Contract Catering

What is a Catering Contract?

A catering contract is a legally binding commitment between a caterer and a client. It contains details
specifying your services as a caterer throughout one event or multiple. It is a way of documenting your
clients' engagements regarding the catering services you are willing to provide them.

There are seven main categories of catering contracts:

1Cost Plus: In this type of contract, an estimated budget is prepared according to which the caterer
prepares the food. If the budget is exceeded, the client is expected to pay the additional amount. In the
case of saving, he is entitled to receive money from the caterer.

2Cost Plus Guarantee: It is similar to Cost Plus except that the caterer adds labor costs and gross profit
percentage as a part of sales and management charges.

3NIL Subsidy / Cost: The caterer controls the tariff, menu, and other miscellaneous costs and applies
these charges. The caterer runs a profit and loss account but does not submit it to the client.

4Fixed Price: An annual budget is calculated. The cost is divided by 12 to calculate a monthly surcharge
that the client then pays. The client, however, does not have to pay any additional costs that may
exceed the budget.

5Fixed Cost Per Head: An annual budget is calculated, and the cost is estimated per user. Then, the food
cost per head is calculated by multiplying it by daily numbers. This is usually done for contracts for
hospitality and schools.

6Concession: It is similar to NIL subsidy except that a percentage return of sales is given to the client
each month.

7Royalty Contract: These are used as long-term contracts. Each month, the client is given a sales return,
which is not affected even if the caterer cannot control its costs.

What Should Be Included in a Catering Contract?

A catering contract is a detailed agreement outlining the essential terms and conditions you and your
client must abide by. Contracts should be just for both the client and the caterer. It needs to be able to
give accountability and value to the client and, at the same time, provide a real incentive to the caterer.

The terms and conditions may include:

Basic Contract Information: The contract should include the complete address and name of the client
and the caterer. It should also contain information regarding the venue, date, and time of the event.

Menu: The contract should have details about the number of items on the menu and the quantity
required by the client. It can even have information on the dishware and cutlery to be used.

Food Service: The contract should all be specified whether you provide a buffet or a sit-down meal. On a
catering contract, it should be mentioned how the meals and beverages will be served to the guest.
Staffing Services: The contract should outline details such as the ratio of guests to staff members, the
staff's dress code, and the services the staff is required to provide.

Final Changes: The contract should also include a final date for any changes the client wishes to make to
the menu or the guest list.

Payment Schedule: The caterer's fees for food and services should be written in clear terms. Any
additional costs should also be included in the contract.

Cancellation Policy: It is essential to provide details such as the notice period and the amount paid to the
caterer if the client terminates the contract.

Breach of Contract: The contract should also contain details for when there is a breach of contract from
either of the parties involved.

When to Use a Catering Contract

A catering contract is used in situations where you are supposed to arrange food for many people. You
rely on a caterer to organize the entire menu, ensuring it is sufficient for all the people.

You may need a catering contract in the following situations:

 Restaurants and hotels often create a catering agreement with other services to organize lunch
and dinner daily. These are long-term bindings.
 Hospitals, schools, and the corporate sector hire caterers to ensure a regular and consistent
supply of food and cleaning services.
 For occasions like weddings, birthday parties, and other social events, caterers are hired to
arrange the food menu requested by their clients. They are hired for a limited time.
 Often wedding planners and event organizers create a catering agreement with caterers. The
purpose is to provide customers with all kinds of services under one roof. The caterer doesn't need a
separate contract with the client in this situation.

Benefits of a Catering Contract

A catering contract restricts both parties from violating the terms made between them. Some of the
benefits include:

Protection of rights: You have legal protection against clients challenging to work with. In addition, it will
help you avoid any conflicts with the client.

Duties and liabilities: A well-written catering contract sets the parameters for the caterer's services and
the client's expectations.

Payment guarantee: Since money is involved, it prevents any mismanagement of the finances. There
remains no ambiguity when it comes to paying off dues on time.

Validity: A catering contract also sets the tone for any future dealings with a particular client. The
contract is renewable, so the parties may decide to continue working on the same terms or after slight
modifications to the existing ones.

Client-caterer relationship: It allows for a smooth relationship between the caterer and the client.