Guest Post – The Profitability of Catering vs. Restaurants
The love of food is absolutely necessary for someone working in the food industry. You must love designing it on paper, preparing it in the kitchen, and serving it on the table. If that’s you, then I’d like to share a little information about the profitability of the two most common routes you can take, starting a catering service or opening a restaurant. As someone who has been involved with both I can honestly say these two routes are incredibly diverse, and the only commonality between the people who do them is their love of food.
When it comes to selecting food the advantage almost always lies with the caterer. This is because caterers work on a tight schedule and know exactly when and where their food will be prepared and served. As a result they’re able to choose ingredients that are fresher, require less refrigeration, and generally taste better. The food they purchase is often served immediately and has fewer preservatives. Unlike a restaurateur, a caterer has little need for a large stockpile of food because they know how many people to plan for every time they work an event.
Unlike most restaurants that produce food on a per plate basis, caterers are able to make large batches of food all at once. This not only reduces the per-plate cost of the food but it also reduces the need for a large kitchen staff. One obstacle that restaurant chefs or managers face is that they never quite know exactly how many people to plan for. This means they must have enough food on hand to feed everyone who places an order for a specific dish. Since this variable is constantly changing on a nightly basis it can cause a restaurant to incur a greater per-plate cost due to the extra attention and food supplies needed.
Purchasing and maintaining equipment is a large expense of doing business in the food industry. In order to produce food on the large scale needed businesses must invest in the specialized equipment that can quickly process large amounts of food. Although both the caterer and restaurant need equipment, their needs vary drastically. For instance, the average catering service will generally only cater a couple of events per week. They will know exactly when and where their events are, and how many people will be in attendance. Since they will produce all the food at once they will only need access to a commercial kitchen for a short amount of time. This means that unlike a restaurant which needs their own dedicated kitchen and dining space, a caterer is able to rent time at a commercial kitchen. Additionally they will be in a position to save money on energy costs associated with heating and cooking food because they will not need to keep the equipment running all day long.
The staff requirements for a catering service and a restaurant differ greatly. A typical restaurant needs a host, multiple servers, cooks, and a manager in order to run smoothly. The very random nature of a restaurant means that you’re never quite sure exactly how many people will walk through the door, and in a world where online reviews and public perception can literally make or break your business, it’s better to be overstaffed than under deliver. Because of this the expense to a restaurant is greater than the catering service. Since a caterer always knows how many people they’ll serve, they’re able to plan in advance and only have the required number of staff members on hand. This gives them another advantage over restaurants.
Although restaurants and catering services don’t typically compete for the same customer base, one thing is clear; it can take more money to run a restaurant. Extra expenses like preserving food longer, offering a broader menu, kitchen energy consumption, equipment wear and tear, and staff pay all take a greater toll on a restaurant’s bottom line than they do on a caterer’s. Add on top of that the extra headache and long hours restaurant owners undertake and you’ll soon find that the running a restaurant is a huge expense both financially and physically.
Trisha Jefford, is a self-proclaimed foodie and wine enthusiast who loves scouring the net for new ideas and trends in food creation and presentation. She currently writes and blogs for the website EZ Cater a site that specializes in helping you find local catering or the perfect corporate caterer.
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