In the restaurant industry, few market opportunities rival catering. In 2018, the catering market pulled in $61.5 billion in sales in the U.S. And that number is growing 6% annually—surging ahead of the restaurant industry by 50%. Today, restaurants in all market segments have joined the catering fray, and for good reasons. Here are some of them.
1. Catering increases order size
Catering orders are not only incremental—meaning they're added to the orders a restaurant would have gotten on its own—but highly profitable. Catering orders average $283 a pop, and some industries, such as consulting, spend closer to $395 on a single order. Compare that to the meager $10 typically earned from a single diner’s eat-in check.
2. Catering hooks repeat customers
Business customers often come back for catering again and again. Forty-one percent of business customers order catering weekly, and research shows that 70% of those customers would order catering more regularly if more restaurants delivered those meals.
3. Catering generates efficiencies
Catering is a solid business strategy, especially when restaurants look at its efficiencies. Fulfilling a single $300 catering order takes less labor than required for 30 individual $10 dine-in orders. Another upside is that many catering orders are prepared outside of the peak breakfast and lunch dayparts, which frees up employees to concentrate on revenue-producing activities. This flexibility allows restaurants to move into the lucrative catering market while optimizing both new and existing arms of business.
4. Catering grows profits
Restaurant industry leaders have confirmed that catering is different and more profitable than only offering in-store dining. “You can do a profit and loss statement of a typical catering order and show what the percentage of profit is versus in-store" transactions, says Ed Keller, director of off-premise business development at Corner Bakery Cafe. “I’ve never worked for a brand yet where catering is not higher because of the large order value and the cost efficiencies you get.”
5. Catering drives in-store sales
“With a to-go order, it's one person who has made that selection. With catering, you're introducing 20 people to your brand,” says Gracie Prasanson, director of off-premise sales for Jason’s Deli. In other words, catering is a form of marketing, exposing restaurants to potential new customers who might convert to lucrative customers.
Catering warrants investment
Catering is worth the investment. For independent operators starting out, purchasing the basics like hot bags, coolers and branded packaging is a modest investment. But as catering sales grow, restaurants may decide to invest more in their catering business—ranging from staff and delivery to online ordering—for a bigger payoff.
This post is sponsored by ezCater