@op as it's nursery, keep the invitation lost small. Spend the money at reception stage when the primary relationship lastsnfkr seven years.
Also, I remember the under 6's didn't eat that much: plate it up for them: 2 finger sandwiches, fairy cake holder of crisps, half a dozen halved grapes, half a satsuma, two party rings and give them juice in a carton but have extras.
Party bags: balloon, glittery pen, eraser, stickers, bubbles, slice of cake. (I bought two little cakes and sliced and wrapped one before the party) I tried to so little books or packets of cress - they like a bag of cheap sh1t and it's about your dc's infant cred.
Parties used to cost £100 to £150 in the early noughties so your price sounds about right. Ours had a choice: a nice birthday present or a party. They always went party.
Your pay back is that ypur child will pribably be invited to another 15 to 20 parties. That's 30 to 40 hours of freedom to go shopping, have your hair cut, read a book, etc