In the heavily labor intensive restaurant industry, owners must utilize every strategy possible to maximize revenue and net profits. This mindset is especially essential to success as customer behavior continues to shift and evolve, in alignment with the introduction and advancement of new technology. One important instrument that many restaurant owners try to use, and that most struggle to develop, is catering services.
Catering is a bright spot within the food service and restaurant industry, showing a higher rate of growth compared to other segments. This is driven largely by the increased popularity of off-premise consumption among consumers.
According to reports by restaurant industry professionals, catering represents a $60+ billion dollar market -- as of 2018, with an annual growth rate of 6%, which outpaces overall industry growth by 50%. It is clear to see the tremendously lucrative opportunity available to restaurants looking to truly grow their business.
If you already own a restaurant but have not yet developed your catering services, or struggling to establish some form of footing, now is the time to try to successfully incorporate it among your list of offerings, in order to tap into its immense potential.
Importance of Incorporating Catering Services into Your Business
The main and most obvious reason for you to add catering services to your restaurant is to boost revenue. It becomes a particularly essential weapon in your arsenal during the slow times when foot traffic decreases and other channels are required to maintain the flow of income. For the day to day, catering orders have a tremendous upside as profit margins are generally significantly larger, compared to smaller in-store purchases, and require less operational resources to fulfill them.
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Some of the other benefits associated with developing a healthy catering segment within your restaurant include;
Catering offers increased order sizes. The average ticket size for catering orders is $283. This is compared to in store check sizes which average around $14, with online orders coming in 23% larger.
Increases your brand exposure. Expanding customer base can be an extremely difficult task for restaurants, especially small independent establishments with limited marketing resources. Offering catering services give current customers other ways to interact with your business, and helps you reach other potential customers who may not otherwise engage with your business.
Catering can be an invaluable tool to help you expand brand awareness, and develop a broader customer base. Your food is ordered by a single individual, but most often consumed by dozens or even hundred, which opens you up to acquiring many new customers.
Catering can facilitate premium offerings. Another huge advantage that will be available to your restaurant is the opportunity to develop and offer dishes that are too risky to include in your standard menu. For example, you can offer premium cuts of meat or more expensive options on your catering menu without worrying about spoilage. It can also be a great way to test what works and what customers are willing to frequently order, enabling you to expand your menu.
Catering can limit food waste. Another major and often understated benefit to offering catering among your restaurant offerings is the impact it has on bulk food offering. A vibrant catering service can help owners to receive valuable discounts from increased bulk orders, as well to help eliminate a lot of food waste.
Food waste is a particularly large problem for restaurants across the country. A 2014 study shows that a mind boggling 84% of food waste in restaurants is disposed of, with restaurants suffering over $2 billion in lost profits.
How to Enter the Catering Market
If you have gotten to this point and the answer to the question of “Do you offer catering?” is no, then the following points can offer some guide to get you started.
Identify your target customer
You should identify what events and group sizes you have the ability to cater, in the same way that you decide on the general viability of your central restaurant concept. It is paramount that you are clear on the resources at your disposal, in order to not accept orders you are unable to fill, which could be damaging to your brand reputation.
Some of the groups you might want to target with your catering services include weddings, family occasions, class reunions, charity events, private parties, corporate events, brunch dates and luncheons.
When thinking of offering catering services, you should first broaden your scope and understand the nature of your clients. Then, research on the expected logistical challenges and operational costs. For instance, are they repeat clients and if so, how much food do they order for each occasion? How far from your restaurant are they located and are they willing to place deposits on their orders?
Also, you may need to understand the demographics of your clients before offering to render your catering services to them. For example, catering to a corporate client is quite different from catering to private parties. Offering the right service to each group is important to creating a great experience and building a good rapport that will offer the opportunity for repeat business.
Develop a simple and straightforward menu
While a catering program can offer some flexibility in testing the dishes you offer, when starting out your focus should be on simplicity and establishing the service. Don’t try to get too fancy or reinvent the wheel. Catering should be an extension of your current business and a reflection of the type of food you already offer. Once your service becomes more seasoned, then you can open yourself up to more experimentation.
Your catering program should work in unison with your already established offerings. Look for ways that you can utilize the ingredients you already purchase in order to avoid bringing in additional inventory that will only go to waste. Think about items you already serve and take into account questions such as how well they travel and how well they will hold up over the duration of an event.
Other important aspects to consider would include how to price and package your offerings. Looking at the catering formats from more established caterers and restaurants in your area can give you an idea of what works, and what would fit your brand. Should you charge by the pound or per person? Additionally, highlight and inform customers on what is included. How will you integrate costs such as set-up and breakdown time, service, disposables, linens and whatever else is needed for the event.
Designate and Train Special Catering Staff
The next step is to allocate specific members of staff that will coordinate all the catering activities. That includes handling phone calls, facilitating the booking of private parties, liaising with event organizers and of course, preparing and serving food.
If it calls for it, sponsor short courses for your staff, especially if they’ve never handled off-site catering before. And since catering comes with additional responsibilities, such as up-selling certain foods and promoting your brand, have a way of incentivizing your catering staff.
Keep Track Of All Expenses
This is a no-brainier. You can only measure the level of success of your catering program if you track everything that comes in and that goes out. The general rule is that every expense that goes into catering should be accounted for, and should be separated from other regular overheads. If something costs you money, then you should recoup that in some way. bundling smaller general costs into the per person fee can be a good way to account for these expenses, as well as prevent customers from feeling nickel-and-dimed.
Before expending on anything, determine whether the move is economically viable. For instance, it might be more prudent to lease a delivery van when you’re just starting off, as opposed to getting one.
Marketing brings it all home
It goes without saying that if no one knows about your catering services, they essentially do not exist and would therefore do you no good. Try to highlight the program in a number of ways to existing customers, and use numerous marketing channels to try and attract other potential customers who are open to utilizing the service.
Some strategies that you could use to generate awareness about your program include;
What is boils down to
There are numerous advantages that come with adding catering to your list of restaurant services. However, remember that catering is a lot more demanding than the regular services you’re used to. It, therefore, pays to have as much information as possible before taking the plunge. But once you get a hang of it, there’s no limit to how much revenue your business could generate.
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