Stepped into this catering business for the first time? Are you finding it difficult to get more clients and make a generous profit? Well, then you have landed at the right place. Here, we will guide you with every detail that you need to know before you make an estimate. Accurate pricing is an art and quoting a price for a particular task will decide business status. An effective pricing strategy can keep your business afloat and raise a decent amount of profit.
Check out this article to get an idea about the pricing strategies for catering jobs if you are a small business owner.
Besides delighting customers, your topmost financial priority is to maximize revenue. So, let’s discuss how to price catering jobs!
Steps to estimate catering jobs for small business
Before creating an estimate consider all the below points to make your price exact and accurate.
Step 1: Get an approximate headcount
Other than food choice, the number of guests attending the event affects the price. Some people may not show up or some may not come in case they have not received the invitation. To protect yourself from unexpected loss implement an effective policy in your contract. Such a policy will compensate for your loss in the above situations.
Step 2: Consider the menu and service
Pricing depends a lot on the menu and the types of service the client wants. A hors d’oeuvres buffet would likely cost less than any other type of service. Moreover, the types of service including the cutlery used would also influence the rate. The glass serving ware, china plates, bowls, etc. would surely shoot up the total cost. Additional items, special requests, dietary restrictions, or adding sustainable seafood may heighten the price amount. Whereas, a simple menu or feeding guests outside regular meal time would cause a dip in the price.
Step 3: Add all the variables
There are other variables as well that need to be considered before estimating your catering jobs. Let’s find out what those are.
a. Food Cost:
Once you get the order you propose a specific list of menus and once that gets approved you need to calculate the ingredients required. The specific quantity of ingredients used in food also reflects the total cost. Feeding a specific set of meals to each guest involves a particular set of ingredient lists with a specific quantity. Hence, before you quote your estimate you must figure out your requirements.
b. Bar Cost
Social parties, get-togethers, and other occasions may include a bar which may be expensive. Some clients invest more in the bar than in food. The entire setup, alcoholic and non-alcoholic beverages, the glasses, and bartenders, all add up to the estimate. Some clients prefer to choose their alcohol and bring up licensed bartenders. But in cases where you need to provide this, create an estimate for this as well. On average, it should cost $4 to $5 per person and hourly calculation for this is recommendable.
c. Supplies Cost
Whether plated or buffet service, supply cost is an inevitable part. Some requirements are a quintessential part of a catering service. These are napkins, tablecloths, chairs, glassware, chafing dishes, utensils, and other equipment. While your estimate for the task does remember to include the rentals of these items to make your estimate accurate.
d. Service Charge
Including your service charge is a must. This includes all your overhead costs. The labor cost, rental, administration, coordination cost, and other utilities like electricity, gas, vehicle fuel, maintenance, etc., all come under the service charge. You can split your monthly overhead costs and add them to the prices of the number of projects you receive in a month. Clients would negotiate so always keep room for that but profit-making is also essential for the survival of your business. Hence, be specific about your expenses while you quote your estimate.
Step 4: Estimate labor cost:
Managing labor costs is important to consider because it directly impacts your business profitability and service quality. The catering business often adjusts labor demand according to event bookings—the labor costs include the workforce involved in preparing, cooking, serving, bartending, and event coordination.
Step 5: Include Profit Margin:
For caterers, maintaining a healthy profit margin is essential to sustain the business, cover overheads, and ensure growth. A typical profit margin for catering businesses ranges from 15% to 30%, depending on market conditions, efficiency, and pricing strategy. Understanding profit margin strategies can help you make better decisions for cost management. A higher profit margin indicates better financial growth and reflects how the company manages its costs and generates a profit.
Step 6: Calculate the total amount
Add all your expenses including your service fee and tax to get the total amount. An estimate with a per-person rate would be certainly helpful to the client to understand their expenditure and plan their budget accordingly.
In this article, we have provided a basic idea about how to price your catering job. Consider all the essential points to make your estimate accurate so that you earn a decent profit by offering the best service.
If you are wondering what will be the average cost of catering for 50 guests, do check out the below-mentioned magic formula:
O+M+L+P => Overhead cost + Material cost + Labor cost + Profit
Food Cost Percentage = Cost per portion/ Selling price
Cost per portion = Recipe cost per portion
Recipe costing = Total cost of all ingredients used
What is a good food percentage?
There is no such good food percentage, it all depends upon the number of people to be served and the type of food being provided. Approximately a good percentage is around 28%-30%.
FAQs
Typically per-hour rate for caterers is between $8.7 to $25. Top-end caterers earn a fairly good amount which is around $25, whereas new caterers get about $8.7 to $9. Hourly rates vary from place to place in New York it is $17.46 and in California, it is $17.41.
To calculate the per person food first cost out your ingredients. Then divide the amount by the number of guests and get an approximate value. You can even benchmark certain items on a per-person basis. Fruits and salads can be considered 1 cup per person or appetizers can be six to eight pieces per hour per person.
The average cost of a wedding buffet is between $1800 to $7700. The catering cost for a wedding may fluctuate and can go as low as $400 and up to $13000 depending on the arrangements and services.
Catering costs in large cities are more than in smaller ones. A sit-down buffet would cost more including the cocktails and bars and the amount varies between $125 to $300 per person. For hors d’oeuvres, reception, or buffet with no cocktails or bar the price can be around $30 to $70 per person.
Bottom line!
As Wedding Reports in the U.S. around $4600 is spent on food and nearly $2400 on bar services. Various factors decide how much the catering costs for a wedding, business owner’s experience, expertise, event guest count, geographic region, and date.
So if you want to make the best out of this business sector, research the current catering prices, and decide the average wedding catering cost tactfully to earn a generous profit.
