Reality of a Catering Business
Prior to our current business, SheZen Mono Hot Pot, we spent years operating a successful catering business. Clients included the typical events of weddings, baby showers, birthdays, and anything else that a client may want. From an outside perspective, this appears to be hugely profitable, especially if you have ever priced out catering for a wedding. When you first start out as a vendor, you're happy to get any clients you can to build your name and reputation. You take any and every gig to get off the ground. Then that dream opportunity calls. A large wedding. When you initially hear $8-9k food budget, you immediately think you’re onto something great. This is it; this is what we’ve been waiting for. If it were only that easy. We took a handful of these jobs right from the beginning; however, it doesn’t take long to see the numbers don’t always add up, and numbers don’t lie. To quote The Notorious B.I.G. “This is strictly for live men, not for freshmen” If you're not fully prepared, this could end badly.
In reality the principle is pretty simple. How many guests x dollar amount per head. Let's say 150 guests @ $60 a person that includes salad, appetizers, a few sides, probably two protein choices for main dishes, your already at $9,000. For a newly established caterer, this can be a love at first sight experience that ends badly if you're not ready for this level. And again, I cannot stress enough, these are not common gigs for someone new in the business.
I have never been around an industry like culinary, that so many people with zero experience think they can walk in and immediately be successful. It's usually because someone told them they can cook well or they know someone that has done it, or just watch a lot of the food network. I can put a nice coat of paint on my bedroom walls, but there's no way I'm qualified to build the house. Catering, like most of the food business has so little to do with actual cooking to be successful. Yes, the product has to be of the highest quality, but that’s a given, you haven't done anything yet.
Here are a few financial obstacles that are easily overlooked.
“There's rules to this, so I wrote me a manual”
Purchasing - Great chefs understand product and how to make it stretch. Waste is the biggest killer of profitability, especially in the brick-and-mortar restaurant business (more on that in another post). Over 100 people is a lot of people. Too much raw product cuts into your margins and too little has a lot of unhappy wedding guests. It’s a tricky line not for the faint of heart.
Storage - That’s a lot of food. Your refrigerator and freezer are not up to the task. You'll be surprised how quick a small deep freezer fills up, plus everything can't be frozen. This is all before prep and cooking begins. Once the items are prepared, keeping it fresh and up to temperature is a skill all in its own. There's a reason why restaurants have giant coolers and ovens.
Kitchen Space – Obviously to be fully licensed in this business you need to work out of a legitimate kitchen. Cloud kitchens are a great solution to this problem, but that is a relatively new service. Prior to this you had to be creative. We all know every new entrepreneur always starts off following the rule book, (insert sarcasm) but if you are not able to, things like preparing food for 150 people in your home kitchen takes a special type of chef. You thought Thanksgiving was stressful.
Transportation – You have purchased all your food, prepped, cooked, and stored it for the day of the event. Now how are you getting all that there. Transporting that much food is extremely stressful. I know this because that was my one of my jobs I was tasked with. I have been moving very expensive production equipment for years and thought this would be no problem. I was incredibly wrong. Every single item has to be handled with the utmost care. There are containers such as hot boxes that makes life much easier, (they stack and keep food hot or cold, but can add up cost wise for beginning inventory) but even the food in the hot box can't just be moved around. I don’t care how much you wrap a sheet pan; sauce is going to sauce. It does not cooperate with your driving skills. Speed racks full of pre portioned items like salads are great to move around the venue, but have you ever tried to put one of these things on a trailer and drive 30 miles watching it move side to side along the way? With food you only get one shot. If anything messes up on the way to the venue, that’s it, a lot of people are going hungry, and your returning money. Ideally the move is using a large professional box truck, with a lift gate, that has plenty of tie straps and hooks on the walls to keep everything secure. But again, how many startups can afford this, or even know about this.
FUN FACT: We once had a box truck for a large event, unloaded everything to bring into the venue. As we were closing up the truck, the hydraulic lift broke and completely stopped half way up, blocking anything from getting in or out. Fortunately, we had everything unloaded, but could you imagine if thousands of dollars of food were on the truck and the door would not open to get it out. That thought still haunts me to this day. Another fun way to end the evening was having to return the truck that night with a broken gate, not knowing if it could fall at any moment. To be safe, someone followed me on the highway at a safe distance, just in case it did fall, no one would get hurt. I'll save how we actually got this professional truck for another story.
Venue – This factor never ceases to amaze me. Most wedding venues are incredibly beautiful and picturesque for this special day. However, some have little to no kitchen space to work out of. Items like a functional sink for dirty dishes, refrigeration, ice machine, even running water sometimes are a luxury. Hotel ballrooms are one thing, but a ton of weddings, especially in Florida, are outdoors at converted barns, cabins, and clubhouses. The challenge of space is a real one. It takes an incredibly experienced chef to execute under any location circumstances, and rarely are they in your favor to make the job easier.
FUN FACT: We once did an event at what looked like a fairy tale Alice in Wonderland, Hobbit Forrest, that at first sight, in the dark, didn’t know if we were going on a fantasy adventure, or get murdered like in a bad horror movie. Editor's note: The place was beautiful and safe
Communication – With larger events, rarely are you, the caterer, speaking directly to the decision maker. Middlemen, usually in the form of an event or wedding planner, takes over this role. If your fortunate enough to work with a professional that remains cool and calm under any situation and communicates the client's needs in a timely fashion, then the event tends to run smooth all around. Unfortunately, this person is not always a professional. They maybe a friend or relative who thinks they know your business better than you and it becomes painfully obvious why they don’t do this for a living. These gigs tend to be a nightmare. Advice to new caterers, acquire all detailed information needed as soon as possible and get everything in writing, basically CYA.
Time – In my opinion, the most important and valuable element of this entire list. I watched this unfold from afar every single event. More than likely as a new Entrepreneur, you have a full-time job that supports this new business venture. Time is not on your side. It is a daunting task to create and send over initial proposals and menu suggestions only to revise until the client agrees. This is where the communication is a huge factor. If that middleman is not efficient, this only doubles or triples your time. From the first client meeting to the actual event can be weeks and weeks of tireless work. It's easy to estimate the hours of the actual event, set up and breakdown, but the amount of time that really goes into executing any successful event tend to be highly unaccounted for.
If you gotten this far, all that’s left is executing through the dinner service. If you have a few good team members keeping an eye on guests, cleaning plates as you go, making sure the buffet line is fresh and stocked, then this hour or so will fly by stress free and you're in the home stretch. You’ve done it. From start to finish you got the client, secured the deal, executed your service, and made the client happy. Congratulations!
Now the financial reality comes in. Was it worth it. That large budget number at the start looked amazing. Breaking down food cost per head by what you're charging initially looks great on paper, but all those other hidden factors, if you haven't experienced it, slowly chip away at your bottom line. Hours and hours that when broken down, becomes a real eye opener of what you really walked away with profit wise. It will make you re-think why you're even doing this and was it even worth it. With a large budget, there lies room for creative methods to ensure profitability, but with small gigs, which will be the most common, there is little to no room for error. You can easily go from $200-300 profit to in the hole $100 plus the time it took to lose that money. The catering business is a fickle beast. As anything else in business, take a moment to assess all hidden factors and proceed with caution. Good Luck!!
“Follow these rules you'll have mad bread to break up, Gotta go, Gotta go, more pies to bake up, word up”