nding the right 

catering equipment and catering supplies marks the beginning of

delivering a winning catering menu. Next, you need to develop a range of menu choices
with calculated food costs for each item. This is not as easy as it seems, since you may
not know at first what kind of events and clients you will be catering to. However,
developing pricing that is both competitive and profitable is essential to running a
successful catering business.

In this article you will learn:

 How to use different systems for pricing your catering services
 How to determine the mark-up on your food
 How to handle extra fees
 A few extra tips for pricing a catering menu

Pricing Options
There are generally three ways to price menu items:

 Fixed Pricing – Fixed pricing is aptly named as it means each menu item has a fixed
cost. You can price items on a per-person basis, and charge your customer according to the
number of people at the event. Or you can price items on a platter basis. For example, you could
charge $16 for a platter of 15 hors d’oeuvres, or $200 for a prime rib carving station that serves
50.

 Tiered Pricing – Big events typically have a lower per-person pricing. This is because it
is more cost-effective for you to produce food in bulk for a big event than to produce food for a
ten-person dinner party. In tiered pricing you use a fixed pricing system, but instead of one fixed
price for each menu item you have three or four, and you charge according to the size of the
event. For example, the per-person cost of fried chicken for an event of 50 people or less might
be $20, while the cost for an event of 200 is only $17 per guest.

 Custom Pricing – In a custom pricing system, you only quote customers on the cost of
food for an event after they have given you all the details about the function. This allows you to
customize a menu for the customer and more accurately determine the true costs of the
ingredients and food preparation before you give a quote.

Choosing a Pricing System

Many customers prefer a fixed price catering menu, since they themselves can easily
calculate how much they will have to pay for food. However, keep in mind that catering
larger or smaller parties will incur different food and food preparation costs. Often,
caterers have found that producing a menu for a smaller party will have almost the
same overall costs as producing the same menu for a party twice that size. Therefore, a
tiered pricing system is a good alternative to fixed pricing, since customers can still
estimate how much the food will cost, but you factor in variances in expenses due to
different party sizes. Here is an example of a tiered pricing menu:
 Menu Item Less than 50 people 50-150 people 150+ people

Petite Filet with a mixed

$23.95 per guest $22.45 per guest $20.95 per guest
green salad

Eggplant parmesan
$22.95 per guest $21.25 per guest $19.95 per guest
with spaghetti

Pan-seared trout $27.95 per guest $25.95 per guest $24.25 per guest

Sesame-crusted
$22.45 per guest $21.15 per guest  $19.75 per guest
chicken breast

Most caterers use a price-per-person or price-per-platter system, but unfortunately,

once you print a fixed price on your menu, you can’t go back on it. By far the most
financially safe way to price menu items is custom pricing. Consider using a flexible
pricing system that is quote-only. That way you can gauge your customer and the
difficulty of the contract before finalizing a price for the food. You can also more easily
alter and customize the menu and pricing for individual clients.

Determining the Markup on Menu

Items
The first thing you need to do when determining a markup on your menu items is to
calculate the food costs. Determine the costs for both large and small parties. If you use
fixed pricing, calculate the average cost according to your expectations of what sized
parties you will be catering. For tiered pricing, calculate the cost for different sized
events. No matter what pricing system you use, make sure you include the cost of labor
for preparing the food when you calculate your food costs.
 Most caterers have found that the following equation offers a good “rule-of-thumb”
markup on menu items:

Food Costs x 3 = Final Menu Price

With this markup, you will make about a 67% margin on your food. At first glance this
seems like a very high margin. However, the unpredictable nature of catering and the
various costs incurred due to transport, set-up and clean-up makes it a reasonable
markup. Remember: when catering buffet-style, it is always all-you-can-eat. Running
out of food would be terrible for your reputation. You should always bring at least 10%
more food than you expect you will need. Compensate accordingly in your pricing.

Other Factors to Consider

Other factors to consider when pricing your menu items include the following:

 Client’s willingness to pay. If you use a custom pricing system, you should always
consider the client’s willingness to pay when you determine the price of your food. Some clients
want the most expensive food and service possible. Others may be working with a tight budget.
The majority are willing to pay somewhere in between. Learning what kind of customer you are
dealing with so you can alter pricing accordingly can greatly improve your profitability. You can
even offer a separate high-end menu, mid-priced menu and budget menu to meet different
customers’ needs.

