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The battle to cut third-party middlemen out of restaurant ordering has a new front: catering.
The big-ticket business has exploded post-pandemic as large gatherings bounce back and workers return to offices. Restaurant catering generated $72.7 billion in 2023 and is expected to grow at a rate of 6.2% annually, according to Expert Market Research. It is viewed by many restaurants as a major untapped revenue stream. But it is still dominated by intermediaries like the giant ezCater.
Some tech firms are working to change that by developing software that allows restaurants to run their own catering programs. It’s a mirror image of an effort that has long been underway in the delivery channel, where white-label programs and a push for customers to “order direct” have become common.
The benefits of first-party catering are similar to those of first-party delivery: better integration, better data and, ideally, a better customer experience. But the technology behind the two is quite different, as catering encompasses things like prep sheets, house accounts and group ordering. The customer, meanwhile, is often the catering manager at a large company rather than the average Joe ordering Uber Eats on a Friday night.
“I think what has been just unbiasedly missed has been the whole catering suite of features and functionality,” said Stefan Hertzberg, chief revenue officer for online ordering provider Lunchbox. “It’s this $100 billion industry … and like 60% of that is corporate orders, and check averages are $500-plus, and no one’s focused on it.”
Lunchbox debuted a first-party catering product last year, and last week doubled down with the launch of Cater Powered by Lunchbox, an online community where operators can talk shop on the subject. The company’s focus on catering helped convince Hertzberg to join after spending nearly six years at another tech supplier. “It just seemed like this massive opportunity,” he said.
Lunchbox spent three years building its catering software, with a special focus on making it easy for restaurants to update their catering menus—a capability Hertzberg said is lacking from third-party catering providers.
“The fundamental thing we’re solving is the chaotic structure and components of menus,” he said. “From there, everything else becomes a feature.”
Hertzberg considers Lunchbox’s product to be best-in-class in an “uncompetitive market.” But it is not the only tech company to see an opportunity in catering. Olo, which competes with Lunchbox in the enterprise restaurant segment, in October launched its own first-party catering system, Catering+. It is making a big investment in the product this year.
“We believe we can do for catering what we've done for mealtime ordering and delivery: Integrate the channel into the brand's operations and drive sales and efficiencies,” Olo CEO Noah Glass said during an earnings call last month, according to a transcript on financial services site AlphaSense.
Big tech supplier Toast also launched a catering system in August.
As the buzz around catering grows, Lunchbox has taken the unusual step of creating a place for the industry to talk about it. Cater launched last week on LinkedIn and has already amassed more than 500 followers. It will get its own website next week, and could also spawn a podcast, conference or Slack channel, Hertzberg said.
The goal of the group is not to sell Lunchbox to anyone, he said, but rather provide a neutral space for leaders to compare notes. The hope is that the free flow of information will benefit everyone involved. Hertzberg is specifically hoping operators will discuss how much they pay for their catering software—a topic that has traditionally been taboo.
“If we were to look back on missteps brands took from 2015 to 2020, I think that all of them should have collectively bargained with the [delivery service providers] a little bit more,” Hertzberg said. He added that he will be happy to see Lunchbox “raked over the coals” on pricing if it means a better outcome for restaurants.
“I think that restaurants need to win and tech companies need to make it work,” he said.