How to Price Catering Orders for Maximum Profit

Pricing catering trips up a lot of restaurants. Price too high and you lose orders to the place down the street. Price too low and you're working harder than your dine-in business for less profit. Here's how to find the middle.

Why catering pricing is different from dine-in

Your dine-in prices cover table service, ambiance, the whole experience. Catering strips that away and swaps in a different set of costs: disposable containers and serving equipment, a vehicle and a driver, dedicated prep time outside normal service, bulk purchasing that comes with bulk labor, and bigger losses when a bigger order goes wrong.

The usual mistake is taking the regular menu, multiplying it, and knocking off a few percent. That ignores what catering actually costs you.

Step 1: Calculate your true food cost per catering item

Same approach as dine-in, with a few catering adjustments.

Base food cost: ingredient cost per serving, same as your regular menu.

Packaging cost: containers, lids, utensils, napkins, labels, per serving. Usually $0.50-$2.00 per person depending on how nice your packaging is.

Portion adjustments: catering portions aren't dine-in portions. Buffet servings run a little smaller per person (people take less when they serve themselves), but you still need overage, so plan for 10-15% extra food beyond the headcount.

Target food cost percentage: aim for 28-35% including packaging. That's a bit higher than most dine-in targets, and that's fine, because catering needs less labor per revenue dollar.

Step 2: Choose your pricing model

Per-person pricing

The most common model for drop-off catering, and the easiest. "Feeds 20 people at $18/person" needs no explanation.

To set it, add up food and packaging cost per person and divide by your target food cost percentage. At $5.50 cost per person, that's $5.50 ÷ 0.30 = $18.33 per person, which you'd 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. Work out what one tray costs you to produce, say what it feeds ("serves 8-10"), and apply your margin. A sandwich platter that costs you $25 and serves 10 prices 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 make ordering simpler for the customer and raise your average order value, because it's easier to pick a complete meal than to assemble the cheapest possible pile of individual items.

Step 3: Set minimum order amounts

Minimums keep you from taking orders that aren't worth the drive. A delivery for 5 people takes nearly the same effort as one for 20, for a fraction of the revenue.

You can set the minimum in dollars ("$150 minimum for delivery orders"), in headcount ("minimum 10 people for catering orders"), or skip it for pickup and let the small orders come to you while you save delivery for the big ones. Delivery minimums usually land between $100-$250. If you're using catering software, the ordering flow enforces them for you.

Step 4: Price delivery correctly

Delivery is the most underpriced line in catering. Three ways to handle it.

Flat delivery fee

"$25 delivery fee" or "$35 delivery fee" is easy to communicate and works if your delivery radius is consistent. If it isn't, tier it: $25 within 5 miles, $40 within 10 miles.

Free delivery above a threshold

"Free delivery on orders over $300" nudges people toward larger orders. Just set the threshold high enough that the order actually covers the drive.

Built into pricing

Some restaurants fold delivery into the per-person price. Simpler for the customer, but your prices look higher next to a competitor who lists delivery separately.

What delivery actually costs you: driver time (30-60 min round trip), vehicle costs ($0.50-$0.70/mile), and whatever else that driver could've been doing. Most restaurants underestimate this at $15-$30 per delivery. Be honest with yourself about the number.

Step 5: Handle deposits and payment terms

Payment at the time of ordering isn't always practical, especially on big 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

For repeat corporate customers, net-15 or net-30 invoicing is normal, as long as you keep a credit card on file as backup. Online ordering systems can handle payment collection at checkout automatically.

Step 6: Build in profit protection

A few ways to keep your margin from leaking.

Rush fees

Orders placed inside your standard lead time (e.g., under 24 hours) get a 15-25% surcharge. That covers the disrupted kitchen and the emergency supply run.

Weekend/holiday surcharges

A 10-20% surcharge for weekend or holiday deliveries covers the higher staffing costs.

Minimum per-person pricing by category

Set floor prices ("no catering package under $15/person") so customers can't bulk-order your cheapest items.

Automatic gratuity

Some restaurants add 18-20% automatic gratuity on catering orders. It pays your team for the extra work instead of hoping the customer tips.

Common pricing mistakes to avoid

1. Copying your dine-in prices. Different costs, different margins
2. Forgetting packaging. It adds up fast at scale
3. Underpricing delivery. The #1 margin killer in catering
4. No minimums. Small orders eat logistics time without the revenue to match
5. Never updating prices. Food costs move. Review catering pricing quarterly
6. Discounting too hard. A 10% "first order" discount is fine. 30% off trains customers to wait for 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 against ~$137.50 in food and packaging. Enough room for labor, overhead, and actual profit.