 Competition’s pricing. Many customers are price-sensitive, especially since contracting

a caterer can be a pricey affair. Before you determine fixed pricing for your menu items, you
should always take a look at the competition. Knowing what other catering companies are
charging will allow you to price your menu items at a competitive rate.

 Desired profits. No matter what kind of pricing system you use, if the return on
investment you get from an event is not worth the time and money put into the event, your
pricing is too low. Determine exactly how much you need to make from an event to make it
worth your while, and price your menu items accordingly.

Extra Fees
In addition to the menu pricing, most caterers tack on extra fees to the total cost of
catering the event. You can charge clients for extra labor, rental fees, cake cutting fees
and delivery fees. If you want to have your menu priced competitively but are not
making the profits you desire, you can make up for it by tacking on these additional
fees. Just keep in mind that they need to be fully explained on your catering proposal
and quote, or clients might feel they are being swindled.

These pricing tips offer a good guideline for determining the cost of menu items.
However, sometimes there are factors to consider that are unique to your business. For
example, if you run a restaurant, make your catering pricing somewhat similar to your
restaurant pricing or your customers will feel they are not receiving a good value. As
another example, if you have won catering awards in your region, you can increase your
pricing significantly, since clients will perceive your services as having a better value. So
when pricing your menu items, make sure to consider as many factors of your business
as possible to determine the optimum pricing structure.

- See more at: http://www.foodservicewarehouse.com/education/how-to-price-a-

catering-menu/c27509.aspx#sthash.nFmskivz.dpuf
 Creating a Catering Proposal and Quote
  79    9   Google +18    38    97

Author: Eleanor Frisch

Published: 2015-06-23
A catering proposal is the quote – given by the caterer to the client – that outlines the services,
food and beverages that will be provided for an event as well as the cost of each service and
menu item. The proposal usually also doubles as a contract: if the client is happy with it and
wants to contract you as their caterer, they will sign it at the bottom and give their payment
information. For the most professional-looking proposal, use your catering company’s letterhead.

In this article you will learn about:

 Writing the cover letter for a catering proposal
 Proposing the event menu
 Quoting the labor and service costs
 Producing a contract and clarifying your policies
In order to create a catering proposal, you will have to outline everything you will provide to
your client with a price attached to each piece, as well as a grand total price quote for the entire
event. There is no specific order that you have to use to present your catering proposal. However,
it is recommended that you use a certain organization to make the proposal less confusing to
your client. Try ordering your quote in the following manner.

Part 1: Cover Letter & General

Information
This section of the quote introduces your proposal in a polite and professional manner and sets
down the basics so that you and your client can better understand the costs that the event will
incur. While you should not include any of the pricing on this page, getting the basics out of the
way now will allow you to explain additional fees or costs incurred due to date, location and
other factors. Your cover letter should include all of the following general information for the
event:

 Type of event. Whether it is a fancy event or a casual one will influence the kind of
services you provide and the costs of catering. A wedding with a full-service buffet will usually
cost more than a casual picnic with only food drop-off service.
 Date of the event. This will actually have an impact on the final cost. For example,
because demand for catering services varies from season to season, an event that takes place near
the holidays will likely have a higher cost than events that take place during other parts of the
year.
 Time of the event. An event that requires the caterer’s time for three hours will be more
expensive than one that requires only two hours of the caterer’s time.
 Venue location. If the venue is farther away, you may have to add additional fees for
delivery and gas costs.
 Minimum guaranteed guest count. It is standard to request that your client give you a
guaranteed guest count. The pricing is based on that guest count. That way, you will not over-
prepare for the event and lose money if fewer guests show up. You should still bring 10% extra
just in case guests consume more than expected or more guests show up. If you serve more
people than the guaranteed guest count, you can still charge for each additional guest.
It is a good idea to continue putting general information as a header on top of every page, just as
a reminder to yourself and your client. An example header would be:

Townsend & Bradley Wedding, 220 Guests 

Saturday, June 25, 7:00 pm

Part 2: Menu and Menu Pricing

The next item on your quote should be the event menu. When pricing the food and drinks, you
will want to include the following information: 

 List of menu items

 Cost per person or per platter for each item
 Total cost for each item
 Total costs for the whole menu
In addition, in this part of the quote you should also include the price of the added costs incurred
for the food, such as chafing dish rental, cost of disposable utensils and dinnerware, cake cutting
costs, etc. Make sure to explain each food-related fee, or it will look like you are overcharging.
 Part 3:
Additional Fees
In catering contracts, there are often additional fees not related to the food. Try to charge for as
few added fees as possible, even if it means increasing your menu pricing. For the fees you do
charge, you must charge a fair price and offer a full explanation of each service and why it is
needed, either on the proposal or directly to your client. One of the biggest mistakes you can
make is to have it look like you are charging for nothing. In fact, many caterers only use custom
quoting. That way they have the option of simply adding the fee to their menu pricing so it looks
like there are no suspicious fees.

