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Pricing strategies key to holiday catering profits

Pricing strategies key to holiday catering profits

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I don’t know about where you are, but when the first cool breeze of fall starts to blow in Dallas, the phone starts to ring with clients calling to book their holiday events. For restaurants, this is the prime time of the year for catering profits.

Imagine having a full reservation list on Friday and Saturday nights in December in your restaurant while at the same time booking your restaurant “party“ rooms and serving at off-site catering for your clients.

The profits can be boundless if—and only if—you have priced the off-site catered events correctly. If not, you might actually be paying clients to host a party in their home featuring your food. You probably just reread that last sentence thinking it might be a typo. Sorry to say that my experience in coaching restaurant owners about off-site catering has proven quite the opposite.   

Many restaurateurs pay a client to host a party in their own home when they make the mistake of handing a catering client their restaurant menu and tell them that those are the same prices they would charge them to cater their signature braised pork belly for a holiday party in the client’s home.

Let me break it down to show you how to make money on such an event now while you are pricing party proposals for the holidays. Let’s assume that the price of the pork belly on your restaurant menu is $18.

Event stats:

  • 100 guests
  • Poolside, casual setting
  • Stations for serving
  • Quality plasticware
  • Start time: 7 p.m.
  • End time: 10:30 p.m.
  • Client providing alcohol
  • Caterer providing soft drinks, tea, water
  • Caterer providing two food tables with cloths, bar and bar back table with cloths

Costing facts:

  • Soft drinks, tea, water charged at $2.25 per person (pp) = $225
  • Plasticware at $2.95 pp (2 plates, 3 cups, 3 napkins, 2 forks pp needed for the entire event)
  • Staff: $765
  • Two kitchen staff at $20/hour from 5-11:30 p.m. = $390
  • Two hours for staff to pick up and bring back food = $60 paid to staff. Charge client $85
  • One bartender from 5:30-11:30 p.m. = $180
  • Ice delivered for $75. Charge client $90. (If you bag your own, charge at least the same as the local  ice company.)
  • Table, bar and cloths rentals = $251 from rental company. (If you provide them, charge at least $200.)

Total so far is $1,626, and you haven’t charged a penny for food. If you charge the client only $1,800 ($18 x 100 guests) for the entire event because the pork belly is $18 per person on your menu, then you are definitely going to lose money on this event. Do you see how you are actually paying them to have a party in their own home?

It’s very easy to explain these costs to your client. Just list them as line items on a summary, and they will understand the costs easily. The biggest pushback might be for the plastic plates, cups, forks and napkins. They might ask why those items are not included in the food costs. If the client asks that question, my answer is, “Oh, sorry, I wanted to make this easy for you by providing those items. I would be more than happy to take them off the proposal for you. Just have two plates, three cups, napkins and two forks per person available for us when we arrive so we can set them out for your guests.”

Ninety-nine percent of the time the client will then understand that you are providing a service to them and will totally let you bring the “guestware” and charge them for it.

Simply stated, food that leaves your restaurant for a catered event costs more than when served in your restaurant because of all the added costs and travel. You must charge for these items to be profitable.

If you don’t price the off-site catered event correctly and actually lose money, you are spending the profits that you are making on that holiday event in your party room. You’ll notice the domino effect at the end of December when you look at your bottom line for the month and wonder, “I was so busy, why didn’t I make more profit?”

Stop the madness! Price your off-site events correctly and make the holiday catering profits that you deserve. If you want to know more about pricing your catering menu, send me an email.

Sandy Korem started The Catering Coach to help restaurateurs and caterers maximize their off-site catering potential and, if desired, establish a take-home catering revenue stream. She is the c.e.o. and founder of The Festive Kitchen, a Dallas catering company.

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