Catering Increases Profits

Restaurants Deliver, Save 20 Percent

In Northwest Arkansas’ viciously competitive restaurant climate, restaurant owners have had to diversify to remain profitable.

For many of them, that means catering.

The reason, says Toney Goucher, owner of Fat Toney’s Bar-B-Que, is that the profit margin is about 20 percent higher for catering than for the same meals served at the same prices in restaurants.

“Everybody is doing it,” he says. “There’s a good mark up in catering. You have to be more diversified, because everybody in town is trying to do it.”

Rowland Hill, operations director for Corky’s Ribs & BBQ LLC, says the profit margin is even greater than that — about 53 percent for catered meals.

“If you had a restaurant showing a bottom line of 20 percent,” he says, “you’d have most investors running up and down the street screaming and yelling [with joy].”

Catering is more profitable because the overhead is lower, says Goucher, who owns one Fat Toney’s in Fayetteville and has franchise locations in Springdale, Rogers and Farmington. He has also signed a contract to operate the barbecue eateries in five area Harps Food Stores. Goucher recently closed franchises in Siloam Springs and Huntsville.

In restaurants, owners have to pay the cooks, waitresses and often hostesses, not to mention high utility bills. One or two people can cater a meal, and it’s cheaper for the restaurant, says Goucher.

Also, catering allows a restaurant to reach more potential customers. If they like the food at a catered event, they’re more likely to eat at the caterer’s restaurant, Goucher reasons.

Goucher says he currently caters more than 300 events per year, ranging in size from 20 to 3,000 people per event. Catering accounts for about 40 percent of his business. He caters everything from wedding receptions to golf tournaments. His prices — both at the restaurant and for catering — range from about $5 to $10 per person, depending on the meals ordered. All events catered by Fat Toney’s are buffet-style.

Goucher, who runs his Fayetteville restaurant and the catering business, says he’s also diversifying his menu. Instead of just barbecue, Fat Toney’s will offer a variety of different kinds of meals.

Ed Knight, who owns Penguin Ed’s Bar-B-Q in Fayetteville, has made an offer to buy B&B Bar-B-Q to use primarily as a catering facility. B&B has been operated by William and Betty Bassett for the past 38 years.

Knight, who began selling barbecue in 1993 from a tent at the site of his current location, says the profit margin is higher in catering, but he’s never done the math to see just how much higher.

“I’m not really a numbers guy,” says Knight. “It is higher, but that only takes into account the bigger jobs. You can’t make that much when catering for only 10 or 20 people.”

Goucher says his business slowed down slightly last summer after Corky’s Ribs & BBQ opened in Fayetteville, “but they couldn’t live up to Fat Toney’s barbecue catering events.” Goucher says his catering business is again on the upswing.

Hill, who lives in Fayetteville and serves as operations director for the entire Corky’s chain, says the catering business for the Fayetteville restaurant has been fairly consistent at about 30 events per month since the eatery opened about a year ago.

Hill says barbecue is less expensive to cater — and thus has a higher profit margin — than many other types of food. Fine-dining restaurants may find it’s too expensive to cater meals, he says.

Hill says Corky’s can cater meals for events ranging in size from 20 to 1,700 people. In August, the two Corky’s restaurants in Fort Smith provided some 5,500 meals during the Nike Fort Smith Classic golf tournament. The average meal catered by Corky’s costs about $6, he says.

Room for all

Ken Woodbury, formerly director of operations for both the Ozark Brewing Co. and Ozark Baking & Catering in Fayetteville, agrees with Goucher’s 20 percent estimate. In addition to savings on salaries and utilities, caterers usually have a better idea just how much food to order, so there’s little waste, he says.

Woodbury left his job at the brew pub at the end of August but remains a partner in the business (see food column page 14). He thinks there’s room for all the restaurants that are getting into the catering business here.

“I think there’s enough business here for everybody,” he says. “Good restaurants run properly will survive. Ultimately, the winners will be the clientele. You have more choices, and it drives the prices down.”

