The Big Off-Premise Opportunity: Catering
As demand for off-premise dining heats up, savvy restaurants are looking to catering for big incremental sales. And for good reason: 90% of restaurants said catering is vital to their business with the average check ringing up at $283, according to the 2019 study, “The Catering Opportunity: Understanding a $60+ Billion Market,” by ezCater in partnership with market research firm Technomic.
Catering is growing 50% faster than the overall restaurant industry, and sales in the U.S. market have already exceeded $60 billion, according to the survey of more than 450 foodservice establishments representing 45,000 restaurant locations.
Restaurants of all sizes are offering catering as consumers are seeking out the convenience and familiarity of their favorite brands. “Fast casual has seen an explosion in catering,” says Tad Low, Senior Marketing Director, Off Premise and Field Marketing at Moe’s Southwest Grill.
Moe’s Southwest Grill is among the brands posting strong catering sales. “Nothing will help you grow sales more than catering,” says Low. Moe’s locations that are set up to offer catering have seen, on average, a 15% jump in sales. For every $1 invested in catering, there’s been a $10 ROI, he adds.
If done well, catering allows a restaurant to market to new customers and to satisfy a need at the same time. Sources interviewed by HT cite two different types of catering: business to consumer, or social catering for parties, and business to business catering where there are a lot of opportunities for large and recurring orders.
To capitalize on catering, restaurants should follow these steps.
1. Say Yes!
To be successful, an organization needs to have a culture of saying yes. This starts with having a strong buy-in from leadership, Low says. “Management needs to believe in catering and say yes to catering.”
Catering is a separate channel and needs separate resources. “The operation and execution is different,” Low adds.
Before restaurants can literally say yes to catering orders, restaurants need to have the space to prepare orders and solid inventory management practices in place, as one catering order can knock out a lot of inventory, advises Chowly.
2. Dedicate Resources
Restaurants that are successful in catering “have separate resources for this separate channel,” Low says. “They have a sales manager that’s outside the store who manages the catering business – and knows how to market, prospect and follow up.”
Cracker Barrel Old Country Store Inc. is among the restaurants that have hired catering services managers to drive sales and purchased vans to deliver catering orders. Off premise, which includes delivery and catering, total 9% of its annual sales. (Individual To-Go is the biggest component of its off-premise business.)
When it comes to payment, Honeygrow is among the restaurants that allows customers to pay when they pick up their catering orders. It also remits invoices to customers that can be paid online, explains Fitzgerald.
Garbanzo does not have house accounts. The fast-casual brand requires a credit card payment up front and 120% of the amount is preauthorized – to allow for tip, which the guest can change when the order is delivered.
Collecting on unpaid invoices “was a big nightmare in a previous job,” says Handler. “When you’re a smaller company, cash flow is a critical thing.”
“We have made a big investment … with our catering vans and our catering services managers. And we hope that in fiscal ‘20 we can continue to build on that,” said President and CEO Sandy Cochran in an earnings call with analysts.
To increase catering sales across the enterprise, Moe’s has an annual sales manager meeting where best catering practices are shared. In many cases, catering orders are driven by the sales managers and the relationships they have with clients.
3. Implement a Centralized CRM
A couple of years ago, writing down catering orders on clipboards was common practice, remembers Devin Handler, VP, Marketing at Garbanzo Mediterranean Fresh.
“There was no choice,” he says about the dearth of tech solutions available a few years ago. “All of a sudden there are so many choices it is paralyzing.”
But clipboards are no longer going to cut it. “To follow up and market effectively and efficiently, you need a centralized backend system,” says Low. Moe’s uses MonkeySoft Solutions, an ezCater company, to standardize and support its online catering orders and customer relationship management platform.
“If ordering for one person or for catering, it should be easy, simple and enjoyable” for the customer, says Handler. “Paytronix does everything for us in terms of guest-facing tech.”
Di Bruno Bros. has done catering for more than 20 years and offers everything from casual catering for breakfast and lunch, up to formal events with 400 people. The Philadelphia-based restaurant and retailer uses its CRM to set up, cultivate and manage the sales pipeline for its catering sales team. The system is peppered with alerts, notifications and reminders that helps keep the sales team on track and orders moving smoothly through the pipeline.
