Launching Catering Profitability: A Guide to Goal-Setting and Growth

By Jim Rand

Operators spend big bucks drawing diners to their restaurants, and you may be one of them. But guess what? Those prized customers increasingly want food delivered to them with the swipe of an app. This shift in how people eat has substantially altered the restaurant industry, fueling a market called “off-premises catering.” (Read more about the off-premises catering market.) According to Technomic, the national catering market generated $58.1 billion in 2017. While that figure is only a slice of the $799 billion restaurant market, the upside potential for catering is massive.

David Portalatin, a food industry advisor for the NPD Group, believes that figure is just the start of a booming trend for the food service industry. “Restaurants that adjust to that shift have an incredible opportunity in front of them,” he says.

To get your share of the fat profits, you’ll need to develop a strong action plan. I’ll walk you through the five steps of customizing a catering program for your operation.

Step 1. Establish Realistic Sales Goals for Catering

Goal setting is an art. Some operators set unrealistically high goals that lead to frustration. Others set goals so low their catering business won’t reach its potential.

So, base your goals on the performance of your catering program, not random numbers (read more). Starting out by saying “I’m going to double my catering sales” means little if you have no sales or just a few weekly transactions. But if you set a tangible goal of $1,500 in catering sales per week, that’s a firm number on which you can base food and labor costs. The target is also modest enough that your employees can attain your sales goals.

Step 2. Develop an Operational Plan for Catering

Now figure out how to get things done and make the business thrive. Develop an operations plan to cover the costs associated with starting and running a catering business. Start by asking:

• How will I market catering? (E.g., point-of-sale displays, social media, paid ad campaigns.)
• How much catering-specific equipment will I need to accommodate my sales goals? (Heated food-delivery bags, coolers, a delivery vehicle.)
• Can my staff manage higher volumes of business that result from catering, or will I need to hire more employees?

Take the time to consider every aspect of operations before offering your catering service. Marketing something you can’t deliver could harm your reputation in short order.

Step 3. Craft a Catering Menu from Your Restaurant Menu

Ideally your catering menu will include customer favorites. But not every item on your restaurant menu will work well in catering, so ask the following:

• Does this item travel well off-premises or is the food quality degraded upon delivery?
• Does this item “package” well? Cold sandwiches and salads can be packaged easily, but hot pasta cools quickly in a clamshell and turns gummy in sealed plastic.
• Can this item be consumed easily in a group setting? Handheld items or one-bowl meals are ideal.

Some menus work well with delivery and catering, but many don’t, according to Carl Sacks, senior consultant and managing director with Certified Catering Consultants. The quality of hot sandwiches and fried foods declines once those items leave the window, he says, “so you must choose products that travel well.”

Step 4. Keep Your Menu Small, So You Can Execute

Catering customers often ask for items not on your menu. Try not to accommodate special requests that:

• Add new SKUs to your inventory, consume storage space, or lengthen your inventory turnover time.
• Could complicate production and labor efficiency both on or off restaurant premises.

Furthermore, try to keep your catering dishes simple, so your team can execute dishes quickly. This way, you’ll be able to avoid overtime costs from added labor.

Carl Sacks warns that “overtime can be highly problematic” for restaurants because of rising wages. His advice? Operators should review staff schedules for periods of downtime when staff can help with catering.

Step 5. Pick and Train a Great Team

Put your catering program on firm footing with a strong team of your best restaurant employees (read more).

• Single-Unit Operators should choose dedicated employees who’ll take ownership of the catering program, oversee and produce orders, and ensure proper delivery. For these employees, create incentives tied to growth or profit such as bonuses or promotions.
• Multi-Unit Operators should also choose current staffers to manage the catering program. But look outside the company to hire a salesperson who can build catering programs at all your locations. This role would focus exclusively on growing sales and profits. Offer this person a base salary and an incentive package or bonus structure tied to sales and revenue goals.

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