Before you sit down to put up a menu and put a price against each menu item, there are some important things to consider. You need to get all the information about the event, if possible, before starting with the catering preparation and pricing. The following pointers might help you in ensuring you have everything you need before you plan for the sourcing of ingredients and supply of food.

Place of the event (how far from your catering location, transportation options, whether there will be on-site catering, etc.)
Starting time and duration of the event
Expected turnout of guests
Guest preferences (if any)

Gather Competitive Intelligence

Once you have the above information, the best way to begin with the pricing estimate will be to scout the market rates for an event of a similar nature. This can be achieved with a few phone calls to some of the local catering companies. With this knowledge, you can be sure that you’re not going to quote above the market rates. In addition, while determining your own pricing strategy, you have a good yardstick so as not to quote lower than the norm. Thus, equipped with the upper and lower limits of pricing in terms of market rates, you can now begin your own estimation and arrive at a competitive pricing.

Factors to Consider During Cost Evaluation

If it is your first venture into the catering business, you need to evaluate the costs thoroughly before fixing the price. You need to determine how much you will end up spending, so that you know how much you need to quote to be able to at least “break even”, that is you must at least make as much money as you would spend. Otherwise, it would be a loss-making proposition. The following factors must be considered to arrive at the break-even cost.

As per the number of expected guests, chart out a “feasible” menu. If you’re going to serve gourmet food for very few guests, the high cost of ingredients may not add up to a reasonable pricing. Some dishes will make sense only if there are a good number of guests.

Calculate cost of your food (include cost of all ingredients for the dishes in your menu and the labor cost).

Extra costs include transportation costs, utility costs including that of equipment, propane, gasoline, ice, cleaning products, and cost of employing extra helping staff.

In case of on-site catering, you may have to include rentals, insurance, etc.

Thumb Rules

Catering Thumb Rules:

Always include 10% extra food than required to manage contingencies. Include this in your costs.

It is customary to fix the menu price at three times the total food cost. For example, if a menu item costs a total of $10 to prepare, then the menu price would be $30.

Depending on whether your customer is price-sensitive and how much your own desired profit margin is, you may negotiate or choose your own margin percentage.

Refer to your competitive rate research information to finally judge your own desired profit percentage.

How to Price a Catering Job

Pricing can be fixed in at least 3 different ways, as follows.

Fixed Pricing: With fixed pricing, you would assign a price to your menu item, do this for each menu item and charge the customer on a “per-plate” basis or platter basis. Check if this model suits your catering assignment. Needless to say, in this case, profits would be determined also on a platter basis.

Tiered Pricing: This is very similar to fixed pricing but you can pass on the benefit of numbers to your customer. Essentially, more the expected turnout, lower will be the price of each item. You can have 3-4 such tiers with the minimum number of guests deciding each tier price. For example, for greater than 50 guests you could charge $20 for an item; for greater than 100 guests you could charge $18 for the same item and so on. This can be a very cost-effective model provided there is a great turnout of guests expected.

Customized Pricing: With the earlier methods, the customer knows upfront what your charges typically would be; however, with custom pricing, you have the freedom to decide the menu and pricing after the customer briefs you about all the details of the event. However, it is still beneficial to have a pricing guide ready for reference even for custom pricing. It will enable you to approximate the estimates better.

The above guidelines for determining the pricing for a menu are not stringent. It is just information about how pricing for a catering job is done. You will in fact need to be flexible if you’re serious about being in the business for a long time. There are many other factors that influence pricing such as the type of customer, your immediate competition in the same area and how established you are in the business. If you’re well-known for the quality of food, customers may not be very rigid about lowering your prices. On the other hand, if you have your close competitors quoting below your rates, you may have to negotiate harder so as not to lose the deal. You may have to provide additional “frills” to add value and differentiate your catering service from that of your rivals. If you’re very new to the business, you may well have to incur losses in your first few assignments just to prove your worth and establish your presence.

Thus, the ultimate profitable pricing strategy is a mix of several factors. Keep an open mind and be optimistic about the outcome. Once you know your market, your client base, etc., you will gradually work out the pricing strategy that is optimum for your catering business. Take each assignment as a challenge and be willing to learn from your mistakes as the catering business is certainly not for the faint-hearted. Many unexpected challenges may arise in the form of lesser than expected guest turnouts or shortage of food during service, weather delays, etc. Once you start your catering business, only experience can help you find your foothold in this industry. With some experience, you will be able to predict and manage most risks and contingencies better and plan everything in a cost-effective manner.

My work experience spans content development, knowledge management and organizational social learning activities. One of my favorite subjects, relating closely with my career background, is the study of social media tools and social learning strategies within huge organizations and their potential benefits in facilitating real time exchange of ideas and knowledge transfer.

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Have you ever dreamed of having a home based catering business? If you have a love of cooking this would be a great career.

In many homes nowadays both parents are working. Economic pressures require a double income. Schedules are hectic and it is very difficult to prepare wholesome, nutritious meals.

A catering business can be very lucrative in providing daily meals for these families (singles or couples). You would not only be preparing delicious meals but eliminating the stress that these people feel when they under the pressure of shopping and cooking. They would have more time to enjoy each other and do the things they enjoy most.

