Catering is a huge business, not just because of the influx of beautiful weddings and corporate events. Catering is also a huge business on the back end. It requires a lot in terms of preparation, supplies, implementation, and then displaying it all beautifully. There’s so much going on in the back end, in fact, that all that work and raw costs can quickly add up to more than you’re getting paid for.
It’s a tricky business to be in, especially if you’re catering weddings. For most, that wedding will be the only time in their life that they’ll ever spend the amount they do on catering (or anything), which means they’ll try to push your service as far as it can go within their budget. If you let it go too far, that budget will quickly eat up any profits you hoped to take home.
Thankfully, there are many ways that you can boost your profits, even without taking drastic action.
Start First By Addressing Your Payment Structure
If you are consistently not getting a healthy profit margin, then it’s time to reconsider your pricing approach. You can do this in two key ways.
Increase Your Prices
If you barely break even or lose money on every job, no matter what, then it’s time to increase your prices. You can go back later on and adjust those prices if you find many solutions that help lower your operating costs and overhead if you want, but the fact is your current pricing model is not sustainable. There’s wanting to keep your prices low to help attract more customers, and then there’s slowly putting your business out of business. You need to do this now (and update all sites you are currently on to reflect this new pay range) and go through and update your prices per season. Interest, rising supplier costs, new taxes, and so much more can impact how much you pay on your end, so you need to update your prices to continue making a healthy profit.
Offer Different Pay Tiers
Most caterers benefit best from a multi-payment approach. You can have a lower tier to help draw in businesses, particularly during dead seasons. Having a bronze, silver and gold tier system for budget options is also useful. While you shouldn’t decrease the quality of the food, you can save big by offering simpler menu items. Something delicious and simple can go a long way toward making your clients happy while helping them stay within their budget. You can then offer a higher-tier budget range for those that want extravagant dishes. Then, since you have those extravagant dishes in the first place, you can use those to market your business to all.
How to Lower Your Overhead
Now that you’ve addressed the front end of your payment woes, it’s time to address the back end. Lowering your overhead and finding ways to bring those costs down will only help you in the long run. You may be able to find a middle ground with your pricing that allows you to appeal to the greatest number of clients, for example, or you can use that lower overhead to increase your profit margin simply.
Either way, there are multiple ways to do this, so explore all your options and, most critically, review your approach so that you continually get the best deals year after year.
Review Your Suppliers
One of the best and easiest ways to get better quality ingredients and lower your prices is to review your suppliers. Sometimes, you can get better deals when you choose one supplier as your exclusive provider. This can be done, for example, by getting in touch with a butcher business, for example, or by contacting farms directly. Bigger bulk purchases can be made and used to save your business money across the board.
Take spices, for example. You can buy all the spices you need in bulk from Ofi Spices. You may think buying a huge bulk order or your essential spice line-up is overkill, but those spices will get used up quickly, especially over a busy wedding season. So long as you mix the spices after you get them and then store them in proper air-tight containers, you can make that bulk purchase last, and enjoy a huge discount. The fact that you typically get a deposit ahead of time also means you can easily make such purchases at the start of the season and have it last you the entirety of the summer.
Master Project Management
Time is money, which means one of the best ways to cut down on your overhead costs is to make sure that everything happens on time and doesn’t go over. This is particularly true for those hiring on extra help and those who either pay their staff by the hour, or need to cover overtime. Either way, mastering your project management will help things get done faster and more efficiently, and as a result, cost will be lower, so you can pocket more of that hire price in your own pocket.
Start Offering Equipment Hire
One of the best ways to encourage customers to hire you on for an exclusive contract is to offer it all. Having tables, chairs, linens, plates, cutlery, and so on that can be rented for an additional fee is a great way to increase your business’s bottom line. While yes, buying those items upfront can be costly, those costs will slowly revert over the years you are in business. Many people are looking to save on their wedding, birthday, and so on by skipping the big venues that offer all that equipment hire and choosing more unique locations. This can be their own backyard, or a park, or a vacation rental.
By offering the equipment hire of these tables, linens, and dining ware, you get to keep everything in-house. Since you also know what the table setup will be more intimately, you can design more unique dining experiences to help your business stand out even further.