Generally, additional fees can include any or all of the following:

 Labor costs. Make it very clear exactly what you are charging for. List the number of
staff needed for each task, such as servers, buffet runners, bartenders, and on-site chefs. If staff
work longer than expected, you should already have a clear formula to determine the additional
charge. Use the following equation to determine your labor costs:
Duration of the Event (in hours) x # of Staff Needed x Hourly Wage

For example, if you need 12 staff to service a 3-hour event, and you pay them $11.50 per hour,
your labor costs would be 3 x 12 x 11.50, or $414.

 Delivery fee. Some caterers include a delivery fee that is standard on all of their
contracts. As an alternative to a standard fee, you may only want to charge extra for delivery if
your client wants you to cater an event that is far away.
 Rental and decoration fees. You can charge an additional fee if you are providing the
venue space, event tents, centerpieces, tablecloths, portable bars and other special services or
supplies that the client requests to deck out the venue. It is best to charge the client the same
amount they would pay a rental company. Otherwise they will go elsewhere. However, if you are
 renting the supplies or venue, you might want to try to work out a deal with the rental company
to get a percentage back for giving them your repeat business.
 Operations charge. Some caterers charge an operating charge for every client, either as
a replacement for other charges or in addition. This is usually used to cover the overhead,
equipment costs, preparation costs and other additional costs incurred. Be sure to fully explain
this fee to your client.
 Event planning fees. If you helped your client plan the event or spent extra time to assist
them in contracting with florists, photographers and DJs, you may want to charge an additional
fee to cover the time and effort you spent planning the event.

The Final Quote

When you are done creating each part of your catering proposal, add all of the charges up to
determine the final quote. On the final page, list the total charge for each part of your proposal,
then add them all up to determine the grand total. That way, the client can clearly see exactly
what they are paying for each part of the catering contract.

It is imperative that you assess the final quote to ensure that you are making money on the event.
For a catering business, after all expenses for an event are subtracted, typical profits from an
event can be as much as 30% of revenue for large events and up to 50% for small functions.
After overhead and other costs are subtracted, you can expect to make 20%-30% profit margin.

Visit ourCatering Specialty Store for everything on your catering equipment and catering

supplies checklist.

Catering Policies and Contract

This section of the proposal lists the caterer’s policies and covers all of the following:

 Guaranteed Minimum Guest Count. If fewer guests show up than are guaranteed, the
caterer still gets paid according to this guaranteed guest count. If more guests show up, you
should reserve the right to charge a fair price for the additional services, labor, food and drinks
required.
 Guaranteed Time Duration. This is the client’s estimated time during which the
caterer’s food and services will be needed. If the caterer’s services are needed for less time, the
caterer still receives payment based on the guaranteed time duration. If your services are needed
for a longer duration than expected, you should reserve the right to charge more for additional
labor and services.
 Deposit. It is standard to charge a 50% deposit upon the signing of the contract, when the
caterer’s service is booked or contracted.
 Cancellation Policies. Be sure to list the policies on cancellation and refund of the
deposit. It is standard to refund the entire deposit if the client cancels within a month before the
 event, 50% of the deposit if the client cancels within 11 to 30 days before the event, and none of
the deposit if the caterer is notified of cancellation less than 11 days before the event.
 Terms. Be sure to spell out the terms for payment of the final costs after the deposit.
Typically, caterers request this payment on or before the 5th business day after the event.
However, to be fair to the client, you may want to give them more leeway, such as 20 business
days, to pay for any additional costs due to extra guests or unexpected labor or services required.
 Booking and payment. At the bottom of the final page, include an area where clients can
fill in their payment information and sign to contract the caterer. This will serve as a binding
legal contract for your services.
- See more at: http://www.foodservicewarehouse.com/education/creating-a-catering-
proposal-and-quote/c27513.aspx#sthash.qMa1kOvV.dpuf