Nearly two years into the pandemic, it might seem like we’ve put the worst behind us—and, in many ways, we have. We are able to produce events again, our employees are getting paid, and we’re all learning our way around this “new normal.”
But we’re not out of the water yet, as the wedding and event industry is hammered with the impact of supply chain shortages. With consumer demand higher than ever, it seems as if everything is harder to get than usual. Some items are unavailable, while others sport exorbitant prices reflective of the current market status.
For caterers, these issues have been especially challenging to navigate while operating on such delicate profit margins. At the same time, they rely on purchasing inventory to provide clients with a top-notch experience.
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So how can catering companies preserve their bottom line while facing limited resources and a higher cost of goods sold? Here are four ways to bridge the gap.
Trim down menu options.
Less is more, especially when you don’t have access to more. Consider cutting down your menu (even temporarily) to consolidate your inventory and focus on items you can easily procure. Remove any dishes that require hard-to-get ingredients and, if necessary, supplement your menu with a few sustainable options. Otherwise, let your curated menu shine and invite your clients to enjoy the popular classics you can serve without issue.
Experiment with substitutions.
Some dishes may not need to be scrapped if you can use alternative ingredients to produce similar results. For example, fresh meat has seen a significant uptick in pricing due to the supply chain. Consider opting for sustainably-sourced frozen meat or plant-based substitutions, like tempeh or seitan. You may have to play around with the flavor profiles to ensure it comes out the same, but it’s a great way to be flexible and continue serving tried-and-true dishes (even if they’re a bit different).
Increase your pricing.
Charging more for your services may seem like the obvious choice, but the reality is that most business owners tend to hold off on pricing changes. And with good reason—increasing rates can price you out of the market if your competitors aren’t following suit. Thus, it’s a careful game to play to ensure you are profiting without losing business opportunities.
Pricing increases can look a few ways:
- Add a flat fee for events booked during 2022-2023. The industry is navigating a “wedding boom” with heavy demand, so an extra fee may be justified.
- Add a scaling fee based on the final invoice amount. This strategy tends to appease clients, as they control their total spend and can plan accordingly.
- Increase prices by the same percentage across all menu items. Be mindful of the cost of goods sold to make sure you are covering your bases.
It also helps to include a line item for protective equipment, like gloves and masks, until we can put COVID behind us. Otherwise, PPE costs will come right from your bottom line.
Upsell additional products and services.
One of the best ways to increase your profit margins without rattling the cage is by simply upselling to clients! By doing so, you can effectively earn more revenue per client without needing too many adjustments in your business. Plus, it’s something you can do throughout the whole process, even when they’ve booked.
Put on your best sales hat and showcase how your clients can upgrade their experiences with additional products and services. Maybe the premium beverage package does make sense, now that you’ve explained that top-shelf liquor is cleaner than cheaper options (and less likely for a hangover!). Or perhaps they didn’t realize you offered linen add-ons until you brought it up in a planning meeting.
Dealing with supply shortages might feel like a headache, but these solutions can help you to recoup your losses, grow your revenue, and keep clients happyeven if you can’t source lychees for your brand’s renowned cocktail.
