Zeidel & Associates Structures Flexible Food & Beverage Management Agreement for Delaware Beaches Hotel

Situation

Zeidel & Associates represented a New York-based real estate investment platform that owns a branded hotel in the Delaware Beaches area. The lease for the hotel’s restaurant space had expired, and the client sought a new operator to take over the space. Given the region’s challenging food and beverage environment, the client wanted an arrangement that would provide both operational stability and the ability to quickly pivot if performance lagged.

Approach

Rather than entering into a traditional lease, Zeidel & Associates recommended a food and beverage management agreement. This structure provided the client greater flexibility to remove the operator if the operation failed to meet expectations and offered advantages from a liquor licensing perspective. The agreement also covered the adjacent ballroom space, requiring the operator to provide catering for banquets and events.  It also required the operator to honor all existing and prospective bookings.

Because the property is a branded hotel, the agreement required the operator to provide the complimentary breakfast mandated by the brand. Drawing from the client’s past challenges with prior operators, Zeidel & Associates incorporated detailed performance standards. These standards were tied both to the operator’s eligibility for renewal of the agreement and the client’s ability to terminate the agreement if benchmarks were not met.

Result

The final food and beverage management agreement gave the client the operational flexibility it needed while ensuring brand compliance and service continuity for hotel guests and event clients. By building in performance-based renewal and termination rights, Zeidel & Associates helped the client protect its investment and mitigate the risks inherent in a competitive and unpredictable food and beverage market.