Don't short change yourself

[foodfinancial]

I just read a posting where a new caterer was charging $10 per head for thirty people.

Lets do the math

Sales 300
Food Cost 33% -100
Labor
-Meeting Costumer 1 hour
-Planning 1 hour
-Shopping 1 hour
-Prepping 4 hour
-Delivering/ pick up 2 hour
-Serving 2 Hour
-Clean-up 1 Hour
--Total Hours 11 x12 per hour -132
68
now lets subtract the rest
Fuel
Electricity/Gas
Supplies
Insurance
Truck Expenses
Sales Tax
Payroll Processing
Payroll Taxes
Income Taxes
And the list goes on!!!

You lost money on the deal.

DO NOT SHORT CHANGE YOURSELF.

We work extremely hard in this business, and the expenses are huge,
You have to charge enough to cover those expenses and still make a profit. Make sure you charge what you are worth, you must make a profit over and above all expenses so you have money to reinvest in your business and to be able to live a better life than if you were to work for someone else.

Please take into concideration your medical insurance, retirement, your kids education, vacations, TAXES, insurance, the unexpected, if you are going to be a caterer, you will work when everyone else is partying, holidays, weekends, you name it.

GET PAID FOR IT!!!!!

My philosphy is here is my price, if you don't want to pay that much then call someone else.

Another way to look at it is, if you under charge you won't have the capital to buy the best products for your customer which in the long run will hurt you because you will get the reputation of not serving the best food. because you could not afford to.

[shroomgirl]

Good Post.
It takes into consideration some of the unseen things that are involved in having any kinds of small business.
Part of pricing is will the customer let you provide a "chef's choice menu".....happens sometimes for those really trying to keep the price low....it's the best of both worlds in that it lets you sell more of the same bought, prepped food you already have in stock. As to delivery and working a party, many caterers take themselves out of that equation and have delivery people/staff......there is a charge for both, set and explained from the beginning.

[pgr555]

Bravo!! I frequently charge too little - but always make sure I have SOME profit!

[pgr555]

Oh yeah - I also have a bottom line - it varies depending on the type of event and # of people, but $300 it would not be for 30!

[BrooklynChef]

It took me some time before I figured out that with all the hard work I put in, unless I profit at least $1000 for a cocktail party, it is just not worth it. My base price for hors d'oeuvres is $35/person. That usually gets 3 cold, 3 warm and 1 stationary platter. Then I charge service with a 5 hour minimum. $50/hr. is my fee, $25/hour/server + transportation + $100 for cleanup. Oh yeah, and it is totally reasonable to charge a client $25/hr./server and only pay the servers $20/hr. You are providing them as a service, it is your right as a business owner to make money on said service. The fewer the guests, the more I find ways to sell the client on things that will jack up the price. No reason why you can't charge $9/person supplement for a terrine of foie gras - one that might only cost you $80 to make. You should be able to keep your food cost below 20% for catering and still maintain quality. And, as was stated in an earlier post on this thread - do not sell yourself short. You do not want to be the guy that got the job because you quoted the lowest price. Besides, raising your price will surely raise the perception of the value of your product.

[KYHeirloomer]

Question: As a nonprofessional with a rep for knowing his way around a kitchen, I'm often asked by acquaintances to cater parties and the like. On the rare times I do it, I charge cost plus. That is, the client is responsible for the food, rental, and (other than me) labor costs, and I get X on top of that.

What I'm wondering is if it's feasible for professionals to charge on this basis? Initially, I thought, it obviously doesn't make sense. But the more I think about it, the more I wonder, because the reasons aren't so obvious after all.

So I'm wondering what you pros think?

