The PAR is used for all capital expenditures for projects such as renovations or build-outs, foodservice equipment and/or smallwares. Capital expenditures are defined as any single item or group of items purchased together that exceed $1,000 of total costs and have a life of greater than twelve months.

Budgeting for Capital Expenditures

During the annual budgeting process, the Regional Vice President and the General Manager must perform a review of maintenance or contractual commitments required for an operation and budget accordingly.  Please note this is the first step in the process, not final approval for the capital expenditure(s).

Types of PARs

Contractual Commitment – Includes: Contractual capex, Rollover capex (contractual capital not fully expended in one fiscal year, creating the need to roll the remaining balance over to the next fiscal year) and Growth (capex to secure new business). The amount of capital and typically the timing of the expenditures are committed to in the agreement with the client.  The Return on Investment (ROI) Analysis has already been done as part of the contracting process; however, for future commitments additional ROI analysis may be required.
Maintenance / Discretionary Capital – Includes capital expenditures for which there is no contractual capital commitment.    ROI Analysis is necessary to cost justify the investment.  In lieu of a ROI analysis (if the capital expenditure cannot be cost justified), a short narrative should be prepared as to the business reason for the investment.  Examples of Maintenance/Discretionary Capital are:

• Replacement Computer/Credit Card Terminals – This category allows for replacement computers or credit card terminals to be procured through the Corporate Support Center.
• Maintenance Capital – This category would include items such as a stove that can no longer be repaired.
• Emergency Capital – Includes capital that is needed for immediate operational health or safety issues (i.e. health inspector wants a change to our existing facilities in order to continue operations or a walk-in refrigerator compressor cannot be repaired and needs to be replaced immediately for ongoing operations).

Process for Submitting a PAR

The following steps outline the submittal process for each type of PAR request.

Contractual Commitment

1. First and foremost, a signed agreement is necessary in order to proceed with a Contractual Commitment PAR. Engage the Facilities Management Department for all contractual commitment purchases. The  operation prepares the PAR and attaches:
   • Capital approval / narrative (detailing the specifics of the project)
   • Excerpt from contract detailing the capital commitment
   • Quote from the Facilities Management Department
2. The GM signs and submits to SVP for approval.  
3. Upon SVP approval, the complete package with all attachments listed above is sent the Area Controller for review and approval. 
4. Upon Area Controller approval, the package is submitted to the CFO for final approval. 
5. Once the PAR has all the required approvals and a PAR number is issued, the Facilities Management Department will issue the PO to the vendor(s)–the ordering process does not get initiated by the operation. 
6. All invoices go directly to the Greenville Support Center and will be handled accordingly.

Existing Contractual Commitment PAR’s with any remaining balance at the end of a fiscal year will be “closed” (with exceptions on a case by case basis). Contractual Rollover PARs can be initiated for the next fiscal year.

Maintenance / Discretionary Capital

Note that before submitting a discretionary capital PAR, please access any contractual reserve funds first as reserve funds are put into many of our contracts to specifically address equipment replacement and repair costs.  In the event a contractual reserve fund can be used, a PAR is not necessary but the purchase request still should go through the Facilities Management Department to ensure the best pricing is received.
Also, keep in mind that budget approval does not equal PAR approval; the operation still needs to go through this process for final approval to proceed with the expenditure/project.

1. Engage the Facilities Management Department for all facilities design, equipment and smallwares needs.
2. The operation prepares the PAR and attaches the following:
   • Capital approval / narrative (detailing the specifics of the project)
   • ROI analysis – this should be a reasonable representation of the financial impact of the purchase (for cost justification)
   • Quote from the Facilities Management Department
   • Client Buy-back coverage Approval – detail the terms of the buyback coverage (length of amortization/depreciation and when it starts) and attach written approval from client for the buy-back coverage (such as an email).  If buyback coverage will not be provided, detail why the client will not provide buy-back coverage.
3. GM signs and submits to SVP for approval. 
4. Once SVP approval is received, the complete PAR package is sent to the Area Controller for review and approval.
5. Upon Area Controller approval, PAR is submitted to the CFO for final approval.
6. Once the PAR is approved and a PAR number issued, the Facilities Management Department will issue the PO to the vendor (the ordering process does not get initiated at the operation).
7. All invoices go directly to the Greenville Support Center and will be handled accordingly.

Existing discretionary PAR’s with any remaining balance at the end of a fiscal year or after three months from the last activity, whichever is first, will be “closed.”

Computers/Credit Card Terminals

Computers and new credit card terminals (Exidigm machines) are procured through the Greenville Support Center.

