2006 Catering Study: Spreading the word

Catering can reap substantial rewards for non-commercial operators, especially those pursuing on- and off-premise customers for revenue.

Administrators at a certain large, state-run university in New England demand a lot from their campus dining department’s catering division: top-notch service, high-quality food, customizable menus and an experience befitting the reputation and distinction of their institution.

Oh yes—they also believe catering to be something you “get” just by placing a phone call at the drop of a hat; and they want the whole package at less than competitive pricing.

Sound familiar?

All of this adds up (or subtracts down) to a loss for dining services, says the director (obviously anonymous). Such is the life for many a non-commercial caterer: According to FSD’s 2006 Catering Business-Builder Study, 17% of non-commercial caterers are forced to operate catering at a loss, while another third say they break even—with the remainder, just under a majority, saying they’re allowed to run catering as a profit center.

A good year: For those doing catering in non-commercial facilities, 2006 was a good year. Half say revenue grew, led by colleges (70% of them) and B&I (66%). Why? For hospitals, it’s simple: more catering is being ordered by various departments in the organization.

“Catering is growing but not because we market our services,” says Mary Keysor, MS, RD, director of nutrition services at Maine Medical Center in Portland. “Our educational seminars, recognitions and evening events are increasing, and catering often supports those events.”

Catering at Maine Medical ranges from coffee carts to a party for 2,000, Keysor adds. “It’s not just lunch in the boardroom. Our executive chef sits with customers to tailor the event.”

Ads add up: In B&I, catering growth is due to promotional efforts, say more than one-quarter of respondents in this segment. Bill Carroll, general manager for Sodexo at Marathon Oil in Houston, says catering accounts for more than 50% of revenue at the account and is growing due to Web and print advertising.

“Our new menu is live on-line,” he says, “and we go out to the community. I sit on the Houston Chamber of Commerce and market [the site] to the chamber, and run a full-page ad in a [local] wedding magazine and national bridal magazines.” Those ads, he says, target Houston-area brides who might be attending college in distant cities.

Colleges, meanwhile, most often cite a growing customer base and customer satisfaction as prompting growth in catering. “We cater 1,900 events per year,” says Dean Wright, director of dining services at Brigham Young University in Provo, Utah. “Our biggest [catering] event last year was the BYU Women’s Conference; we served 5,000 people for one meal. We also did a horticulturalists’ convention attended by 1,500 people. The busiest time of year is Homecoming [during which] we can do as many as 40 to 45 events a day.”

Reaching out: To grow their catering businesses, non-commercial operators continue to look beyond their physical and organizational boundaries, with good reason—only 30% have an exclusive on their organization’s catering opportunities. Of those FSD Catering Study respondents doing catering, 51% do catering on-premise only, while almost as many cater events both on- and off-premise.

“We have been making a real push for business off-campus,” says Karen Focarazzo, director of catering at Fresno (Calif.) State University. “We have exclusive rights to catering on campus, but we are assertively partnering with people and organizations connected to the campus, such as community groups or university donors, to bid for off-campus business.”

Keysor adds that at Maine Medical Center, external catering represents new revenue to the hospital, and her department does market catering services to external entities. But as a non-profit organization—like many in the non-commercial realm—she must keep a tight financial rein on the catering business. “Internal catering is an expense to the medical center,” she explains. “Nutrition Services does bill and cover department costs for services; however, the goal is not to create more expense for the hospital.”

Maximizing revenue: Many in non-commercial also need to be careful how they charge off-premise customers. About two-thirds of FSD study participants say they can and do charge off-premise customers more than on-premise customers. At Maine Medical, for example, “we have a separate catering book to give to external customers listing the price they would be charged,” Keysor says.

BYU Dining Services doesn’t have an exclusive, but captures between 80% and 85% of business, Wright notes, describing off-premise business as “very limited, usually for donors.”

Three years ago, catering customers at Marathon Oil often turned to outside caterers. Now, Carroll of Sodexo says, “probably about 98% order from us. We have at least two vans on the road delivering to other accounts—some are former Sodexho accounts where we’ve continued with catering.”

The foodservice team at Providence Memorial Hospital in El Paso, Texas, is also capturing upwards of 90% of in-organization catering business. But that doesn’t stop the team from pursuing off-premise customers. “We did quite a bit of catering with the Salvation Army during the hurricanes of 2005,” says Daniel Coté, executive area chef for Morrison Management Specialists. “We fed evacuees [about 3,000 to 4,000 meals]; last summer, we did over 10,000 meals for the Salvation Army. We also do catering for a synagogue in town, using their kitchen.”

Day parts, drop off help boost catering profits
Plus: Catering menus help showcase the talents of your culinary staff.

Just as non-commercial foodservice is highly segmented by day part, so is catering. Luncheons and lunch meetings comprise 39% of the catering revenue, followed by breakfast (28%), dinners and banquets (26%) and special events such as festivals and, say, campus parties (7%).

Catering at Pennsbury (Pa.) School District, for example, ranges from morning and afternoon coffee breaks, breakfasts and luncheons to afternoon meetings and some dinners, according to Steve Kline, foodservice director for Metz & Associates, which manages foodservice for the district. Catering revenue totals about $40,000 a year.

Standing up: The budget for catering is somewhat limited, but Kline says he’s trying to stay current with trends in order to expand his offerings. “We have gotten away from sit-down meals,” he explains. “Customers want to do more stand-up [events] and grazing, which gives us an opportunity to do different things.” That includes putting more meal production elements out in front of customers: fresh items, carving stations and even chefs, Kline notes.

In addition, he’s “dabbling in heavier hors d’oeuvres” and has developed programs for pizza and birthday parties.
B&I caterers do the most breakfast business (35% of revenue) while hospitals get the most from lunchtime business (48% of their catering revenue).

Colleges, meanwhile, lead in the dinner category: 36% of catering revenue. To grow that business, Dean Wright, director of dining services at Brigham Young University in Provo, Utah, finds it necessary to increase customer education of what his department offers.

Yearly reminder: “One of the biggest challenges we face is people will look at our Web site and think that is all we do,” he says. “So we do a Taste of Catering once a year—we invite customers and university decision-makers to a food fair that highlights new menu ideas and reintroduces us to our customer base.”

One of the goals of these efforts is to convince customers that Brigham Young University Dining “can create any type of meal to go with their event,” Wright continues. For example, a recent Scottish dinner staged by the English department honoring the poet Robert Burns featured smoked salmon chowder, beet greens salad, potato scones, herb-crusted lamb with root vegetables.”

Breakfast is mostly a drop-off business, the study shows. Sixty-two percent of breakfast revenue among all operators that cater breakfast comes from drop-off events, compared to 38% for full service. Logically, the opposite is true for dinner: three-quarters of revenue is full-service, one-quarter is drop-off. For lunch, the business splits nearly evenly at 45%/55%.

Catering menu expansion often helps operators broaden business in individual day parts, operators suggest. “New catering menu items include low-carb breakfast wraps, yogurt parfaits and make-your-own granola bar,” says Emil Grosso, president of Sebastians Café and Catering, which manages foodservice at a multi-tenant site (One Beacon Street) in Boston.

New family-style light entrees include grilled salmon salad and cumin-lime crusted chicken salad. “We have also brought a taste of our retail cafés to our catering menu with an expanded custom salad bar section and signature sandwich selections,” Grosso adds. New dessert themes include an ‘Espresso Pick Me Up’ featuring cappuccino and mini cheesecakes.