A venue without its own kitchen still shapes every catered event that happens in it. It provides the room, the kitchen space, the loading dock and often the client. Many venues decide that relationship should come with a share of the catering revenue.
A catering commission is the most common way to earn it. Set up well, it rewards the venue for the business it sends without making its caterers more expensive than the competition.
What Is a Catering Commission?
A catering commission is a payment a caterer makes to a venue, usually a percentage of the food and beverage sales from events at that venue, in exchange for access to the venue's clients and facilities or a place on its preferred or exclusive list. It is set out in a written agreement between the venue and the caterer. The client typically pays the caterer, and the caterer pays the venue its share.
Common Commission Structures
Venues use a few structures, often depending on how much business they send each caterer.
- A percentage of the caterer's food and beverage sales for each event
- A flat fee per event, regardless of size
- A per-guest fee, which scales with headcount
- A kitchen use fee, sometimes in place of a commission
A percentage is the most common for exclusive and preferred caterers. It ties the venue's income to the size of each event. A flat or per-guest fee is simpler to track and avoids disputes about what counts as sales.
When setting a rate, look at what each caterer gets from the arrangement. A spot on a short preferred list at a busy venue is worth more than a place on a long list at a venue with few events. Exclusive caterers usually accept a higher commission than preferred caterers in exchange for guaranteed volume.
What Counts Toward the Commission
The agreement should say exactly which sales the commission applies to. Disputes usually start here.
Most venues apply the commission to food and beverage subtotals, before tax, service charges and gratuities. Some include rentals the caterer provides, such as linens or china, and some exclude them. Bar sales may or may not count, depending on who holds the liquor license.
State it plainly. "Commission applies to the caterer's food and non-alcoholic beverage subtotal for each event, before tax, service charge and gratuity" is clear enough to settle most questions.
A Worked Example
Consider a preferred caterer that pays a 10 percent commission on food and beverage subtotals. A wedding with $12,000 in food and beverage sales earns the venue $1,200.
Across 40 catered events a year at a similar size, that is about $48,000 for the venue. The figures are illustrative, but they show why commissions matter to venues without an in-house kitchen.
The cost does not disappear. Caterers often build the commission into their prices at that venue, so clients pay a little more. Keep commissions at a level that does not make your caterers uncompetitive.
Documenting and Reporting
Put every commission arrangement in a written caterer agreement. It should cover the rate, what counts toward it, when it is paid and how it is reported.
- Commission rate and the sales it applies to
- Payment timing, such as monthly or within 30 days of each event
- Reporting, such as a monthly statement with event-level totals
- The venue's right to review caterer invoices for its events
- What happens if an event cancels or the caterer is removed from the list
Record commissions as their own revenue line in your books so you can see what each caterer contributes. Ask your accountant how commissions should be reported for tax purposes.
Commission or Food and Beverage Minimum?
A commission and a food and beverage minimum solve different problems. A commission gives the venue a share of whatever the caterer sells. A minimum sets a floor on total catering spend for a date, with any shortfall billed to the client.
Commissions suit venues with several preferred caterers and less control over menus. Minimums suit venues with an exclusive caterer or in-house kitchen, where the venue sets prices. Some venues use both, with an exclusive caterer paying a commission and the date carrying a minimum.
Transparency With Clients
Clients and planners sometimes ask whether the venue earns a commission from the caterer. Answer honestly. A short line such as "the venue's preferred caterers pay a commission, which supports kitchen maintenance and staffing" is usually accepted.
Transparency matters for planners in particular, since they recommend caterers to their own clients and want to know where the money goes. If a client chooses a caterer outside your list, explain how the outside vendor fee differs from the commission, so the two are not confused.
Review Your Caterer Agreements
Pull your caterer agreements and check each one for the rate, what counts toward it, payment timing and reporting. Compare the commissions you received last year with your event records, event by event. Any gap is money owed or a clause that needs rewriting. Fix the clause before the next busy season, while there is still time to talk it through calmly with each caterer.
Frequently Asked Questions
What is a typical catering commission for a venue?
It varies by market, venue type and how much business the venue sends the caterer. Many venues charge a percentage of food and beverage sales, while others use a flat or per-guest fee. Set your rate based on your margins and your caterers' pricing.
Do venues charge caterers a fee?
Many do, either as a commission on sales, a flat fee per event or a kitchen use fee. Venues with a preferred or exclusive list are especially likely to have an arrangement. Terms should be in a written agreement.
Does the catering commission include alcohol?
It depends on the agreement and who holds the liquor license. Some commissions include bar sales and some apply only to food and non-alcoholic beverages. State it clearly in the caterer agreement.
Is a catering commission the same as a food and beverage minimum?
No. A commission is a share of the caterer's sales paid to the venue. A food and beverage minimum is a spending floor the client agrees to for a date, with any shortfall billed to the client.
