In real estate, there is a concept called "highest and best use" of a piece of property. An investor maximizes his return when he develops his property in order to capture as much income as possible.
That is why you never see an entire New York City block with just a three bedroom, two-bath home. The income from the property is far greater by erecting a tall skyscraper.
You can apply the "highest and best use" principle to your pizza business. Catering is a profit center many operators neglect using to get the highest return possible from their restaurant, especially in this challenging environment. As a fellow operator, I am familiar with the fact you pay the same amount of rent each month regardless of whether you cater or not. You pay your managers no more, whether you have one dollar or $1,000 in drop-off catering due to go out before you unlock your doors.
Most restaurants are able to incorporate a catering profit center within their existing overhead structure and take a large portion of catering sales to their bottom line. Often times a 10 percent increase in sales – very doable with catering – will lead to a doubling of profits. Catering also helps your labor costs. You can utilize your crew to prep for catering jobs during down time. Cost-justifying extra hours makes for happy employees. Your front and back house crew will enjoy going out on catering jobs. It is the equivalent of a field trip in school with the possibility of making extra income from host tips.
Your employees will often times receive tips on catered events. One of our regular catering clients tips our crew $200 per person at their annual open house. The lure of extra tips is a strong motivational tool to reward your best employees and keeps them interested and committed to your operation.
Due to the higher check averages of catering, you can get a higher return on your advertising investment. If your average delivery is worth $14.52, you'll find your average catered event can start at $100 and go way up from there. I have clients that have spent as little as $15 and brought in $6,000 in drop-off catering in a single day. You could probably buy door hangers for $15, but not the labor to distribute them. And, you definitely won't generate the same six grand in sales. An added benefit is that you get paid to market your restaurant each time someone enjoys your food at a catering.
The Keys To Catering Success
The difference between owning a business and job is a good system. Here are the keys to catering success for your pizza operation.
- Evaluate Your Current Strengths: Do you have a chef with culinary talent? Take an inventory of your staff and their strengths, as well as a physical inventory of what equipment you have to help you start catering. Knowing which assets you have to deploy will keep you from getting in over your head in the beginning. I've found that operators that start small and grow are more successful. You won't have a second shot at impressing a catering client.
- Determine Your Menu & Catering Packages: I'm sure you've had the "catered" order for 100 pies at the local factory, but do you want to limit yourself to just pizza? Salads, wings and garlic bread are a natural extension. Pans of chicken Parmesan and lasagna squares can be assembled with value added products found at your food supplier and heated in your pizza or convection oven. Add salad and bread, and you've just created a great catered meal. Catering clients expect you to think for them. You don't walk into a fast food restaurant and order a piece meal. Everything is a value meal. Your clients expect you to sell them in packages and determine quantities for them. Making them choose from a whole laundry list of your specialties and figuring out how much they'll need will get you overlooked. Consider creating packages of varying price points that include an entree, salad or sides and bread. You can include drinks, desserts and paper goods or use them as up-sells.
- Develop A Pricing Strategy: Your competition for catering dollars is not limited to your pizza brethren. Mexican to barbecue restaurants are all going after a piece of the catering pie. Call your local catering competitors and play prospect. Get menus and determine where the catering marketplace is. You want to price your services to be a good value and congruent with your concept. If you are a pizza operator that is positioned as "2-for-1" all the time, your clients will expect lower catering prices than a higher end gourmet pizza parlor. I always like to offer at least three pricing options: low, medium and high. It appeals to the three buying personalities and assures you maximize your catering sales without relying on employees that are master salespeople.
- Layout Your Catering Pieces: Once you've determined your menu, studied your competitors' packages and calculated your prices, it's time to design and print catering menus. You can design a simple 8.5" x 11" flyer and copy to colored paper or have a graphic artist design a four-color glossy catering brochure. Places like Kinko's can cost effectively design and print four-color catering menus with small output through their digital copiers. Until you've refined your menu, avoid expensive high volume offset printing. Make sure you have a black and white catering menu to fax customers.
- Market, Market, Market: Marketing catering could fill a year's worth of PMQ issues and then some. Start fishing where the fish know you – your current customers. I would attach catering menus as box toppers to all deliveries going to corporate customers. If you have seating, design table tents, "grab-one" menus, signs, banners and even restroom signs to let your customers know you now cater. A lot of my store's catering comes from existing dining room customers. If you have a customer database, mail them a letter and catering menu announcing your new service. If you dabble in catering now, examine your database of catering clients and determine what types of companies book catering and for what reason. For example, a close look might reveal factories use you for safety luncheons. Get yourself a list of all the factories in town and contact their safety directors about your catering. I love niche marketing. Uncover as many catering niches as possible, and go get them! Sampling your menu is also a strong marketing weapon. From free samples to local offices to a more formal tasting for a holiday party committee, the quality of your food and your professionalism will do all the selling.
You are armed with some powerful knowledge to pump up your pizza profits with catering. A word of caution though, don't make the mistake of assuming catering is just about good food. A secretary that trusts you with her company's board meeting or client appreciation event cares more about not being embarrassed. She also does not want a career as a party planner. You'll be expected to be responsive and customer-centered. From handling billing to knowing client preferences, the easier you make your catering clients' lives, the more business they'll trust you with.
Each issue I'll give you different operational and marketing tips to help you grow your catering profit center. Go out and start using catering to get the 'highest and best use' of your pizza business. You have too much money invested and work too hard to not milk every pizza profit dollar out of your business.