You see, all business is simple math: Buy products and mark them up for a profit. But in order to make a profit, one must consider all costs associated with selling the product.

Basically, in catering, we have 5 costs. Cost of goods sold which include food, beverage, rental, and disposable products (if used), labor costs, facility cost (which includes rent, utilities, etc.), marketing costs, and miscellaneous expense.

Cost of goods sold is very important. It dictates what you charge for your product. It is recommended to keep your cost of goods sold at around 25% and no more than 30%. This can be achieved by managing your purchases and proper menu pricing. Find at least 2 purveyors to compare prices when setting up accounts. Also, utilize wholesale membership clubs.

Managing your labor when operating a catering business is imperative. Labor can eat you alive if it's not run properly. Schedule hourly labor only when necessary. Utilize salary employees to their fullest potential. Industry standards are 15-20% for labor.

Facility costs are mainly determined by location and the size of space necessary to handle your projected volumes. Remember, it isn't always necessary to have a prime location to start a catering business. The larger the size of your facility, the higher the utilities are as well. Some people opt to run a home catering business. Just be aware of your local laws if you're going this route. Try to keep your total facility costs under 15%.

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for enquiries email me on victoria@sosorichfoods.com or call 08120210021

See you at the top

Victoria Joshua

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Marketing expense can be a challenging area for your business.

Where to spend your marketing money is an important decision. At first, I would recommend network clubs,church and your local Chamber of Commerce. Develop a website to advertise your services. Set up taste with potential clients. These are all relatively low-cost marketing strategies. Try to maintain a marketing cost of 5% or less.

Always set some money aside for miscellaneous expenses such as equipment repair, vehicle maintenance, glassware breakage, etc. This variable is very hard to predict not knowing what the future holds and the condition of your current equipment.

Remember, this is your business and your livelihood depends on it. You must take the time to manage it

We will continue from next edition

for enquiries on how to start your catering business with free loan email me on victoria@sosorichfoods.com or call 08120210021

See you at the top

Victoria Joshua