Before you jump into your apron, here are some things you want to consider:

1. What will be the name of your business?

2. Are you doing this by yourself or will you have a partner? If you have a partner will you both be responsible for the cooking, or will one take care of the administrative duties? In the future you may find the need to hire a cook. Dependability is a required.

3. Create a business plan that you can use if you need to get financing.

4. Check with your local food administration authorities about the laws governing your type of business. Find out the appropriate licenses and permits you will need. Check into these details first so you will not have problems in the future.

5. Decide on what types of meals you are going to provide. You will want to include two or three choices daily. Once you establish your clientele you can give them an order form of the various meals available on certain days. You can establish the time frame you want to maintain. A week or two ahead have the forms returned to you. You can come up with a computerized form that you can email your clients and they can email you their choices. Do whatever you can to automate your business and eliminate unnecessary legwork. You will have to decide what works best for you. You will want a week’s notice for shopping and preparation purposes.

If you want to specialize utilizing your specific cooking/baking talents, your catering service could be for special soups, desserts or birthday cakes. This is your choice.

6. Pricing your meals will be more of a challenge. You will want to keep your costs as low as possible in order to have a desirable profit. Call other catering businesses to get an idea of what your completion is charging. You do not want to price your meals so high that you will price yourself out of the market. Allow for a fluctuation margin in market prices.

7. You will want to buy in bulk. Get a membership at your local wholesale club. This will save you quite a bit. You still want to be a savvy shopper as there are times when your local supermarket’s prices are lower than the wholesale club.

8. Bulk shopping will necessitate your knowledge of the shelf life of the foods you are storing. When in doubt of how to, and how long to store food items, the internet holds a wealth of information at your fingertips.

9. How are you going to advertise your business? Of course, word of mouth continues to be one of the best forms of advertisement. You should consider flyers, or posters that you can leave at various businesses in your area. You will be able to create and print these on your computer. This will cut printing costs. Newspapers and mail coupon services can get the word out to many, but will be more costly.

You may want to consider designing a web page so that you can create an internet presence. Print up business cards including your web address. Get permission to leave this in places such as the doctor’s office, dentist, or hairdresser. Design your website so you have your weekly choices listed and your contact information.

10. If you go this route, you will want to find a web hosting company that also provides you internet marketing tools. I know of one company that has a bulk emailing program, with an auto responder where you can set up various campaigns. It also provides a video producer with templates that you can create for your specific business. The best part of this company is that they have training by professionals in the industry. If you are a cook, more than likely, you are not overly versed in computers!

11. How are you going to get the meals to your customers? They can pick them up from your home or you could deliver to their place for a set fee. You will need to put great thought into planning your cooking and delivery schedule. As a suggestion, allow yourself about one hour to an hour and a half.

12. What type of containers are you going to use to pack your meals? As there is a possibility that the food may need to be reheated, you will have to take this into consideration when purchasing containers. Look into microwavable items. A wholesale club usually has great prices on food containers.

13. Be a good planner. The internet will provide you with an endless supply of recipes and ideas for different meals. If you are cooking for a family with children, take this into consideration. Spicy does not always work with little ones!

14. When you purchase your fresh produce make sure it is cleaned properly and when possible cut and ready for use.

15. Keep a cautious eye on your costs.

16. You want to develop a good relationship with your clients. When possible, satisfy special requests. Always be the type of person that you would want to work with.

17. As suppliers are an important element in your business you want to develop a good relationship in this area. This will go a long way in getting better service.

It is up to you to decide on how large of a business you want to create. A small business will be easier to handle. Once it grows it will necessitate hiring additional staff members. But then again this would translate into greater revenue.

As an added suggestion, be sure to keep your recipes either on the computer or in a binder in protective sheets. Who know, someday you can add to your business profits by publishing a cookbook of your catering recipes.

I hope that your love of cooking will be the first step to initiating a profitable home based catering business. I wish you all the best and a kitchen filled with aromas of happiness and success!

Judy Conway is retired. She has a passion for writing and uses her blogs and articles to reach out to encourage and help others sharing her life’s experiences. In addition to spending time with her family, she enjoys learning all she can about internet marketing. She feels a day without learning something new, is a day wasted. To learn more about Judy and what she does visit [http://judyconway.com] and [http://fullservicemarketingtools.com].

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Do you need to write a proposal to promote your food-related business to a prospective client or to get funding? It doesn’t have to be an intimidating process. The goals for any business proposal are: introduce yourself, highlight your products and/or services, describe the costs, and convince the client that you are the right choice for the job or you are worth investing in. To speed up the proposal writing process, you can use pre-designed templates and get ideas from sample proposals.

Whether you are describing a catering service, pitching a food service (deli) to be installed within another company, buying or selling a food franchise or food vending business, requesting that a grocery store of specialty store chain carry your food product, or even asking for funding to start up or expand a restaurant, the proposal structure will be similar. Here’s the basic structure to follow: introduce yourself, then summarize the prospective client’s needs, describe your services and costs, and finally, provide information about your organization, your credentials, and your capabilities.

