Do Catering Services Make Money?
Catering can be satisfying work if you are a resourceful cook who enjoys creating meaningful occasions. But catering is a tricky business and it can be tough to make a profit unless you have regular clients or cater very large events. Caterers who take advantage of economies of scale and establish solid reputations can make money at their craft, but caterers who only find intermittent work or small catering gigs may have a hard time making ends meet.
Catering expenses include ingredients, labor, transportation and the cost of leasing or subletting a commercial kitchen. Many catering events, such as weddings, are unique, with clients choosing specific menus and themes. This variability can make it difficult to achieve economies of scale by buying ingredients in bulk, so a catering business is more likely to make money if it caters large events that make it feasible to buy in quantity for a single event.
Many catered events are once in a lifetime events. Unlike restaurant sales where customers who enjoy a meal will come back again soon, a client who has a wedding catered may never pay for another catered event in her lifetime. The intermittent nature of many catering jobs makes it difficult to earn a consistent profit, even though a single event may be profitable. Successful caterers who make money at their craft build a clientele and a reputation over time, diligently marketing their companies enough to bring in a steady stream of business.
Caterers do enjoy some advantages over restaurants when it comes to making money. A restaurateur must keep his restaurant open and have food ready to serve, even though business on a particular night may be dreadfully slow. In contrast, caterers know ahead of time how many people they are likely to serve at a particular event. Most catering arrangements require clients to pay per person based on a head count provided ahead of time, even if the expected number of people do not show.
A catering service has improved odds of making money if it is a sideline for another business, such as a restaurant or a farmers' market concession. These types of food businesses require infrastructure like staff and commercial kitchens, and they usually pay for these expenses out of their regular operations. When a restaurant also does catering work as a sideline, then the catering company does not need to pay for the company's rent or for training and maintaining a skeleton staff. Using existing infrastructure makes this type of catering work more likely to be profitable than relying on catering services to pay all of a company's expenses.