Retail Revolution   //   August 25, 2022

With events back, restaurant chains bet on catering programs to drive sales

If national restaurant chains have their way, more companies will tack on a Bloomin’ Onion to their next corporate retreat.

With group gatherings in full swing, more restaurant chains are looking to grow out their catering businesses.  Restaurants had to pivot drastically during the pandemic, as they had to suddenly rely predominately on delivery and e-commerce sales to get through 2020. Even though in-restaurant dining is back, national and local restaurants are increasingly betting on catering to build out a more diversified revenue stream. 

The online catering market is expected to continue to grow in the coming years, especially as more downtown offices call on employees to return. In turn, restaurants like Subway, True Food Kitchen and Outback have invested more time and resources into their catering programs, with some overhauling these segments to adapt to post-pandemic habits.

After losing 85% of its business overnight at the start of the pandemic, catering orders platform ezCater’s business-to-business demand is on the upswing. Mike O’Hanlon, chief customer care and operations officer at ezCater, told Modern Retail that the platform’s B-to-B software and consumer-facing marketplace are recovering thanks to post-Covid gatherings. 

The software provider works with both international chains and local restaurants, which O’Hanlon says are increasingly interested in a plug-and-play catering solution. “Half of our network consists of independent – either local chains or single locations,” said O’Hanlon.

Overall, monthly orders on the ezCater platform are currently up 77% since January 2022, with sandwiches being the top-ordered item this year. Additionally, ezCater now has over 95,000 catering partners on its platform, a 28% jump year-over-year. 

Servicing back-to-work events

New York City-based 12 Chairs Cafe, which currently operates two locations, said that events and corporate catering has been booming — despite 12 Chairs not having an officially-promoted catering business. “We’ve started growing catering alongside our dine-in business,” she added.

Rotem Itzhaky, general manager at the 12 Chairs’ Brooklyn location, has taken on the restaurant’s catering operations due to a surge in demand. Itzhaky told Modern Retail that since vaccination rollouts began last year, “we’ve seen a big increase in catering requests,” especially from offices and families throwing gatherings like weddings, birthday parties and bar mitzvahs. “We have a few companies consistently ordering for 500 to 1,000 people, and want ‘Covid-friendly’ individually packaged orders,” she said.

To date, 12 Chair’s catering orders have mostly come from word-of-mouth and courtesy of recent pop-ups and collaborations with YouTube and New York Fashion Week. But with the organic demand comes on-the-fly planning, Itzhaky said. For one, 12 Chairs currently uses its private events space’s kitchen to fulfill these large orders. “Every order and every event is very different, so we’re still in the process of building our catering program to best meet the demand.”

Catering to the return-to-office

A number of national chains are hedging their bets on employers luring workers back to the office with free meal perks. One example is Applebee’s, which expanded its catering menu to include a variety of wings and salads. The chain now offers off-premise catering through its 600 locations.

Subway is another example. Jenn Saunders-Haynes, director of catering at Subway, told Modern Retail that while Subway has offered catering services for more than 15 years, the company recently relaunched its overall catering program “with the return of in-office operations and in-person gatherings in mind.”

As part of the relaunch, Subway also revamped its corporate catering business this summer, with over 10,000 of Subway’s locations joining the ezCater Marketplace. The refreshed catering program, launched in May, was designed to make it easier to order for large groups. 

“We enhanced our lunch box bundles as part of our refreshed catering program, to allow our guests to easily select meal options without having to choose every sandwich variety or topping themselves,” Saunders-Haynes said. Now, Subway’s lunch box bundles include 12 lunch boxes and 12 bottled beverages to choose from, and don’t require any upfront customization. Due to the dietary flexibility, this catering option has become one of Subway’s most popular menu items over the past couple of months, Saunders-Haynes said.

Subway isn’t the only national chain betting on corporate catering. Earlier this year, Bloomin’ Brands — parent company of Outback and other restaurant chains —  said it’s “ruthlessly” focused on growing its catering business. One of its restaurant chains, Italian grill Carrabba’s, reported that catering sales grew by 46% between 2019 and 2021.

In turn, Bloomin’ Brands decided to launch a digital catering program in April for Outback, currently available at 481 Outback locations.

In a statement regarding catering’s growth trajectory, Outback president Brett Patterson said the company is “particularly excited to cater to employees as they return to the office because we know the power of sharing a great meal whether it be for recognition or a social gathering during a busy day.”

Diversifying revenue amid inconsistent traffic 

For smaller restaurant chains, corporate catering is also becoming a bigger priority than it has in previous years as the pandemic has underscored the importance of revenue diversification — even for restaurants.

True Food Kitchen, a restaurant chain that specializes in seasonal dishes, with over 40 locations across the country, has been revamping its catering business this year. Christine Ferris, director of marketing at True Food Kitchen, said the company revamped its catering menu and moved it to a priority, sales-driving initiative last fall. True Food Kitchen first launched its in-house ordering software channels, for both pick-up and delivery, last October before also joining ezCater in early March 2022.

Catering has helped to supplement the restaurant’s off-premise business, and is expected to become a bigger part of the business as awareness of the catering program grows, Ferris said. True Food is launching new branded packaging and individual boxed lunches later this fall to help draw buzz for the program. 

Group catering is also solving a unique problem for True Food Kitchen, Ferris noted. “We have several restaurants located in markets that are out-of-season, so the additional sales from catering has helped to offset any decrease in dine-in business,” she added.

As restaurant operators continue to face multiple challenges, ranging from inflation to inconsistent foot traffic to delivery demand, corporate orders are quickly becoming a major area of growth. 

“The future is bright for catering, and research predicts significant growth in the coming years as the world continues to recover after the pandemic,” said Subway’s Saunders-Haynes. “Guest preferences are changing at a rapid pace, and we are constantly innovating and adapting to meet those changing needs.”