Whether on-premise or off, catering can be a lucrative extension of your brand. But just as with the in-restaurant dining arena, the economic downturn has changed the rules of the game. Corporate events and high-ticket expense account dining have dried up. Weddings and other social events are smaller in size and budget. Fancy and formal are out; casual, creative and flexible are in. Caterers' new marching order: Do more with less—a lot less.
To that end, here's a look at some of the new realities driving this unique part of the business, and strategies operators are using to adjust to them.
It's not about the food, it's about the budget
"The hottest trend in catering has nothing to do with food," says Michael Roman, founder and president of Chicago-based Catersource, a leading catering consulting firm. "People in some markets have lost half their worth but they still have to do a nice wedding for their daughter, or a bar mitzvah party for their son. Whether social or corporate, all clients are looking for better value and that absolutely has to be driving your catering business model."
- No more rigid Plan A and Plan B catering options, says New York-based chef and restaurateur David Burke. "We get one-on-one with clients and see what we can do at whatever price they have to work with. We want the business, so we're more flexible in pricing."
- Work harder to qualify clients and determine their needs upfront. "We ask a lot more questions today about what it would take for prospective clients to buy our services," says Carlyn Berghoff, owner of Chicago's iconic Berghoff Catering & Restaurant Group. "Buyers today want it to be good, they want it to be creative and they don't want it to look like they spent a lot of money. We need to understand what that means to each client before we put proposals together."
- Get more creative with basic ingredients. "Catering menus today are driven by less-expensive proteins," Berghoff says. "Chicken is huge and so are inside round, flank steak, tilapia and salmon. Food costs have held steady and even dropped on some items, but you have to be creative to satisfy clients' desire to both save money and serve something special." Roman agrees, noting that the food cost on a single frozen shrimp can run $1.25, but drops to almost nothing for shrimp toast. "It still says shrimp, it's trendy and it's affordable," he says. "Catering in this environment isn't about discounting, it's about presenting creative alternative ideas at alternative price points."
- Ditch formal sit-downs in favor of passed hors d'oeuvres and grazing stations to save on labor, rentals and food cost. "You can do a Mediterranean, Asian and Latin station, for example. Or choose a single theme and repeat it at three stations," suggests Jim Israel, owner of Philadelphia's Culinary Concepts catering company. "That's even more cost-effective because it's easier to produce and you can still incorporate a lot of excitement and a lot of food."
Corporate catering's not dead, it's different
While caterers lament the fact that corporate budgets vanished almost overnight, those who persevere in the segment say it's not actually gone, it just looks a lot different than it used to. And it still represents strong sales opportunities.
"Employers don't want people going out for two-hour, $50-a-head expense account lunches anymore," notes Burke. "Instead, many now have their business celebrations or weekly lunches in-house, delivered at probably less than half the price they'd spend going out. But they still want quality food, and they look to restaurants that can deliver something special on a budget. We see that as an opportunity."
- Cast a wider net. Burke, who has diversified from fine dining with convenience-oriented concepts such as Burke in a Box, targets offices with promotional e-mail blasts and free food samples as a way to get a foot in the door. He's also looking beyond the traditional office market, promoting to businesses such as hair salons. "We'll drop off 20 sandwiches a day to those types of clients," he says. "If we can get to where we drop off Mondays at one place, Tuesdays at another and so on, that's good repeat business."
- Beat more bushes. Jeremy Merrin, founder of Havana Central's three large-volume restaurants in New York and a thriving corporate catering business, says his sales staff is simply pounding the pavement harder to counter declining catering sales. "We're doing much more cold calling, more e-mail blasts, social networking, sampling and taste testing with prospective clients," he says. Berghoff agrees, saying her catering sales staff has had to transition from being order takers into aggressive sales people.
- Make it easy and affordable. Havana Central has worked to make lunch easy and to focus on value. "We've developed more flexible menu packages, lunch specials and a new boxed lunch program that's been very popular" Merrin says. "It's faster, easier and more affordable for clients to order in lunch for large groups. Any compromises we've made in margin we're making up for in volume." Culinary Concepts is launching a new business model that takes them from just catering to full event management. "We've aligned ourselves with the Independent Seaport Museum, so we'll be able to manage the venue, the catering and every aspect of event planning—a one-stop shop," says Israel.
