Yes, catering deposits are refundable and a caterer is meant to include a clear refund and cancellation policy. However, in terms of deposit refunds, there may be a sliding scale for the amount to be refunded as it relates to when the event is cancelled.
On What Conditions Can Catering Deposits Be Refunded?
The standard refund for a cancellation is the entire deposit amount if the client cancels within one month of the event. But if the client cancels up to 11 days before the event, the standard refund is 50 percent of the original deposit. Also note that if the client cancels 10 days before the event, the client receives no refund.
Nonetheless, caterers are always advised to create their own refund policies while also keeping the industry standards in mind. If as a caterer you always purchase certain ingredients or supplies a month ahead, push back your refund policy date to accommodate this.
The reality is that once a client books with you, you start working on that event. Most caterers tend to block off that spot and even turn down other events because their schedule is full. You do floor plans, host staff meetings, order equipment, and more or less even order food.
Chances are that as a caterer you have already made substantial financial investment into events for clients who are cancelling at this point.
It is pertinent your legal team check over your contract and advise you on what you need to do contractually, and also discuss any specific cases where you may be considering acting outside of your contract. In some cases, the contract may have a clause that would allow you to perform an audit of each event that is being cancelled and refund the remaining balance or use it towards a future event.
However, if you’re unable to offer a refund, note that being transparent about your processes and why the money is unavailable to be refunded will help the client understand that they do have to pay, even in the event of a cancellation.
Also if your legal team clears you to make an offer outside of your contractual obligations, be sure to consider your financials and overall business model to find ways that you could offer extra value to your clients without hurting your bottom line.
Do not forget that your goal as a caterer is to make them thankful for having had a difficult conversation with you, even if they failed to get exactly what they wanted (i.e. a refund). And always make sure your deposit policy is designed to protect your catering company from losses.
5 Factors to Consider When Writing a Catering Contract Agreement
When you take on a new client in your catering business, a verbal agreement is never enough. You need a written catering contract to explicitly state the terms and conditions of your service. The contract will be the go – to source if a dispute arises.
So when writing your catering contract, always make sure to analyze and manage all expectations of food service, procedures, fees, liability concerns and dates of delivery for your catering business. Here are steps to consider when putting together a catering contract in the United States.
1. Gather all necessary information
First gather important customer details needed to execute and write the catering contract. Draft a form that requests the following information from the client:
The client’s name, address, telephone number and email address, the function’s date and specific location, the function’s start time and expected duration, and the number of guests expected – adults, children, and vendors like photographers and DJs.
Also remember to put this information into the first few paragraphs of the contract as appropriate, and then keep the form for future reference.
2. Know and outline the expenses
Ensure to include a detailed cost breakdown of food and other services you will be providing as services to your client. To avoid issues between you and your client, provide the following information:
A ratio of staff and servers to guests, the menu and type of service provided (buffet, sit – down dinner or a combination of services), the cost – per – hour rate for staff, the type of beverages served and any other pertinent event details, as well as the estimated total cost of the event.
Explicitly state all costs for food service per person, rentals, including facility rentals, setup fees, cleanup fees, overtime fees, portion sizes, fees for additional guests and delinquent account charges.
Remember also any special request and services, such as flaming foods or construction and pouring of champagne towers, and any associated fees. If the client expects to provide alcoholic beverages, the contract should note any corkage fee.
3. Fee and payment method
Make sure to add a fee agreement into the contract which includes all costs mentioned above, as well as tax and gratuity. This same clause should include a payment schedule. Standard catering contracts include a down payment or retainer fee to cover basic food costs and initiate the agreement.
Also note that final payment of the estimated price is usually expected no later than three business days prior to the event – the exact date should be specified in your contract.
Do not forget to state a date shortly after the event for final settlement of charges like extra guests, overtime, breakage, etc. Ensure that your contract explicitly state your policy regarding acceptable forms of payment, such as cash, credit card, check or certified funds, for your catering services.
4. Make room for necessities
Have it in mind that event details may change unexpectedly, and you should negotiate terms for refunds or cancellation of the catering agreement.
Note that adding a clause outlining the severance of the agreement protects the catering owner and the client from ongoing liability and fees. Also note the terms concerning the refunding of the deposit or the assessment of additional charges to sever the catering contract.
Explicitly state the required steps for a breach of contract and before signing the agreement make sure that both parties are aware of who is responsible for attorney fees in the event of a lawsuit. Also, include an option to seek mediation for conflict resolution if you wish to avoid costly legal fees.
Catering deposits are refundable in the United States, however when estimating your deposits you need a firm understanding of how much the event will cost you – food costs, labour costs and rental fees – and how much your company loses if the event is cancelled last minute.
Always remember to 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.