The Festive Kitchen has nine revenue streams, including corporate event catering.
In the Great Recession of 2008, most catering companies were down 30-45 percent in overall gross sales. It was definitely a tough time. I didn’t hear many of my peers discussing profits. Instead the discussion revolved around keeping the doors open—and many couldn’t. A few examples:
- Catering Company A closed because all they catered was corporate boxed lunches. I think they survived 60 days after the “crash.”
- Catering Company B laid off all 12 employees except the owner and a cook because they only catered weddings. Yes, there were still weddings but everyone was spending less money on them. Unable to make it through low season, they eventually went out of business and made the local news by abandoning brides with whom they had contracted, leaving them without a caterer on their wedding day.
- Catering Company C only catered corporate “events.” Well, we know what happened to those: They didn’t happen. This company couldn’t meet payroll, and I’ve not heard of them since.
Do you know what the secret to success was for those of us who kept our doors open during that terrible time in our economy? It was multiple revenue streams (MRS).
For the purposes of training our new executive chef, I recently broke down and analyzed all of the revenue streams for my catering company, The Festive Kitchen. I set it up in an organizational chart format. Although I knew we had all of these MRS, I hadn’t seen them presented so visually. Our company has a total of nine revenue streams. Wow!
Why is that so important? Because the more ways you have to bring cash into your business, the more opportunities you have for profits and to be successful, even when the economy is in a downturn. If you only have one or two MRS, you are on the edge of a cliff that is not very safe.
At the time of the Great Recession, my catering company had seven MRS. We had flat growth in sales, but flat growth during the recession was defined as being “up” at the time. We had no layoffs, and on top of that, we were involved in a huge crisis for our company, stemming from the largest egg recall in U.S. history. We had more than six tons of potentially contaminated frozen product that we had to quarantine and reproduce. The work to reproduce meant money to pay for product, money to pay for labor, and money to pay for overtime, due to the short time constraint to get the product back in inventory before fourth quarter. Yes, you read it right—we had to come up with more cash during a time when most companies were just hanging on. With seven MRS, in a crisis situation, and in the middle of a recession, we actually had the extra cash to handcraft more than six tons of product. If we would have had nine MRS like we do now, I am confident we would have had growth not only in gross sales but in net profits. Yes, I said growth.
How can that be? If you have at least seven to nine MRS, not all of them will be down during a recession. Even the ones that break-even will help the company survive. For example, weddings may be down, but if you cater funerals, they will be consistent, which will compensate for the wedding sales loss. If you are the caterer for a hotel, those sales may be down, but your retail food sales will definitely be up because women may work, but they still want to feed their family handcrafted meals—even more so in a recession, because buying prepared food from your retail food shop is cheaper than taking the family to a restaurant.
I’m not predicting doom and gloom, but as we all know, the economy has cycles. Right now most caterers are in a great cycle of sales and profits. Many had a record year in 2015. I personally have a friendly competition between my company in Dallas and another catering company in the Chicago area. We compete each year on gross sales and profitability. Both of us were way up last year. But both of us are preparing for the next cycle.
Here’s the bottom line—seven to nine MRS means:
- A recession-proof company
- More security for your employees
- Less stress for you as an owner
- More company profits
Now is the time for you to be creating multiple catering revenue streams for your company. You have to be creative and think outside the box to find these sources of revenue that exist in every community, no matter the size. Some of the revenue streams may not be your favorite style of catering, but get over that attitude and look at these profit streams from a business perspective.
My all-time favorite type of catering is the large corporate gala event for over 500 guests. I love creating the menu, the timelines, and the food presentation at different stations. But selling more than 10 tons of chicken salad to my retail food shop customers has also become one of my favorite types of catering because it provides security to me, my employees and their families.
About the Author
Sandy Korem, catering expert, is CEO and founder of one of the top 20 catering companies in the U.S., Dallas-based The Festive Kitchen. She was awarded the White House Food Service Medallion in 2008 for outstanding food service to President George W. Bush. Her company, The Catering Coach (thecateringcoach.com), helps restaurateurs take their off-site catering revenue stream to a different level. If you have any questions about how to launch a profitable catering business, email her at firstname.lastname@example.org.