Point of Sale
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By Dana Krook
Your restaurant is doing well. Sales are up, profits are pretty decent, and you’re seeing the same loyal customers returning week after week.
But you want more. So where do you turn to get more customers?
Answer: Restaurant catering.
The Bureau of Labor Statistics estimates that the average household spends $3,000 annually in restaurants (a 94% increase since 2003). With that many people already eating out, and a growing number of restaurants competing for their attention, more and more restaurant owners are turning to restaurant catering as a means of reaching a wider customer base.
However, incorporating a catering element into your business is no small feat, which is why we’ve decided to break the whole thing down into canapé-sized bites for you.
As always, we’re here to offer resources and support to nudge you toward success. Below, we’ve broken our recipe for a winning restaurant catering business into five digestible parts:
Before we start, let’s take a moment to go over the pros and cons of adding a catering element to your existing business.
Let’s keep moving.
Here are some key restaurant catering ideas to explore as you set up your business.
The difference between on- and off-premise catering is rather self-explanatory.
On-premise catering takes place in your restaurant while off-premise catering involves you bringing the food to the customer. Both come with some major considerations, which we’ve outlined below.
When it comes to designing your restaurant catering menu, you’ve got a few options and a few things to consider.
The first decision you’ll need to make is whether you’ll be offering buffet-style or plated dishes. You could also make both available, so the customer gets to choose which option best works for their event.
Next, your catering menu and catering kitchen equipment will be very closely linked. Some restaurateurs opt to serve raw foods or foods prepared ahead of time in their restaurant kitchen that can be served cold – this helps avoid needing to invest in expensive warming equipment or rentals.
Serving hot food at off-premise events or on-premise, buffet-style events requires warming trays. And off-premise events with full dinner service will require portable cooking equipment like a travelling gas stove.
It’s up to you whether you’ll let your equipment needs dictate your menu, or your menu dictate your equipment needs. Either way, one decision leads to the other.
Highlighting one or two items from your restaurant’s existing menu gives people a taste of what you offer at your venue. This also helps maintain a consistent brand.
Events may call for themed menus or have specific requests to work around. It’s a great opportunity to get creative with your catering food ideas.
The most important things to remember in designing your menu are:
Normally, when pricing your restaurant menu, you want to look closely at your food cost percentage – the difference between what it costs to make a dish and what you’re charging customers for it – and make sure it’s between 20% and 40%. This way, each dish accounts for the cost of ingredients, overhead, and profit.
But, for your catering business, you may want to be on the higher end of this range.
With restaurant catering, there are a few extra costs you’ll have to consider.
Some catering businesses make up for these costs with additional fees (e.g. room fee, cake cutting fee, bartender fee, etc.). Others increase menu prices, so the food cost percentage is higher than at the restaurant.
With all these factors in mind, calculate menu prices that let you:
Because some of the costs above are fixed, restaurant catering businesses can also offer tiered pricing – the more guests an event has, the lower the menu prices go. If this is the way you want to go, figure out your break-even point first (what you need to charge to cover costs), then your gross profit (see below), and then build out tiered pricing from there.
Overwhelmed by all the numbers you need to calculate?
Technology is here to help.
Your POS can take some of the pressure off by doing a lot of these calculations for you.
Let your POS help you balance your books by setting up your system to calculate the following metrics:
Gross profit and gross profit margin: Your gross profit can be calculated by subtracting the cost of goods sold from your revenue from any given event. Your gross profit margin is that number as a percentage. These will help you determine budget and profitability as you grow your catering business.
Labor cost percentage: What percentage of your revenue is going towards labor costs? This will assist you in determining where you can cut back or bring in extra help to increase efficiency and cut back on labor costs.
Food cost percentage: Like we mentioned above, food cost percentage is the difference between what it costs to make a dish and what you’re charging customers. Your POS can further break this down for you by day and menu item, so you can those numbers from your restaurant to help you figure out pricing for your catering.
There are loads of other ways your POS can help you keep track of your restaurant catering metrics.
The advantage to launching a catering business as an extension of your existing restaurant is that you already have an interested customer base.
However, if the point of your restaurant catering is to expand your reach, you’ll want to market your new services beyond regular customers.
Here are a few channels you can use:
Create separate accounts for your catering business that include your current brand name. Use the same tactics you used to establish your restaurant on social media to grow an audience through these channels.
Follow and engage with people and businesses in your area who are linked to the event world. Think venues, popular event planners, florists, DJs, photographers – use your imagination. Create a hashtag for your catering brand and encourage customers posting photos at events to tag and hashtag their posts to increase your brand visibility online.
Networking has been a thing since long before the days of Zuckerberg.
Reach out to business owners in your area who are involved in other aspects of event catering – maybe some of the same people you engaged with on social media. See if they’d like to partner up on future events.
It’s mutually beneficial for two brands to work together when they can cross promote to different audiences. Maybe you offer a discount on catering if they book you through your florist neighbor.
Every good marketing plan includes a touch of old school. Give your serving staff the information they need to spread the word. Encourage them to speak to their tables about your catering services and let your regular customers know about this new service you’re offering. Community is everything, and people tend to support their own. Lean into the community you’ve built and ask them to help you spread the word.
Apply to have a booth at wedding and party planning conventions in your area. It’s a great way to meet and partner up with local event planners and other business owners within the industry, plus meet potential customers looking for caterers. You’ll also get to scope out the competition and see how their marketing efforts compare to yours.
As a restaurateur, you’re in a great position to set up a successful and lucrative restaurant catering business.
Whether you decide to flaunt what you’ve got and host events in your existing space, or take what you do best out into the world for off-premise catering, follow the steps outlined above to give yourself the best chance at knocking it out of the park in your new venture.
Now go forth and cater!
Dana is the former Content Marketing Manager at TouchBistro, sharing tips for and stories of restaurateurs turning their passion into success. She loves homemade hot sauce, deep fried pickles and finding excuses to consume real maple syrup.
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