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Expert Guides

Understanding the different types of catering contracts

catering contracts client

Catering contracts are vital legal agreements between the client and caterer, facilitating the supply of food and drink in the workplace for a specified duration.

Each contract type has different and distinct advantages and considerations. It’s crucial for clients to select the contract style that aligns with their organisation’s needs, culinary preferences, and workplace dynamics. This expert guide outlines the types of catering contract and their different purposes.

Cost plus

Cost plus guarantee

Nil subsidy/cost

Fixed price/cost/subsidy

Fixed cost per head/user/employee


Royalty contract

Glossary of common contract catering terms used in different types of catering contracts


The bottom line cost paid by the client to the caterer to provide the catering service, used where the sales income is less than the cost of operation.

Service-level agreement (SLA)

Part of service contracts where the level of service is formally defined. The caterers income (however earned i.e. management fee) can be incentivised either on sales and/or SLA.

Gross profit (GP)

The difference between the food cost and sales revenue that normally offsets part or all of the operating costs


Recommended retail price


Selling price

Operating expenses

Costs other than food, i.e. cleaning, disposables, uniforms, equipment and deep cleans. Labour costs and all the associated employment costs of the team i.e. employer’s NI, pension, healthcare etc.

Management fee

Catering revenue received directly from client for operating the catering service to cover costs for employing and managing the people and services needed to deliver the service.

Expert advice

To share best practice, we have developed BM’s unique expert guides for workplace and contract catering. For more information read our expert guide to 5 advantages of contract catering.