Catering Foodservice Development

Contents

3.1. Learning Objectives

3.2. Introduction
3.3. Developing a Catering Business
3.4. Market Survey Information
3.5. Customer
3.6. Competition
3.7. Community Labor
3.8. Applying Market Survey Information

Learning Objectives

Upon successful completion of this course, the students will be able to demonstrate and
practice:

1. Determine the tools I market survey analysis

2. Evaluate the types of customers necessary to carry-out catering functions.
3. Analyze different key players in the catering business.
4. Interprete data gathered from market survey information.

INTRODUCTION

This module reviews the initial concepts and activities related to new business
development. These include the market survey profile, development of a target market,
and an analysis of the competition. In addition, feasibility estimates must be developed
to determine if the business concept is feasible. All these activities produce the
information that provides the foundation for the formal business plan and a basis for
deciding whether to continue developing the business concept.

Developing a Catering Business

The successful development of any business rests on a foundation of information

identifying the market for the products or services offered for sale. The population group
that represents the primary potential customer group is known as the target market.
Information regarding the target market is gathered through market survey research
conducted in the community.

The market survey analyzes the community in which a business is being developed,
concentrating on four major segments of the market:

1. Customer
2. Competition
3. Community
4. Labor pool

Each of these four market segments contributes to the success of a foodservice

operation. It is important to analyze the segments individually in terms of the type of
product or service being offered. For a business to be successful, the following
questions must be answered:

1. Who constitutes the target market that needs the product or service in the
community?
2. Will the target market perceive a value for the product or service equal to the
selling price?
3. Is the target market willing to pay for the product or service?
4. Will the business be competitive with others identified as offering a similar
price/product/service to the target market?
5. Are sufficient skilled foodservice production and service personnel available
within the community to fulfill the requirements of the business?
Market Survey Information

To provide complete information with which to analyze the market, an effective market
survey must elicit the following information:

A. Customer - this has never been presented in a survey format before. To do so

correctly will take time to design and create the questions in a correct format. Answer is
no.
1. Population breakdown by age
2. Percent population growth forecasted for next five years
3. Percent population growth forecasted for next ten years
4. Number of households
5. Number of two-income households
6. Average family income for 35–60-year-old population group
7. Average family size for 35–60-year-old population
8. Average education level for 35–60-year-old population group

B. Competition

1. Number of foodservice operations offering catering services

2. Number of independent catering businesses
3. Number of competitive catering businesses

C. Community

1. Number of overall businesses

2. Percent growth in past five years
3. Percent growth in past ten years
4. Percent of retail food and beverage sales to total retail sales
5. Anticipated growth of community for the next ten-year period
6. List of community organizations
7. List of community businesses
8. Percent growth of group meeting and conference business in last five years.
9. Percent growth of travel/tourism business in last five years

D. Labor

1. Availability of trained foodservice production personnel

2. Availability of trained restaurant service personnel.
3. Projected increase or decrease in overall labor pool in next five years.
4. Availability of vocational and/or community-college foodservice programs.
5. Community unemployment rate.

The market survey results are analyzed according to the needs of the prospective
business. The information from the market survey most valuable to foodservice
businesses offering catering services indicates the primary influences on prospective
customers to patronize a catering foodservice business. A discussion of the significance
of these influences follows to help in understanding how to analyze market survey
information.

1. The availability of expendable income to pay for extra food services.

Unit of Analysis: Average family income for the 35–60-year-old population group
(Customer item #6) Due to its work patterns, social and business obligations, and
family patterns, the 35–60-year-old group is the population segment most likely
to use catering services. Family income should range upward of $50,000 per
year to be eligible for target market designation.
2. Lack of time for food preparation
Unit of Analysis: Number of two-income households (Customer item #5) A high
number of two-income households indicates a possible shortage of time for food
preparation and a consequent need for prepared food products. Community
demographics and trends influence the patronage of catering businesses. In
 addition to economic trends, social, religious, and cultural movements within the
community affect the volume and scale of catering functions.
3. A population growth within the age groups that require catering services. Unit of
Analysis: Percent of population growth over five- and ten-year periods (Customer
items #2 and #3) Catering services are required by each population group
identified. The 18–25-year-old group needs graduation parties, proms, and
weddings; the 25–35-year-old group, weddings and social functions; and the 35–
60-yearold group, social, business, and family-related functions. An anticipated
population growth in the 35 to 60 age range indicates a healthy demand for
catering services over a ten-year period.
4. The availability of funds for community development and marketing Unit of
Analysis: Percent of growth of community and businesses (Community items #2,
#3, and #5) Growth in the business community indicates possible availability of
funds for community development, charitable as well as industry-oriented, and
increased marketing efforts. Both factors indicate an increased demand for
catering services for private business and social functions.
5. Strong presence of charitable organizations. Unit of Analysis: Community
organizations (Community item #6) A survey of community organizations that
sponsor fundraising functions for charitable programs allows prospective caterers
to assess the need for catering services for private parties.
6. Strong interest from outside sources in holding meetings and conferences within
the community. Unit of Analysis: Community businesses (Community item #8) A
survey of hotels, conference and convention centers, and the chamber of
commerce identifies the level of group meetings and conference business.
Meetings lasting two days or longer often need outside sources for entertainment
and function planning. Growth in this business segment indicates an increased
demand for catering services

Market survey information profiles the target market and begins to identify
characteristics and trends important to the success of a catering business. Using these
percentages and statistics as a foundation, management can form a complete picture of
the customer, competition, and community. Additional research into the history of local
business can also help in forecasting for the future.

