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STAFF REOIRT <br /> DATE: June 18, 1996 <br /> TO: Mayor and Councilmembers <br /> FROM: Michael Mornson, City Manager +"1 <br /> ITEM: FOOD SERVICE CONTRACT AT THE STONEHOUSE <br /> As you know, the City has a contract with Ernie Swanson doing business as Ernie's Catering <br /> Service, to run the food operation at the Stonehouse. ,The contract summary is as follows: <br /> Contract Term: July 1, 1995 to June 30, 2000 <br /> Termination Options: 90 days by either party <br /> Profit and Cost Sharing;. First year - City shares net profits with Ernie. We basically are <br /> breaking even on the food, however, customers in the premises <br /> • for food is up from prior years, which results in more beverage <br /> sales - which is all profit for us. <br /> Second to Fifth year - July 1, 1996 - Ernie is paid 9% of gross <br /> whether or not a profit is made on the food. Based on year 1, the <br /> City would have paid Ernie,about $1,100 per month (a $13,200 <br /> loss). <br /> Because years 2 to 5 would be cost prohibitive to the City, Don Perry and I met with Ernie <br /> Swanson on Wednesday, June 5th. We will meet with him on Monday, June 10th as well. <br /> We are obviously looking at various options with Ernie, primarily because the 9% gross is not <br /> appealing to the City. Ernie Swanson is aware of this and is going to present us with a <br /> proposal on Monday to enter into a new lease where he makes us,a minimum rent payment to <br /> lease the kitchen for food preparation for the Stonehouse. We would then continue to make all <br /> the money on beverages, etc. Part of his proposal would be reduced food hours. <br /> Because the 9% gross starts July 1st, I feel this is important to discuss and possibly decide at <br /> the June 25th Coungil meeting. <br />