Pre-COVID, 90 percent of restaurant leaders said that catering was strategically important to their business.
High margins, high order values, and incremental brand exposure make catering orders extremely valuable to restaurants. With catering demand increasing every day, if a restaurant hasn't yet built a catering program, now is absolutely the time to start. “Brands who proactively invest in their catering program will get the lion’s share of the business when business fully returns,” says Jim Rand, operating partner, off-premises at Act III Holdings. “If they're doing a good job with execution then they’ll hang onto that business. It's gonna come back. It's no secret that catering sales are going to return and be a significant revenue channel once again.”
Catering Before COVID-19
Consumer behavior has been shifting toward on-demand for the past decade because customers want what they want, when they want it, where they want it, and how they want it. As consumer demand rose for a digital off-premises experience rose, industry leaders scaled their off-premises strategies to include easy online ordering. At $60 billion with 6 percent growth year-over-year, catering was the hot channel in the industry, growing 50 percent faster than the overall restaurant industry.
Pre-COVID, 90 percent of restaurant leaders said that catering was strategically important to their business and 91 percent of brands who were growing the channel year-over-year were actively investing in the program. In recent years, frontrunners in the industry understood that while all of off-premises was growing, catering was a unique opportunity.
Catering is different. For the customer, it is higher stakes and higher rewards than other channels. Customers need a business grade experience that is reliable. For restaurants, it means higher margins and higher order values. The customer is different, so technology solutions need to be different. “You need to proactively invest in technology,” says Gracie Prasanson, director of sales at Jason’s Deli. “You need to take orders online. That is just table stakes. You need that infrastructure built before you can even try to cater.”
While the industry was rocked by COVID-19, adoption of online food ordering by customers brought significant growth for off-premises channels. Some restaurants have been steadily scaling these channels over the last decade, but others had to pivot quickly to build the infrastructure to support these new lines of business.
ezCater has seen significant changes throughout our nationwide B2B customer base. COVID curve balls like unpredictable schedules and reduced budgets mean that high delivery fees, high order minimums and high lead times are a dealbreaker for many. Customers are drawn to restaurants who clearly state safety measures and provide frictionless ordering experiences.
Many restaurant leaders have reacted with COVID-smart offerings like individually packaged meals. Boxed lunches are the number one searched item on ezCater, but many customers are still searching for tray catering. Menus should include multiple options to cover all customer demands. Accommodations for multiple dietary restrictions are quick to convert customers, too.
Lowering lead times is critical to capture more catering orders. Today, 46 percent of ezCater searches are for lead times of under 24 hours and 14 percent of searches are for under five hours. The days of 48 hour lead times, operationally inefficient menus, and leaving catering buyers waiting on the phone while they try to place an order are in the past.
The State of Catering Recovery
Catering demand is returning and the consumer is used to ordering food digitally for both social and professional occasions.
Restaurants have to meet their customers where they are. They don’t want to wait on hold or place an order through a form anymore. Your digital footprint needs to make it effortless for the customer to choose you.
During the pandemic, food for work habits changed. Pre-COVID, companies provided food to employees and guests for meetings, events, or as a perk. Now, food for work is a benefit and a way to show appreciation, keep them productive, and help them feel safe and confident. 33 percent of companies have increased their meal budget, price-per-head, and/or ordering frequency, and 66% of companies now offer free or discounted food at work. We expect these ordering trends to increase as more workplaces reopen with new hybrid models that require flexible meal solutions.
As COVID restrictions lift and on-premises dining increases, restaurants will need to balance their new off-premises demand with on-premises traffic. Catering should remain a priority. It is a powerful way to introduce your brand to high value customers and has a halo effect on the other channels of your business. It can have a powerful impact on your lunch daypart revenue specifically. “Starting off your day with a catering order is even more important now than it was in the past,” says Jennifer Crawford, director of off-premises and field marketing at Fazoli’s. “The industry has seen a decrease in dine in and we have a lot of space to make up. If we have a good catering day, everything is wonderful. If it is slower, it is a real challenge.”
If you decide to grow your catering business, consider these strategies:
Think Beyond the Four Walls: Be everywhere online. If you don’t have online ordering for catering, you must. Your catering strategy needs to be front and center and woven throughout your brand’s digital footprint.
Assess your capabilities: Restaurants require different capabilities to manage their catering business. The demand is returning and the question is whether or not you can execute when given the opportunity.
Compete with your menu: Offset operational complexities by focusing on streamlining your menu and simplifying it for operational efficiency. “Safety still is top of mind,” says Crawford. “Adding individually packaged items and streamlining our menu was a pivotal win for us to capture demand early in the pandemic.”
Now’s the time. Our on-demand society is here to stay and catering demand is increasing. “I have no question whatsoever about catering fully returning,'' says Prasanson. “Food is going to be an important way for employers to get their people back in the office. And if you wait to get your catering program in place and build relationships until then, you're going to be way behind.”
Mike O’Hanlon is the Head of Catering Partner Business, ezCater. He has over 20 years of experience in eCommerce, general management, partnerships and investment banking. Mike joined ezCater as the Head of Catering Partner Business in 2018 where he is responsible for managing relationships with over 80,000 restaurants and caterers.