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National Restaurant Association - Increase your revenue through catering

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Increase your revenue through catering

The economic conditions of the last several years have prompted many restaurateurs to focus even more on their financials and strategic growth.

If done and thought out correctly, catering represents a potentially lucrative revenue stream for restaurants looking to expand and diversify.

Be aware of current facts and trends

Recent research by Technomic revealed that restaurants are now generating four times more catering revenue than retailers such as club stores ($19.3 billion vs. $4.0 billion).

Fast-casual chains in particular are poised to outperform all other retail catering resources with projected growth of 12 percent, versus quickservice 8 percent and club stores 7 percent).

Thirty-six percent of surveyed consumers said they plan to entertain at home more often in 2013. Twenty percent would consider fast-casual restaurants for at-home catered occasions (compared to only 7 percent in 2009).

Restaurants are responding to the customer call. Denver-based Chipotle Mexican Grill recently launched a catering service that will allow groups of 20 to 200 to customize their own meals at their homes, schools or offices just as they do at Chipotle restaurants.

Scranton’s Restaurant and Catering in Pascagoula, Mississippi, devotes 35 percent of its operation to catering. According to owner and General Manager Richard Chenoweth, catering has kept the business profitable through several downturns over the last 30 years, particularly during the recent recession.

Choose your catering format

Catering can comprise many different forms and services, including private parties, party platters, deliveries, carryout and off-site foodservice. Decide exactly what kind of catering you will provide.

For example, Scranton’s through the years has developed into a full-service operation that now caters for on- and off-site weddings, pharmaceutical representatives, corporate and charity events, class reunions and safety luncheons for construction companies.

Selecting your format will require careful research, planning, purchasing and marketing strategy. Reflect upon the range of difficulty as well. Carryout/Delivery is easier, private parties are moderately difficult and off-site, full-service catering is the most challenging.

Develop your menu

Create a special catering menu that extends from your dining menu. Think in terms of bulk (e.g. platters, trays, containers). Offer different packaging options so customers can choose how much they want to order and spend.

Catered items should be just as delicious as those you serve in your restaurant. Determine how food will be transported to maintain that quality. Also consider whether catered items will be ready to eat or ready to reheat.

“Start with what you do best, and build on your restaurant items,” Chenoweth says. “Many customers will come to you for catering because they want that certain dish you serve. Also remember that most dishes you prepare in the restaurant can’t be prepared the same way for catering events. You’ll need to make changes in preparation, holding, ordering and serving.”

Designate and communicate with catering staff

Some restaurants assign a specific staff member to coordinate catering responsibilities such as handling calls and booking private parties. Other restaurants have current staff prepare catered food during off-peak hours.

Communicate clearly and often so all staff involved in catering know what’s expected. Post fliers in the kitchen and the break room. Speak with staff during meetings and shifts.

Establish your kitchen design and equipment

Catering typically requires extra workspace for preparing big platters, bags and boxes. You might need more cold-storage space as well.

Chenoweth suggests the best kitchen design for catering will include a large prep area for staging and a back door for loading food and supplies into the delivery van.

He also points out that regardless of format, any catering business will need basics such as a convection oven, a tilt skillet, a 10-burner stove, a steamer, refrigeration, holding cabinets and hot boxes for holding and transporting food at correct temperatures.

A dedicated delivery van is another requisite according to Chenoweth. Employees should not use their own vehicles to make catering deliveries because of insurance and liability issues. You have no control over their coverage. If they are involved in an accident while representing your business, your insurance may not protect your assets.

Master costs and finances

Account for all expenses such as food, labor, insurance, maintenance, and delivery gas and mileage. Also allocate the costs that catering will share with the dining-room side, such as overhead and administration.

Determine when to lease and when to purchase. You might lease rather than buy your most expensive gear and vehicles only when you need them.

Be diligent with marketing

Growing a catering business requires the same consistent marketing as running your restaurant does. Draw attention to your service in menus and brochures and on table tents. Create a page for it on your website. Raise awareness through social media, mobile devices and e-mail marketing.

Build and maintain a database of current and prospective catering customers. Communicate with them regularly. Suggest new reasons to cater, such as for a company anniversary or a personal milestone.

Scranton’s applies such a diversified approach. It brands its catering business through everything from proposals to invoices to employee uniforms to on-site banner advertising. It uses Constant Contact to market to all of its customer segments; communicates through Twitter and Facebook; runs occasional print and TV ads; appears on cooking shows; features photos and videos of its work on its website; and promotes its website with rigor.

Chenoweth also emphasizes that the most reliable ways to grow and sustain his business are to perpetuate word of mouth and remain involved in the community.

Devote a little time each day to focus on catering sales and marketing. When you look at the potential payoff as orders worth hundreds of dollars, it’s worth the effort.

Utilize supporting resources

Software programs such as Caterease are available to assist you with catering planning, sales, booking and marketing. Many programs can generate letters, quotes and invoices as well.

If you’ll offer off-site catering, you might consider partnerships with full-time caterers. These professionals can manage off-site catering’s more challenging aspects while acting as a joint partner in marketing efforts.

With the right knowledge, planning and execution, you can grow in a way that caters to both your business and your customers.

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