What are the key financial KPIs for catering businesses?

Build a catering arm alongside your restaurant, and you'll quickly notice that the financial KPIs for catering businesses sit differently than for your restaurant. Your costs differ per event, you have busy and dead months, and there's more coordination involved. The key financial KPIs for catering businesses are revenue per event, average order value, profit margin, cost control, client satisfaction and how much your team can handle in a day. With those figures you see where your catering profit sits and where it leaks away, and you can run your restaurant and your catering side by side without one draining the other. (source: Horecatweepuntnul)

Revenue per event and average order value

Your revenue per event is maybe the most direct figure you have. It shows how you're doing right now, and it helps you estimate what's coming in next quarter. You work out that figure by dividing your total revenue by the number of events in a period.

Average order value is just as important. You work that out by dividing your total revenue by the number of orders. For catering businesses, that figure is usually higher than in the restaurant, because clients order a complete package for a group.

To push your order value up, there are a few things you can do:

• Offer packages instead of individual items
• Suggest extra services such as serving staff or decoration
• Put a premium option alongside your standard menu
• Suggest an add-on that fits, such as a cheese board after dinner

By tracking these figures separately per type of event, business lunches, weddings and parties, you see in black and white which work pays off the most and which work is mostly just busy. Those figures help you decide which work to take on next year. (source: Wikipedia)

Profit margin and cost control in catering

Your profit margin in catering sits differently than in your restaurant. Clients are happy to pay for convenience and service, so the margin can run higher, but that comes with costs you don't have in the restaurant: transport, equipment and hired serving staff.

You work out your gross profit margin by dividing your revenue minus your direct costs (ingredients, packaging, transport) by your revenue. A healthy gross margin for catering usually sits between 60 and 70%.

Working out your food costs is trickier in catering, because you have to account for:

• Waste from uncertain guest numbers
• Extra costs for transport and keeping food warm
• Ingredient prices that can swing a lot by season
• Minimum order quantities that don't line up with your numbers

Staff costs as a percentage of your revenue are the figure you want to check weekly. In catering that swings more than in the restaurant, because you bring in extra people for big events. Aim for 25 to 35% of your revenue, depending on the type of catering you do. (source: Wikipedia)

Measuring client satisfaction and repeat rate

In catering, your client value over several years weighs heavily, because satisfied clients come back for the next event. You work out that value by multiplying your average order value by the number of orders per year and the number of years a client stays with you.

You work out your repeat rate by dividing the number of clients who order a second time by the total number of new clients. A healthy repeat rate for catering sits around 30 to 40%.

Satisfaction hits your figures directly, because:

• Satisfied clients spend on average 15 to 20% more on their next order
• Word of mouth keeps your marketing costs down
• Complaints and redeliveries can eat heavily into your profit margin
• Good reviews can bring new clients your way

You measure this KPI with a short survey after every catering event. Ask about the four things catering jobs tend to stumble on: taste, presentation, delivery and service.

Operational figures and staff productivity

Your revenue per employee says a lot about how smoothly your operations run. You work that out by dividing your total revenue by the number of FTEs (full-time equivalents). For catering businesses, that figure is often higher than in the restaurant, because the average order value is higher.

Labour costs as a percentage of your revenue swing a lot in catering. For small events those costs can run up to 40%, while for large events, with almost the same team, you work through far more revenue and land around 25%.

Operational KPIs that affect your bottom line:

• Prep time per portion
• Number of events per day your team can handle
• Combining runs (several deliveries per trip)
• Equipment return rate

By tracking those figures you see where things pinch: the run that always overruns, the equipment that never comes back complete. They help you find the spots where you make profit without needing a single extra client. (source: Wikipedia)

Seasonal trends and cash flow

Catering has strong seasonal patterns that hit your cash flow. December and spring are usually peak months, January and August are often quiet. Lay your revenue figures from past years side by side per month, and you'll spot the pattern straight away.

Keeping an eye on your cash flow matters extra in catering, because:

• Clients often only pay after the event
• You have to pay for ingredients and staff upfront
• Large events can temporarily drain your account
• Seasonal swings affect your liquidity

You can predict your peaks and troughs by:

• Looking at last year's figures month by month
• Building holidays and school breaks into your planning
• Building up a buffer for the quiet months
• Working with a deposit for large events

Good cash flow planning means you can pay your fixed costs even in a quiet month and still invest. In catering especially, where your revenue bounces around month to month, that's the difference between working steadily on and going into the red.

Which software helps with measuring catering KPIs?

For tracking your hospitality KPIs you need something that grows with you. Spreadsheets can work fine if you do a few events a month, but they get unwieldy once your calendar fills up.

Type of software	Pros	Cons
Spreadsheets	Cheap, flexible, familiar	Error-prone, time-consuming, everything by hand
Accounting packages	Good financial reporting	Know nothing about catering
Catering software	Everything in one place, calculates for itself	Higher cost, you have to learn it

Software built specifically for catering saves the most work, because it:

• Works out your food costs per event for you
• Shows your profit margin straight away, even when the guest count changes
• Quotes connects to your purchasing and your planning
• Builds overviews for every KPI you want to track
• Connects to your bookkeeping

Choose something that fits the size of your business and grows along with you. Which KPIs you track in it is up to you. What matters most is tracking your figures the same way every month, because only then do you see a trend rather than a one-off month.

Measuring financial KPIs for your catering business mostly takes discipline. Track your revenue, your margins, your client satisfaction and your operational figures systematically, and you get a grip on your catering finances, and make decisions on figures rather than gut feel. That's as true for a catering arm that's just starting out as for one that's been running for years. Want to know how we help hospitality business owners with that, get in touch with us.

Worth reading: ➡️ What information must a catering invoice legally include?

Frequently asked questions

How often should I update and analyse my catering KPIs?

Track your key KPIs, such as revenue per event and profit margin, weekly, and sit down with them properly once a month. Look at seasonal trends per quarter, because you only see a pattern there once you lay several months side by side.

What do I do if my profit margin drops below 60%?

First look at your food costs: have your purchase prices gone up without your menu prices following? Then check your portions and your waste. If the margin stays low, it's often down to order values that are too low, or work that takes more hands than you budgeted for.

How do I avoid cash flow problems during quiet seasons?

Build up a buffer in the busy months and work with a deposit for large events. Fill the quiet months with other work: cooking classes, meals for businesses, or a partnership with a venue that's actually busy in the low season.

Which KPI matters most for a catering arm that's just starting out?

Average order value. That determines directly whether you make money on an event. Work first on higher order values with packages and extra services, and only chase volume after that. Ten good events are more profitable than twenty thin ones.

How do I calculate my food costs correctly with varying group sizes?

Work with standard recipes per person and build in 5 to 10% waste. Calculate your cost per portion including transport and packaging, and adjust that for group size: for larger groups, your cost per person is usually lower.

What's a realistic repeat rate for my catering business?

30 to 40% is healthy for catering. Below 25%, look at your follow-up: do you call clients again after an event? Above 50%, you have loyal clients and can turn your attention to new ones.

How do I deal with KPI differences between different event types?

Look at your KPIs separately per type of event, because each type has its own margin. Business lunches earn less per job but come back more often, weddings carry a higher margin but need far more people on the floor. Tune your approach per type.

Catermonkey works out your catering quote from your recipes and your purchase prices, so you see the food cost and the margin per event before you send it, and you're not left guessing at the end of the month where your money went.

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