How to run a profitable catering business

A catering business makes money when every quote carries all its costs (food with overproduction, staff, transport, rentals and your own time), has a minimum order, takes a deposit that covers the shopping, and puts in writing what happens if the event runs late or more guests arrive. Most of the money lost in catering is not lost in the recipe. It goes on the day: overtime, extra trips and small costs nobody quoted for. This guide brings the whole method together and points you to the detailed guide for each part.

In this guide

• Building a per-person catering quote
• How much food per guest for a buffet
• Pricing canapés and finger food by the piece
• Catering staff costs
• Event rentals and transport
• Catering deposits and terms
• Client tastings
• Wedding catering
• Office lunch boxes

Where the money is made and lost

A catering order has four blocks of cost. Look at them separately, because they behave differently:

Food is the part you control best, because it comes from your recipes. Staff and event-day extras are the parts that slip. If you already sell other products and want to see how events fit with the rest of your business (the capacity they take, the weeks you cannot produce anything else), read the guide to catering and events as a sales channel.

Quoting: price per person and a minimum

The price per person comes from separating what multiplies with each guest (food, overproduction, disposables) from what costs the same for the whole event (staff, transport, rentals, fuel). The formula:

price per person = (cost per guest + event costs ÷ guests) ÷ (1 − margin)

Because event costs are shared out, the price per person falls as guests go up and climbs fast when there are few. So you need two things: a table with two or three guest-count tiers, and a minimum order. The guide to per-person quotes walks through it with a 50-guest lunch, and how to price a catering order shows the shorter version and what to do when a client asks for a discount. The per-person catering quote tool helps you run the sums.

Work all of this out before any sales tax, then add what applies. Check your local tax rules or ask an accountant.

Quantities: how much to cook

Overproduction is necessary, because running out at an event cannot be fixed. But it is food you buy and cook, so it belongs in the price. Three working rules:

• Use your own grams per guest for each dish, taken from your usual portion and corrected with what is left after each event. No table fits everyone.
• Put the extra where it is cheap (rice, potatoes, bread) and keep the meat close to what your records say people eat.
• Weigh the leftovers after every event, before they are handed out.

The guide to buffet quantities has the full sum with a 60-guest example. For a canapé event, pricing finger food by the piece explains how to cost per piece and how many pieces to plan per guest. To take a recipe up to event size, use the tool that scales a recipe to N portions.

Staff: your time counts too

In catering, staff are usually the biggest cost after food, and the one most often underestimated. Count:

• Your hours for shopping, prep, loading, service, breakdown and cleaning, at the rate you put on your time. The guide to labour cost explains how to set it.
• Kitchen helpers and servers, at what you pay them, plus their travel and their meal if you provide one.
• Real hours, not contract hours. A four-hour event takes your whole day.

Staff go up in steps: one helper covers you up to a certain number of guests, and then you need another. The guide to catering staff costs shows how to build those steps.

Rentals and transport

Chafing dishes, insulated carriers, platters, tables, linen. And transport: shopping trips, the van to the venue and back, and sometimes a second run. These are nearly fixed per event: they cost the same for 30 guests as for 50.

Two things protect you: a loading checklist you go through before leaving (every forgotten item is a paid trip), and a line on the quote about breakage and loss of rented items. The guide to event rentals and transport goes into what to rent, what to buy and how to charge for it.

Deposits and terms

A deposit exists so your own money is not riding on an event that might be cancelled. At minimum it should cover what you spend before the day: shopping, rentals and transport. Alongside the quote, put in writing:

• What the price includes and what it does not (servers, china, tax).
• The deposit and when the balance is due.
• The deadline for the final headcount and the price per extra guest.
• What you charge per extra hour of service.
• What happens if rented items are broken or lost.
• What happens to the deposit if the client cancels.

The guide to deposits and terms covers each point.

Tastings

Many clients, wedding couples especially, want to taste before they book. A tasting has a cost: ingredients, your time preparing and hosting, sometimes travel. Decide whether you charge for it, deduct it from the event when they book, or carry it in your overheads. What you should not do is leave it uncounted. The guide to client tastings shows how to cost one.

Types of event

The method is the same, but each type of event has its own trap:

• Weddings: many planning meetings, a tasting, late changes and long service. The guide to wedding catering covers how to quote for all of it.
• Office lunches: repeat volumes, fixed delivery times, little floor service. A different logic, closer to batch production. The guide to office lunch boxes works through it.
• Birthdays, christenings and family parties: smaller groups, where the minimum order matters more.

Worked example: a 60-guest lunch, quoted and actual

You quoted a wedding lunch for 60 guests at $42 a head: $2,520. Your planned costs:

Planned margin: (2,520 − 1,716) ÷ 2,520 = 804 ÷ 2,520 = 31.9%.

What happened on the day:

• Actual cost: 1,716 + 290 = $2,006
• Actual profit: 2,520 − 2,006 = $514
• Actual margin: 514 ÷ 2,520 = 20.4%

You lost $290 of the $804 you expected to make: more than a third of the profit (290 ÷ 804 = 36%). The recipe had nothing to do with it.

With written terms: if the quote had said $90 per extra hour of service and the price per extra guest, the client would have paid 2 × 90 = $180 for the hours and 6 × 42 = $252 for the extra guests.

• Revenue: 2,520 + 180 + 252 = $2,952
• Margin: (2,952 − 2,006) ÷ 2,952 = 946 ÷ 2,952 = 32.0%

Neither of those clauses covers the broken platter or the second trip. Those you prevent with the loading checklist and a breakage line.

What to review after every event

Spend half an hour the next day comparing what you quoted with what happened:

1. Food: how much of each dish came back, weighed. Adjust your grams per guest.
2. Hours: how many hours you and your team actually worked. Adjust your staffing steps.
3. Extras: what you bought or paid for that was not on the quote. If it keeps happening, make it a fixed line.
4. Actual margin: revenue collected minus actual cost, divided by revenue. If it lands far from the plan, find out where.

Three or four events logged like this give you far sharper quotes than any table. To see how it all connects to pricing, how to price a catering order and building a per-person quote are the next step.

Do it with the calculator

Put each dish on the menu into the food cost calculator to get your cost per guest; from there you build the quote, compare guest-count tiers and know the lowest price at which an event is worth taking.