Editor’s note: A universal truth about Italian food is that it travels well. Also, you can make a whole lot of it and it won’t lose flavor or integrity. It’s one of the reasons the segment and catering have, historically, been such a perfect match. Pasta bars at weddings? Never disappoints. An office luncheon catered by pizza? Can’t go wrong. But where operators can go astray is in the details. How do you make sure you’re making the most of the opportunity?
Have you ever wondered if you’re pricing your catering proposals correctly? Is it possible to make more money? I know I wasn’t doing it right and it cost me. Let me show you what took me too long to learn myself.
Let’s pretend we’ve been asked to cater an event with the following specifics:
- 150 guests
- Location: Backyard pool party
- Start time: 7 p.m.
- End time: 11 p.m.
- Alcohol provided by the client
- Caterer to provide staff, including bartender
- Caterer to provide disposable guest plates/utensils/cups
- Caterer to provide tables for food
Whatever you do, do NOT send the client an all-inclusive price. All-inclusive pricing does nothing to show the client the value you bring and the cost for all the things they are asking you to do for their convenience. It also protects you, the caterer, in case you leave something out by mistake.
Cost breakdown
Now, let’s price this event right. Here are the components for our cost breakdown:
Food Experience
- 150 guests @ $X per person
- 150 desserts @ $X per person
- Staff
- Rentals
- Disposables
- Subtotal
- Tax
- Total
Food experience
Combine ALL of the costs of the accurately updated recipes that you will use for the menu EXCEPT for dessert. Take the cost of goods sold (COGS) and multiply by 3.5 to set your profit margin (the standard is 3 times, and you can even multiply by 4 or 5 times during high-demand periods to maximize profits during the busiest times if your market can bear it). Let’s suppose the COGS is $800. Multiplying $800 by 3.5 = $2,800. Divide $2,800 by 150 guests = $18.66.
If the dessert COGS is $174, then multiply 174 x 3.5 = $609. Divide $609 by 150 = $4.06.
Food
- 150 guests x $18.66 per person: $2,799
- 150 desserts x $4 per person: $600
- Profit to the company for food experience = $2,425
Many business owners stop right here and ONLY charge the client for the food and include in that cost the staff, disposable plates/utensils/cups or/glasses plates, and any other equipment for food presentation. In other words … many caterers give away their catering profits and wonder why they worked so hard and made so little.
Why do you charge for staff? Think about it.
- Who finds the staff?
- Who pays the staff’s payroll taxes?
- Who pays for the insurance to cover damage at a client’s home?
- Who trains the staff?
- Who spends time contacting the staff to inform them about the event?
Answer: YOU do. Do you want to just let the profit you are making on the food cost cover the cost of that staff? I’m not going to, and I don’t know why you would.
To determine what to pay your staff, find out the average cost of waitstaff for your area of the country. In many parts of the county, it is at least $25/hour per staff person. Make a profit PER HOUR on each of your staff members and mark up what you pay by at least $5 per hour per staff person. Remember, you have to match payroll taxes and expenses from each check plus make a profit.
The minimum each staff person should be paid is four hours per event. Also, figure in the staff time a minimum of two hours prior to event start time for set up. Don’t let the client talk you into a one hour set up. Your presentation and food will not be the same if you are rushed. Many times it takes 30 minutes just to unload the delivery van and get everything to the event room.
Also, figure one hour after the event ends for clean up. Clean up is CRITICAL. If the place is left a wreck, you will not be hired again.
For our sample event, I have charged $31/hour per staff person and also allowed one waiter/kitchen staff per 50 people since this is a casual event with an easy menu. The staff is paid $20/hour.
Staff
- Two kitchen (5 p.m.–12 a.m.): $496
- Waiter (6 p.m.– 12 a.m.): $186
- Bartender (5:30 p.m.– 12 a.m.): $201
- Profit to the company for the staff: $274
Rentals
If your company is providing the platters, chafers, paella pans, table top griddles, serving utensils, etc., for this event, you must charge for these items. They are rentals from your company.
- Rentals (platters, serving utensils, table, cloth): $110
- Profit to the company for rentals: $110
Disposables
For some reason, charging for the disposable items is difficult for many caterers, especially restaurant owners. Remember: this is not an event at your restaurant where the client is seated and served at your table. This is at a home, in a park, at a business where the food can be dropped off or served with staff. I prefer to line item the cost of the disposables, but you could wrap it into your food costs. In the end, it doesn’t matter how it’s done, just get it paid for by the client.
For our 150-guest party, we will need two plates, one fork, three cocktail napkins and conservatively two-and-a-half cups per person. The approximate cost for this is $1.26 per person. I would at least double the cost of this when charging it to the customer.
- Disposables: 150 guests @ $2.75 per person: $412
- Profit to the company for disposables: $223
Cost Break-down
150 guests
Food Experience
- 150 guests x $18.66 per person: $2,799
- 150 desserts x $4 per person: $600
Staff
- Two kitchen (5 p.m.—12 a.m.): $496
- Waiter (6 p.m.—12 a.m.): $186
- Bartender (5:30 p.m.—12 a.m.): $201
- In-house Rentals: $ 110
- Disposables @ $2.75/person: $412
- Subtotal: $4,804
- Tax: $396
- Total: $5,200
Client pays $5,200. Profit to your company $3,032. Now that’s a profit that reflects what your food and service are worth.
What I have written in this article is the MINIMUM profit that should be proposed for this sample event. There are more items like service fees or production fees which are at the discretion of the caterer. My company always charges a production fee of 18 percent. There is value in what you do and people are willing to pay for it.
