Most hotels lose money on catering because they price packages like regular restaurant service. Group bookings have hidden costs that'll eat into your profits if you don't account for them. I've seen too many properties struggle with unprofitable events because they forgot to factor in setup time, extra staff, and no-show risks.
What makes catering different from regular restaurant service?
Catering for group bookings operates on completely different economics than your regular dining room. You're calculating per person instead of per dish, and there are costs lurking beneath the surface that can destroy your margins.
- Preparation costs (mise-en-place for large groups)
- Extra staff for service and dishwashing
- Buffet setup or presentation
- Possible equipment transport
- Risk of no-shows (you prep for 50, 45 show up)
The basics: calculating cost price per person
For catering you always calculate per person, not per dish. This approach gives you crystal-clear visibility into what each package actually costs to deliver.
💡 Example:
Lunch package for 40 people:
- Food costs: €12 per person
- Extra staff: €3 per person
- Buffet setup: €1.50 per person
- No-show buffer (10%): €1.65 per person
Total cost price: €18.15 per person
Calculating food costs
Start by listing every single ingredient for the entire package. Don't skip anything - main courses, sides, bread, butter, sauces, even garnishes add up.
Formula: Total food costs / number of people = food costs per person
⚠️ Note:
Build in 10-15% extra for waste and no-shows. You'll prep for the confirmed headcount, but there's always spillage, dropped plates, or fewer guests than promised.
Including labor costs
Catering demands additional hands. From years of working in professional kitchens, I've learned that most operators underestimate labor by at least 30%. Calculate exactly how many extra hours you need and divide by guest count.
- Kitchen: extra prep time for large quantities
- Service: buffet supervision or table service
- Dishwashing: more plates, trays, cutlery
💡 Example:
For 40 people you need 6 extra hours of staff:
- Hourly rate including employer taxes: €20
- Total labor costs: 6 × €20 = €120
- Per person: €120 / 40 = €3 per person
From cost price to selling price
For catering, target a total margin of 60-70% (food plus labor combined). That's higher than regular restaurant service because you're shouldering more risk and upfront costs.
Formula: Selling price = Cost price / (1 - desired margin)
💡 Example:
With a cost price of €18.15 and desired margin of 65%:
- Selling price excl. VAT: €18.15 / 0.35 = €51.86
- Selling price incl. 9% VAT: €51.86 × 1.09 = €56.53
Rounded: €57 per person
Special considerations for hotels
Hotels face unique challenges that standalone caterers don't deal with:
- Room rental: Calculate this separately or include it in the catering price
- Equipment: Chafing dishes, warming plates, extra tables
- Cleaning: Extra cleaning of the room and kitchen
- Opportunity cost: What revenue are you losing from regular restaurant guests?
⚠️ Note:
VAT calculations can trip you up. Catering is 9% VAT, but alcoholic beverages are 21% VAT - keep them separate in your pricing.
Checking profitability
After each package, compare your estimated costs with what you actually spent. This reality check helps you refine your calculations for future events.
Food cost calculators help you track all costs per package and automatically calculate margins, so your next quote becomes more accurate.
How do you calculate the margin on catering? (step by step)
Calculate food costs per person
Add up all ingredients for the entire package. Divide this by the number of people and add 10-15% extra for waste and no-shows.
Calculate extra labor costs
Calculate how many extra hours you need for prep, service and dishwashing. Divide the total labor costs by the number of guests to get the cost per person.
Add up all other costs
Add costs for buffet setup, extra equipment, cleaning and any transport. Convert these to costs per person as well.
Calculate selling price with desired margin
Use the formula: Selling price = Cost price / (1 - desired margin). For catering a 60-70% margin is normal due to higher risk.
✨ Pro tip
Track your catering margins by group size - packages under 25 people often need 75-80% margins because setup costs don't scale down proportionally. Review your last 12 months of bookings to find your break-even point.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What margin should I target for hotel catering packages?
Aim for 60-70% total margin on catering packages. This is higher than regular restaurant service because you're taking on more risk with no-shows, prep costs, and equipment needs.
How do I handle no-shows in my cost calculations?
Add 10-15% to your food costs as a no-show buffer. You'll prep for the confirmed number, but groups consistently have fewer attendees than promised. This buffer protects your margins from last-minute cancellations.
Should I calculate room rental costs separately from catering?
That depends on your pricing strategy and competition. You can bundle room costs into the per-person catering price or itemize them separately. Just make sure all costs are covered somewhere in your quote.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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