5 Ways Catering Improves Restaurant Revenue

Seasonal changes can affect traffic even at the best restaurants, particularly during transitions when families get back into routines, such as fall and spring. But even if foot traffic has taken a noticeable downturn, there are opportunities for restaurants to keep revenue flowing with catering opportunities. In fact, restaurants, QSRs, and grocery stores drew $19.5 billion in 2013 in catering revenue (the most recent data available). The closest competition came from independent catering companies, which brought in less than half of that with just $8.3 billion in revenue.

Catering brings in new business
Depending on how long your restaurant has been in business, there is a good likelihood that you’ve already established a flow of regular customers. Expanding that base can be challenging the longer that you’re in business, though. When adding catering to your available service options, you not only bring your existing customers new ways to engage with your business, you also get the opportunity to reach new clients and build a broader customer base.

Despite the staggering revenue the industry generated from catering, most restaurants aren’t offering it as an option. As a result, potential clients looking for a restaurant to cater their next event may have to choose a vendor that they’re unfamiliar with. A well-executed catered meal with quality service is a great way to generate new business from the event host, as well as their guests.

| See Also: Catering Management: Top 5 Tips for Profitability |

Catering optimizes slower business windows
While business might be softer certain times of the year, it likely doesn’t disappear completely. Obviously, you still have a restaurant to run. When you’re adding catering options, you can choose your required notification window to ensure that you’re staffing properly for your variety of services.

Beyond merely staffing properly, you can optimize times that your restaurant is usually closed or struggles to build a significant showing. If your restaurant focuses primarily on dinner, lunch catering options for businesses in the area can create an additional revenue stream without impacting your regular operation. Additionally, if weeknights tend to bring in less traffic, working with local event spaces to be a preferred vendor can bring in supplemental sales and help you retain more of your staff in the off-season.

Catering can reduce waste
All food businesses struggle to perfectly hit inventory par levels. Relying on historical data helps you make the best projection possible, but it’s impossible to predict exactly what customers will order. One major benefit to catering—especially when you’ve established a required notification window—is that you can order perishable ingredients with greater precision. This greatly improves your ability to order just what you’ll need for a set number of patrons, reducing the overhead cost of spoilage.

Catering allows flexibility in service delivery
Unlike the typical constraints around service delivery in your establishment, catering empowers you to create unique experiences based on the needs of individual clients. You could simply offer standard table service as you do in your restaurant, or you can vary your services by offering passed hors d'oeuvres, buffet style, or service stations.

Flexible service delivery creates the opportunity to establish dynamic pricing, which can help you better control resources and drive greater revenue. A meal offered buffet style, the most common in the industry, requires far less labor than a full-service experience. Passed appetizers however might require more than usual to ensure that enough food is flowing through the crowd. The best part is any given event can utilize just one or multiple options, giving you the ability to tailor service to the client’s specific needs.

| See Also: A New POS for a Five Generation Bakery |

Catering can open the door to premium offerings
In addition to creating a dynamic pricing model for service delivery, catering also provides the opportunity to develop menu options that are out of the scope of your restaurant’s standard fare. For example, depending on your establishment, premium cuts of meat could be a risky bet if the price is significantly higher than your average item. If customers don’t order those premium cuts, you run into high-dollar spoilage, which significantly adds to your bottom line costs.

When you add premium options to your catering menu, you’re not liable for expensive spoilage as you only need to order enough to fulfill the catering order. Offering premium catering options can help offset periods of slower business in your food establishment and provide insight into what else your customers might be willing to pay for the next time you refresh your menu. Just be sure that your kitchen staff is just as prepared to execute anything that isn’t on your standard menu.

Ultimately, catering is an extension of your establishment that provides the opportunity to reach other community groups that can produce a great return in the long run. Revel Systems has a variety of functions built directly into the POS platform to manage catering services. You can find more information about this functionality in our recent webinar Exploring Revenue Streams with Catering.