Catering Food Service Development CM226 Catering and Event Management Chapter 3, page 60 – 73
CHAPTER OBJECTIVES • Describe the initial concepts and activities related to new business development. • Explain a market survey profile, the development of a target market, an analysis of the competition and feasibility. • Discuss the foundation for the formal business plan. • Discuss the development of the business concept.
Market survey research is essential to the success of every catering service. The four major interest segments that a market survey must investigate are the customer, the competition, the community and the labor pool.
Statistics and data from the market survey yield information that can be used to assemble a profile of the average customer. The customer profile is a major means of identifying the target market on which to focus marketing efforts.
Customers base the decision on which catering services to use for a private function on four major factors: availability, location, facilities and service. A thorough survey of the competition with respect to these factors identifies those restaurants and catering services that are directly competing for the same target market.
The availability of trained food service personnel is critical concern of every catering business. Catering service does, however, offer prospective employees the benefit of flexible hours and guaranteed income. Both of these factors have a significant perceived value in the part-time labor pool.
Caterers who can develop a core of reliable part-time employees, both production and service, will be secure in their ability to service customers. The application of market survey information throughout the menu program can increase sales, as well as customer volume.
Menu pricing is one area in which this information can have a significant effect. By thoroughly analyzing the menu process of the catering businesses identified as direct competition, a pricing structure can be developed to reflect current acceptable menu prices and customer needs.
1. DEVELOPING A CATERING BUSINESS. • Successful development of any business rest on a foundation of information identifying the market for the products or services offered for sale. • Define target market • Discuss how information on the target market is gathered: (gathered through market survey research conducted in the community).
The four market segments: Customer Competition Community Labor pool
2. MARKET SURVEY INFORMATION. Market survey information profiles the target market and begins to identify characteristics and trends important to the success of a catering business.
3. CUSTOMER. • Determining a customer profile is difficult due to the span of age groups participating in catered functions. • Because of the shortage of time to prepare food, many single and two-income families to turn to catering services.
4. COMPETITION. • Competing businesses can often provide valuable information to new and developing operations. • Existing foodservice operations indicate the presence of customer and community need. • A complete analysis of the competition requires a comparison of the variety of catering services, their menu items, and their pricing structure. • Explain the package-pricing format.
COMPETITION. It 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 in to accurately compare prices.
5. ANALYZING THE COMPETITION. • A comparison of competitive catering services reveals trends in private party formats, cuisine menus, theme and entertainment concepts. • Prospective caterers can use the information to the competition survey form to identify the direct competition and determine how their catering services can compete in the established marketplace.
ANALYZING THE COMPETITION. • When the pricing structure for similar services is reasonably close, customers consider four additional major factors: • Availability • Location • Facilities • Service
6. COMMUNITY. Economic health of a community is the single most important contributing toward disposable income habits. Community Demographics are also critical to the level of disposable income available. Communities, as well as individuals, adjust their dining and social activities according to the current economic situation.
7. LABOR. • The availability of both skilled and able to work the flexible hours required by catering services is essential to the success. • Labor is one of the most critical supply areas. • Trained wait staff is difficult to find and retain. • Labor turnover is often high.
8. LOCATION. • The primary consideration for off-premise caterers is the distance traveled to function locations. • On-premise catering companies must consider how guests will access the facility and the location of other businesses offering catering services.
9. FEASIBILITY STATEMENT. Determine the feasibility of making a profit. Estimate the amount of revenue and profit that can be achieved. Discuss the importance of forecasting.
10. APPLYING MARKET SURVEY INFORMATION. Market survey information can be applied to catering menu management in a number of areas of a menu program and is particularly helpful in menu pricing.
Management should review the following questions: • What is the competition charging for a similar catering menu? Are portion sizes and quality of food items similar to the competition? • How important is this menu to the total menu program? • Will a lower selling price and the resulting higher food cost of this menu cause the overall food cost to be too high
Management should review the following questions: • Will volume sales of this menu create the desired profit at the lower menu price? • Will the average catering customer accept this price as meeting their perceived value of all the menu items included in the menu? • Will this menu price blend into the pricing range for the total menu program?
Key Points Review: • Market survey research is essential to the success of every catering service. • The four major interest segments that a market survey must investigate are the customer, the competition, the community, and the labor pool. • The customer profile is a major means of identifying the target market on which to focus marketing efforts.
Key Points Review: • Customers base the decision on which catering service to use for a private function on four major factors: availability, location, facilities, and service. • The availability of trained foodservice personnel is a critical concern of every catering business. • The application of market survey information throughout the menu program can increase sales as well as customer volume.
Key Points Review: • Menu pricing can have a significant effect. • By analyzing the menu prices of the catering businesses competition, a pricing structure can be developed to reflect current acceptable menu prices and customer needs.
Review Questions Name and discuss the importance of each of the four market segments which contribute to the success of a foodservice operation.
Customer The customer profile includes age, average income, occupation, and a family profile. This information can be used to target direct marketing efforts toward the customer group that matches the profile.
Competition The market survey profile, development of a target market, an analysis of the competition, feasibility estimates must be developed to determine if the business concept is feasible. All of 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.
Community Owners and managers need to estimate the amount of revenue and profit that can be achieved by these efforts based on the predicted volume of business. In addition, it must also identify the number of catering functions available to be booked within the target area. This becomes the projection for new business development. Forecasting is based on the number of functions, group size, and average check rather than table turnovers and daily receipts.
Labor pool By thoroughly analyzing the menu prices of the catering businesses identified as direct competition, a pricing structure can be developed to reflect current acceptable menu prices and customer needs.