7 Pricing Catering Menus
Pricing The Menu
Determining prices for your catering business involves balancing your costs, considering market demand, and clients’ value perception, and always maximizing profitability.
Be very clear on all prices when giving your client a proposal, so there are no surprises later that they can not afford. Understanding what it costs you to prepare and deliver your services is very important to your success.
Sometimes, catering is used to cross-sell. For example, a wedding will also bring in hotel and bar guests. Typically, caterers aim for 18%-25 % Food Cost and a 12- 30+% desired profit. Keep in mind that typically, larger events = larger profits.
The first step is always accurately calculating your costs.
What’s your goal?
- First, the goal from the seller’s perspective is to get the highest price possible without the client feeling as if they have been taken advantage of.
- The second goal is to use pricing to develop and maintain a sustainable competitive advantage.
- The third goal is to use variable pricing to develop client loyalty, to the extent possible.
Costs to Consider/Account for:
- Labor
- Food
- Paper, disposables, etc.
- Packaging
- Delivery/Transportation of food and labor
- Time
- Overhead (insurance, license fees, utilities, maintenance, etc.)
- Drop-off vs. staying at the event
- Clean-up
- Service Level
- Dishes
- Rental Charges
- Venue Charges
- Equipment (Ex. Champagne Fountain)
- Decorations
- Quality (Comparing Apples to Apples)
- Profit-always account for profit; that is why you are in business.
- Gratuities
- Taxes
- Service Charges
Research the Market
See what your competitors charge in your area for similar services:
- Per-person rates (buffet vs. plated)
- Service fees (delivery, setup, servers)
- Minimum order size
- Customization or add-on pricing
Look for competitors targeting your same niche as well as similar niches. (e.g., weddings, corporate events, casual gatherings).
Pricing Models
There are a variety of pricing models that you can use. You may even use more than one of these. You need to earn a profit on each item sold.
- Per person pricing (most common)
- Per tray/dish
- Flat rate (for small events)
- Hourly + food cost (for private chef or custom events)
Pricing Alternatives for Beverages Sold By……..
- Drink
- Bottle
- Time period, per guest, in a package price
- Beverage Cost/Beverage Cost % = Selling Price Per Bottle
- Drink prices should be rounded up and include tax
Offer Tiered Pricing Options
Offer packages at different price points:
- Basic: Minimal offerings, lower price
- Standard: Most popular items, mid-range
- Premium: Full service, exclusive dishes, decor, or service upgrades
Determine Your Cost per Serving
- Break down your total cost per menu item or per person to get a base cost.
- Determine and add your Desired Profit Margin
Once you know your cost, add a profit margin that makes your business sustainable.
- Typical catering profit margins: 15–30%
- For premium services, higher margins may be justified (up to 50%+)
Formula:
Price = Cost per person + (Cost per person × Profit Margin)
You can also divide your cost per person by your approved cost percentage to come up with a sales price. Once you do that, adjust to what your customers will pay.
Test and Adjust
Start with an initial pricing model, then:
- Track profitability for each event
- Gather client feedback on pricing and service
- Compare time and effort vs. profit for each event
- Adjust every 6–12 months or as needed; when food prices are volatile, you want to review that more regularly.
Customer Count Guarantees
When planning the event with the client, you will need to spell out in the contract how you will charge for their event. Typically, it is by the guest, and the contract will spell out how many guests you will prepare for. What happens when more than expected show up? This is known as an over method. Typically, a caterer will charge for the extra guests plus an extra percentage (30%-50%) to deter customers from underestimating guest counts. In most cases, charges are not reduced when their customer count is less than what they planned for.
Always consider the meeting length; write in the contract the times and fees for late meal times. For example, if the guests are an hour late for the meal, how much extra do you charge? You are paying your staff to stay longer, and the food quality starts to diminish.
