Catering Translates Into Fatter Revenues

This story began with a flawed premise.

The notion was that restaurant owners and operators with catering sides might try to bolster faltering in-store revenue during rocky economic times by boosting out-of-store operations like catering.

Not so fast.

“Catering is not a sales-driver that’ll offset slower sales in the store,” said Tom Gordon, owner and president of Slim Chickens, which operates six stores across Arkansas and Oklahoma.

What Gordon and others agreed on, however, is the idea catering can provide a steady, if not spectacular, revenue stream even during times when more families might choose to eat at home. Catfish Hole owner Pat Gazzola said catering gigs are responsible for about 10 percent of his store’s total revenue “in a good year,” and that they’ve never accounted for less than 7 percent.

Considering Catfish Hole raked in more than $2.2 million in 2009 sales – based on taxes collected by Fayetteville’s Advertising and Promotion Commission – its catering piece can account for a nice chunk of change.

“It’s a wonderful thing,” Gazzola said.

 

A Deep Menu           

Ask a dozen restaurateurs to define catering, and you’re liable to get a dozen different answers.

“Catering is a very generic term,” Restaurant Management Group LLC managing partner Dave Godwin said with a grin. RMG is the parent company of MarketPlace Grill, among other entities, including MarketPlace Catering.

For Gazzola, who launched Catfish Hole’s catering division in 1998, four years after he opened the Fayetteville store, it involves a mobile kitchen that allows food to be prepared wherever the event is held.

“When we take food somewhere, we call that delivery,” Gazzola said. “Catering is when we cook the food on-site.”

Gazzola said he got the idea to devote more time and energy to catering – and ultimately purchase the mobile kitchen – when he was asked to feed about 800 people at a picnic held by Washington Regional Medical Center. Typical events for Gazzola and his staff these days include everything from other medical-group functions to University of Arkansas events to the member-guest golf tournament at Paradise Valley Golf & Athletic Club.

Godwin has a similar story, if a slightly different definition. While the bulk of MarketPlace’s catering jobs are run out of one of its three Grill locations, the food also is packaged there and transported in a company van.

The demand for large-group catering surfaced within a couple of years of MarketPlace’s debut, in 1995. Godwin said the meals often fed up to 30 or 40 people.

“We’ve always tried to provide food off-premise in some form or fashion,” Godwin said.

It’s now been more than three years since MarketPlace got more aggressive in its approach to doing just that. While adding a separate division, headed by Tim Howington, to handle its catering business, MarketPlace also created a separate logo and website for the venture. It set up a toll-free number and beefed up its in-store advertising and e-mail campaigns, too.

“The reason we did it was just trying to create more revenue,” Godwin said. “We’ve got quite a bit of brand recognition, so we tried to leverage that.

“We were starting to see some of the clouds moving in.”

Godwin was referencing the recently tumultuous economic period, perhaps best exemplified by the fact more than 30 restaurants closed in 2009 – in Fayetteville alone. Even at a restaurant like Catfish Hole, a regular contender for top-10 status revenue-wise, Gazzola said business is down 2 or 3 percent compared to last year, which was down 2 or 3 percent compared to 2008.

 

A Natural Progression

But while the catering side, when done properly, can add some revenue, it also can be an up-and-down endeavor. That’s especially true for restaurants that don’t necessarily devote the time and energy those like Howington and Gazzola commit.

“You might see a store doing $300 one week and $3,000 the next week,” Renee Eiffert said. “It can be a very erratic business.”

Eiffert is the director of marketing for Traditional Bakery Inc., a franchisee of Panera Bread LLC. TBI owns all of Panera’s Arkansas stores.

Eiffert said adding a catering element is simply a natural progression once a restaurant has established itself. Panera’s Bentonville store has had a catering component since it opened.

“When you have a restaurant, you have your four walls and that’s where people come to eat,” Eiffert said. “You’re bound by how quickly they come and how quickly they leave.

“So anyone who has a portable food in their concept probably will look at a way to take that outside. Basically, that’s what Panera did.”

Gordon did the same thing after enduring a challenging first 10 months when Slim Chickens opened in Fayetteville in February 2003. Business eventually “kind of caught fire,” Gordon said, and small- and large-group catering orders soon followed.

These days, policy is to deliver only orders of more than $250 in value. At the same time, Gordon said the restaurant regularly takes and fills orders for 100 wings or tenders, as well as salad and wrap trays.

Like others, the bulk of his orders are business lunches and university-related events. Continuing expansion, however, has Gordon contemplating a stronger emphasis on catering.

“We could be better at promoting catering and improve our revenue stream,” he said. “I’d like to be better at it, but we’ve been busy trying to grow the business.”

That growth includes the projected opening of two Oklahoma stores in November, and one in Fayetteville on Joyce Blvd. in December. The Fayetteville location, in particular, has promise related to catering, based on its large kitchen space.

Gordon said he’d like to add a sales manager to oversee catering efforts. With a faith in his product both firm and proven, Gordon said such a move could help the soon-to-open Slim Chickens become a “catering hub of Northwest Arkansas.”

As of now, that honor likely belongs to MarketPlace, which handled more than 2,000 events last year. A key part of its success is the fact the catering division is a true extension of the restaurant.

“We’ve been very pleased to see the same principles we have in the restaurant carry over to the catering side,” he said.

“When my clients say they want Jambalaya Pasta off-site, they know exactly what it is they’re getting.”

Godwin said that’s also true of the service they receive. An integrated approach, he said, allows client to get the “same feel and food as when they go to the restaurant.”

And when that happens, Gazzola concurred, catering can pay off in more ways than bottom-line revenue.

“It’s a great tool not only from the standpoint of producing revenue, but as an advertisement for your business,” Gazzola said. “If they like what you feed them, maybe they’ll come eat at your restaurant.

“For years, catering was our sole form of advertising.”