There's a lot of money to be made in catering, but you've got to make sure you're doing it right. Here's how to write a contract, add premiums, stay prepared and manage your kitchen.
Many operators find that catering is a lucrative extension of their restaurant’s brand. The business proposition is a refreshing alternative: you know how many people you’re serving, you cook how much food you need, you get paid at the end of the night. Bing, bang, boom.
While it’s true that banquets and catering can be highly profitable, it’s likely that you might be leaving money on the table, literally, due to an inefficient contract and an unfair guarantee system.
How would you know? Take a minute and check with your kitchen to see how they handle the guarantee for parties. If the Banquet Event Order (BEO) guarantees 100 people, how many does your kitchen prepare for? Bet you’ll be surprised by the number. In some cases it could be as much as 10 to 15 percent more than that guarantee number, which means that it cuts deeply into your profits. If it’s less than 2 percent, you can stop reading this article right here. If it’s more than 2 percent, read on.
1. Write a good contract
First of all, the built-in overproduction is more than likely not due to sloppy kitchen management. Instead, it’s probably due to a standard industry practice that’s just a broken system. Take a look at your catering contract—you do have one, don’t you? In that document you should have a section related to a guarantee of the number of guests for the party, meaning that after a certain point in time prior to the event, the client is guaranteeing you that they will pay for a minimum number of guests. Now, what does it say about how you’ll charge for any guests over that number?
The point is, most catering contracts only guarantee a minimum number, but do nothing to prevent a client from sandbagging that count (under-guaranteeing the number). They are quite sure that as a quality operator, you will always be happy to accommodate a few extra guests. Hence, you probably often experience parties coming in over the guaranteed count. If that’s true, your crew has learned how painful it is to have to scurry about to prepare those extra meals and therefore has pre-conditioned them to make a little extra, just in case.
That’s not fair. So, let’s talk about what is fair.
2. Add premiums to bills
An effective way to combat this is to add some language to the count guarantee section of the contract that encourages the client to be fair. One way to do this is to stipulate that any guests that exceed the guaranteed amount will be charged at a premium (150 to 200 percent, or some percentage you like) over the standard cover cost. You’ll be surprised at how careful your clients become to make sure you get an accurate count.
Another thing to check is to determine how far in advance of the event the guarantee becomes binding. Many contracts stipulate 24 hours, but is that enough? Check with your kitchen and find out how far in advance they need to order supplies and set preparation into motion. If 24 hours is fine, don’t worry about it. But don’t be surprised if that number shouldn’t be more like 72 hours to truly be effective in preventing over ordering or over producing.
3. Be very prepared
Now, let’s look at what takes place behind the scenes on the day of the event. Given today’s world of allergies and dietary restrictions, how many of your guests announce their special needs at the time they are seated? And how does the kitchen prepare for, and record, those last-minute changes? Don’t forget that the kitchen prepared (and spent your money on) the regularly menued item. Shouldn’t you charge extra for those special requests since they are essentially the same as an extra guest?
4. Control the kitchen
Okay, so you’ve got your guarantee in place and it’s working fine. Now let’s get back to the kitchen and hold them to a practice that treats the guarantee as a solid number. If it says 100—make 100 and 100 only. The first thing you are likely to notice is that your profitability improves. But, while counter intuitive, you are also likely to notice some benefits in quality as well. As was learned by the U.S. Culinary Olympic Team in 1988, sticking to tight numbers of production actually tended to increase overall quality of the production. It was observed that team members were much more careful with the entire production run when it was known that every portion counted and there wasn’t an opportunity to eliminate imperfections by having a few extras.
Does all of this sound like too much pressure on your client and are you thinking that it might be easier for everyone if you simply price up your proposal and allow for a little sloppiness in your system? That might be true, but when your client is comparing the cost of your services to that of your competitors, you can be sure your profits are under pressure. You have the right to present proposal pricing that is both trim and well protected. It’s only fair.