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QSRs explore catering
12/23/08 - Christa Hoyland
The term catering for most people brings up images of trays of finger food and Sterno-heated buffet lines watched over by professional caterers. But for many businesses and other organizations, box lunches brought in from a nearby restaurant can fit within the definition when it comes to meetings.
Many fast casual brands have found success in offering catering packages to the business market as well as special occasion gatherings. Quick-service restaurants also are latching on to the trend, often on a franchise by franchise basis.
"More QSR operators are looking at catering as a means to boost revenue, typically because they've eyed what you're typically seeing in fast casual," said Melissa Wilson, principal for foodservice consultants Technomic. "They're seeing opportunities to drive top line revenue often (while) being able to leverage existing facilities and existing labor pool."
Catering can be big business. Recent Technomic research into the consumer catering for social and personal occasions found that more than a third of respondents said they've ordered meals or platters for meetings, parties and social occasions. And a third of those respondents indicated they place those types of orders at least once a month.
While the study found that the majority of those consumer orders came from retailers, including supermarkets and warehouse clubs, about 36 percent of their catering orders were placed at restaurants.
"Our initial findings show that chain restaurants have a viable opportunity to capture a larger share of this market and improve same-store sales without cannibalizing their dine-in traffic," Wilson said.
For the professional market, a 2007 Technomic study of off-site catering orders from businesses and pharmaceutical reps found that those orders represented an $18.5 billion market opportunity. Each new business or pharmaceutical customer an operator brings in can represent potential annual revenue of $8,000 to $14,000.
Subway franchisee Michael Dey, who has a store in Denville, N.J., said that catering adds 5 percent to 6 percent to his store's bottom line.
Dey's store features Subway's standard catering menu with Giant Subs, 3-foot and 6-foot subs, and platters of sandwiches, wraps and cookies. Catering orders and the bread for the sub sandwiches are made up as close to the delivery time as possible to ensure the food is fresh. Condiments and utensils accompany every order.
Dey also likes to offer a few special touches, such as delivery and setting out the food for customers. That extra step often creates a repeat customer.
"Any deli can make you a sandwich," he said. "But our catering not only is competitively priced, but the presentation is top notch, and you can't beat the freshness. (That) almost always leads to a future order."
A natural extension of the menu
While Subway has been offering catering for more than 20 years, some QSRs are just now testing the option. Arby's, for example, has a number of franchisees with online catering menus that offer the brand's Market Fresh sandwich line on party trays or in box lunches. A spokeswoman for Arby's said the chain is testing the service in two markets.
Other brands, like Popeyes Louisiana Kitchen and KFC, have interested franchisees who have offered the service for years. For Popeyes and KFC, catering looks a lot like large orders, with the number of chicken pieces and size of side orders built to match the crowd.
Chick-fil-A has an online catering menu that features trays of sandwiches, wraps, nuggets and other menu items as well as box lunches.
Fast casual McCalister's Deli has been offering catering since the company was founded nearly 20 years ago. The company's biggest seller for catering is a boxed lunch with sandwich, side, cookie and a pickle. Deli trays also are popular.
Catering is an easy growth opportunity for the company, growing from a rate of 2 percent of business when catering was first offered to as high as 15 percent now, depending on the restaurant.
To handle catering, McAlister's generally employs one person per market to handle sales and direct marketing as well as one or two people who focus on food prep.
Dey said his Subway shop employees are able to handle the store's catering business, which is steady throughout the year.
"We constantly have an influx of orders," Dey said. "You have your peaks obviously, like Super Bowl Sunday, and we have a decent amount of catering lined up for Christmas. Other than that, it's very steady, very consistent."
Getting into the act
For QSR operators looking to get into the catering business, a good place to start may be with a consumer focus, experts say.
"It's a good idea to start with your regular guests," said El Pollo Loco director of brand marketing Brad Pinkerton. "You already know they love your food, so you only have to convince them that you can provide great catering service."
Dey said he promotes Subway catering on his in-store tray liners and puts flyers in to-go orders. When he has time, he also takes sample trays to surrounding office buildings.
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Subway also suggests its franchisees donate party platters to community groups in support of fundraising efforts. Dey said doing so often leads to new catering customers.
"While it's not necessarily catering (to donate a platter), it does lead to future orders to feed the office staff in their weekly meeting," he said.
But operators should beware of getting into catering half-heartedly. Pinkerton advises avoiding the catering business unless an operator is willing to dedicate the resources to do it right.
"Catering customers are far less forgiving as the food and service they cater reflects on them personally," Pinkerton said. "These customers are responsible for feeding large groups, so if the food is late, arrives cold or the order is not accurate, they are the one who gets blamed."
— Richard Slawsky contributed to this report
