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Events catering – All partied out

03 December 2008 by

Even last December, as the talons of a hatching credit crisis poked through their shell, the City Champagne continued to flow. Take Barclays as an example: despite losing £1.3b in December, the company's investment banking arm, Barclays Capital, still splashed out a cool £600,000 on a two-day Christmas bash beside the Houses of Parliament. Insulated by their sound-proofed marquee, bankers quaffed bubbly like doomed passengers on the Titanic laughing off a bump in the night.

Fast forward 12 months and that bubbly has dried up Barclays Capital has cancelled its Christmas shindig, and City revelry is rarer than stock market surges. The reasoning is obvious. "Nobody wants to be seen unloading Champagne when they're making redundancies," says Damian Clarkson, managing director of Red Snapper Events.

Fairly or unfairly, bankers have borne a backlash from Joe Public for their hand in bringing about the current financial climate. But, amidst all the blaming and name-calling, spare a thought for those barometers of social wealth, the events caterers. As the next year proffers a spell of frugality to offset the lavishness of the past decade, it promises to be a trying time.

Business this Christmas seems a mixed bag. While some events caterers report similar, or in some cases improved, business compared with last year, most see their low bookings as a grim portent for 2009. PB Jacobse, managing director of Rhubarb, claims that, "Early spring, following the annual post-Christmas dip, will see caterers back on track." But Andrew Fleming, managing director of Seasons Catering, believes an unprecedented lack of business in April and May will push companies on to the ropes. "It's pretty dire at the moment. Unfortunately, outside catering is the first to get hit - that's the nature of the beast. Normally at this time of year we'd all be fighting for clients, but they're not there."

Charles Beer, chief executive of Crown Group, one of the UK's largest independently owned groups of event and catering companies, has seen the same 25% dip in Christmas business as Seasons, and warns that next year doesn't promise any improvement. "Nobody should be kidding themselves about what next year will bring. I think the market has shrunk considerably, and we haven't yet seen the worst of it yet."

Rounded mix

The most important factor in play is the events caterer's particular market. Those relying on mainly corporate business will be the most precariously balanced those with a rounded mix of corporate and private clients, including sectors that have looser purse strings than finance, such as sport, will be in a much better position. "The overall market will contract," says James Hurworth, managing director of Mustard Catering. "But in the market there will be pockets that are much less affected. Yes, if you have all your eggs in a corporate basket, you will have problems next year but that doesn't mean everyone will."

Jacobse says summer bodes well for Rhubarb, with sports events bookings on the cards already, while Clarkson argues that those largely reliant on Christmas to pay the annual bills will be in greater danger than those with solid year-round business.

Beer estimates that "Between 30% and 40% of the Christmas party market in the UK is unsold. With many businesses relying on these months for a large percentage of their yearly business, I predict that we are going to see a large number of event companies forced out of business in 2009, with possibly hundreds of jobs lost. Smaller businesses that rely on borrowing will be the first to go." If the past 10 years were all about the glory days of events catering, the next few will be all about survival.

The principal lesson for the next few years is prudence, says Beer. "To survive, businesses not only need to demonstrate to clients that they provide value for money, they also need to be careful who they do business with. Credit checks on both the buyer and the supplier should be mandatory."

So, first make sure you're not going to haemorrhage money to untrustworthy companies. The next step is to address expenditure: achieve the cited value for money.

There are ways of trimming off excess cost to make an event more affordable. A major outgoing is the venue itself. Whereas, previously, companies would pay a large sum to secure an exciting venue for an evening - Red Snapper uses London's Billingsgate Market, for example - parties will increasingly have to be held in less exotic, but better value-for-money locations. "The more the venue already has the right kind of lighting, the right sound system, the right backdrop and so on, the less you will have to do to it," says Saipe. "So choose a venue where the things you will need are already in place for your party. Museums and art galleries often make superb and cost-effective venues precisely because the props and the backdrop are already in place." An evening in a top venue can cost upwards of £10,000, but the same in a historical venue in London might be a third of that.

Taking this a step further, Clarkson is hosting a few events forgoing the use of a venue altogether and is putting together office-held parties this Christmas so clients can let their hair down without being seen to be flaunting their money in public.

Food is the other major consideration. "What happens when the banks suffer is the parties go from Champagne to white wine," says Clarkson. There are ways to save money on food and wine yet still maintain quality. According to Saipe: "Focus on the fun factor rather than making the food as lavish as it was in the past." In other words, instead of offering a sit-down dinner, make high-quality canapés, or try to ramp up the entertainment by throwing a wine tasting.

False economy

Fleming argues that a company must maintain its quality in the face of a dip in pricing, however. "If you advertise deals, you start to dilute your brand," he says. "It's a false economy to think you can just hop into another pricing category. Firstly, there are already companies that operate at that pricing range, so you'd only be taking a share of the business. Secondly, the reason we've lasted as long as we have is we've created a unique product in a marketable area. All of a sudden if we start dropping our prices without giving great value for money, then we'll find ourselves against the supermarkets, and we just can't compete."

There is also the danger that, when the market eventually picks up, word of mouth will have the company as a cheap and cheerful caterer, not a purveyor of quality.

On the other hand, those who can't change their offering to better accommodate value for money will find it tough. "As we have been shown in the last six months, no one is safe from the economic downturn," says Beer. "And the brutal commercial reality is that only the strong will survive."

Fleming believes that the next few years will be good for those that do business well. "I'm not looking forward to the next year, but I'm looking forward to the challenge," he says. "To survive something like this you have to be bloody good at what you do. Those cowboys who have survived these last 10 years aren't going to ride out the storm."

Tips for surviving the recession

  • Make sure you are not aimed just at the corporate world. While work functions may be few and far between, people will always celebrate birthdays and weddings.
  • Cut out excess expenditure when you package events. Find value-for-money venues. Discuss client needs in great detail, seeing if you can, for example, swap Champagne for white wine.
  • Maintain your high standards. If money is tight, clients will want to see that it has been well spent.
  • Focus on the fun. People want to enjoy themselves. If excellent food and wine and venues are too expensive, make sure the event is pitched so that it'll be entertaining.
  • Be careful. Credit check suppliers and companies you are unsure of. Don't let someone else's failure pass on to you.

Just how bad is it?

"No matter how many economic scare stories appear in the media, the fact is that there are still plenty of people out there who are not really affected by the current economic situation and will be partying on just as they always have."
Julian Saipe, managing director of Zafferano caterers

"Normally you can recover quite quickly from financial bumps, but no one's sure how long this one is going to go on for. Showing that you are economically sensitive and that you are guarding your clients' money is imperative."
Damian Clarkson, managing director, Red Snapper Events

"People have been throwing money around. It's been 10 glorious years for the events industry. When I started 15 years ago there were half the venues there are now. There's no way those venues are being filled now."
Andrew Fleming, managing director, Seasons Catering

"I'm not sure the glory days of the last 5-10 years will return for quite some time. What we are seeing now is unprecedented since the 1930s. it won't be a case of 18 months' struggle then back to normal. It'll be quite some time before we're back to pre-2008 times."
Charles Beer, chief executive, Crown Group

"If you haven't got money to repay to the banks, who have initiated all of this, then you should be able to soldier on. That's the view we're taking."
James Hurworth, managing director, Mustard Catering

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