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If you feel it's the right decision, that's all that matters. In writing, simply say, "I'm terribly sorry, but my fiance and I have decided that another caterer is better suited for us since deciding on a plated meal. We have truly appreciated your services up to this point, and we're happy to recommend you to anyone in the future."
Definitely don't count on getting your deposit back, unless the contract states it's refundable.
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Ok, I know I am getting married and I shouldnt be such a big baby but I am! I picked a caterer who is a really nice woman, very friendly very kind and verry attentive. However, I picked her when I thought we were going to have a buffet style meal. We recently decided to go with a plated dinner and while buffets are more her specialty she provided me with pricing and information for a plated dinner. It is pretty obvious its not her thing and she is jumping through hoops for me, but I found another caterer (same price, but the only thing is I would lose the deposit I already paid the other woman) who speacializes in plater dinners and makes a beautful presentation. I want to switch caterers but am really nervous about how to do it...any advice?