Catering grew 50% faster than entire restaurant industry in 2018

Dive Brief:

Catering, which makes up more than $60 billion in sales within the restaurant’s $600 billion industry, grew 6% year-over-year in 2018 compared to 3.6% growth across the restaurant industry, Technomic principal Melissa Wilson said during a CaterUp panel on Tuesday. Catering outpaced overall industry growth by 50% last year, according to a Technomic and ezCater report released during the conference.
Catering makes up 18% of sales on average at restaurants that offer it, ezCater CMO David Meiselman said at the panel.
Ninety percent of restaurant operators believe that catering is somewhat or very important to their business, but 28% of operators haven't made strategic investments to build this business, according to the report.

Dive Insight:

Many brands, including Red Robin, Bloomin' Brands, Chuy's, Cracker Barrel and Olive Garden, have been focusing on growing their off-premise and catering businesses. All restaurant segments including fast casual have been reporting flat traffic growth, Wilson said.

"As brands and independent operators look for ways to increase same-store sales or generate incremental revenue, catering is definitely a conduit," Wilson said during a conference panel.

But as more brands turn toward catering, competition has grown, and 64% of the Technomic/ezCater survey respondents said they expect flat growth for this year. Several brands including Auntie Anne's and Red Robin are relatively recent entrants to the catering business, Wilson said. Even McDonald's rolled out breakfast catering last year, she said.

"Catering may be flat, but flat is good compared to traffic declines," Wilson said.

For brands that are reporting growth in catering, 91% are making investments in people, technology, marketing, packaging, equipment and facilities. While 34% of respondents said they are investing in people, 25% said they are investing in technology, according to the Technomic/ezCater report.

And as far as technology is concerned, 42% of survey respondents said they are investing in online ordering, more than any other technology, according to the report. Thirty-two percent of business customers surveyed by Technomic in 2018 want to order online, and 70% want their catering orders delivered, according to the report.

Online ordering signals to business customers that a restaurant is serious about its catering and not in the business accidentally, Wilson said.

And appealing to these business customers is the name of the game. The survey found that 61% of respondents said their catering business was coming from business-to-business operations, Meiselman said.

"Operators really concentrate on that B2B customer because it's so present and so obvious. Just one contact can generate tens of thousands in revenue because of the steady stream of business and high check order," Wilson said.