Customer - Determining a customer profile for catering services is difficult due to the
span of age groups participating in catered functions. Teenagers attend proms and
banquets held in locations ranging from school gymnasiums to hotel ballrooms.
Weddings are popular in the 20–25-year-old group. The 25–30-year-old group plans
both business functions and weddings. The 35–60-year-old bracket uses catering
services in settings from tennis tournaments to hospital picnics. Social and business
occasions are increasingly served by caterers. The rising demand for home meal
replacement, in addition to at-home functions, calls for everything from party trays to
full-course dinners. The shortage of time to prepare food causes many single and two-
income families to turn to catering services.

Competition - Competing businesses can often provide valuable information to new

and developing operations. Catering services that have opened as independent
businesses or recently been added to existing foodservice operations indicate the
presence of customer and community need. Current trends in takeout meals and home
meal deliveries reflect both the need and receptiveness of local customers to catering
services. The ongoing use of restaurant, charcuterie, and delicatessen services for
home meal replacement indicates the customers’ perceived value of the time required
for home food preparation. Such customers are likely to take advantage of catering
services. A complete analysis of the competition requires a comparison of the variety of
catering services, their menu items, and their pricing structure. Catering services often
employ a package pricing format that includes food-and-beverage services along with
entertainment or theme programs. It is important to identify the number and type of
services contained in the packages of each competitive catering business to accurately
compare prices.
Analyzing the Competition - A comparison of competitive catering services reveals
trends in private party formats, cuisine menus, themes, and entertainment concepts.
The introduction of new theme and menu ideas into the catering market can create
customer interest. Customers who use catering services on an ongoing basis are
constantly looking for original ideas to highlight both business and social functions. The
window of opportunity for new and established catering businesses exists in the
identification of unique cuisine, entertainment, and theme concepts that result in high-
quality food and service at a reasonable price. Prospective caterers can use the
information on the competition survey form to identify the direct competition and
determine how their catering services can compete in the established marketplace. An
understanding of why customers choose a certain caterer and facility is important in
identifying the services or facilities needed by both customers and the community. Price
is the primary determinant in the decision-making process for most customers. When,
however, the pricing structure for similar services is reasonably close, customers
consider four additional major factors:
1. Availability
2. Location
3. Facilities
4. Service

Style of Catering Operation

Full-service restaurant ____________
Hotel food-and-beverage facility ____________
Catering hall ____________
Independent caterer, delivery only ____________
Country club ____________
Contract foodservice ____________
Charcuterie ____________
Delicatessen ____________
Other ____________

Location
Address __________________________________________________
________________________________________________________________
Access to major roads ______________________________________
________________________________________________________________
Available parking __________________________________________
Problems in locating _______________________________________
________________________________________________________________

Services
Catering services in-house___________________________________
Outside caterer allowed_____________________________________
Meal services available: breakfast ___________ lunch____________
dinner _________ coffee service _________ other _______________
Full or limited liquor license _________________________________
Table-service styles_________________________________________
Entertainment_____________________________________________
Business-meeting services___________________________________
Conference and convention services __________________________
________________________________________________________________
Concept and theme party services____________________________
_________________________________________________________
Cuisine specialty___________________________________________

Facilities
Number of function rooms __________________________________
Total available seating ______________________________________
Breakdown of seating by function room _______________________
_________________________________________________________
Decorative theme __________________________________________
Condition of exterior facilities________________________________
Condition of interior facilities ________________________________
Dance floors: portable ________ built-in ________ size___________
Bars: portable ___________ built-in ___________________________
Floor plans available _______________________________________

Availability
Heavily booked ________ Some dates available_________________
Many dates available _______________________________________
Heaviest booking period ____________________________________

Service Reputation
Food service: good ________ average ________ poor ____________
Party-planning service: good ______ average ______ poor________
Theme parties: good ________ average ________ poor___________
Entertainment: good ________ average ________ poor __________
Meeting services: good _______ average _______ poor___________
Overall follow-through: good ______ average ______ poor ________
Invoicing and billing: good ______ average ______ poor _________
Pricing: competitive _________ high _________ low _____________

Marketing Materials
Menus ___________________________________________________
Presentation cover _________________________________________
Theme brochures __________________________________________
________________________________________________________________
Floor plans________________________________________________
Maps to location ___________________________________________
Other ____________________________________________________
Copies of attached _________________________________________
Completed by _____________________________________________
Date _____________________________________________________

. Figure 3.1,
SURVEY OF COMPETITIVE CATERING OPERATIONS