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Exhibit 1 - Agenda Information SheetCity of Denton _____________________________________________________________________________________ AGENDA INFORMATION SHEET DEPARTMENT: Materials Management CM: Todd Hileman DATE: June 5, 2018 SUBJECT Consider adoption of an ordinance of the City of Denton, Texas, a Texas home-rule municipal corporation, authorizing the City Manager to execute a contract for food and beverage concession services; and providing an effective date (RFP 6650- awarded to Mega Promotions, Inc. for a one year term with two (2) one (1) year options). The Parks, Recreation and Beautification Board recommends approval (6-0) RFP INFORMATION Historically, the North Lakes and Denia softball concession stands have been operated by Parks and Recreation Department (PARD) staff. The concession stands offer food and refreshments during adult and youth tournaments and events. Temporary/seasonal staff sold concessions, reconciled deposits, cleaned the stands, and counted inventory. Professional staff scheduled concession workers, stocked the stands, verified and submitted deposits, and verified inventory counts. On average, the concession stands were open 155 times per year, combined between the two locations. A three year history of sales resulted in the following gross revenue: FY14-15 $27,757 FY15-16 $34,901 FY16-17 $38,591 Previous estimates of revenue versus expenses, showed the City breaking even to provide concession services. With the implementation of a new payroll software in 2016-2017, staff hours are more accurately tracked, allowing a more precise calculation of expenses. Data gathered from FY 2016-2017 confirms the operations were essentially cost neutral with a net profit of $348. City Hall 215 E. McKinney Street Denton, Texas www.cityofdenton.com Contracting out the softball concession stands was identified as a process improvement for PARD during the FY 2017-2018 budget presentation. The change in service model is expected to save staff time by eliminating operation duties and reducing expenditures associated with the purchase of goods and supplies. PARD would continue to be responsible for scheduled maintenance and related costs for required upkeep of the concession stands. There are no additional expenditures associated with the implementation of an outside service contract. In addition to saving City resources, other advantages considered include expanded menu options and improved customer service by professionals with extensive experience in the concession business. Contracting the concession stands was also expected to result in an increase of net revenue. The contractor’s menu prices for standard concession items such as water, Gatorade, candy, pickles, hot dogs, and nachos are within 50¢ to $1 of City managed prices. Expanded menu items not previously offered by the City, such as deluxe nachos and tacos, range from $1 to $4 more than the standard items. Per the contract, the City will have final approval on the menu and pricing. A benchmark survey was completed in August 2017 with 24 Texas cities responding. Results show most cities outsource their concession stand operations. Only three (3) of the 24 cities run their own concession stands. The survey demonstrated that 21 of 24 cities (87%) contract their concession stands out or allow them to be operated by sports associations. Request for Proposals (RFP) for concession stand services were sent to 255 prospective firms for these services. In addition, the specifications were placed on the Materials Management website for prospective respondents to download, and advertised in the local newspaper. Two (2) proposals were received and evaluated based upon published criteria including price, compliance with specifications, delivery and indicators of probable performance. Based upon this evaluation, Mega Promotions Inc. was ranked the highest and determined to be the best solution for the City. Mega Promotions, Inc., proposed a reimbursement percentage of 25% of gross sales payable to the City of Denton. Mega Promotions is a local company that has been managing concession stands for over 20 years. According to the proposal, the estimated amount of sales per year is $41,900 with the City’s estimated reimbursement of $10,475 per year. This results in a projected net revenue of $8,305 considering the resulting savings in operational expenses and the reallocation of staff time for improved utilization of resources. In awarding this contract, PARD will improve efficiencies, expand product offerings, and increase customer service. By reducing staff time dedicated to operating concessions, the athletics division temporary/seasonal staff will be able to redirect resources to monitoring league games, providing customer assistance, and managing incidents/accidents at the softball complexes. This will provide a greater customer service experience to our league patrons. Professional staff time will be better utilized by implementing and managing our athletics program offerings. PRIOR ACTION/REVIEW (COUNCIL, BOARDS, COMMISSIONS) On April 2, 2018 the Parks, Recreation and Beautification Board recommended this item to the City Council for consideration. RECOMMENDATION Award a contract to Mega Promotions Inc. to provide concession services at the North Lakes and Denia Softball Complexes for a one year term with two (2) one (1) year options. PRINCIPAL PLACE OF BUSINESS Mega Promotions Inc. Denton, TX ESTIMATED SCHEDULE OF PROJECT This is an initial one (1) year contract with options to extend the contract for two (2) additional one (1) year periods, with all terms and conditions remaining the same. FISCAL INFORMATION The City of Denton will receive 25% of gross sales from Mega Promotions, Inc. The City will be responsible for maintaining concession facility upon request of repairs and will be funded out of an operating account 411170.6389. STRATEGIC PLAN RELATIONSHIP The City of Denton’s Strategic Plan is an action-oriented road map that will help the City achieve its vision. The foundation for the plan is the five long-term Key Focus Areas (KFA): Organizational Excellence; Public Infrastructure; Economic Development; Safe, Livable, and Family-Friendly Community; and Sustainability and Environmental Stewardship. While individual items may support multiple KFAs, this specific City Council agenda item contributes most directly to the following KFA and goal: Related Key Focus Area: Safe, Liveable & Family-Friendly Community Related Goal: 4.4 Provide and support outstanding leisure, cultural, and educational opportunities EXHIBITS Exhibit 1: Agenda Information Sheet Exhibit 2: Pricing Evaluation Exhibit 3: Contract Exhibit 4: Ordinance Respectfully submitted: Karen Smith, 940-349-7100 Purchasing Manager For information concerning this acquisition, contact: Laura Behrens, 940-349-7469.