CSP Magazine

CSP Kitchen: Can C-Stores Cash in on Rising Catering Sales?

To cater or not to cater? If you asked a convenience retailer that question a few years ago, you likely would have heard a flat-out “no way.”

But ask that question again today and you might get a far different response. As more restaurants expand their catering business, c-stores are finding there’s some potential to compete in the corporate-meeting, holiday-party arena.

And sales are up—way up, in fact, according to a new restaurant catering study released in September by Technomic.

Overall, business-to-business and consumer catering sales have increased 20% since 2012 to reach $52.3 billion. Business-

to-business events such as catering for office buildings and business meetings has had an average 7.2% annual growth rate each year since 2012, compared to a 6% growth rate year over year for social catering occasions. Technomic found that businesses spend on average $1,611 per month on catering compared to $984 just three years ago, when the firm conducted its last catering research study.

“This is very significant growth,” says Melissa Wilson, principal of Chicago-based Technomic. “What the research shows is that there absolutely could be more opportunities for c-stores to cater if structured correctly.” (More on that structure in a bit.)

Menu Development

When it comes to social catering occasions, 63% of consumers place catering orders at least once a month or more often. Naturally, holidays, tailgates and birthday parties draw the most orders, but many customers now look to restaurants to supply their food for potlucks and picnics, and community, school and family events.

The growth in restaurant catering is even coming at the expense of another retail segment. “Consumers now source platters and catered food from restaurants even more than they did from supermarkets in the past because restaurants are becoming a bigger part of the everyday fabric of their lives,” says Wilson.

Another major reason for the increase in restaurant catering sales has to do with the Great Recession, from which the industry was still reeling even in 2012. “At that time, we noticed business catering frequency and ordering had steadily decreased tremendously since 2006, which was the last time we conducted a catering [business-to-business] study,” Wilson says. “[Now] with employment on the rise, businesses are hiring more, they’re hosting more training sessions

and are less focused on frugality and budget and more on presentation.”

Still, consultants and retailers who have “been there” warn that careful considerations are needed before jumping headfirst into catering, including the menu, price structure, packaging and whether to offer pickup or delivery.

Before even consider catering, c-stores first need to be seen as a foodservice destination.

“It’s important that a c-store has a core fresh-food offering that they do well before they broadcast it into a catering program,” says Deborah Holand, executive consultant for FreshOne, a Dallas-based provider of fresh foods for c-stores and hospitality businesses.

For most c-stores, that means a strong pizza program, made-to-order sandwiches and/or a craveable selection of baked goods, coffee and other sweets for morning and afternoon occasions. Some c-stores partner with local high schools and sports teams to cater games and meets. Others might run a robust business-office program for breakfast, lunch and other catered meetings. But the right menu variety and selection has to be there.

“Then you want to make sure you can add other sales-building items to the menu, like chips, drinks and other products,” Holand says. C-stores have a unique position compared to restaurants in that they can offer nonfood products as part of the catering pickup or delivery package. Think: a “new mom” package with freshly prepared meals, groceries, beverages, water and other nonfood staples such as toiletries and even diapers.

QuickChek Corp., Whitehouse Station, N.J., built its catering program on a pre-existing, robust deli program. “As we evolved to prepared food and sandwiches, we evolved our catering program to be more in line with what our day-to-day business was to our customer base,” says Jennifer Vespole, director of foodservice.

For QuickChek, that translated into platters and boxes of prepared subs and specialty sandwiches, along with breakfast items such as bagels, baked goods and coffee. The 141-store chain also offers packages with sweet treats and desserts such as cookies and brownies as well as soup and other items. A c-store retailer might also look to build a catering platform off an existing pizza menu. But to do that, “you have to make sure you’re in the whole-pie business, not just the slice business,” says Joe Chiovera, a former retailer who’s consultant and principal of XS Foodservice and Marketing Solutions, Dallas.

Chiovera recommends limiting any pizza catering to higher-volume stores because they are more likely to have the space, product and labor. “You should know how much inventory you have in terms of ingredients and how capable your regular staff is of handling a larger order should it come in the morning,” he says.

For further menu inspiration, look at what supermarkets do—especially around the holidays.

“There’s really nothing stopping a c-store from putting together a great holiday meal program or platters if they plan and market ahead,” says Holand. “Still, all the basics have to be there: You have to have a clean store with friendly service and quality and consistent food so people can trust the brand extension of catering.”

As consumers increasingly seek variety, it’s important to keep menus updated and seasonal throughout the year, she says. Timing is crucial for any menu type. “If someone calls looking for 10 pies, you have to make sure you can execute,” Chiovera says. That means having enough time to prep and bake the pies, but not such an extended amount of time that you’re turning people away. “People don’t want to have to give you 72 hours; they often want to be able to call in the morning to place their order and pick it up for lunch or later that day.”

When it comes to menu development for catering, variety is key—but so is packaging, pricing and understanding the needs of the catering consumer.

“Retailers need to understand what would be appealing in a catering format to their customer base,” Vespole says. “Packaging is a huge part of the program. You need to have the right package for each offer and be able to deliver it to the customer in a professional manner.”

It’s also important to understand, says Wilson of Technomic, that businesses and consumers have different needs when it comes to catering.

While businesses might want variety in menu items and price points as well as utensils, beverage selections, professional presentation and delivery options, consumers might prioritize the ability to order at the last minute. The latter is where c-stores can play up their best asset: convenience, says Wilson.