1. Obtain a quote for the needed equipment from the Greenville Support Center IT Department.
2. The  operation prepares the PAR and attaches:
   • Quote from the IT Department
   • Short Narrative detailing who the computers are for or what the operational need is for the credit card terminals.
   • If the computers or credit card terminals are part of a contractual commitment, attach the page from the client agreement detailing the commitment.
3. For PAR’s up to $2,500: The GM signs and submits to Area Controller for approval. Upon Area Controller approval, the approved PAR will be forwarded to the IT Department.
4. For PAR’s over $2,500: The GM signs and submits the PAR package to the SVP for approval.
5. Once SVP approval is received, the complete PAR package is sent to the Area Controller for review and approval.
6. Upon Area Controller approval, the package is submitted to the CFO for final approval.
7. Once the PAR has all the required approvals and a PAR number is issued, the IT Department will issue the PO to the vendor(s)–the ordering process does not get initiated by the operation.
8. All invoices go directly to the Greenville Support Center and will be handled accordingly.

Emergency Capital

Before submitting an emergency capital PAR, please access any contractual reserve funds first as reserve funds are put into many of our contracts to specifically address equipment replacement and repair costs.

1. The operation details in a Capital Expenditure Proposal /narrative (include, pending fines, etc) the nature of the emergency need and the proposed cost of the solution to the SVP and Area Controller.
2. The SVP or Area Controller has the authority to approve emergency expenditures up to $5,000.  The SVP or Area Controller will provide approval via email.
3. Preferably the PO for the emergency purchase is issued from the Greenville Support Center and the invoice will be processed in the Support Center.  If the operation ends up with invoice, forward the original invoice to the operation’s Field Accountant in Greenville.  The Field Accountant will process for payment and charge to the Fixed Asset Clearing Account.
4. If the invoice was created by going through the Facilities Management Department, the invoice (upon receipt and matching of the Emergency Purchase approval email from the SVP or Area Controller) will be paid and charged to Asset Clearing.

Smallwares

All smallwares orders go through the Facilities Management Department so that Centerplate can exercise the greatest buying power.  Please keep in mind that smallwares are handled in one of two ways depending on the following scenarios:

• Replacements – Replacement smallwares orders are for replacing smallwares previously purchased and which are included in the par stock.  For example, based on the anticipated catering levels at the operation, it was determined 2,000 place settings were the proper par stock level.  As part of these place settings, 2,000 dinner plates were originally ordered and capitalized (set up as an asset).   A smallwares inventory was done and there are now only 1,500 dinner plates indicating the 500 plates were either broken or lost.  A smallwares order for 500 dinner plates is necessary to get the dinner plates back up to the 2,000 par stock level.  The order for these plates would be expensed or applied to a Replacement Reserve Fund, if available.

• Increasing Par Stock Levels – If the original par stock level for dinner plates was 2,000 but the business demand for catering has picked up considerably, the new par stock needed to service this new demand is now 3,000 dinner plates.  Assuming the operation already has the 2,000 dinner plates on site, the additional 1,000 dinner plates would be ordered to bring the total dinner plate stock up to 3,000.  This order of plates would be capitalized since we are increasing the par level.  Now the books would have a total of 3,000 dinner plates as assets and this would be the new par stock level.

Exceeding the approved PAR Amount

It is against company policy to exceed an approved PAR’s assignment dollar value.  If the dollar value of the actual purchases will exceed the approved PAR value, these exceptions are handled as follows based on the amount of the overage:

• Minimal Overage – If the PAR overage is up to 5% of the original PAR value up to a maximum of $5,000, the Area Controller can approve the cost overrun to be charged to the original PAR.  For example, if a PAR was originally approved for $10,000 and based on the final invoices including tax and freight, the final total is $10,500; the Area Controller can approve exceeding the original PAR amount.  This is due to the $500 overrun being 5% ($10,000 x 5% = $500) of the original PAR amount.
• Material Overage – For any PAR overage greater than 5% of the original PAR value or greater than $5,000, a Supplemental PAR must be submitted for the value of the overage.  For example, if the original PAR was approved for $200,000 and the final invoices come in at $206,000, a supplemental PAR for the $6,000 overage needs to be submitted.  Note that even though the overage is less than 5% of the original PAR, the amount exceeded the maximum limit of $5,000.
• Either case noted above will require the submission of a Supplemental PAR along with an explanation narrative by the responsible party.

Leases

To clarify the policy on leasing:

• The same procedure as noted in the Discretionary Capital section above would be followed as to sourcing the best pricing for what is needed.
• A cost analysis needs to be done to calculate if a lease is a better way to go versus outright purchase.  Most often the best deal will be to purchase outright, so leases are uncommon.
• If a lease is determined to be most cost effective, it must be signed by the corporate office – it can never be signed by anyone in the field.

The above procedures are mandatory and any deviations from these policies require advance written approval from the CFO.

• 2014 PAR Form
• 2014 PAR Supplemental Form