The restaurant industry is a risky business. It requires challenging procedures with an extremely high risk of failure. Today, when the economy can rise or fall in a short period, it is important that restaurant owners take into account the alternative drivers of revenue. Catering businesses might be an ideal and flexible alternative to opening and operating a restaurant. The catering market generates $52.3 billion, where 64% of which goes to restaurant catering. Catering business gives you the creative freedom to operate a food service business without standard operating hours or strict schedules. In addition, starting a catering business often costs you less capital and financial risks than starting a full-service restaurant.
Many restaurant owners feel that catering may not suit their concept or it would be very hard to start and manage, so they completely avoid it. However, if done properly, catering represents a potentially profitable channel for restaurants looking to grow and diversify.
If you are interested in starting a catering business, keep on reading to learn how to increase revenue by adding a catering program to your restaurant.
Types of Restaurant Catering:
Restaurant catering could be on-premise, where customers come to your restaurant for special events, or off-premise catering, where the restaurant brings the food to customers. In both ways, your restaurant might be catering for:
- Social gatherings: weddings, charity events, birthday celebrations, anniversaries.
- Companies’ events: conferences, staff meetings.
- Personal uses: cooking food in someone’s home for a special party or personal event.
The pros of taking on catering services:
1. Generate More Revenues:
Given the fact that every restaurant goes through a slow period, whether on specific days of the week or even months of the year, catering services can be a great way to address this imbalance. Moving to the catering business allows your restaurant to generate new and unique revenue. Apart from being another way to make money, catering services offer a much easier and more efficient process than traditional restaurant services. Catering services let you know in advance exactly what is being served and how much is required for the service. There will not be any sudden loses since you cook exactly what is in the contract. Since you are offering a specific menu for customers to choose from, you can be assured that your items have been optimized for significant margins and returns.
You will need to think about your labor expenses and operational costs and mention them into any catering contracts. Sit-down, served meal services and buffets and serve-yourself services are totally not alike. Offering non-served catering options can help you reduce costs and increase returns. Additionally, the event planner is usually responsible for logistics in space, and some staff may not have to wait.
For starters, the catering business offers you strong cash flow and the opportunity to get cash in hand in advance, as you require customers to put a deposit or pay in full before ordering an inventory.
2. Gain Exposure and Extend Brand:
Entering into the world of catering services provides greater exposure to your restaurant’s brand. The results can be positive or negative according to the quality and success of your catering services and your ability to deliver unforgettable positive experiences that can drive new customers to your restaurant. Take advantage of catering exposure by preparing branded materials. You may use signs or posters that are stylish and suitable for the catering function at hand. Show your brand on plates and other serving utensils, business cards, and even uniforms. You just want to show the guests who is offering them these delicious meals and dining experience.
Catering can be a great way to attract new customers who may not have found your restaurant on their own but they enjoyed your food at a party. When your restaurant offers catering services, you can reach more potential guests and turn them into regular customers. Although your restaurant can be discovered online and through other marketing channels, catering allows people to taste your menu. In addition, make sure that your waiting staff is aware of your website and social accounts to refer curious guests there to learn more about your restaurant.
If you have already established a catering business and you are thinking of offering discounts to your customers and their guests, you shall track these discounts to identify their value for your business. A restaurant POS system and CRM system are the ideal tools to manage such a task. These tools will help you track customer interactions, record important data, and track valuable event details and contact information.
3. Increase Order Sizes and Reduce Food Costs:
Catering services have a big impact on restaurant business concerning order sizes since catering clients order food in bulk because they are usually ordering for a large event. To meet the needs of large orders for catering, restaurants increase the quantity of food they order from suppliers, resulting in receiving goods at a discounted price. Moreover, a catering business can be a considerable outlet for selling products that may not be served or disposed of in the restaurant. Make sure to keep your catering and in-house menu separate since not every item on your menu may suit ordering in bulk.
4. Reduce Waste and Manage Inventory:
It is great to have another revenue channel of using excess food rather than the trash can. It might be difficult for any restaurant to fully predict the ideal inventory levels. Although historical data might help to come close to the right level, it is still almost impossible to know the exact amount before the due date. Nevertheless, catering allows you to order perishable ingredients much more accurately. Accordingly, you will be able to reduce food waste, as you will know exactly the amount of food you will need early on.
Catering might not eliminate all your food waste, but it is a great way to recycle some of it if you have the right inventory management system.
Before stepping into the catering business to take advantage of its benefits, it is important to ensure that your business can afford additional functions. Do not consider starting a catering business if you, your employee and your equipment have reached the limit. Alternatively, focus on growing and expanding your restaurant until catering becomes appropriate for your business. Not mention that you have to concentrate on your overall restaurant concept. Be organized, and you will succeed in adding a catering program to your restaurant.