How To Price Your Catering Services For Profitability | Cups To Gallons
How To Price Your Catering Services For Profitability

How To Price Your Catering Services For Profitability

Welcome everybody, Stacey and Dave here from Cups to Gallons. We are excited to be joining you here. I know people are going to be streaming on, so we want to give you a few minutes to do that. Come in, have fun, engage.

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Learn how these 2 coffee and smoothie shop owners went from $500K in debt to a 7-figure profitable business

Tell us your name, tell us where you’re from, the name of your shop. We’re so excited you’re here. We want you to engage with us. Ask questions. We are here tonight to help you get the answer for how to price for profitability.

Welcome to Coffee Talk Live Show. Where independent coffee, smoothie, juice bar, ice cream, dessert and snack shop owners come together to talk shop, learn the best business building and marketing ideas and have lots of fun along the way.

So as we’re getting started, I want to ask Dave a question. Dave.

Yes ma’am.

Why are men like coffee? 

Because we drink it all day. I don’t know.

Maybe. The real answer is that the best ones are rich, hot and keep you up all night. Now you get two out of three. I’m not going to tell which that is. I’m going to leave it to the guests, to the viewers to guess which two out of there. All right, let’s get down to business, pricing for profitability. What kind of questions are we getting asked about that?

That’s a really good question Stacey. So thank you everybody for joining us and we really do thank you for participating in our Facebook group. You guys have been giving us a lot of great feedback and asking a lot of great questions and I think the question that’s been coming up the most is do you really price your catering services by the gallon or by the cup? So Stacey, can you just share with our audience  how we really do our pricing and are we really pricing by the gallon?

How To Price Your Catering Services For Profitability

Yeah, it’s a great question. I’ve seen a lot of comments in the group saying, oh I want to price my catering by the gallon because our name is cups to gallons, right? So I just want to be clear, we are not at all suggesting that you price your catering truly by the gallon. I mean, think about it, when you go to buy a car and you see this big number on the sticker, right? $50,000 for a car, you’re like, Oh my God. Right? But the car dealer, the salesperson isn’t selling it to you that way. They break it down and they say for just $249 a month, you can drive off the lot with this beautiful vehicle. So it’s kind of the same with pricing you’re catering, right? You’re not, hey, want to buy this gallon of coffee for $800 which is our average catering job, right? If somebody called and said, Oh, how much is your catering? And I said $800 right off the bat, they would like run for the hills. So it’s the same in your coffee, smoothie, juice bar, right? Because nobody’s going to come in and pay $800 for a cup. So the way we break down our pricing is very simple. You just break it into pieces. We do one charge for transportation, set up delivery. We do one charge for the beverage service itself, tax and gratuity. That’s it for simple things.

All right, so Stacey, when you mean pricing, not by the cup and by the gallon, you’re also talking about more, you’re not just bringing this stuff out to the people that you’re doing the catering for and dropping it off there and saying, Oh, here’s your gallon of coffee. Right? You’re, giving them an experience, and that is really what they’re buying. They’re not buying a cup of coffee, they’re not buying a gallon of coffee. A cup of coffee is a commodity, a gallon, a coffee as a commodity, just like a cup of milk and a gallon of milk. Everybody knows what the prices of those are and what they’re willing to pay. But when you package your services and you put them together with an experience, it changes everything. Am I correct?

Yeah, you’re exactly right. So let’s loop it back to the example of the car. When you go to buy a car, people buy what they want, not what they need. If somebody just needs a car, they can go get that anywhere. Something with four wheels and a steering wheel will get you from point a to point B. But people pay 50, 60, a hundred thousand dollars for a vehicle. And why is that?

Well, I’ll give you an example and that’s a really, really good point. So last year we went to the car show and at the car show, they had an exhibit with the Jeep. Jeep had an exhibit there and they were allowing people to ride in their vehicles around this test track where they had all these obstacles. They had this huge mountain, they had you tilt it sideways, you had you going over the bumps and stuff like that. And so by the time you were done and you got over the top of that hill and you went sideways in the Jeep, you wanted a Jeep, you didn’t even care what it costs because it was so cool. Right. Is that a perfect example of an experience and why you would be willing to pay way more for a Jeep now? I guarantee you I could probably do half of that stuff in my car. It wouldn’t be nearly as fun though. And it wouldn’t be nearly as good of a ride.

How To Price Your Catering Services For Profitability

Exactly. So people buy what they want. They can go anywhere to get what they need. And when you’re putting together the pricing for your catering packages, if you do, as Dave said, make it an experience, then they will handsomely pay for it. So let me give you an example. In our coffee and smoothie bar, we’re not just saying, Oh, we do catering, we don’t just do coffees and we don’t just do smoothies. So if you were to contact us to learn more about our smoothie bar catering, here’s my pitch.

We’ll come out, set up a Tiki Bar where our professional Tiki tenders serve Gourmet All Natural Fresh Fruit Smoothies topped off with a Hawaiian parasol. It’s a “vacation in a cup”, and boom, they’re sold because they have the picture in their mind of this Tiki Bar with somebody dressed up in a cool Hawaiian shirt serving umbrella drinks. It’s not about the smoothie, it’s not about the coffee, it’s about the fun and having a done for you solution. And that’s how you package for profitability. Now I see a lot of people have come into the group. Hi Amanda. Bella, Taylor. Thank you so much for being here. So feel free to ask any questions that you have. We are really here to help you learn how to cater your way to success. Pun intended.

What else, Dave?

Now I think you know that is really the basis for how you price your catering services. You don’t want to sell by the cup, you don’t want to sell by the gallon. The gallon is a metaphor. You’re bringing gallons of your product out to the person’s facility. How you price that is entirely independent of whether it’s by the cup or by the gallon. It’s by the experience. You’re just bringing the coffee with you. So hopefully that makes sense. And hopefully when you go to package your catering services, you’ll give some really deep thought about how you can make your experience different and unique and make people want to pay 20, 30, 40, 50. 60, 80, a hundred dollars a gallon for this experience. So hopefully putting that in a different perspective gives you some idea of how you should do your pricing.

All right? I think you simplified it for everybody.

All right? So again, don’t go out and literally sell by the gallon, okay? Put together a package that is an experience and break your pricing down into very simple pieces like ours is literally just a transportation setup fee. The price of the beverage tax and gratuity. It’s as simple as that. And we get an average of $800 for a two hour catering job with 75 to 90% net profit. Some stores don’t even do that in a day. So we are here. We are your Cups to Gallons champions here to help you go from Cups to Gallons. Bye everybody.

Have a good evening.

About the Author Stacey and Dave Riska

Stacey and Dave Riska, aka "The Cups To Gallons Champions" are on a mission to help independent coffee, smoothie, juice bar, ice cream, dessert and snack shop owners learn how to get into lucrative catering. They transformed their coffee/smoothie business from $500K in debt to a 7-figure profitable business (yes you read that right!) by doing catering. They're the author of "Cups To Gallons where they share the 5-step CATER system that can give you $800 a day (or more!) in profits. Join Stacey, Dave and your fellow small business owners in the FREE Facebook Cups To Gallons Group

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