[shroomgirl]

posted prior, these are many of the unseen expenses we incur as licensed, insured, legal caterers.....
Catering is not all about how to cook food en masse....off site catering involves oh so much more.

menu development
pricing
portion
movement of food/equipment/staff
staffing
staging
decorating
being able to work with time.....time is one of caterings biggest elements.
working out logistics, time schedules, personnel issues
knowing with each client what's important
running a commercial kitchen, training staff
looking at packaging
retail vs wholesale
deciding whether to add a "bread and butter" product ie....a friend who caters sells shortbread and cookies to coffee shops and stores to help suppliment her bottom line. I take in personal chef clients and teach classes to offset the slow time.
print material
advertising
public relations
choosing events and professional groups to join
learning about new equipment
working up new ideas
deciding when/if to expand
how to continue enjoying the work we've chosen
how much staff to bring in.....
chosing premade vs scratch vs partially made vs contracted out.....ie I make water bagels but buy swiss commercial chocolate small tart shells, I'll make lavosh but buy other crackers....I'll make pate chou but would buy petit fours from a wholesale baker.
types and amounts of insurence
licenses/taxes etc...

Alot depends on cash flow.....many times we've taken jobs that have been lowball to pay the bills. When you are a sole proprietor there's only so much of you to go around....marketing and PR need to be consistant.....keeping in touch with clients, making sure jobs are lined up and deposits are paid so you can remain flush. Many here have store fronts, that's very different than having a commercial kitchen not visiable to passers-by. I was used last week as a resource for organic local beef....my name/company were on the front page of the local major newspaper, the writer kept asking if I didn't have a store front.....several in the past month have asked if I didn't have a bakery. What all this means is unless you know my company exists you'll never find me. Restaurants generally have set menus, they can recycle product many times as specials.....they can prep for their catering as well as daily business.
Within the next week I'll have 3 breakfasts, combined a few hundred people....so product can be prepped and bought in decent bulk. Not always the case.
A friend of mine's kitchen is at a seminary, they have lunch 3x a week for $5.50 but move all the leftover product they've had from catering jobs.....great for them, great for the students. That in my mind is the best of all worlds. Not open long hours as a store front, but having a built in place to take product that would otherwise go to waste.

[BrooklynChef]

Hey KYHeirloomer,

The answer to your question, I think, is that there is no universal answer to your question. As a professional caterer, I own an catering company set up in NYC as an LLC. That being said, I make make money off of everything I can. You can only charge your client an hourly rate for the time spent actually on premises of the gig. We are not attorneys who can rack up billable hours doing prep work. So, let's say you charge $50/hr for your services. At most, you will be at a location catering for 7 hours. $350 is not worth the effort. I think you have to make money off the food to make it worth your effort. As a non-professional, I am not sure that you could get away with doing that though

[KYHeirloomer]

>As a non-professional, I am not sure that you could get away with doing that though <

Sure I could. As a non-professional I can quote a job anyway I want. The "client" then accepts the bid or not.

I quote on a cost-plus basis because it makes sense for me; I don't have to worry about things like over- or under-buying, recycling overages, mispricing, etc. I don't quote my own fee by the hour, but by the job. So, the way it works out in reality is, "yeah, Sally, I'll be happy to do your party. I get X dollars plus all direct costs." My flat fee includes figuring all the pre-aspects, such as planning, shopping, prepping, etc., plus the time I'll have to spend supervising (or handling) clean up. If I figured an hourly rate, it would not be confined to the 5-7 hours I'd spend on site, but all the other time investments as well.

Because I don't do this on a regular basis, my ability to pre-figure food costs and other charges is seriously curtailed. So it makes little sense for me to quote on a per person basis, for instance, because until I sit down and do the figuring I have no feel for what those costs are likely to be.

Associated question: Why can't you, as a professional, quote on a cost-plus basis that includes surcharges on things like food, service rentals, etc.? Other industries do it all the time; the PR and Advertising agencies do it as a matter of course, with some really outlandish surcharges.

As a professional, you should be able to provide a horseback estimate about the time investment you'll have in any particular job. Convert that to a unit labor rate, multiply out, add a profit and GSA percentage, and that gives you a base rate. The "plus" part of the quote. Then, if you want to include surcharges as well, that's between you, the purveyors, and the client.

