How to Price Catering Orders for Maximum Profit

Pricing catering is one of the most common sticking points for restaurants. Price too high and you lose orders to competitors. Price too low and you're working harder for less profit than your dine-in business. Here's how to find the right balance.

Why catering pricing is different from dine-in

Your dine-in menu prices factor in table service, ambiance, the full restaurant experience. Catering strips all of that away — but adds different costs:

• Packaging — disposable containers, utensils, serving equipment
• Delivery — vehicle, fuel, driver time
• Advance prep — dedicated kitchen time outside normal service
• Larger quantities — bulk purchasing, but also bulk labor
• Risk — bigger orders mean bigger losses if something goes wrong

The mistake most restaurants make is simply offering their regular menu items in larger quantities at a slight discount. That ignores the real cost structure of catering.

Step 1: Calculate your true food cost per catering item

Start with the same approach you use for dine-in, but account for catering-specific factors:

Base food cost — ingredient cost per serving, just like your regular menu

Packaging cost — add the per-serving cost of containers, lids, utensils, napkins, labels. This typically runs $0.50-$2.00 per person depending on your packaging quality.

Portion adjustments — catering portions are often different from dine-in. A buffet-style serving might be slightly smaller per person (people take less when serving themselves), but you need to account for overage. Plan for 10-15% extra food beyond the headcount.

Target food cost percentage — for catering, aim for 28-35% food cost (including packaging). This is slightly higher than many restaurants' dine-in target because catering has lower labor costs per revenue dollar.

Step 2: Choose your pricing model

Per-person pricing

The most common and easiest model for drop-off catering. Customers understand "feeds 20 people at $18/person" immediately.

How to set it:

• Calculate total food + packaging cost per person
• Divide by your target food cost percentage
• Example: $5.50 cost per person ÷ 0.30 = $18.33 per person (round to $18 or $19)

Per-person pricing works best for buffet-style packages, boxed lunches, and platter-based menus.

Per-tray or per-platter pricing

Better for appetizer platters, sides, and items that don't scale linearly with headcount.

How to set it:

• Calculate the total cost to produce one tray/platter
• Specify what it "feeds" (e.g., "serves 8-10")
• Apply your margin
• Example: $25 cost for a sandwich platter that serves 10 → price at $75-$85

Package pricing

Bundle items into preset packages (e.g., "The Executive Lunch: sandwiches, salad, chips, cookies, and drinks for $22/person"). Packages simplify ordering for customers and increase average order value for you.

According to Toast's restaurant data, restaurants that offer catering packages see 15-25% higher average order values compared to a la carte catering menus.

Step 3: Set minimum order amounts

Minimum orders protect you from catering orders that aren't worth the logistics. A delivery for 5 people requires nearly the same effort as a delivery for 20 — but generates a fraction of the revenue.

Common approaches:

• Dollar minimum — "$150 minimum for delivery orders"
• Headcount minimum — "Minimum 10 people for catering orders"
• No minimum for pickup — encourage smaller orders to pick up, reserve delivery for larger ones

Most restaurants set catering minimums between $100-$250 for delivery orders. If you're using catering software, you can enforce these automatically in the online ordering flow.

Step 4: Price delivery correctly

Delivery is the most commonly underpriced element in catering. Options:

Flat delivery fee

• Simple to communicate: "$25 delivery fee" or "$35 delivery fee"
• Works if your delivery radius is consistent
• Consider tiered fees: $25 within 5 miles, $40 within 10 miles

Free delivery above a threshold

• "Free delivery on orders over $300"
• Incentivizes larger orders
• Make sure the threshold is high enough to cover your actual delivery costs

Built into pricing

• Some restaurants bake delivery costs into per-person pricing
• Simpler for the customer, but makes your prices look higher when compared to competitors who list delivery separately

What delivery actually costs you: Driver time (30-60 min round trip), vehicle costs ($0.50-$0.70/mile), and opportunity cost. Most restaurants underestimate this at $15-$30 per delivery. Be honest about the number.

Step 5: Handle deposits and payment terms

For catering orders, payment at time of ordering isn't always practical — especially for large corporate orders.

Deposit structure:

• Orders under $200: full payment at time of order
• Orders $200-$500: 50% deposit, balance due day of delivery
• Orders over $500: 25-50% deposit, balance due day of delivery

Corporate accounts:

• Net-15 or net-30 invoicing for repeat corporate customers
• Require a credit card on file as backup
• FlashCater's online ordering system handles deposits and invoicing automatically

Step 6: Build in profit protection

A few pricing strategies that protect your margins:

Rush fees

• Orders placed with less than your standard lead time (e.g., under 24 hours) get a 15-25% surcharge
• This compensates for disrupted kitchen flow and emergency purchasing

Weekend/holiday surcharges

• 10-20% surcharge for weekend or holiday deliveries
• Covers higher staffing costs

Minimum per-person pricing by category

• Set floor prices: "No catering package under $15/person"
• Prevents customers from ordering the cheapest items in bulk

Automatic gratuity

• Some restaurants add 18-20% automatic gratuity on catering orders
• Compensates your team for the extra work without relying on customer tipping

Common pricing mistakes to avoid

1. Copying your dine-in prices — catering has different costs, different margins
2. Forgetting packaging costs — they add up fast at scale
3. Underpricing delivery — this is the #1 margin killer in catering
4. No minimums — small orders eat up logistics time without proportional revenue
5. Not updating prices — food costs change; review catering pricing quarterly
6. Discounting too aggressively — a 10% "first order" discount is fine; 30% off trains customers to expect deals

A simple pricing formula

For each catering menu item:

Price = (Food Cost + Packaging Cost) ÷ Target Food Cost % + Delivery Allocation

Example for a sandwich lunch package:

• Food cost per person: $4.50
• Packaging: $1.00
• Total cost: $5.50
• Target food cost: 30%
• Base price: $5.50 ÷ 0.30 = $18.33 → round to $18/person
• Delivery: priced separately or built in

At $18/person for a 25-person order, that's $450 in revenue with ~$137.50 in food/packaging costs — a healthy margin that accounts for labor, overhead, and profit.