foodservice-catering-in-a-crowded-market

In the last decade, the crush of new competition has forced restauranteurs to look for revenue beyond their dining rooms — and catering has emerged as one of the biggest boosts to the bottom line. It is now a $58 billion business in the U.S. — fully 11% of total foodservice industry revenue — and it’s projected to grow 5.6% annually. That’s the good news.

The bad news is increased competition. Lots of it, from every sector. Fast casual. QSR. Big names like Chick-Fil-A and Olive Garden. Mom and pop local operators. Look at any restaurant category and you’ll find brands chasing catering customers.

Unfortunately, in such a crowded marketplace, there are only just so many customers to go around. How can you maintain, and even grow, your catering business amid such intense competition? Here are five tips to keep you on top:

One: Decide what kind of catering works best for you

The first question to answer is “What kind of catering do we want to provide? Carry-out? Delivery? Full-service?” The latter, typically involving on-site catering and service, is likely too labor- and investment-intensive for most restaurants to gear up for and execute well, at least at the start. Carry out may seem the simplest option for launching — but it also may be less appealing to catering customers, who are typically looking for convenience.

Two: Segment your catering market

Consumers and business represent two distinct opportunities. Consumer, or social, catering (for parties, social or organization/community gatherings) currently represents 63% of restaurant catering revenue. Businesses (for everything from last minute lunches to planned in-office events) comprise the other 37% — but research also indicates that they represent a larger growth opportunity. You can and should go after both segments, but you need to understand them individually — what are their service needs, menu desires, price parameters and “points of delight” (the things beyond good food and on-time delivery that will set you apart from the competition and keep customers calling for more).

Three: Invest in dedicated people and a plan

Especially for larger operations, catering is best pursued not as a simple extension of your in-store business but as a unique, distinct endeavor. Staffing, workflow, prep, customer expectations and marketing are all different for catering, and need to be treated as such. Chick-fil-A, for example, is making a significant investment in catering, including an investment in people. By hiring a catering director, the organization can better deal with everything from monitoring supply chain and production capacity issues (which may conflict with those of the main business) to how a consistent brand experience is created for customers outside of a Chick-fil-A store.

Four: Deliver your real brand experience

The subject of “brand” should always be considered in the context of experience. In other words, it’s not enough to slap your logo and colors on boxes and napkins (although that is critical to invoke the sense of trust and expectation your customers have come to expect). A brand today is a total experience that must be delivered consistently at all customer touch points, whether in-store, online, in advertising and communications, or off-site.

For catering, that raises a range of concerns, such as how well you’re delivering on service, including: timeliness; condition and presentation of food versus in-store; and how consistently you’re projecting the brand personality people have come to depend on. This is why many restaurant chains prefer to have in-house delivery people for catering, employees who are trained and invested in the brand promise and personality (versus third party delivery services that are out of a brand’s control).

Five: Continually, creatively market your catering

Finally, it’s important not to assume that your catering business will spontaneously flow from your in-store base. Successful operators take every opportunity to inform and remind that base that catering from their favorite restaurant is available. That message should go on napkins, menus, table toppers, and, of course, ads, social media posts and even the sides of delivery trucks, to help reach beyond your existing consumer base. Consumers, however, are not your only catering customers; businesses need to be cultivated, too. That may mean more direct outreach via advertising, direct marketing and even sampling.

Even in this highly competitive environment, catering can still build significant revenue for your restaurants — if you build your catering operation correctly.


SOURCES
Cleveland Research Report (notes)
National Restaurant Association: Increase Your Revenue Through Catering
Restaurant Business: Catering Strategy Is Key To Driving Off-Premise Dollars