Woodbury says area caterers also work together. He occasionally refers customers to other caterers, including Goucher if they’re wanting an event catered with barbecue.

“He’s got it down to a science,” Woodbury says of Goucher. “He’s got a good product. We all kind of work together. It’s the client who runs the business.”

Woodbury and co-owner John Gilliam decided the kitchen at Ozark Brewing Co. wasn’t large enough to handle catering, so they opened Ozark Baking & Catering in January in the Bakery Building a block down Dickson Street from the brewery. In addition to catering, Ozark Baking & Catering also serves breakfast and lunch at the Bakery Building location.

Woodbury says Ozark Baking & Catering can cater events for 10 to 1,000 people. Prices range from $4 per person for a continental breakfast to $22 for an upscale dinner. The business has catered about 250 events since opening in January. Some of those were small events, consisting of 10 to 15 diners, he notes.

AQ enters market

AQ Chicken House of Springdale, one of the oldest restaurants in the area, got into the catering business last May.

Mark Henry, general manager of the Springdale AQ, says the company decided to do catering after giving away chicken as a promotion at several events.

“The profit margin is not the reason we’re doing it,” he says. “It gives us extra exposure out there. We’ve been here for 50 years, but we want to keep our name fresh. We didn’t start this business to generate profits. We started this business to generate exposure.”

Henry says the profit margin isn’t that great for catering because caterers can’t charge as much per person for catered events as restaurateurs can charge for restaurant meals.

AQ has catered 150 to 200 events in the three months the company has offered that service. Meals have ranged from $4.50 to $25 per person. So far, AQ has catered events for 30 to 1,200 people, with the average event being between 100 and 125.

In addition to chicken, AQ has also prepared barbecue and fish meals for catered events.

“We can cater anything from a backyard picnic to prime rib, seafood, lobster, smoked salmon — the works,” says Henry. “We have the staff and the know-how to pull off anything like that.”

In addition to the venerable restaurant in Springdale, AQ also has a restaurant in Fayetteville and AQ Outbacks adjacent to the restaurants in the two cities. The Outbacks provide indoor dining as well as meals to go.

Nibbles to go

To operate a full-service, fine-dining catering business, the overhead will be just as high as that of a restaurant, says Suzie Stephens, who owns Nibbles Gourmet Catering in Fayetteville, which is catering events this month for Wal-Mart Stores Inc. featuring Trisha Yearwood, Garth Brooks and Marvin Hamlisch.

“We’re one of the few catering companies in Northwest Arkansas whose only business is catering,” she says. “I believe restaurant catering is a whole different ball of wax. I don’t believe you can run a full-service restaurant and full-service catering business out of the same kitchen without people running into each other. A catering kitchen is designed different than a restaurant kitchen.

“The way I see it, we’re moving a restaurant to you. If a restaurant is catering an event, they must have two restaurants to be able to keep one operating and move another one to someone’s house.”

Feeding 500 people requires a different kind of kitchen than that of an average restaurant, says Stephens. That was the reason, Woodbury says, that he opened Ozark Baking & Catering in a different building from the brew pub.

To begin a catering service, many businesses must first buy a vehicle for deliveries, says Stephens, and that can be a major expense.

Stephens, who also owns Nibbles Food Emporium, recently leased an additional space a block away from her old business at 3290 N. Lee Ave. to house the retail shop. That way, she’ll have a location exclusively for preparing meals to be catered.

Stephens says she has three chefs working in the kitchen at Nibbles, including Morgan Stout, the former sous chef at James at the Mill in Johnson. The business caters about 600 events a year, she says. Prices range from $7 up per meal.

The main event

Shellie Morrison, owner of The Event Group, merged her events-planning business last May with Stars Catering, which began operating last December out of the kitchen at Jose’s Restaurant & Club in Fayetteville.

Although Morrison and Jose’s owner Joe Fennel are partners, The Event Group will also use other restaurants and catering in the area if customers request it. Through Jose’s, The Event Group offers Mexican, Italian, barbecue, hors d’oeuvre and a classical menu.