Operators seek pockets of opportunity in catering, even as potential clients face drastically curtailed events budgets.
This article first appeared in the 1 October 2009 issue of Restaurants & Institutions (R&I).
R&I is the USA's leading source of food and business-trend information and exclusive research on operators and restaurant patrons. Editorial coverage spans the entire foodservice industry, including chains, independent restaurants, hotels and institutions. Visit the R&I website to find out more about the magazine or to search its recipe database.
By Christine LaFave Grace, Associate Editor
For Spartan Catering, the catering arm of San Jose State University Dining Services, the business picture heading into the 2009-2010 fall semester was pretty bleak.
"For [August], we were down almost 40%," says Jay Marshall, executive chef and assistant director of catering. "The vice president of finance and administration, [his office] usually does a welcome-back breakfast; that was cut out altogether." And Marshall and his staff already have been told that an annual end-of-the-school-year celebration will have a budget 40% to 50% of what it was in spring 2009. "I guess 40%, 50% is better than zero," Marshall says, aiming to put things in perspective.
Still, for Spartan Catering, the new economic reality doesn't mean merely cutting operating expenses temporarily but rather making wholesale changes to the business. Already some employees have had their hours reduced, and the department is considering a name change to help promote the fact that it also provides off-campus catering services.
There's No Place Like Home
At Southport Grocery and Café in Chicago, Chef-owner Lisa Santos believes that catering a higher proportion of smaller home-based parties this year has helped offset a decline in Southport's overall number of catering contracts (including business events).
"[A home party] is a great marketing tool," she says. "[Hosts] are inviting 30 people to their house who maybe haven't tried Southport Grocery. It gives us a chance to showcase what we do." Consumer clients turn to caterers not just to provide guests a meal but also to help fulfill their vision for an event, she says, and satisfied home-party hosts can be among the business' strongest word-of-mouth advocates.
Santos' perception of consumer catering's business-boosting potential is supported by Chicago market-research firm Technomic's "POP: Parties Off Premise" study released in August. Four in 10 consumers surveyed said they planned to entertain at home more often in the coming year than they have in the past. Furthermore, Technomic reports, the current consumer catering market is valued at $33.3 billion-nearly double the value of the business-to-business market.
Of course, consumer catering clients are looking to rein in entertaining costs just as commercial clients are. Santos says she's doing more "partial events"-providing some but not all of the food-for home-based celebrations such as wedding and baby showers and birthday and graduation parties.
"We did a shower for someone and they wanted little tea sandwiches [from Southport] and our sides," she says, "and then they made all their own baked goods."
The scenario isn't ideal from a profit-maximizing perspective, but partial events still serve to promote the catering business. And clients appreciate the flexibility of the arrangement, Santos says. "It helps make events special without [the host] having to have the entire meal catered," she says.
The catering operations at both San Jose State and Harvard University in Cambridge, Mass., are hoping new value menus will show potential clients-on-campus administrative offices and academic departments in particular-that they sympathize with concerns about event costs. Both have created dedicated menus that showcase less-expensive choices for breakfast and lunch service.
Harvard University Dining Services' Crimson Catering launched a value menu this summer featuring a selection of salads, hot entrées, desserts, beverages, Budget Buster Snacks (trail mix-style blends) and more which it promoted with the tag line "Crimson Catering wants to help you give your warm-weather budget a break." No entrée (designed to serve 10 to 12 people) on the menu is priced higher than $60.
Additionally, in a nod to the appeal of familiar, inexpensive comfort foods in difficult economic times, an All-American Favorites menu subcategory offers such classic fare as grilled ham-and-cheese sandwiches ($36 for 12), steamed hot dogs with mustard, relish and ketchup ($24 for 12) and macaroni and cheese topped with toasted breadcrumbs ($35, serves 12). The regular catering menu has some similar selections: The Classic American Buffet includes a mixed-green salad, mini burgers and mini hot dogs, Boston baked beans, bags of chips and chocolate-chunk cookies-but it's priced at $15.75 per person with a 25-person minimum order and a $30-per-hour (four-hour minimum) attendant fee.
At San Jose State, Marshall is not only touting the budget-friendly options but also the convenience factor of using the catering service. "A lot of people think it's cheaper to go to [a warehouse store] and buy coffee or muffins and bring them to campus," he says. "We're installing a value menu where we'll provide the same thing, and you don't have to go out and do it â¦ [It might be] no-frills muffins or donuts in a box, but we'll take care of it."
Marshall also points out to potential clients that the little extras a catering service provides can go a long way in setting a professional tone for a meeting or event. With lunch service, for example, "when we do it, it's tablecloths, china, someone to stand there [and oversee the service]," he says.
Extending a Brand
For catering operations that rely heavily on business-to-business sales, boosting the bottom line in an exceedingly challenging environment is a matter of selling the brand as readily accessible and willing to go out of its way to help corporate clients shine.
"This is a game that's won 1 inch at a time," says Len Van Popering, vice president of brand development for Atlanta-based Arby's, which began testing catering service in a few markets in summer 2008. By the end of 2009, the chain will offer catering in 29 markets.
Though best known for its signature roast beef, Arby's is heavily promoting its eight-year-old Market Fresh line of deli-style sandwiches in rolling out the catering service nationwide. The goal, Van Popering says, is to position Arby's as a fresh and affordable alternative to both "the $15 box lunches" and pizza delivery.
Spotlighted on the catering menu are Classic Boxed Lunches, priced at $7.89 each and consisting of any of 12 Market Fresh sandwiches, a bag of chips and a cookie, and Premium Boxed Lunches, featuring the same items plus a choice of Mediterranean pasta salad, a garden side salad or an extra cookie. Individual salads as well as platters of sandwiches (including build-your-own roast-beef varieties) also are available.
"We're really focused on the business customer," Van Popering says. To that end, Arby's has trained dedicated catering customer-care teams in each of its 29 catering markets, established a catering hot line in each area and created a catering microsite, arbyscatering.com. By devoting such resources to catering, "we can be very responsive when it comes to the customer-service element," says Van Popering.
Convenience Factors: 1 in 10
For consumers, hosting a catered event at home often proves more wallet-friendly than booking a restaurant's private party space, even when delivery costs are taken into account. It also gives hosts complete freedom to set the atmosphere and tone for their event.
Around one in 10 participants (9.8%) in R&I's 2009 New American Diner Study, released in January, said they had used a restaurant's off-site catering services in the last year. Among select demographic groups, however, catering was significantly more popular: 16.9% of Gen Y members, 16.4% of Hispanic consumers and 23.1% of Asian consumers said they had a party, meeting or other event catered in the previous 12 months.
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