The Catering Coach
3 Tips to Get the MOST Profits from Your Catering Sales
Successful catering is all about profits, NOT sales. Many times, we only see the dollar signs when considering a potential catered event. Three of the mistakes I see caterers make, or restaurants trying to cater, are to take every sale that comes in the door, to match pricing to a competitor and to sell catered food at the same price as the restaurant menu price.
If you have tried any of these, well, you haven’t graduated from Catering 101 with a passing grade! For example, boxed lunches for 500 people at $8 per person during a slow week looks very enticing. Who wouldn’t want to deposit $4,000 in the bank during off season? Everyone would, unless you knew the $4,000 would hit the bank one day and two days later $4,300 would be debited from the account to pay for those boxed lunches.
Want to get past these mistakes in your catering business? Here are three things that will make you the most profits in catering.
Number One – MINIMUMS
Everyone I know in the restaurant or catering business has been approached about catering an event for 10–12 guests. I’ve been guilty of taking these jobs myself. In my “non-profit” catering days, I jumped at every catering sale that came in the door, whether it was 100 guests or 10 guests.
Unless you are charging the client a huge amount of money for food and staff for 10, there is NO WAY you are making any money on an event for 10-12 guests.
For a simple boxed lunch with a sandwich, chips and cookie, the cost of goods sold is a minimum of 40 to 45 percent if all of the sandwich flavors are the same. Assume your client wants three kinds of sandwiches offered for the 12 guests to choose from and you, out of the kindness of your heart, throw in delivery as part of your pricing. If you add up your food costs, packaging, napkins, fork, delivery bag and delivery costs, there is NO profit.
What should your minimum be? For my catering company, our minimum for drop-off catering and boxed lunches is 25 guests. For off-site events, it is 30 guests. For years, I had no minimum guest count, and I paid for it with no profits for small events. In fact, we lost money. Will you turn down business? Absolutely! But, who cares? You are turning down business, also known as gross sales. You are NOT turning down profits.
Number Two–Not competing with the “guy down the street”
In my business as a catering coach, I have a member who makes excellent food and has exceptional staff and customer service. The competition in their town charges a ridiculously low price for their catered food and service. There is no way that company is making any real profits, yet my member will not price the menus higher than the competitor because “no one will use us.” Are they making a profit at the end of the year? NO! They are losing money because they won’t step out of their fear box to be paid what their product is worth.
When it comes to making profits in your catering business, don’t let the competition rule your company profits. Be paid what your food and service is worth. Do not compromise, or your profits will fly out the window. Catering is not easy. If someone tells you it is, they have never catered an off-site event for at least 100 guests. Be paid what you are worth, and you will make a profit.
Number Three – Catering food is more expensive than restaurant food
Any food that is catered off site from your restaurant costs much more to serve. Besides the traveling of the food, there is staff, plates, cutlery, equipment, small wares like lighters, sterno, etc., that all have to be paid for to accomplish a successful catered event. If you only charge the $21 menu price for your restaurant’s version of the pork belly, like the example from the beginning, I guarantee you have lost profits because of all of the other expenses involved with a catered event.
Don’t give away your profits by throwing in staff costs, plate costs, even ice costs, to your client. If you do, you will be working for nothing!