Catering is the Best Way to Combat Rising Costs

It’s no secret that restaurant operators are facing rising costs, which in turn have created a cycle of rising menu prices.

The net result has been a slow down in traffic and an overall sentiment that guests are using restaurants less, or at the very least much more selectively. Based on recent data from both 2023 and early 2024, sales growth is minimal.

There is no indication that costs are going to stabilize, and continued creep especially for food and labor, your two most significant costs will continue to rise.

So besides obvious choices, like raising prices, changing the quality of products used in your menu or implementing technology to reduce labor costs, what other choices do you have?

Creating a catering program or focusing on increasing your catering sales is one of the best ways to positively impact your cost structure as well as add value to your brand and drive additional awareness and engagement with your local trade zone.

Catering will need initial investment.  Investment in centralizing services, sales services, technology, leadership resources, packaging and training being the main investments.

Once these investments are in place, and you begin to build those sales, the ROI comes very quickly.  Here is a quick scenario of how catering can impact your profit margins.

  • 10% increase in sales
  • 2% reduction in COGS (yes paper will go up and food goes down)
  • 3%-5% reduction in labor 

So with a $1 million in sales location here is the outcome.

That $100,000 in new sales almost goes completely to the bottom line, as the two ongoing expenses, sales resources and technology fees are just slightly more than the added sales.  The net improvements in your two largest costs help change the overall cost structure of the restaurant’s finances.

Now take this scenario and put it in an urban environment, where opportunity is 2x or 3x and you have some big improvements.  

Many urban restaurants can see 40%-50%, of their sales come just from catering, turning $1 million into $2 million in just a few years.

Now what you do with these extra profits is up to you, but it gives you a hedge against needing to raise prices in the future, or at the very least use these funds to improve other aspects of your business.  

Let’s talk catering!


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