One commonality Technomic found between business and social catering is that all customers want more healthier, better-for-you options. “There is also more demand for customizing orders and an expectation that the catering program can accommodate dietary restrictions,” Wilson says. Snacking and late-afternoon meal occasions are two other trends permeating the catering space.

Packaging for heat and freshness is an important part of the equation at The Hub Convenience Stores, which offers catering through the Schlotzsky’s and Cinnabon restaurant concepts inside its single store in Dickinson, N.D. A newcomer to the industry that caters to the fracking and oil boom in North Dakota, The Hub saw success with catering sales shortly after introducing the program.

It offers hot sandwiches, salads, pizzas, flatbreads and trays of cookies, brownies, cinnamon rolls and beverages for morning, midday and evening catering occasions.

“We use gallon boxes for drinks and use steam pans for our pasta with warming racks and warming candles if it’s for an event that is going to last longer,” says Wayne Rau, general manager.

“You have to think of how you’re going to package the utensils, condiments, side dishes, bowls, beverages and more,” Chiovera says. There’s also the question of choosing microwave- or oven-safe containers that can be used for easily and safely reheating hot food dishes.

Special packaging can also serve as a vehicle for stronger branding and marketing.

“If you have your name on the napkins and there are extras floating around at the office, that can serve as a subliminal message to order from your business again,” Chiovera says.

When it comes to price, there’s no need to discount, Holand says: “People know catering and especially delivery is a premium, but your food and systems have to be adequate enough to compete with restaurants offering the same prices.”

Pricing will also dictate the size of your menu. “You don’t have to offer everything to everyone, because you also have to take into account you’re adding the price of trays, sides, salads, cookies and more,” Chiovera says.

The key, says Holand, is to price your catering packages to bring in higher profits by building the price of packaging, utensils and services into individual menu items. When it comes to delivery pricing, “most restaurants charge 20% of the ticket for delivery, and depending on where you are, people will pay the price for the convenience,” she says.

Systems in Place

A crucial component of building out a catering program involves analyzing and adapting current operational setups and systems.

Rau and his team faced that challenge head-on when they began catering. “Being an Express Schlotzsky’s when we first opened meant we only had a one-sided line, unlike most Schlotzsky’s restaurants, which have a two-sided line,” Rau says. To accommodate the space constraints, Hub conducted its catering prep in the mornings during nonpeak hours. Eventually, it expanded the kitchen, and as a result, the c-store has moved from requiring 24-hour notice to being able to execute a catering order just hours prior to pickup or delivery.

Having a commissary in place also helps, Holand says. “That’s when you can isolate certain stores that can handle volume when it comes to catering and pickups,” she says.

Here’s how a commissary-based catering program might work:

  • Calls are placed to the commissary or higher-volume stores
  • Orders are relayed and prepped
  • Trucks bring the catered packages to the stores
  • From there the customers pick up their orders, or the trucks move on to do some deliveries at office buildings or event sites.

That’s just it: A huge consideration behind catering is whether to offer pickup only or delivery. With pickup, you run into a greater risk of last-minute orders. With delivery, you can charge more. But without an existing commissary/fleet system, this can bring in a whole new set of challenges, not to mention the cost of vehicles, gas, drivers, insurance, repairs and maintenance, says Rau.

There’s the option to deliver only larger orders as a way of limiting the need for extra vehicles, or to limit the geographic scope of the delivery range to maintain consistency and freshness of food. Better yet, third-party restaurant delivery services such as Grub-Hub and Postmates let retailers outsource delivery needs for nominal fees.

Many of these newer delivery services also have built-in marketing: Customers visit their sites not necessarily looking for any one restaurant, so they scroll through the list of participating operations. This could help boost visibility to a whole new set of customers who may never have visited the store.

“The shift in third-party delivery options is a real game changer,” says Holand, pointing out that even Starbucks, Focus Brands and Chipotle are testing or have considered outsourcing delivery in this way. “There are many pizza-delivery networks as well, and that’s a great way to get into catering ... before investing in your own vehicles,” as well as a great way to boost p.m. and late-night sales.

If you do have a vehicle or truck, it’s the perfect place for extra signage—just as food trucks have capitalized on this type of marketing on wheels. Case in point: The Hub uses delivery vans with the Schlotzsky’s logo.

Also take into consideration whether or not you’ll offer online ordering. It’s a great way to create staff efficiencies, build in certain cutoff times or run limited-time offers and promotions.

“Catering has the potential to be a decent business, but it needs a strong marketing platform in and out of the store,” says Vespole, who recommends retailers be able to answer a number of questions: “Is it a separate printed piece for the customer to take with them, or is it on your menu in the store? Do you put it on your website or [via] other digital advertising? Having your store employees push the program is also beneficial. Can you ... visit local businesses with your offer and provide samples?”

Handling Large Orders

When running a catering program on site, staff members must be trained to handle larger orders just as they can handle one or two orders at a time, says Chiovera.

“Training is probably the most key ingredient in a strong catering program,” says Rau. “It is very labor-intense, but as always, it starts with management. If they buy into it and are passionate about it, that should rub off on the staff. Mistakes happen, but if we fix them right away, nine times out of 10 the customer will come back.” Tools such as standard operating procedures, recipes and good oversight help improve consistency, which is key to catering, says Rau.

In the end, analyzing current operations and studying the potential costs—and profits—of a catering program will determine if it’s right for you.

“If your business is looking at catering, make sure your staff is efficient in handling larger orders, but also research what your competition is doing,” says Rau. “This is a segment that can and will produce sale increases if the customer wants it and we can provide it.

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