Why catering may be the new black
Third-party delivery of restaurant meals has opened up the eyes and wallets of restaurateurs, investors and hungry consumers. Several years into this dinner-on-demand revolution, catering is emerging as an adjacent option to give restaurants another avenue for adding incremental sales and revenue—with a much smaller fee than what accompanies traditional third-party delivery partners like Grubhub and DoorDash.
Boston-based ezCater is one of several brands looking to cash in on this catering craze, and with a recent $100 million investment, the company expects to see a big push to position catering as an increasingly important trend in the U.S. restaurant scene.
‘Catering stands alone’
Jim Rand, ezCater’s catering practice leader, said “catering is the new black” in the wake of its latest investment that has swollen its war chest to $170 million. With 35 years in the restaurant business, including jobs building in-house catering programs at Panera and PF Chang’s, his prediction carries more weight than most.
“There’s a lot of people talking about off-premise” dining and they “lump a lot of things into that one bucket,” Rand said of the herd mentality in the restaurant world. “Clearly catering stands alone as its own revenue channel versus delivery or takeout or drive-thru because each of them meet a specific customer need.”
Before Panera Bread was a household name, he was a partner in a Panera franchisee group with 27 locations. Spotting an opportunity to grow the business before Panera had its own in-house catering program, he devised a slimmed-down catering menu, hired sales staff and built a top-to-bottom catering platform for his locations that was wildly successful.
He raised enough eyebrows that Panera later hired him as its vice president of catering from 2007 to 2016. After building its company-wide catering platform to scale he left for PF Chang’s, where he helped the Asian casual chain launch its own catering program.
Since joining ezCater at the start of 2018, Rand’s job is dedicated to connecting restaurants that desire a new revenue stream with corporate and individual customers desiring catering options beyond the institutional players like Aramark and Sodexo.
“It’s a $22-billion industry that’s grown over 35 percent over the last two-and-a-half years, and it’s still continuing to grow at a double-digit rate,” Rand said.
“Restaurant companies themselves are seeing an option where they didn’t see it before, so they’re making themselves more available” to catering as the supply grows.
Before the investment windfall was announced, ezCater had broadened its product offerings to include ezOrdering, ezManage, and ezDispatch. Its ezOrdering service enables restaurants to take online catering orders from their own website, ezManage lets them manage their catering orders, and ezDispatch connects them to delivery companies within their territories.
Stefania Mallett, ezCater’s co-founder and CEO, said the brand has doubled its annual revenue for the last six years, and said part of the company’s new focus will include international expansion.
Feeding suburbia on the cheap
Foodsby is another tech-based company working in the restaurant catering world, with an approach that is designed to avoid some of the key pitfalls of third-party delivery: cost and logistics during peak in-store rush periods. In the six years since founding the Minneapolis-based lunchtime meal delivery service, Foodsby has expanded to 13 U.S. metros and delivers thousands of meals on any given weekday.
Foodsby brings scads of meals to large-scale buildings in a single drop at a set time each day, giving restaurants the ability to plan their labor and production days in advance.
Because Foodsby acts as a marketplace, with the restaurants handling their own deliveries, it’s able to charge much less than traditional third-party delivery services. For customers who receive a rotating handful of local and national restaurant choices each day, the typical delivery fee is $1.99 with no tipping.
While it’s ultimately all about the end customer and the restaurant that plans, cooks and schleps the food itself, Foodsby considers large office buildings as a third main client, with some property managers viewing the service as a perk for tenants increasingly focused on employee attraction and retention. Expanding culinary options in suburbia, the brand says, can go a long way with employees tired of the usual suspects that deliver or are within a quick walk or drive down the street.
“We’re a very specific business model, so we basically just operate during the lunchtime,” Foodsby founder and CEO Ben Cattoor said. “When you look at our model, we don’t have the same downsides of all the high fees and some of the issues people were to articulate with what I would frame as the courier model where people are actually delivering food.”
An accountant by trade, Cattoor was called “the bottlenecker” at his previous firm where he earned a reputation for finding and solving inefficiencies in a variety of settings. His analytical mind zeroed in on the global inefficiency of everybody going it alone for lunch at his previous office, and he set out to create a better option.
“I was working at this company that had like 1,200 people in one building and there was really only one restaurant that delivered,” he said. “I watched the same delivery driver show up to our building five times in like 45 minutes. Why would they do that? It’s just weird. If I would have known that five other people in this massive company were placing orders, I would have just called them all and said, Hey, do you guys just want to order together?”
Since launching the company in 2012, Cattoor said Foodsby has grown at triple-digit rates in recent years as the service expands both through word of mouth recommendations and through its direct marketing to building managers and restaurants that don’t typically deliver. Because Foodsby provides guaranteed order volume, intentionally scheduled on either side of the peak lunchtime rush, restaurant partners are able to add delivery staff—or existing employees—to handle the preparation, packaging and transport of the meals with less impact to operations than other delivery options.