- Stay top of mind. Berghoff's company moved up holiday-themed promotional drop offs of cookies and hot chocolate to July from September this year to get an early jump on holiday bookings. "We hit companies who have booked events with us in the past and just include a ‘thanks for your business, we're already booking for the holidays' note to make sure we're top of mind," she says.
Brides want it all, and more
Okay, maybe that's not an entirely new reality. But what is new, caterers say, are demands being made for discounts, unheard of turnaround times, and more creativity than ever in attempts to serve up the perfect blend of fast, frugal and fabulous.
"Wedding and other social event planners today have a much shorter buying cycle," Berghoff says. "With brides it used to be a year, but now three to six months is common. They don't want to part with their money and won't commit until closer to the event. They're demanding discounts, they want much faster turnaround time on proposals and they still want tons of creativity."
- Play to win. Berghoff recently set out to create a strong wedding catering niche. "People get married, recession or not, so we diversified from mostly corporate catering into weddings, and we're doing a lot of them," she says. "We changed our whole presentation—e-mails, how we communicate, the look of our proposals. We're more thoughtful in customizing our cover letters, using specific strong words and phrases that have helped us to win sales."
- Don't take weddings casually. "If you do them, you have to commit to being a strong, full-service caterer," she adds. "You need a dedicated team and tight systems in place to make them successful and avoid catastrophe."
- Follow caterers' lead. "If you're just starting to go after weddings, look around at what established wedding caterers in your market offer," Roman suggests. No doubt you will not be able to provide all the amenities that full-service wedding caterers offer, but it will tell you what the competitive landscape looks like. "You'll see things like a separate entrance to the banquet area, separate restrooms, a bride's room with plenty of mirrors and amenities. You may not have the physical space to do such things, but you'll get ideas for things you can do that will boost your attractiveness to brides."
Partnerships pay off
Building an off-premise catering business doesn't have to mean going it alone. Roman recommends partnering with dedicated caterers as a way to tap in. "There isn't a caterer alive right now who wouldn't take a look at partnering with a strong restaurant brand to get more customers," he says. "It's a great way for restaurants to offer their food to catering customers without having to handle the logistics, which is where the caterer excels."
- Handle what you can, but tap a partner for bigger events. "For larger events we have a venture partnership with a caterer who helps us with rentals and staffing," Burke says. "We don't have those resources at the ready, so it works well. We do the food prep, but they help with the set-up and service."
- Find caterers that are just getting established and offer to partner. "The caterer handles the logistics and the client gets the cachet of having the restaurant cater the event. It's a win-win," Roman says.
- Look for caterers who aren't name brands in their communities who'd love to be the "stealth caterer" of the restaurant. "Just make sure they're reputable and have the proper licenses," he advises. To find out who the good caterers are, ask local party rental/supply shops.
Tech Tools for Caterers
If dedicated staffers, the right equipment and rentals are critical for catering, so too is having a back-end business management program. There are many on the market with different bells and whistles. Three worth checking out:
Room Viewer A TimeSaver Software product (www.timesaversoftware.com), Room Viewer uses computer-aided design (CAD) software to prepare detailed, fully customized event diagrams, calculate seating capacity and automatically lay out seating with whatever table configuration is needed. Print out diagrams showing exactly where everything should go.
Caterease Offering both desktop and Web-based products, Caterease (www.caterease.com) offers sophisticated event calendar and scheduling options; comprehensive and customizable event and client management tools; customized prints (proposals, contracts, menus, invoices, inventory/recipe/purchasing sheets); staffing and shift management tools; even batch e-mailing and advanced querying tools for sales.
Synergy A comprehensive set of tools for catering menu, resource, financial, sales and marketing management, Synergy programs (www.synergy-intl.com) can be customized to individual operator needs. "We've used Synergy for more than 10 years," says Israel. "It handles room and booking space planning and design, prospecting and customer databases and generates beautiful proposals and contracts. They tailor everything for us, including customized graphics and reports. Everything related to proposals and contracts can be done electronically. Our next step will be to tap their Web portal, which enables online interaction with clients and with personnel who work our events." (www.synergy-intl.com)