing you should consider is how large the crowd will be.
“We initially picked classy festivals, but then we switched to populous events,” said Bailey, who was looking for more exposure at the time.
Participating in big community festivals also earns you credit within your region. Even though Schulman has had tough years at Taste of Chicago, he has participated every year since its inception, with no plans to stop.
“The Eli’s Cheesecake brand is a really important part of Chicago,” said Schulman. “Participating in Taste of Chicago works really well for building our brand and story.”
The dates and length of the food festival also makes a difference.
“Most festivals are on weekends or holidays,” said Goel. “Most of the busiest days for restaurants (corporate lunch-driven restaurants excepted) are on weekends and holidays. Don’t sign up for a big festival if it’s going to be too much for your business to handle.”
Finally, make sure your presence at a food festival will expose you to a new customer base. The idea is to grow, not to just feed your current customers in a new location.
Tips for success at the festival
Once you’ve decided to participate in a food festival, employing a few clever tips will help you thrive. First, develop strategies to encourage festivalgoers to come back to your brick-and-mortar location.
“Have literature on hand to establish return customers,” said Bailey. “A coupon may also make them want to come back.”
Bailey added that you should encourage engagement with your customers on social media. For example, you could offer a coupon or free treat if an attendee agrees to follow you on Twitter. Then your business can connect with them after the festival.
When it comes to weather, plan for the worst and hope for the best. Schulman said poor weather wiped out one of the best days of Taste of Chicago a few years ago, leaving him with lots of unsold, perishable product on hand.
“[To prepare for bad weather,] sometimes we offer a product that can be kept frozen and used somewhere else,” he said.
Since staffing your booth could be one of your biggest costs of doing the event, it might seem like a good idea to hire low-paid temps to help out. Goel said you should avoid this temptation and instead bring your best staff to your booth.
“Any service-orientated place should bring their own people to help convey the experience [of the actual restaurant],” he said, adding that this gives your team a chance to develop their skills.
And finally, stay positive and focus on the benefits. Festivals can be hot and crowded, and it’s challenging to serve your food without access to your home kitchen. Focus on your reasons for doing the festival and you’ll get through it with a smile.
“Profit, personnel development, research and marketing are all great reasons to participate,” said Goel.