Important points to consider before starting a catering program
Off-premise catering is undoubtedly a compelling business opportunity for restaurant owners. Aside from boosting revenue, catering can boost business during slow performing times, reduce excess food waste, allow for menu changes, and helps to increase employee retention as they gain new skills and varied tasks that challenges and keeps them busy (1). Catering also gives businesses brand exposure and valuable marketing opportunities. Instead of waiting for customers to walk through their doors, businesses can bring its brand to the customers in a catering environment (2). As for profit, the percentage is largely variable dependent upon the business model, size, and marketing strategies, but high-end caterers have boasted impressive sales—a pretax profit of over 25% (3). But on average these numbers are much more modest.
For example, Catersource magazine reported 7 to 8 % as the average pretax profit in the full-service restaurant industry (3). Nevertheless, we think it is a good time for caterers as recent studies have made clear the growing demand and popularity for catering. Chicago-based foodservice research firm Datassential, for example, reported that consumer spending on catering was capturing growth that is on par, if not beyond, that of other restaurant categories (2). A more recent research from Technomic reported that business catering brought in $22 billion in 2018, with catering expecting to grow 5.6% annually through 2019 (4). As Gene Lee, the CEO of Olive Garden parent Darden Restaurants said in an interview with RestaurantBusinessOnline.com, “(Catering) makes a lot more sense for us to market and pursue than running around delivering $10 entrees at this point in time” considering that the average order for a large-party delivery catering in Olive Garden is $300 (5).
With that said, there are several factors restaurants must consider before starting a catering program for their restaurant. While it may seem like a big opportunity, off-premise catering is also a lot of work—requiring your time and energy for adding necessary staff, purchasing delivery vehicles, acquiring needed equipment, and paying for miscellaneous expenses that come with the service (2). It is therefore imperative that when starting out, restauranteurs tread slowly and carefully. A successful catering service may take years of adapting and fine-tuning before it is perfected. The personnel, storage capacity and vehicles are dimensions that can be added to the business as volume increases (2).
Possibly the most overlooked element in operating g a successful catering program is good organization. An absence of organization, according to catering experts Maulik Suthar and Nishin Sura, creates a huge time strain and causes simple tasks to take up an unnecessary amount of your day (6). Imagine being too late or too early to the venue because you did not factor in delivery timing, underestimating the amount of food or bringing incorrect food due to miscommunication. Making your guests impatient and uncomfortable is the last thing you want to establish a good impression of your brand. We recommend that you set up a system in place that will allow you to keep track of venue information, menus, pack lists, hiring, timelines and more.
Alternatively, you can invest in a catering software to do this for you. First, find a catering software that can help you organize more catering orders. Basically, a catering software manages business functions for the catering, event planning and banquet management industries, and you start by compare product reviews and features here (7). We recommend that you find one where the invoicing is automated, such as Gather (8) or Total Party Planner (9). BEO (Banquet Event Order) binders, used by event professionals and venue managers to outline all the details on a particular event, such as food and beverage orders, A/V requirements, room info, decor, signed receipts, staffing and more, are also all managed digitally thanks to software like these (10). Other good features to have are integrated/shared team calendar, task management, communication tracking (for proposal or invoice re-reads or reviews), 3rd Party Integrations from excel spreadsheets, credit card payment processing and business insights.
Next, you should assemble your catering team. Having a point person who is dedicated to directing catering, to oversee operation of the catering business and handle with employee training, customer concerns and safety compliance, is a must because it helps catering operations to run more smoothly (5, 12). You’ll also need to cross-train some of your employees so that they can serve as backup staff for your catering service, as catering programs often require irregular staff scheduling and flexibility to handle catering orders that vary in size and complexity (13, 14). Having employees who can multi-task or who can work on a flexible schedule can help. You can also hire a catering salesperson, someone that who will manage business and customer relationships by sales calls, networking, advertising, and social media.
Other questions business owners should ask and answer before you start catering is whether your business has the right equipment, storage capacity and the delivery logistics in place. According to Aaron Hoffman, CEO and co-founder of DeliverThat, a third-party delivery service provider in restaurant catering delivery and setup, how restaurants implement their catering delivery strategies have changed much in these recent years due to growing popularity of third-party delivery (15). According to his article, restaurant owners who implement a hybrid approach to delivery—using both self-managed fleets and third-party delivery providers—have shown the highest customer and employee satisfaction rates. For example, a small fleet of delivery drivers and branded vehicles will cover a few daily runs while third-party providers will handle the most of restaurants’ catering deliveries or overflow on days with higher volume. “The hybrid approach also works well for brands that handle large catering volumes, see seasonal fluctuations, or have VIP clients that prefer one delivery channel over another” (15).
Whether it is simply dropping off the goods or offering more extensive services like buffets or a full dining service, catering is an excellent opportunity for your restaurant to draw in more vertical revenue streams. We hope that these considerations should give you a foundation you need to start your business, but the most important advice for a successful catering program is presenting a professional service that is organized, timely and executes on its promises.
References:
- https://www.caterease.com/boost-revenue-adding-catering-restaurant/
- https://www.fsrmagazine.com/fsr/events/right-way-cash-restaurant-catering
- https://www.catersource.com/business-operations/what%E2%80%99s-fair-profit-margin-caterer
- https://www.technomic.com/
- https://www.restaurantbusinessonline.com/operations/catering-strategy-key-driving-premise-dollars
- https://www.fsrmagazine.com/expert-takes/3-strategies-running-successful-catering-business
- https://www.capterra.com/catering-software/
- https://www.gatherhere.com/
- https://totalpartyplanner.com/catering-software/
- https://www.gatherhere.com/blog/gather-makes-beo-binders-obsolete-heres/
- https://www.catersource.com/business-operations/how-hire-great-salesperson
- https://www.catersource.com/restaurants/four-steps-building-successful-premises-catering-operation
- https://www.ezcater.com/lunchrush/restaurant/catering-feed-hospitality-training-chaz-patrick-podcast/
- https://www.restaurant-hospitality.com/food-trends/6-smart-tips-deliver-successful-catering-program
- https://www.qsrmagazine.com/outside-insights/how-hybrid-approach-eases-catering-delivery-challenges
Interested in setting up a catering program for your restaurant?
Goliath Consulting Group with headquarters in Norcross, Georgia offers a dynamic array of business development solutions, tailored to meet the needs of each individual client – in addition to a full suite of knowledge and tools that help make restaurants more profitable, including strategic planning, menu development, project management, new restaurant development, branding, marketing, franchising, equipment, technology, evaluations, outsourcing, and more. The company also has a management division that manages full-service restaurants. Goliath Consulting enjoys a ten-year track record of creating client success among local, regional and multi-unit national restaurant chains.
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