Surprising Mistakes Caterers Make That Cut Into Profits

Running a business requires a very careful balance

of inflow and outflow to ensure you maintain your profit margins and remain sustainable.

One poor decision can impact your bottom line, so it’s essential to be mindful of revenue coming in and expenses going out at any given time. However, when business is in a constant state of go-go-go, it can be hard to take time out to run the numbers and look for gaps and inefficiencies that are costing you hard-earned money. 

We’ve outlined five key mistakes caterers make that reduce their profit margins so you can know what to avoid.

Choosing the wrong product

Most caterers have a handful of products that they live and die by, simply because they’ve been using them for so long. But, in all of that time, there are likely other brands on the market that offer equivalent quality for a lower price. Spend some time researching to see if you can do any simple swaps and save some change.

Or, maybe you shell out on organic ingredients every month despite the fact that it’s not a top priority for your clients. Getting the right product means serving your clients’ expectations without spending any more than necessary. You can have the best of both worlds!

Listening to your supplier blindly

We all like to think our foodservice partners have our best interest in mind, and maybe they do. But, at the end of the day, you are the only one making decisions for your business! Don’t let your supplier tell you what to buy or when to buy it, as you don’t always know their motivations.

Many food distributors are helpful resources, so feel free to welcome their advice and guidance. But, don’t take their suggestions as more than that — always do your due diligence to ensure you’re getting the most bang for your buck. Don’t be afraid to negotiate for a better rate!

Not considering other suppliers

If you’ve been working with the same distributor for years, it’s easy to fall into the swing of things and get comfortable with what they offer. However, you may be doing your business a disservice by sticking to the same old, same old.

Other suppliers may offer better deals or more cost-effective brands, but you can’t know unless you start asking. Consider doing an annual review of your options and evaluate pricing for the items you purchase regularly.

Buying more than necessary

Food waste isn’t just bad for the environment; it’s also damaging your profits! In fact, it’s one of the biggest offenders when it comes to decreasing margins. Cutting down on waste means you’re making better use of what you buy, and it all starts when you’re shopping. Avoid overbuying ingredients by strategically planning your menus to maximize your purchases.

In the kitchen, get creative with food scraps — freezing leftover herbs in olive oil, preparing pesto with carrot tops or beet greens, and tossing leftover meat and produce into a soup are all better alternatives than throwing money in the trash! 

Not joining a GPO

If you haven’t joined a group purchasing organization (GPO), then you are missing out on savings every time you make a purchase. GPOs run on the power of collective buying, bringing many companies together to make bulk purchases so each company gets what they need at a lower cost than if they were to purchase individually.

One of the perks of a GPO is that you don’t have to worry about any of the negotiations! The organization handles all of it, so you can reap the saving benefits even if you don’t need items in bulk. It’s a win-win situation!

As a business owner, never forget that you are your one and only advocate! If you need to make changes to increase your profit margins, you have to take control and make it happen whether it’s in the marketplace or in your own kitchen.

Clint Elkins is the V.P. of Sales for SB Value, a Group Purchasing Organization that helps culinary professionals save an average of 16% on every food order. Membership is 100% free. No hidden fees. No extra work. Just extra profits. See how much you can save on your next food order when you become an SB Value member. Request a quote today.