The Earning Potential of a Barbecue Catering Business
Southern barbecue chicken, Southwest-style fajitas, Texas beef, South Carolina pulled pork and Korean ribs -- whatever the type of barbecue, it has the potential to be a profitable small catering business. According to Technomic, a food industry research firm, the popularity of barbecue among diners continues to be on the upswing. Barbecue is so popular that there are literally hundreds of competitions, contests and events across the country. The National Barbecue News lists more than 500 events. Texas alone has more than 100.
The catering industry in the United States is a $9 billion market as of 2012, with slightly more than 9,000 catering businesses, according to IBIS, a marketing research firm. That would result in average revenues per business of $1 million annually, or $83,000 per month. That might seem unreachable for a start-up caterer, but could be attainable by a caterer who has been in business several years. Earning potential varies depending on the type of barbecue the catering business serves, how many guests, at what event and how many events. Earnings are your total sales minus food costs, salaries and all other expenses.
Fairs, sporting events, corporate meetings, weddings, special events, street trucks and carts are all venues for a barbecue catering business, in addition to a bricks-and-mortar restaurant location. Each venue brings in revenues of from $1,000 to more than $10,000. For example, a well-attended arts-and-crafts fair generates a potential of 100 customers per hour for an extended lunch period of four hours. That's 400 customers per day, or 1,200 total for a three-day fair. If the average purchase per customer is $12, potential revenues for the event would be $14,400.
A small business owner must correctly gauge how much of her product she can sell during the events. Bring too little and she leaves potential earnings on the table; too much and she wastes money in leftover food.
Weddings are another lucrative market. The average number of guests is 149 and the average catering cost per guest is $63, according to wedding site TheKnot, which results in potential revenues of slightly more than $9,000 per wedding. One wedding per weekend adds up to $36,000 per month.
Events with more than 20 or so attendees require additional staffing if the catering business is expected to provide wait staff and cleanup as well as the food. Correct staffing has an impact on customer satisfaction as well as earnings potential. Slow service results in unhappy guests and a dissatisfied client. Overstaffing results in unnecessary personnel expenses.
The correct level of staffing depends on whether the barbecue is served buffet-style and wait staff is only expected to serve the food at the buffet, or if it's a sit-down dinner and the staff has to bring each guest dinner, refill glasses, clear plates and serve dessert. Catering companies often hire wait staff on a per-event basis rather than full-time employees. Four too many wait staff members cuts down the potential earnings for an event by $300 to $400.
Food costs have a direct impact on earning potential. In the restaurant business the food costs -- the ingredients -- are between 28 and 35 percent of the retail price, according to the Restaurant Report. If the cost is higher, but there is competitive pressure on the prices, the potential for earnings decreases. For example, pulled pork sandwiches that cost $3 result in a retail price of around $9. If pulled pork sandwiches retail at competitors for $6, the catering business may lose customers. Decreasing the cost of the sandwich to $1.75 makes it possible to bring pricing down into the range of what competitors charge.
Barbecue ribs, beef brisket and baked beans all have to be kept hot from the caterer's kitchen to the event, while coleslaw and salads must be kept cold. The caterer needs a method of transportation such as a truck or van, as well as insulated carriers and the cooking equipment in her kitchen, and most likely a smoker. This equipment is part of the operating costs and reduces income. However, having too little equipment means she has to bypass booking larger events.
Barbecue comprises slow-cooked, roasted and smoked meats. These primary products are complemented by traditional accompaniments such as coleslaw, baked beans, corn on the cob, biscuits and cornbread, or not-so-traditional kimchee, tortillas, salsa and refried beans. Which product a small businessperson chooses and how she prepares it has an impact on her company's earning potential. Beef is one of the more expensive meats, with chicken one of the least expensive. However, her geographic location may mean that her customers expect beef brisket rather than chicken. A full dinner menu from salad to dessert has more options, such as weddings and business dinners, but requires more staff and equipment.