Evaluate Potential Sales Before Booking Them

Being selective about which events you take and which you pass on assumes that you will not book every order that comes along. But most caterers can’t bear the thought of letting a job go to another caterer, which is where the problem arises.

You must think before saying “yes” to any event, no matter its size or type. This includes both full-service and drop-off catering. Sadly, most caterers believe that all orders are wonderful and that, in the end, everything will be fine. So they just keep booking orders while knowing in their hearts that some may not be right for the company. The assumption is that these unwise orders will be propped up by those orders that are correct.

A caterer may take an order that clearly shouldn’t be taken, simply because it gets the company’s catering “in the door” of a new customer. So, the thinking goes, the new customer will fall in love with their catering and buy more in the near future. Even if the order is improperly priced or too small in guest count or difficult to deliver, it’s still taken. Caterers often justify this by chalking the order up to “marketing.” Sometimes this kind of booking works just the way you hope, but in general it leads to erratic profitability and even to bankruptcy.

It is more important to book business that is properly priced than to book as many orders as you can. In no circumstance should the number of orders taken for a single day exceed the ability of a catering kitchen to produce them in a normal eight-hour shift. This eliminates any chance of overtime pay for the staff, which usually lowers whatever profitability is possible.

This statement is the basis of tremendous problems for caterers: “I need to keep taking orders even if they are not the best for us or my staff will leave me for lack of hours.” Yes, this might happen. If business is slow elsewhere as well, where are they going to go?

The question you have to ask yourself is: “Is my business a charitable organization or is it a business that needs to work for proper profitability?” When a caterer does a day with only a few orders, just to keep the staff busy, the caterer loses money from not having enough orders to cover the staff’s wages. In fact, when a caterer takes a few orders just to keep their staff busy, they usually lose more money than they would if they actually had their staff stay at home with a paid holiday.

Bonus Tip: Caterers make their profit based on all the orders that go through their kitchen on any given day. Often the actual profit in dollars on a day with only six orders ends up being more than a day that had nine orders. One or more of the three additional orders actually may have messed up the profit ratios for the day! Don’t take an order without first thinking about how it fits into the day with respect to pricing, size, delivery destination, degree of production and execution difficulties, overtime pay and who the actual client really is. Catering businesses go bankrupt not because of a bad year, but because of a few bad days.