“Most people like to be communicated to,” says Emilio Mignucci, owner. “We want to make sure we communicate and that their event goes well. People spend good money with us. We have to communicate and follow through.”
With a commissary kitchen, a dedicated catering sales team and its own delivery drivers already in place, the Philadelphia-based restaurant and retailer is taking its catering to the next level: it recently acquired its own catering venue.
“Catering is a growing part of our business,” says Mignucci. “Now that we have our own venue, we can do a lot more.”
Many of their catering clients are repeat clients and have regular orders. Follow-up after the event is just as important as closing the sale. “Afterwards, we ask for their feedback. Of course we love to hear good things, but it is so important to also hear the negative [so we can] fix the things that aren’t right,” says Mignucci.
To help drive loyalty amongst key decision makers at offices, Garbanzo offers a catering rewards program. “CRM and loyalty is a great thing. We get repeat customers,” says Handler. “More importantly we end up knowing about the catering customer as well.”
Garbanzo pushes personalized marketing offers, such as a 10% off coupon for a catering customer who has not ordered in the last 60 days.
For all the bells and whistles tech can provide, many catering orders are still placed via phone. Restaurants interviewed by HT stressed the importance of the human touch via catering sales managers. Calls for catering orders should be routed from the store to a call center or to the catering sales manager.
On the Schedule: Big Orders
Fortunately for kitchen operations, many catering orders are placed in advance. For example, Garbanzo requires 24-hours notice and catering newcomer Honeygrow requires 12-hours notice.
Honeygrow, a fast-casual concept focused on made-to-order and fully customizable stir fries and noodle dishes, funnels in most B2B catering orders before the dining room opens. “You can prepare the orders and ship before opening so it shouldn’t affect operations,” says Keith Fitzgerald, VP of Technology
Teriyaki Madness also looks to start the day with catering orders. It is piloting online ordering for catering. “We want to get those big orders before the shop is open and jump start the day,” says EVP of Marketing Jodi Boyce.
Restaurants offered these tips for efficient throughput:
- Second Make Lines
Off-premise sales can disrupt the flow of walk-in traffic. Teriyaki Madness is considering adding second make lines that would be used for catering and other off-premise orders, says Boyce.
- Dedicated Menu
To simplify preparation, Moe’s created a dedicated catering menu. “A pizza place doesn’t need to have catering menus,” says Low. “In fast casual, you have to take what you do, like a bowl or burrito, and take that to 40 people for a party.”
Packaging is critical for off-premise orders – especially for catering orders that are prepared in advance. “It took us some time to figure out,” Fitzgerald says. “For catering, we had to play with it a little bit and separate the noodles and the sauce, which helps keep the noodles at a constant temperature and allows some flexibility … Packaging continues to get better and better.”
Despite restaurants’ policies for advance orders, customers are requesting catering orders with shorter notice, restaurants interviewed by HT agree. Fitzgerald says it is up to stores’ general managers if they take an order for the same day — and depends on inventory, staffing and ability to deliver. “As we build relationships, some people will call day-of for a catering order. It is interesting to see how the GM will react,” he said.
4. Ensure Reliable and On-Time Delivery
For catering orders, delivery is not only necessary, but also expectations are higher than consumer delivery. It is critical that catering orders be delivered on time. Customers expect drivers to show up on time, dress professionally and understand the high-stakes of their event, ezCater says. While it uses third-party delivery for individual orders, DiBruno’s uses its own delivery drivers for catering to ensure proper set up and customer service for complex orders and larger orders, explains
Multi-state organizations need to take notice of varying state laws. Because there are different rules state to state around insurance and driving, there’s not a one-sized fits all solution for franchisees who may want to deliver, Boyce points out.
Just as with individual orders, there are third-party delivery services delivering catering orders. Teriyaki Madness and Honeygrow are among the brands using DoorDash Drive, which is available in select markets for catering order delivery. (Restaurants may request that the DoorDash driver unpack and lay out the catering trays for the customer upon delivery.)
Teriyaki Madness plans to join the ezCater marketplace and use its white glove delivery service that includes setup. “We are not turning away any avenues,” says Boyce. “We are going to be available where our customers are.”
To help ensure standardized catering order set up, Moe’s is creating a setup guide for delivery drivers. “The level of care of the delivery driver may vary greatly,” says Fitzgerald.