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Some of the approximately 24,000 runners pass by the Royal Ontario Museum during the Toronto Waterfront Marathon in Toronto on Sunday, October 14, 2012.Michelle Siu/The Globe and Mail

In an unprecedented move, Toronto's Royal Ontario Museum is asking caterers to pay an annual fee of $10,000 – for up to 10 years – to secure a slot on its preferred list of suppliers.

The demand is part of a complicated Request for Proposal (RFP) issued by the ROM last month. The deadline for submissions was Friday.

The contribution would not guarantee caterers even a single evening's work – just one of four slots on the Museum's coveted preferred list.

The fee would supplement the so-called landmark commission, which requires caterers and other suppliers to remit 10 to 15 per cent of their gross invoice to venue operators.

For consumers, the new measure could ultimately add to the financial burden of weddings, bar mitzvahs and other social events.

Under terms of the Museum's RFP, caterers that pledge to contribute more than $10,000 if they are seeking the right to be the exclusive caterer to the Royal Ontario Museum. The ROM is thought to generate $750,000-$1-million a year in catering food sales and another $1-million for liquor, rentals and wait staff.

Glenn Dobbin, the ROM's deputy director & chief operating officer, defended the measure.

"Cultural venues like ours are increasingly looking to grow our revenues," he said. "We have to – to improve financial sustainability."

But some members of the local catering fraternity are concerned about the optics of the demand.

"Do you think they'd ask the construction industry for that fee?" asked David D'Aprile, president of 10tation Event Catering. "I think there'd be a little bit of a conflict. … This is going to set a precedent."

"We're struggling with it," conceded Russell Day, vice-president of Daniel et Daniel, one of the city's leading caterers.

"It's nothing that has happened before, and is not … necessarily good for the community."

"It's basically a buy-in, like joining a country club," added another caterer who asked to remain anonymous. "I've never seen it, in 28 years. Obviously, it [ROM] must be having financial strife." Caterers, he suggested, often "see things that appear disingenuous," but are constrained from protesting because "we have mortgages to pay."

Others suggest that while the Museum's money-up-front approach is novel, some elite venue operators effectively levy the same fee at the back end – as a 10-per-cent "commission" or discount from suppliers on final invoices.

"There's the landmark fee and there's the commission – both standard practice," acknowledged Tony Loschiavo, owner of Toronto's L-Eat Caterers.

"And there's also a service charge. It's often presented to look like a gratuity to wait staff, but it actually goes to the venue. In some cases, 30 to 40 per cent of the net goes to the venue. Unfortunately, I have to pass this on to my clients. Do they recognize that venues are collecting rent, landmark fees, commissions and service fees? I don't think so."

Mr. Dobbin concedes that the ROM is "being aggressive. We're trying to determine what the market will bear. That's a fair thing for us to do."

Like other arts organizations, the Museum has been struggling. In August, it announced plans to chop its annual $30-million budget for staff salaries by 10 per cent, and invited applications for voluntary severance.

If the ROM's preferred list is limited to four caterers, it stands to earn an extra $400,000 over the 10-year term. If its annual $57-million operating budget stayed static for the decade, the new revenue would represent about three-quarters of one per cent.

Mr. Dobbin says he's not convinced the optics of the fee are negative.

"We issued the RFP September 11, and have so far had this issue raised on only one occasion," he said.

That, caterers contend, is because they fear incurring the ROM's wrath, in public or in private, before it adjudicates RFP submissions.

Although a loose association of Toronto caterers exists, it's not strong enough to organize a boycott of the ROM process. Someone would almost certainly opt out and seek to win the Museum contract.

Some caterers are complying with the ROM's new policy.

"The RFP was a challenging document," said L-Eat's Mr. Loschiavo, "but it weeds out the pretenders. If you don't have $10,000 for the ROM, your business may not be viable. But it's an elite facility. I don't see how I can walk away from that venue and tell my clients I don't have access to it."

Sebastien Centner, director of special events and catering at Eatertainment, declined to comment on the ROM's new policy, but confirmed that he had submitted a proposal "abiding by their terms and expectations."

The larger problem, caterers say, is competition. Where once only a handful of quality banquet venues existed, there are now dozens – and more suppliers springing up to service them. The catering pie is increasingly being cut into smaller pieces. Said Mr. Loschiavo: "The market is saturated."

This month, yet another Toronto event venue, the Design Exchange, sent tremors through the catering community.

The DX is trying to raise its profile by importing bigger design shows. But contracts for those shows typically prohibit food and beverage service near exhibits, reducing the Exchange's income from space rentals.

To offset the loss, the DX last month sent feelers to a select group of event organizers, seeking ideas about how to operate more efficiently. The public-relations problem: none of the caterers on its current preferred list were invited to make submissions.

"It was meant to be a confidential process," said board chairman Tim Gilbert. "But it wasn't a formal tender, like an RFP. We were committed to nothing. And we've made no final decisions."

Mr. Gilbert allowed, however, that fence mending with preferred caterers was required. That process seems to be already under way.

"I'd be very surprised to see the Design Exchange change direction without providing current partners a chance to participate," said Mr. Centner. "I've recently been assured of this by DX management."

Editor's note: An earlier version of this article incorrectly said caterers bidding on work at the Royal Ontario Museum that pledge to contribute more than $10,000 can buy themselves more points in the assessment process. In fact, bidders can contribute more than the $10,000 if they are seeking the right to be the exclusive caterer to the Royal Ontario Museum. This version has been corrected.

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