For a food-related business, you will also need to include some detailed information about your services, menus, or products that are of interest to the specific client. For example, a catering service might need to include menus and décor themes from which the client can select, and a food vending operation might need to explain how machines will be operate and which items will be stocked.

Always keep in mind that the purpose of a proposal is to persuade your potential clients to give you their business or loan you their money. You must prove that you can deliver the products or services they need. A simple price list can never substitute for a real proposal.

Proposals should be targeted to a specific client. This means you need to gather information about your client so that you can present a proposal tailored to that individual client’s needs. It’s never a good idea to send all prospective clients the same sales letter. Clients are much more likely to accept a proposal tailored just for them.

So, let’s get back to the order described above. Start your proposal with a Cover Letter and a Title Page. The Cover Letter should deliver a brief personal introduction and contain your company contact information. The Title Page is just what it sounds like: the name of your specific proposal (for example, “Proposed Catering Plan for Your Awards Banquet”, “Proposal to Place Food Vending Machines in Community College Buildings” or “Business Plan Funding for Hot Stuff Bakery”).

After this introduction section, add topics that describe the needs of your client. If you are presenting a proposal for a complex project, you may need to write a summary to precede the detail pages. In a proposal for a corporate client, this is normally called an Executive Summary. For a less formal but still complex proposal, it’s more often called a Client Summary. In this summary and the following detail pages, you should demonstrate your understanding of the client’s requirements, goals, and desires, as well as discussing any restrictions or limitations you are aware of. This section should be all about the client.

Next is your chance to advertise yourself. Follow your introduction section and the client section with pages that describe what you are offering. These pages might have general headings like Services Provided, Samples (offering the client to pre-sample selections from your menu or food products), Benefits, and Services Cost Summary, Product Cost Summary, Entertainment (if provided with food service) as well as more specific pages that detail the products and/or services you can provide and explain the associated costs, the number of people that will be served and so on.

Your specific business will determine the specialized topics and pages you need to include in your proposal.

A catering service might need to include topics like Specialization (to highlight a specific niche you excel in) Services Provided, Options, Cost Summary, Events, Entertainment, Rentals, Special Needs, Policies and a Contract and Terms.

A deli or fast food franchise might want pages such as a Location Analysis, Future Potential, Financial Information, Income Project, Feasibility Study and other business opportunity templates describing the business opportunity.

A company selling a product to a store might include Product Cost Summary or Price List, Distribution, Market and Audience, Marketing Plan, Ingredients, Packaging, Footprint, Cost/Benefit Analysis, Quality Control and Benefits.

Specialty businesses such as event planners, party planners and wedding planners typically have to incorporate catering services as just one component of a larger proposal and will deal with additional topics such as the Venue, Performers, Products, Logistics, Packages and so on.

A business proposing to provide school lunches for students would need to provide additional details to show they can handle the volume and safety requirements. You can add topics for Requirements, Facilities, Safety Plan, Training Plan (for how your employees are trained), Certifications, Insurance, Quality Control, Experience, Capabilities, Capacity and so forth.

If you’re asking for funding to start a food business (anything from a coffee shop or bakery to a full size restaurant), you’ll want to add pages such as a Competitive Analysis, Industry Trends, Market and Audience, Marketing Plan, Insurance, Liability, Time Line, Funding Request, Services Provided, Products, Company Operations, Balance Sheet, Income Projection, Sources of Funds, Uses of Funds, Personnel, Legal Structure and any other topics required by the lender.

In your last proposal section, provide your company details, including pages such as Company History or About Us, Capabilities, Testimonials, Our Clients, or References. Your goal in this section is to convince the prospective client that you can be trusted to deliver the goods and/or services they need and want.

Those are the basic steps for organizing and writing the proposal. But you’re not quite finished yet. After you have all the information down on the pages, focus on ensuring that your proposal is visually appealing. Incorporate your company logo, use colored page borders, and/or select interesting fonts and custom bullets to add color and flair. Just be sure to match your company style when making these selections.

To finalize your proposal, it’s essential to proofread and spell-check every page. It’s always a good idea to get someone other than the proposal writer to do a final proof, because it’s very common to overlook mistakes in your own work.

When the final touches have been completed, print it or save it as a PDF file, and then deliver it to the client. The delivery method you should use will depend on your relationship with your potential client. While it’s common to email PDF files to clients, a nicely printed, personally signed, and hand-delivered proposal may make more of an impression and demonstrate that you’re willing to make an extra effort for the client.

So, to sum up, a food-business proposal can vary widely in content depending on the business and the project. Each company’s proposal contents will need to be a bit different. But all these proposals will have a similar format and follow a similar structure.

If you’d like to get a jump start using pre-designed templates with simple instructions and tons of suggestions for content, you can use Proposal Pack which includes all of the material mentioned above. The product also includes many sample food business proposals that will give you great ideas and help you easily create your own successful proposal.

Ian Lauder has been helping small businesses and individuals write their proposals and contracts since 1999. => For more tips and best practices when writing your business proposals and legal contracts go to http://www.proposalkit.com

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