A medium-sized off-site catering business is not easy to sustain. The owner should always account for all the things that happen during working hours. Apart from managing the employees, the kitchen facility, food delivery, and servings preparation, there is also the financial part of the catering business. To ensure the company’s continued success and profitability, the owner should remember the three most important numbers: sales, profit and loss, and gross margin.
Sales are one of the most important numbers that a medium-sized off-site catering business must always consider. An increase or decrease in sales can serve as a warning sign. A period of low sales should signal the owner to reduce the inventory and expenses of the company to avoid wasteful spending and the risk of bankruptcy. Determining why sales increase and noticing a possibly systematic change is crucial for in-advance preparation to sustain the business’ growth (Rezaee, 2016). It could require raising prices, spending money on advertising, or ensuring staff’s availability (Sulong et al., 2017). The change in sales could also be seasonal or a part of any other noticeable pattern. Reacting quickly to this change is an essential skill of a catering business owner.
Keeping a record of a yearly profit and loss report is important for any business. For a catering company, the reports could be further made quarterly, every six months, and every month to calculate the income of the company during specific periods of time. The records enable the owner to calculate the earnings ahead of time and plan for the future. It also helps determine what causes the decrease or increase of income, for example, finding the expenses that could be cut. Measuring customer satisfaction can help explain the change in profits and losses. Together with improving the service based on the clients’ feedback, it can increase the company’s overall sustainability (Rezaee, 2016). Specific activities, such as delivering the food and service to a distant place ordering exclusive and expensive resources, can be assessed with the help of profit and loss records, reducing the unnecessary expenses.
A gross margin is a number that reflects the amount of money left after the cost of resources is subtracted. It is an excellent determiner of what price should be put on the catering service. If the figure is insufficient or close to not being enough to cover the rest of the expenses, such as salaries, rent, and transportation, then the price of the services is too low. This number should be calculated before opening the business and then yearly, as there is a risk of debt. However, in case of equipment deterioration or any other unpredictable increase in expenses, a catering company should not deliberately raise the prices (Sulong et al., 2017). Instead, the owner should focus on carefully selected clientele and downsizing to ensure the growth of gross margins.
In conclusion, the three most important numbers any off-site catering company owner should always consider are sales, profits and losses, and gross margin. Sales are crucial because they can serve as a warning sign that, if properly utilized, can help sustain a sudden growth of business and profits. A record of profits and losses for a certain period of time, together with measuring customer satisfaction, can be useful in planning, calculating, and increasing future income. A gross margin is a number that is important in any business, reflecting the need to increase the prices of the company’s services.
References
Rezaee, Z. (2016). Business sustainability research: A theoretical and integrated perspective. Journal of Accounting literature, 36, 48-64.
Sulong, S. N., Shariff, S. N. F. A., Omar, M., Kamal, M. S., & Ideris, U. U. A. (2017). Perceived quality, customers’ satisfaction and post purchase action in off-premise catering. Journal of Applied Environmental and Biological Sciences, 7(12), 106-113.