Whether you've never catered an event before or have many years of expert cooking under your belt, the business of pricing a catering job requires an understanding of everything that factors into an event estimate. The more detailed you are, the more likely you'll turn a profit on every catering job. Focus on accurately capturing every possible cost involved, including your required profit, and then simplify the result into a format you can neatly present to your customer.
The Starting Point
Like any business, caterers have certain fixed costs to cover regardless of how many catering jobs they take on for the month. This includes expenses for kitchen rentals or other space, transportation, utilities, advertising and equipment. Add up the monthly cost for all these items and then divide it by the number of catering jobs you anticipate having for the month. When pricing each new catering job, include this cost as your first step.
Food and Labor Costs
Set your catering costs based on the specific type of event. For example, a formal event with tray-passed hors d'oeuvres, extra serving staff and expensive food ingredients requires not only a different cost structure but also additional cost items, such as rented staff uniforms, in your pricing model. Decide also how you'll charge labor costs for events that run over schedule. Customers may ask for discounts if they have a poor guest turnout and want reduced rates for children who eat less food, so decide how you'll address these requests ahead of time.
Add the cost of your food ingredients to the labor involved in preparation. While some dishes have inexpensive ingredients, they could require a significant amount of labor to prepare, so don't overlook this factor in your estimate. Tally the cost of your servers, kitchen help, and the number of hours you'll need them to work. Add any additional labor required to handle large parties, meet tight time schedules, serve multicourse meals or prepare complex foods. Implement minimum fees or increase some of your rates, especially labor rates, for holiday or busy season periods.
Event Decor and Supplies
A simple catering event such as a picnic requires fewer resources than a black-tie affair. Unless your customer plans on providing decor supplies, you'll need to factor in costs for items specific to the event such as table linens, flowers, serving trays, glassware, and dishes that fit the formality or casual nature of the occasion. Alternatively, farm out this aspect of the business to a party-supplies company and charge a small additional fee to your customer for supplying the resource. Don't forget the cost of gas to and from the event site, along with any additional equipment you need to keep food warm or cold while traveling.
Presenting to the Customer
When presenting your cost estimate to the customer, keep it clean and simple to avoid confusion. Consider working all the information into a cost-per-head figure, which makes it easier for the customer to understand and compare to other caterers, which they'll likely do regardless of how you present your cost summary. You may also consider offering standardized pricing by using a basic price for your standard menu with additional costs for extra items. You could also fit the job pricing into a model based on the number of courses involved. An elaborate seven-course spread warrants a much higher cost than a simple two-course meal.
Cynthia Gaffney has spent over 20 years in finance with experience in valuation, corporate financial planning, mergers & acquisitions consulting and small business ownership. She has worked as a financial writer and editor for several online finance and small business publications since 2011, including AZCentral.com's Small Business section, The Balance.com, Chron.com's Small Business section, and LegalBeagle.com. A Southern California native, Cynthia received her Bachelor of Science degree in finance and business economics from USC.