Whether in the form of a sandwich tray from the local deli or a full banquet from an upscale steakhouse, more and more consumers are looking for catering options from their favorite restaurants. But it’s not just a matter of giving customers more ways to eat your food. Offering catering can seriously benefit your bottom line.
Why is it so profitable? Because catering most often involves:
- a predetermined customer count (and less overall food waste)
- advance notice for careful preparation and planning
- a shorter storage and outlay period for unprepared food
- the opportunity to serve guests — who may never have been exposed to your restaurant — who will now know what you can offer in a full-service setting.
A single catering order can serve nearly as many people as you may see in your restaurant in a single day — and potentially generate more profit. But getting this additional profit comes with a price. Opening a catering business is more than adding drop-and-go delivery — no matter the scale. To be truly successful, catering must involve launching an entirely new arm to your full-service restaurant. This can cost anywhere from $10,000 and $50,000, or more, depending on your current capacity to meet demand and the staff, menu, and equipment you require.
Training current (and new) kitchen staff
Although the basics of table service remain the same, catering comes with an entirely different set of issues for servers. The biggest challenge? Dealing with an unfamiliar environment — and customers who may behave much differently than they would in a restaurant.
Case in point: Many customers would hesitate to walk from table to table in a restaurant, greeting other patrons. But at a wedding, this behavior is downright expected from the bride and groom — not to mention the guests, who are enthusiastic about seeing all of their friends and family.
When launching your catering business, you’ll have to spend time and money developing a training plan for your serving staff that includes preparation for just such behavior. This will also include run-throughs on site and set up and break down.
Although some of the servers and kitchen staff at your current restaurant may be able to work at the new business, you will most assuredly need to hire additional, catering-specific staff to ensure everything runs smoothly. As several “Top Chef” challenges demonstrated, many talented restaurant chefs are not able to easily adapt to the scale of catering work — and vice versa. You can opt to include some of your kitchen staff on a trial basis at your catering business, but acquiring chefs and line workers with experience in catering is critical for ensuring enough food is made, and made well. These catering professionals will already be pros at the tricky business of properly storing, plating, and keeping the food at appropriate temperatures for serving.
Sales and coordination
Although the number of total staff will be dependent on the size of your operation, you will most certainly need a sales manager (or team) responsible for coordinating the terms and conditions of each job. Each event can be vastly different — ranging from weddings and funerals to corporate events and cocktail parties. This individual will be on the front lines of ensuring that every detail is included in the contract, and can be correctly communicated to the onsite team.
To ensure that communication happens without a hitch, your operation will also need a banquet manager. In many ways the keystone to a successful event, this person takes over managing every detail of the project from the time the contract is signed until the last guest leaves on the day of the event.
While in the development phase, you may also want to speak with a local lawyer or experienced caterer to ensure you have all of the necessary licenses. In many instances, catering business require different permits from a typical restaurant, and there may be state-specific regulations that can easily be overlooked in the hustle and bustle of launching the new business.
Chances are, there are more than a few items on your current menu that cannot withstand pre-prep, transport, and reheating. That’s why it’s important to develop a catering-specific menu full of dishes that are perfectly suited to large-scale production and transport.
It’s important to also get a feel for the demand in your market. Are you located near an office park, where sandwiches, soup, or warm comfort classics could play well at lunch time? Are you in a residential area, where formal events like bridal showers or large-scale parties like family reunions may make up most of your business?
Unless your kitchen is large enough to handle the scale of most catering orders — on top of your day-to-day service needs — chances are your catering business will need to be housed in another building. And that means your restaurant guests likely may not realize that you even offer these services, and you won’t have curb appeal or outdoor signage to help spread the word. Finding other ways to advertise your catering services to the public becomes key to success.
Equipment is potentially the costliest aspect of starting up a catering service. Top of any must-have list is a reliable vehicle (or more than one, depending on the scope of your business) large enough to handle the volume you expect to transport — plus the materials needed to safely carry that food to its final destination and prepare it once it arrives.
Because they are for commercial use, each vehicle you purchase will also have to be licensed for this purpose. You’ll also need a staff member with a commercial driver’s license and experience handling these operations.
To transport everything from your site to the event space, you will need carts, food and beverage carriers, and storage for the wide array of utensils you’ll need for prep. But that’s just the beginning. If you are offering full banquets, you may also need to invest in:
- Dinnerware, chairs, linens, and banquet tables, either purchased or rented
- Food pan or banquet holding cabinets
- Portable catering and cooking equipment, such as commercial induction ranges, hand sinks, and cold food tables
- Buffet serving materials, including serving trays, beverage dispensers, and chafing dishes
Keep in mind the expenses associated with locating and outfitting a new commercial kitchen with equipment that can handle food preparation on a catering scale. The changes that may be required for your restaurant’s kitchen if you intend to house both businesses in the same building could be substantial.
Yes, developing a catering arm to your restaurant may seem daunting, but it’s really as simple as taking your current skills and know-how and applying them to a fantastic new revenue stream. And with a merchant cash advance, you can quickly and easily receive a cash infusion to cover all of the start up costs — and pay with a plan that reflect the ebb and flow of your burgeoning new business model.
But catering isn’t all you can do with a cash infusion. With a merchant cash advance, you can:
Make back of house updates
Build your brand with event marketing
Renovate your front of house
Update your technology