Building a catering menu is a delicate balance. You want to create a menu that shows off your best dishes to delight your customers, but you also need to make money. It’s important to think about how to best serve your customers needs — like how much they are willing to spend for good food — while also creating healthy catering profit margins.
Your margin is the percentage of profit you’re making off any given menu item. As Restaurant Business Online reports, start by calculating your profit (your selling price minus the cost to make the menu item). Then divide your profit by the selling price, and then multiply that number by 100 to find a percentage. For example, if you sell a meatball sandwich for $12 and it costs $2 to make, your selling price minus the cost of your goods is $10. Divide that by the selling price (and multiply by 100), and your meatball sandwich has a margin of more than 83 percent. The higher your margin, the better.
Not every menu item will offer you such a high margin. And it shouldn’t. Your high margin items help offset those really special dishes you make that you know will always cost more to produce. But there are ways to balance your numbers so that you can still create tasty menus that also bring in revenue. Consider these four ways to increase the margin on your menu items to build your catering profit.
1. Look at Packaging
Always include packaging costs when calculating the cost of individual menu items, Risa Rappaport, Director of Catering for Firehouse Subs says. To increase your catering profit margin, look for a way to deliver a few items in one package instead of individually without losing quality. It’s worth making that switch in the long-run.
Rappaport says that Firehouse Subs offers a platter menu option that displays cut sandwiches wrapped in paper for easy serving during a catered lunch or event. A solution like this cuts down on your packaging costs. It also looks great to your customers. But be careful how far you go when cutting packaging costs. You never want to sacrifice the quality of the food. Dishes that are packed too tightly, or in flimsy packaging, might be harder to serve or might even decline in quality.
2. Offer Drinks and Desserts
Drinks and low-cost desserts are great menu items that help your bottom line. For the most part, they don’t require as much labor for your team, you can make them in bulk in a relatively short period of time, and they usually don’t require special packaging. So the difference between your selling price and production cost remains high for something like chocolate cookies, brownies, or lemonade. And that means your margin is high too.
You don’t have to stick to the standard desserts and drinks though. Add a twist here or there to keep things interesting. As Nation’s Restaurant News notes, horchata and tamarind-flavored drinks — which have always been popular in Latin culture — are all the rage these days, and can add something really special to your beverage menu. Try out different flavors to see which works best with your menu. Your customers will love the tastes and variety and it will help your bottom line.
3. Get Creative with Your Existing Items
When you’re looking to increase your catering profit margin, it doesn’t mean you have to start from scratch with a new menu. Take a look at what works on your current menu, and make creative tweaks.
“If you sell a brisket sandwich and a turkey sandwich and the brisket costs more,” Rappaport says, “then you have to find ways to push the turkey,” One of the ways to do this is to create a signature menu with these specialties. Dedicate an entire section to your turkey sandwiches with options that add avocado or bacon, or a Thanksgiving-themed version with cranberry sauce and stuffing. As the turkey sandwich section becomes the star of your menu, hopefully, your customers will naturally gravitate there when placing orders. Use whatever marketing resources you have to push that section so that customers choose the higher margin turkey sandwiches. It will increase your profits, and your customers will love the range of options.
4. Cut Your Labor Costs
Another thing to consider to make your items more profitable is the amount of time it takes to prep each dish. Pay attention to how long you and your team spend preparing each item. Use that estimation to understand your labor costs. Are there ways to shave off prep time to cut those costs? Maybe there is a certain ingredient that can be bought pre-prepped without losing quality in the final dish. Can you streamline your process using an assembly line? If you can decrease the amount of time it takes to create each item, ultimately it will lower your costs and keep your profit margins high.
As Rappaport knows: “Profit margins add up along with labor, the cost of delivery, food costs and everything else to let you know if you’re doing a good job.” When your margins are high, your business thrives and you can continue to provide a high level of service and quality catering. You started your catering business to make money off of your love of food. Keeping your profit margins high will ensure that you can keep sharing your love for years to come.
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