Catering at home is a largely untapped $33 billion industry, double the size of the market for business catering, according to a new report. This could present food franchisees with a way to expand their revenues, or for investors to tap this burgeoning opportunity. The following article from Blue MauMau explains.
A restaurant research and consulting firm has just released a study in which an overlooked $33.3 billion market opportunity for catering at-home social occasions has come to light. That is almost double the size of the business-to-business off-premise catering market that marketers had previously thought was the dominant part of catering.
According to food researcher Technomic, Inc., consumers say that they are as likely to source food used for social events from restaurants as from supermarkets, and they anticipate having more purchases from restaurants in the coming year.
“We were surprised to learn that the consumer catering opportunity is much larger than we originally expected,” said Melissa Wilson, a principal at Technomic. Regarding the study’s findings ($$), Wilson concludes, “This is where the customers are. They used to use restaurants as social venues, but now they’re entertaining at home. And they’ve told us they plan to continue doing so because they’re enjoying socializing with friends at each other’s homes. In fact, 40 percent of consumers say they expect to entertain at home more often over the coming year.”
Brad Shelton, a seven-year franchise owner of a Quiznos unit outside of Denver, says, “Most of my catering are social events like weddings, graduations, or little league baseball.” He observes that in his quick service restaurant, consumer catering gives fatter profit margins. “The larger volume has the labor mix go down,” says Shelton. That’s because he has a minimum amount for catering orders. “Our smallest tray covers 10 people and is about $25,” declares Shelton.
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The Denver franchisee feels that revenue from catering is icing on the cake. “You are using people that are already here,” he explains. “You can knock out the catering tray during slow periods.” He sees catering as a pretty steady revenue source. “That might be interpreted as growth in this bad economy,” he states.
But Shelton only has one or two catering orders in a typical day. That’s hardly a feast.
Richard Glass, a franchise owner of a Quiznos toasted sandwich shop in Cleveland, Ohio, thinks there are advantages to offering a catering service. “I can prepare the catering dishes during non-peak times from 7 a.m. to 11:30 a.m. I already have about $4,500 on the board for catering [services this week].” Unlike the Denver store, he sees a lot of business clients coming in through catering, rather than social events at homes.
“Twenty years ago it would not have been acceptable to have platters from a restaurant when mom was entertaining at home,” says Technomic’s Wilson. “But the pendulum has totally swung [the other way]. Consumers find it very acceptable. It helps them entertain at home because they get the food that they like and it still fits in with their convenient lifestyle.”
Church groups, life passage events, home parties and pot luck dinners, to name a few, often include food prepared at a restaurant. According to Technomic, it is an opportunity for franchise chains that haven’t fully taken advantage of this large market. Rather than the subway shops, Technomic feels that chains such as Applebee’s or Chili’s could benefit the most from this trend. “They already have the advantage of their curbside pick-up,” says Wilson.
Many consumers who have organized at-home social events are willing to grab their orders through a restaurant’s curbside pick-up service.
“A lot of the full-service restaurants aren’t focusing on the consumer catering business and yet they [consumer catering services] have a bigger share of the market,” elaborates Wilson. “So there’s a big opportunity for them there.”
This article has been republished from Blue MauMau. You can also view this article at Blue MauMau, a franchise investment news site.