Profit margins for caterers?
I am putting together my business plan for my fledgling catering company and was hoping to get some insight from you experienced caterers regarding some ball park average revenue/person & net profit/person from various event sizes . . . i.e., 30 people, 75 people, 150+, etc.
I realize everything depends on number of meats, which meats, number of sides, etc. . . . but I am hoping there are some ballpark figures you may use as you budget or project financials.
Does anyone have some thoughts? Thanks in advance for your input!
When projecting (the SWAG method :wink:) our revenues we use an "average" per person charge of $15 for a catered event. This is calculated from past years events that range from $10 to $20 per person depending on what is being contracted and size of events.
We accept catered events for 25 to 100 servings. Less than 25 serving is not cost effective for us. More than 100 servings is too large for our operation due to equipment, etc limitations.
Also be aware that our pricing is based on our local costs and price resistance level. YMMV.
As to estimated profits: We set price on the 1:3 ratio method. We total our food costs for the event and multiply by 3 to arrive at our pricing. From past sales/profit history we find our average net profit to be approximately 12%. Taking into account our overhead is unusually low for this industry due to certain circumstances you may find that a more accurate net profit to be around 8% to 10%.
EDIT: I had to dig to find this in my past research. It may help you also. The link gives a bit more detailed info as well.
Unlike restaurants, which require you to staff a dining room and supply a kitchen whether or not you are busy, catering businesses allow you to tailor your staffing and food purchases relative to the number of events you have scheduled. As a result, catering businesses tend to have lower food and labor costs -- and therefore higher profit margins -- than restaurants. A typical catering company earns a profit of 10 to 12 percent, as opposed to the four to seven percent profit typical of restaurants.
Thank you very much! Very helpful :)
Steve - Get the So Ezzy calculator on this site and download it - Has never failed us once. Our Minimum is 50, and our "sweet spot" is in the 150-225 Guest range.
Need to look at your food cost, labor cost, production cost (Charcoal, electricity, rub, equipment/vehicle cost/maintenance, insurances, business license(s), supplies, utensils, aluminum pans, lids, foil, etc), gasoline and/or mileage, marketing, and State/Fed taxes and Sales Tax.
At the end of the day, with all expenses allocated as above, your "net" net is what you'll have. Everyone's accounting practices differ. Business plan is a good start, but don't be afraid to re-evaluate and course correct as you go!
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