Picture this: a corporate client wants catering for 80 people but offers 30% below your usual rate. The event might still be profitable if you cover variable costs and gain strategic value. Your decision hinges on understanding which expenses truly matter for this choice.
The difference between fixed and variable costs
Smart event decisions start with separating your ongoing expenses from event-specific ones:
- Fixed costs: rent, insurance, fixed salaries - you pay these anyway
- Variable costs: ingredients, extra staff, cleaning - only for this event
Fixed expenses don't disappear if you skip the event. But do you earn enough to cover variable costs plus generate additional income?
💡 Example:
A company requests catering for 50 people. Your standard rate is €35 per person, but they're offering €25.
- Ingredients per person: €8
- Extra staff for the evening: €150
- Packaging and transport: €50
Variable costs: (€8 × 50) + €150 + €50 = €600
Revenue: €25 × 50 = €1,250
Contribution: €1,250 - €600 = €650
Calculate the minimum threshold
Your breakeven point occurs where revenue exactly matches variable expenses:
Minimum price = Total variable costs / Number of people
Any amount beyond this threshold becomes profit, regardless of fixed cost coverage.
⚠️ Note:
Account for every variable expense: ingredients, temporary staff, cleaning, transport, packaging. Missing items will skew your calculations.
Situations where lower margins make sense
From years of working in professional kitchens, certain scenarios justify accepting reduced-rate events:
- Slow period: staff has limited tasks anyway
- New customer: potential for future orders at standard rates
- Reference value: prestigious client that attracts others
- Network expansion: event attended by prospective customers
💡 Example of strategic value:
A regional bank requests catering for their client appreciation event. The margin is modest, but:
- 100 local entrepreneurs attend
- You can distribute business cards
- The bank hosts 6 annual events
Long-term potential often exceeds immediate profit.
Red flags that signal refusal
Several warning signs indicate you should decline the opportunity:
- Below variable costs: you lose money per plate served
- Peak periods: you sacrifice regular sales with better margins
- Poor timing: unnecessary team stress without justification
- Dead-end prospect: one-time customer lacking strategic importance
⚠️ Note:
Avoid consistently accepting below-margin orders. This practice erodes your pricing structure and draws problematic customers.
The practical decision matrix
Apply this framework for quick evaluation:
- Above normal margin: accept immediately (if capacity allows)
- Between normal and variable costs: assess strategic benefits
- Below variable costs: decline without exception
Food cost calculators help you rapidly determine per-person variable costs, enabling instant decisions about worthwhile opportunities.
How do you decide about a special event? (step by step)
Calculate your variable costs
Add up all extra costs: ingredients per person, extra staff, transport, packaging. These are the costs you only incur if you do the event.
Determine your minimum price
Divide your total variable costs by the number of people. This is your absolute floor - anything below that means a loss.
Weigh strategic value
If the price is above your variable costs, then consider: new customer, slow period, network value? These factors can justify a lower margin.
✨ Pro tip
Track your variable cost per person over the past 6 months - this gives you an instant floor price for any event inquiry. Accept anything above this number, even if it's 40% below your normal rate.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
Was this article helpful?
Frequently asked questions
Do I always have to recover my fixed costs?
No, fixed costs continue regardless. If you exceed variable costs, you contribute toward fixed expenses. That's superior to skipping the event entirely.
How do I calculate my variable costs per person?
Sum ingredient costs, extra staff, transport, and packaging. Divide by guest count. Include minor expenses like additional cleaning or fuel costs.
Can a discounted event harm my reputation?
Only if you advertise the discount publicly. Ensure other customers remain unaware of special pricing, or they'll demand similar rates.
What percentage of revenue can come from below-margin events?
Limit this to 10-15% of total revenue. Exceeding this threshold undermines your pricing strategy and conditions customers to expect constant discounts.
📚 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.
Make better decisions with real numbers
Should you change your menu? Raise prices? Test a new concept? KitchenNmbrs simulates scenarios with your own data. Try it free for 14 days.
Start free trial →