Reason I bring this up is the way a lot of people relate to money. Let's say you are going to charge $750 for a party for ten people. Most people I know would go crazy if I told them $75/person. But they wouldn't blink twice at a flat rate quote of $750. And would be even more open if I said, "I'll do it for $550 plus direct costs."

If they agree to that, then there is no financial risk on my part, because they've accepted liability for all other fees.

Or am I missing something?

>You can only charge your client an hourly rate for the time spent actually on premises of the gig. <

Why? Who says so?

[pgr555]

I have charged cost plus hourly rate at certain times. I have never don't it with a flat rate.

[KYHeirloomer]

Is there a particular reason you charge an hourly, rather than flat, rate?

[shroomgirl]

many cases parties will run over.....things get started later than scheduled for a mydrid of reasons, guests stay later, wine dinners drag on with verbal winery guys....everyone's happy trying the 5 wine and not budging out of their seats.....staff can't clear the table until guests are up.

Personal Cheffing (except for the salaried/insured position I'm in now) has been cost plus. Cost of food plus my labor....drive time, shop time, prep time, cleaning up time, menu planning time.....packaging....delivery time....
It's good money but not the money you'd make cooking for a decent size party....and one of the reasons I migrated from personal cheffing to having a catering kitchen. Albiet, personal cheffing is bread and butter work, you have set clients and know from week to week what's on the books, the only other costs are your car and a computer/phone. Catering is variable. Interesting how some weeks are crazy busy and others are very slow.
It was a rude awakening when my first wedding for 175 net as much as 52 weeks of personal cheffing for one client. The return is exponentially greater vs time/energy outlay.

*oh, and when I recently personal cheffed for 3 months for a past client having surgery the staples were bought and i cooked out of my commercial kitchen....ie olive oil, flour, sugar, a stipend for spices/herbs.....

[KYHeirloomer]

I guess what's confusing me is this: how and where to you account for all those GSA costs? You know, that whole long list of running the business costs?

Are you converting them to a unit labor rate, and adding them into your hourly? Or what?

Y'all understand, I hope, that all this is merely pernicious curiosity. I have no intention of going into the catering business.

My concern with hourly charges is that I've had bad experiences with them, and have to believe that you all do to.

Example: Years back I was contacted by an agency rep with an emergency job. They were doing a marketing report for a client, which was due the following week. The freelancer who'd had it for two months fell down on the job.

I estimated it would take me ten hours. In those days I was quoting $35/hour. The agency guy said, "are you kidding? I've never paid more than $15/hour." I didn't get the job. But I'll bet you any amount of money if I had quoted $350 for the job, he'd have asked how quickly I could pick up the materials.

So my proclivity is to price my work based on either the job (i.e., flat rate), or on a retainer (i.e., cost plus). But I'm always interested in the ways others price their services.

[BrooklynChef]

I have been charging $50/hr for my services since I started my company. I have never had anyone question this rate. I actually think it is a few bucks under what it could be, and I will probably have to increase it this year. After accounting for all those extra costs, and my talent, experience, and education in my field, I know that what I charge per hour is acceptable. If they don't want to pay it, then they can try to find someone else. The reason I charge by the hour is like shroomgirl said. Often, events last a lot longer than expected. I need to be compensated for my time, and my staff needs to be compensated for theirs.

[shroomgirl]

on a rare occasion I've been known to package a party....meaning 175-200 people for this menu, x amount of time (with a hard cut off), decorations/staff for $XXXXX. The menu reflects the numbers and amounts of XXXXs. That way there is a firm budgeted price from a non-profit, normally they are less concerned about the menu because they know I'll cover the bases. It works. But I prefer costing it out. We do give estimates with contracts/bids. When you do a specialized menu though it's good if the customer knows from the git go what their budget is, how many people, type of event......we'll go from there.
When I personal cheffed on a full time basis there was a set fee + food costs. Fees were decided on the type/amount of food desired. When I consult for universities there is a contracted hourly rate with a year cap. When I teach classes/camps there are set rates. Is it more palatable? depends on who your dealing with......