Catering Services
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Industry Overview
The catering industry includes 10,000 companies with combined annual revenue of $5 billion. Large companies include Centerplate, Restaurant Associates, and Wolfgang Puck Catering, but no major companies dominate. The catering industry is very highly fragmented: the top 50 companies account for less than 15 percent of industry revenue.
While many hotels, facilities management companies, restaurants, and food service contractors also cater events, these businesses aren't included in this industry.
Competitive Landscape
Demand is driven by corporate profits and consumer income. The profitability of individual companies depends on cost controls and effective marketing. Large companies have advantages in offering expanded services such as facilities management, room rental, and entertainment. Small companies can compete effectively by serving small groups and offering personalized service. The industry is labor-intensive: average annual revenue per worker for a typical company is just over $40,000.
Products, Operations & Technology
Major services include off-premises catering (food prepared away from the premises where it's served) and on-premises catering (meals prepared and served at the same location). Off-premises catering represents 45 percent of the market; on-premises, 40 percent. Other services include alcohol sales and facility rentals.
A typical catering event starts with a consultation with a potential client to assess the type of event, guest count, venue, and special food requests. The client may want the caterer to also coordinate facility rental, flowers, entertainment, and photography. The caterer produces a detailed proposal that includes the menu, beverages, a list of rental needs, special requirements, and a detailed price quote. After the client accepts a proposal, frequent communications are maintained with the client until the event takes place.
Major operations on the day of the event include cooking, setting up, serving food and drinks, and cleaning up. On-premises catered meals are typically served buffet-style or as seated functions. Off-premises catering includes boxed lunches, buffets, "finger food," barbecues, clambakes, and seated meals. Large off-premises functions may require a portable kitchen. The optimal server-to-guest ratio for a sit-down dinner is one waiter per 10 to 15 guests; for buffets and standing receptions, the ratio can be as high as 1:50. If the event includes alcohol, caterers typically supply one bartender per 100 guests.
A caterer's waitstaff is critical to a successful catering event. Servers typically help set up the event, serve food, and break down tables once the event is complete. Since waitstaff work is irregular and pay is low, finding dependable waitstaff can be a challenge. The seasonal demand for catering makes it even more difficult, as servers are often unavailable at a caterer’s busiest time of year: summertime and just before Christmas.
Cooks and chefs are important to the success of a catered event. As with servers, work is generally part-time, irregular, seasonal, and often stressful. Work includes preparing, transporting, and cooking food before the event; serving food at carving tables and chef stations; and cleaning the kitchen. Food can be pre-prepared and pre-proportioned, but many catering chefs still make meals from scratch. Caterers plan for around 10 percent "overage" to avoid leaving people hungry or dissatisfied.
Kitchen facilities may be large or small, depending on the types of events a caterer services. Food is bought from wholesalers if the quantities are large. While a caterer will prepare standard food items, specialty items like wedding cakes may be subcontracted out.
Many caterers use event management software to help with deliveries, logistics, and inventory management. New CAD software can help caterers draw up floor plans to maximize the use of floor space.