How To Start A Catering Program On the Cheap

Recently I have had a couple of encounters with some smaller restaurant brands, specifically talking about growing catering sales.  It usually starts like this; can you talk to so and so and see if you can help them with our catering program?

I am always interested to see what other people are doing, so I usually volunteer and it is usually with a small restaurant group with 3-10 locations.

The method of getting more sales is a fairly simple process but like all things, the success of any program involves a little more thought that just going into office buildings and handing out menus.

If you are trying to get something moving quickly, without a major investment this is where you should start your work.   The number of restaurants in your group is going to have a direct correlation into how much overhead you want to add, so below refers to generalizations based on assumption of 1 to 10 units.

Program Leadership – Pick someone already in your organization, preferably your Ops Director, they already have the authority, relationships, trust, and accountability with your teams, and can get things moving quickly without major objections. The one downside is they may not have a good grasp of the sales process, but you can read about that, hire some outside consulting, or hire a strong sales person to fill in the knowledge gaps.

Sales Person – There must be someone that does this as their #1 priority.  It doesn’t mean it must start out as a full-time role, but if you are going to take it seriously the more it is full time the better your results, and obviously, the more experienced the quicker things get moving.

As a second step, you should define some clear tactics for outreach and a daily routine so your sales person has an ideal of what you want to see accomplished.  I usually bucket these into three specific sections, New Customer Outreach, Lapsed/Lost Outreach, and Active Customer Engagement Outreach.

 

Central Systems – There are many things that fall into this category but the one thing that is mandatory is a CRM, you must have an effective way to manage contact data and communicate with customers, including order feedback. I am still surprised by how contacts are managed via the excel spreadsheet.  Excel cannot keep track of emails, notes, meetings, funnel progress and a host of other crucial ways to communicate.  The CRM is by far one of the most critical pieces of the puzzle and is actually very easy to implement.  My current favorite is Hub Spot Sales, you can start with a free version and upgrade to Sales Professional Package when you need more capabilities.  Salesforce is also a great tool but the learning & cost curves are significantly higher and not designed for novices. I will get into how to use a CRM when talking about data collection and outbound marketing.

 

Operations – Catering demands some specific and separate operational parameters; define, teach, and monitor daily until the execution is flawless.  A good review of order flow, order execution, and order building along with defining needs and expectations for delivery are all crucial to getting things right the first time. My teams live off others poor operations, it is so common that even customers expect everyone will soon fail them.  So, if you can truly excel you are miles ahead in establishing what every customer wants, trust.

The Financial Part of a Catering Program – Measuring ROI for catering programs has some basic components.  It is not complicated to figure out although there are differences in how people like to make these calculations.  The basic components are;

·         Wages and expenses of any added catering personnel, materials, and programs.

·         How you decide to calculate gross margin (Sales – Food & Labor = GP% for Catering)

o   Labor + Food = 50% Gross Margin for every catering sales dollar is 50 cents

o   I consider this a very conservative GP estimate, a more accurate (IMO) measure is cost associated with sales program + food cost + actual labor to make & Delivery the food.  This is closer to 10% and would yield a GP of closer to 60%

Conclusion: For every dollar in catering overhead added you need to generate $2.00 in extra sales to break even.  I like to shoot for a minimum of $3.00 and up to feel like the program is worth the commitment. 

The extra benefits really start accruing in year two and beyond as the added sales volume each year continues to offset a larger portion of the fixed expenses of the restaurants.  As your sales grow and unit count grows the fixed expenses of running the program decreases.

There are three basic parts to every restaurant; dine-in, delivery and catering.  Catering by far delivers your best profit margin.   Every restaurant brand has multiple day parts to build sales, the hardest fought increases and usually the most expensive is growing your current day parts; driving additional traffic is challenging and not easy to track results.  Added a daypart like breakfast takes a lot of time and reduces check average and comes with some of the lowest margins.  Catering is the right and best choice to make up the slowdown that everyone is having with traffic.


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