Article
Fast casuals build catering business
Catering can be a stable addition to a restaurant's revenue stream.
December 15, 2008
Fast casuals seeking to pump up the bottom line might consider doing so by throwing a party. Business-building parties can range from wedding rehearsals to office parties, meetings, school functions, birthday parties or fundraisers. Each one, although different in scope, has the potential to create catering opportunities for restaurant operators. More than a third of respondents to a survey by foodservice consultants Technomic said they've ordered meals or platters for meetings, parties and social occasions. And a third of those respondents indicated they place those types of orders at least once a month.
"We know that the majority of these consumer orders are currently sourced from retailers, including supermarkets and warehouse clubs," said Technomic principal Melissa Wilson. "However, our initial findings show that chain restaurants have a viable opportunity to capture a larger share of this market and improve same-store-sales without cannibalizing their dine-in traffic."
About 36 percent of their most recent catering orders were placed at restaurants, respondents to the Technomic survey said.
According to an earlier Technomic study, off-site catering orders from businesses and pharmaceutical reps alone represented an $18.5 billion market opportunity in 2007, larger than the $17 billion estimated size of the entire fast casual market. Each new business or pharmaceutical customer an operator brings in can represent potential annual revenue of $8,000 to $14,000, the study found. And despite the stagnant economy, Wilson doesn't see catering, at least to those sectors, slowing much if at all.
"What we found is the business group is not price sensitive, and when we pressed them on their budget for these types of orders, it didn't really exist," she said. "I wouldn't expect them to be cutting back, especially in this economy, because that's promotional." Easy business addition
Nearly every fast casual operator offers catering in some form. Panera Bread has dubbed its catering service Via Panera Catering. Early morning options include bagel or pastry assortments and coffee, while lunch fare features sandwiches, salads soups and sides.
El Pollo Loco launched an actual catering menu in 1999 with its "Party in a Box," a 48-piece chicken meal that serves 20-24 people. The company had offered catering since it was founded in 1980.
And McCalister's Deli has been offering catering since the company was founded nearly 20 years ago. The company's biggest seller for catering is a boxed lunch including a sandwich, a side, a cookie and a pickle. Deli trays are popular as well.
"We have a lot of variety and a wide menu, and it was very for lack of a better word, very convenient," said McAlister's CEO Phil Friedman. "It was an easy extension of our business."
It's also an easy growth opportunity for the company. Catering is growing as percentage of business at a rate of between 2 percent and 15 percent, depending on the restaurant.
And offering the service generally doesn't involve an additional commitment of labor, Friedman said.
"It's more planning it, getting the restaurant organized to do the production work before the busy part of the day and then getting it to the location on time," he said.
McAlister's generally employs one person per market to handle catering sales and one or two people who focus on food prep.
El Pollo Loco, like several other fast casual operations, treats catering as a separate business with dedicated resources. The company has three staff members devoted entirely to catering.
And Panera Bread recently opened a hub in the Chicago area to focus exclusively on catering.
Getting into the act
For fast casual operators looking to get into the catering business, a good place to start may be in the restaurant's dining room, experts say.
"It's a good idea to start with your regular guests," said El Pollo Loco director of brand marketing Brad Pinkerton. "You already know they love your food, so you only have to convince them that you can provide great catering service."
Some concepts employ coordinators in each market to go out to solicit business, while others handle catering on a unit-by-unit basis, Wilson said. A half-hearted catering effort could do more harm than good, though. Pinkerton advises avoiding the catering business unless an operator is willing to dedicate the resources to do it right.
"Catering customers are far less forgiving as the food and service they cater reflects on them personally," Pinkerton said. "These customers are responsible for feeding large groups, so if the food is late, arrives cold or the order is not accurate, they are the one who gets blamed."
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