Monday, June 11, 2012

Don’t Book Just For Cash Flow


The single hardest thing for a caterer to do is to say “no” to an order, especially during the first years as a caterer. I believe you aren’t really a professional caterer if you accept any and all orders. Doctors, lawyers and other professionals don’t take every client that comes their way.
Beginning caterers often feel it is great to take all orders no matter what their profit profile, just to keep the staff busy and gain experience. When food prices and fuel are increasing dramatically, only orders that return proper profitability should be booked—no matter what! The number of orders you take is not as important as the profitability of those orders.
Caterers need to keep their spending and purchases in line with what they are selling their products and services for. A caterer working with a 50 percent to 60 percent cost of sales needs to make sure that, after all the bills are paid for raw materials and after all the culinary staff and other event costs are paid, there is still a 40 percent to 50 percent gross margin left to work with. A few poor selling or buying decisions can dramatically change your ratios.



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