Drafting a catering contract requires you to include a lot of details. One of the more important details is the deposit. The deposit secures a client’s appointment with your catering services, but also protects your catering company from unexpected cancellations, changes or inclement weather that would otherwise create a loss for your company. When you’re determining the deposit amount you can use a set percentage or base the deposit on unique factors surrounding the event.
The standard catering deposit amount is 50 percent of the total catering bill. This percentage is factored after all costs -- including sales tax -- have been calculated.
Special circumstances surrounding the event may require you to ask for more or less of a deposit. For example, the bride and groom are unsure of their guest count at the time they book your services. You can get an estimated guest count from the couple, calculate a price and deduct a standard deposit fee from that amount with the stipulation the deposit may increase if the couple adds more guests. In other situations, the bride and groom might request a particular dish or ingredient that requires you to special order the product. In this case you might request an upfront, in full, deposit for that special item in addition to the standard deposit for the entire event.
When a customer submits his deposit, he should be given the key information regarding that deposit including cancellation policies, refunds and terms. The standard refund for a cancellation is the entire deposit amount if the client cancels within one month of the event. If the client cancels up to 11 days before the event, the standard refund is 50 percent of the original deposit. If the client cancels 10 days before the event, the client receives no refund. Create your own refund policies keeping the industry standards in mind. If you purchase certain ingredients or supplies a month ahead, push back your refund policy date to accommodate this.
Your deposit policy is designed to protect your catering company from losses. Therefore, when estimating your deposits you need a firm understanding of how much the event will cost you -- food costs, labor costs and rental fees -- and how much your company loses if the event is cancelled last minute. Adjust your deposit amount to what the market allows in your area and compare your deposit requirements to other caterers in the area. In some cases you may find a policy of collecting 10 percent to book and 50 percent a month in advance adequate, or collecting one-third of the price as a deposit. Don’t forget to include the final payment information -- industry standard is to collect the entire balance one month before the event.