When it comes to catering businesses in the United States, pricing is a different ball game and tend to be very confusing. Typically, events that require caterers are hosted for a specified amount of people with a pre – determined menu. Most times, there is a pre fixed menu with cost per person.
Types of Pricing Strategies for Caterers
In terms of per person pricing, catering businesses in the United States select their secondary pricing strategies from two options. Fixed pricing with set prices per plate or per appetizer round. Tiered pricing changes the per – plate price based on the number of guests. But since working in larger quantities often provides savings in both materials and overhead, tiered pricing provides better benefits when compared to fixed pricing.
Additionally, caterers are also expected to calculate quantity perfectly so that they avoid running out of food at events. At least a 10 percent buffer is advisable for caterers. This will safely cover every other kitchen mistake and unexpected guest.
Also have it in mind that the cost per person tends to depend on the quantity, quality and service style of the caterer. For instance, an average plated meal can be anywhere from $35 to $140 per person, and for a fancier event or wedding, plated service can cost anywhere from $70 to $260 per person on average. Have it in mind that plated meals more or less mean the caterer cooks specific orders and then the company serves them to the guests.
What is the Average Buffet Catering Cost Per Person?
Meanwhile, buffet – style catering is less expensive, mostly since the serving aspect is eliminated. In the United States, average buffet costs range from $15 to $50 per person and mostly depends on food selection. Howbeit, servers are expected to be tasked with clearing tables, but guests serve themselves.
For a caterer, an important value for the business is food cost per serving, which is more or less the cost of the food included in the meal. For instance, if the food on the plate costs $5, then that is the food cost per serving.
Since the cost of the food isn’t anywhere near the full cost of the service, there needs to be an additional charge to represent the overhead of the kitchen as well as the cost of labour, which might include an upcharge based on skill set. Then, on top of that, some kind of profit margin needs to be added as well. Catering businesses also charge between 18 – to – 23 percent of your total bill as service charge.
How Much Do Catering Businesses Charge in the United States?
Pricing in the catering industry just like it was stated above, can be a bit more complicated than pricing a restaurant business. There are more variables, such as party size, transportation costs, and having to overestimate food quantities. Hence, there’s more flexibility in catering pricing methods.
In this business, you can assign fixed fees, structure tiered prices based on number of guests, or create custom prices on a case-by-case basis. Catering service fees encompass certain costs without excessive mark up on food. Even if you won’t necessarily offer fixed prices on your catering menu, it is advisable you establish them anyway as a point of reference.
In this industry, it is standard practice to set an item’s menu price at 150 to 200 percent higher than its fixed cost. Fixed cost is the cost of an item’s ingredients and the time and labour involved in its preparation. Although the profits might sound too high to outsiders, caterers and restaurateurs know how much of this money goes to covering the many other operational expenses and surprises that go along with the food service industry.
There are a number of considerations affecting where on the mark up spectrum you set your catering menu prices. However, in summary, in the high end, there are caterers that have consistently shown pre – tax profit of over 25 percent, an impressive percentage in any industry.
There are also caterers that have barely been able to generate any profit in the entire life of their companies. But the average pre – tax profit of all of the caterers in the United States over the years has been 7 percent to 8 percent. For purposes of comparison, the average pre – tax profit in the full service restaurant industry is 3 to 4 percent.
How to Make your Catering Business More Profitable
A catering business can be scaled easily, meaning, you can start it anytime, even with little capital; and you can grow it as much as you want or just let it stay as a small-time, home – based sideline business. Read on and find below few tips on how you can raise your catering profit margins.
- Focus on a precise niche
No matter how small or big your business seems to be, note that the key to a successful business in this modern era is finding out your niche market and setting your eyes on it. By focusing on a specific specialty, you will have a clear idea of what you really want. You will need to be realistic with your goals so you can keep your expectations achievable. So, if you are a new entrant in this business, take gradual precise steps and grow your business from there.
- Always Have a Plan
Whether it is on – site or off – premise catering that you are offering, do not forget that no catering business will be lucrative if it fails to implement an achievable plan. Remember that smart planning also means a more efficient and organized group, which could mean a smooth – functioning job.
If you are catering at an off – premise site, this is where planning is best put to use, because you just can’t run back and get whatever that is missing. So, before hitting the road, make sure to plan out how to keep everything orderly, so you won’t have to fret.
- Get a Catering Software
In this modern age, do not underestimate the importance of catering software. Aside from streamlining the work, it also stores every detail of your business’ operations. Have it in mind that catering software providers, like Better Cater, see to it that the best is offered to their clients, so you can expect to get only the most useful, most user – friendly tool to ensure that your business operates in a smooth – flowing manner, helping you not only boost your business’ revenue but only raise your catering profit margins.
- Cooking and food presentation
When compared with eating at a restaurant, catering is more event specific, so you really have to understand that both the cooking and food presentation are centered on special occasions, like wedding, birthday, anniversary, holiday or corporate gathering.
In this business, expect your clients to expect more and demand more from you. You need to ensure that not only the food is unique, but as well as the presentation. There are venues, as well as clients, who will always remind you that presentation is a big factor.
Pricing effectively is all about strategy and crunching the numbers in order to avoid selling yourself short. Indeed, you want to please customers and give them a fair deal in order to win the business and hopefully lock them in as a loyal patron.
However, be reasonable and fair when charging guests for an event. Don’t drive your charge per person way up just to see higher profits for yourself. A higher cost must be justifiable. Being greedy is bad for business and might make you lose the deal altogether.