Why fast casuals are catering to catering

Dec. 14, 2012 | by Cherryh Butler

Although fast-casual chain Capriotti's has offered sandwich trays since opening in 1976, the company launched an extended catering menu in October. The business is just one of many fast casual chains that are now competing heavily in the catering space, according to Technomic.

It found that fast-casual restaurants are poised to outperform all others in the catering market, with projected growth at 12 percent. Quick service sandwich restaurants are next in line with an 8 percent increase, and club stores should see a 7 percent jump. Together, restaurants are now capturing four times the revenue of retailers for catering occasions — $19.3 billion versus $4.0 billion.

"Businesses are looking to impress clients with catering options that are both high-quality and within tight budgets," said Jason Smylie, Capriotti's executive vice president, CIO and CMO. "With the current economy, fast casual restaurants are the perfect option to meet both needs."

Capriotti's gets about 5 percent of its business from catering but expects that number to grow to about 10 percent as customers take notice of its extended catering options. Besides its standard sandwich platters, hot subs and a meatball bar are now available. (Click here to see a slideshow of photos.)

"There is a high demand for sandwiches in catering, as they are quick and simple options for meetings and parties," Smylie said. "With a variety of cheap selections out there, Capriotti's offers a higher quality option that remains affordable."

Limited- and full-service restaurants hold the strongest shares of the catering market at 36 and 34 percent, respectively, according to Technomic, but fast casual chains are picking up quickly for the simple reason that customers are demanding it, said Doug Reifschneider, Firehouse Subs VP of marketing services.

When the first restaurant opened in 1994, it didn't have a formal catering program but that changed in 2002. Before that, however, franchisees had been doing their best to deliver any large orders they received.

"Restaurants in the fast casual space offer higher-quality food at a reasonable price with great service," Reifschneider said. "We can extend the same offerings and service mentality to the catering space very easily. Many of our franchisees personally deliver the orders, including setting up their event space with our platters, salads and desserts. It's that additional level of service that is unmatched."

Nationwide, 4 percent of Firehouse sales come from catering, although many franchisees sell 10 percent or more of their annual sales in catering, Reifschneider said.

"Our sales growth has been so strong in 2012 that our catering percentage of sales actually decreased because our average unit volume increased by about 9 percent to over $730,000," he said.

Other findings from Technomic included:
At $27.5 billion, the size of the consumer catering opportunity is significantly larger than similar opportunities with business-to-business users (corporate/pharmaceutical representatives), estimated at $15.8 billion.

Twenty percent of surveyed consumers would now consider fast-food restaurants as a source for at-home catered occasions, compared to just 7 percent in 2009. In contrast, warehouse clubs have slipped seven percentage points in shoppers' minds, from 26 percent in 2009 to 19 percent today.

Cover photo: Firehouse

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Topics: Marketing / Branding / Promotion , Operations Management

Cherryh Butler / Cherryh Butler has been a reporter for nearly 10 years, writing on a variety of topics ranging from the restaurant industry to business and health and fitness news. Before joining FastCasual.com as editor, she oversaw KioskMarketplace.com and PizzaMarketplace.com and contributed to RetailCustomerExperience.com. She's also written for several daily newspapers, magazines and websites, including The Kansas City Star and American Fitness magazine.
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