The competition in catering no longer is limited to the restaurant space. Fast-casual and midscale operators now are vying with supermarkets, c-stores and even on-site foodservice for a chunk of today’s corporate and social catering business. The reason for the outside pressure? Technomic charts restaurant-catering sales at $52 billion.
So how can restaurants stay on consumers’ radar? Menu differentiation, flawless delivery and having an on-premise catering manager are essential, say several operators who are successfully growing their catering business.
Smalls bites, big opportunity
“When we started Mendocino Farms [10 years ago], developing office catering was a top business objective,” says Mario del Pero, co-founder of the Los Angeles-based fast casual. By examining the offerings of the competition—from packaging to portion size—and pricing the menu to go head-to-head with the likes of Panera Bread and Corner Bakery, del Pero was able to grow corporate catering to 17 percent of sales in each of his 11 locations, for a total this year of $6 million. To handle business even as the chain expands, corporate catering is led by a manager at “base camp” and expedited by a third-party delivery service.
Catering private events and parties wasn’t in the original business plan, but three years ago del Pero and his wife and co-founder, Ellen Chen, noticed an increasing demand for this service in their area. “Supermarkets were garnering much of the local social catering business that we could have had,” he says.
So Mendocino Farms launched a social catering program using SKUs already in house for operational ease. The sandwiches—cocktail-size versions of its “edgy” twists on classics, like its Ham & Brie or Fennel Salami and Honey Ham—are marketed specially for a party, picnic, tailgate or similar occasion and priced at $35 for 15. And the menu works hard to shill the chain’s catering advantage, with a chart to help guests determine how much to serve at a party and “tablescaping” tips. “Social catering has added 4.5 to 5 percent to our total catering sales,” del Pero says.
Mendocino Farms received a minority investment from Whole Foods Market in October to help the fast casual continue to build infrastructure and locations; two more units are planned to open by early 2016. The partnership also will allow del Pero to test his concept inside some Whole Foods stores, perhaps eliminating one catering competitor.
Having the hot hand
“Catering is the No. 1 marketing vehicle to entice people to come into our restaurants for the full experience,” says del Pero. Brian Farris, VP of catering for Atlanta-based Schlotzsky’s agrees. “One person makes the decision, but 20 people are getting fed,” he says.
To give customers the full Schlotzsky’s experience and differentiate its offerings from the cold cuts common to its competition, it was important for the 350-unit fast casual to find a way to deliver hot sandwiches—a mainstay of its menu.
“We invested quite a bit of money to have a special insulated bag engineered just for us,” says Farris. The bag is equipped with ceramic hot plates so sandwiches such as The Original (ham, salami, melted cheddar and mozzarella on a toasted sourdough bun) stay warm.
Catering sales doubled in the last two years, says Farris, which he attributes to Schlotzsky’s “having the whole solution.” There’s a dedicated employee to expedite at each location, reliable delivery service and competitive pricing of about $10 per person for a sandwich assortment.
Targeting the casual customer
Fast-casual sandwich sellers have a large share of the office market. To get a piece, casual-dining La Madeleine had to expand and refine its sandwich menu and figure out how to translate a full-service experience off-site.
“We wanted to offer catering to our guests—they demanded it,” says Susan Dederen, VP of culinary for the 75-unit Dallas-based chain. La Madeleine started small in 2014, offering pastries, simple sandwiches, salads and soups. Two years later, catering comprises 8 percent of systemwide sales and sandwiches account for north of 50 percent of that number.
“The big challenge was finding a bread that holds up under refrigeration without getting hard,” she says. Its vendor came up with a ciabatta made with a higher ratio of olive oil so it stays moist. The bread is baked with different toppings, including tomato pesto and grated Parmesan, and paired with complementary fillings, such as turkey, provolone and a tomato-pesto spread.
The average sandwich catering order is $150 to $200 for 10 to 15 people—a slightly higher price point than fast casuals. “We try to give customers the same food and presentation they would experience in the restaurant,” says Dederen.