Catering vs Restaurant?

[Joe Bryant]

Apologies if this isn't the right forum. I know some of you frequent both the catering forum and this one and thought I'd ask it here. Of course move to the correct forum if the moderators feel it's better somewhere else.

Marv's post in another thread got me thinking:

[Pit Boss]

I'll bite.

The biggest difference between catering/vending and brick & mortar restaurants is overhead.

Caterers and vendors usually do alot of their work themselves. Restaurants have so many employees doing various things every day hours before even opening for business. As an example, my last place cost me about $50 per hour in payroll...whether I was open or not. Just having people there prepping and cleaning is an expense that many small caterers and vendors simply don't have...or not to the extent that restaurants do. In the larger restaurant I worked at previously that per hour number was easily doubled (+). Employees typically start to arrive 4-5 hours before opening for business. That's a big expense.

They also don't have to physically own a commissary (or restaurant). Typically the fees they pay to use someone else's facility would be much less than the monthly on a leased or mortgaged restaurant property. I don't know what commissary fees are, but I do know that the cheapest rent (lease) I can find at the moment (and this is for buildings UNDER 1,000 square feet) is $2,500 per month. It goes up from there. For a large restaurant your monthly lease (or mortgage) can go well above $15,000.

There are utilities associated with brick & mortar restaurants that caterers and vendors don't experience. Same as two guys...one renting a room from a friend and one paying the mortgage (or leasing) a 3,200 sq ft house and having to pay all the utilities and insurance that go along with home ownership.

Catering and vending also typically carry higher price tags than brick & mortar restaurants. Consumers are willing to spend more for a catered event or to vendors at the local fair than they are at the restaurant down the road. Believe me, in the restaurant business one of the most heard complaints is about price.

It does make a difference that brick & mortar restaurants are generally open 5-7 days a week whereas some caterers are lucky to average more than one job per week for the year. For that reason the profit of restaurants doesn't have to be as high as the guy who gets paid for six gigs per month.

So caterers and vendors can see a higher profit margin. It's great to see 20%-30% profits...but that just isn't going to happen in a restaurant situation. I've seen as high as 12% and lower than 5% (maybe even a (-) negative number in there on occasion).

I hope this makes sense to you. There are pluses and minuses to both sides of this conversation.
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Somewhere in Kenya...a village is missing their idiot.

[Harry Nutczak]

Catering;
You will know how many people you will need to feed for each event, therefore you will only need to purchase the correct amount of food and supplies to fit the needs of that event.
Overhead; Not really a whole hell of alot besides cookers, fuel, supplies and staffing needed per each paid event, you only requisition what you need for both food and labor.

restaurant;
All menu items must be kept in stock at all times, and most fresh items can only be kept for 7 days by law, you never know how much or how little you may need so stagnant-inventory cost's are usually huge. then you have a building that you must heat, cool, and maintain, mechanical equipment that must be serviced on a regular basis (ice machine, exhaust hood, HVAC, dish sanitizer, coolers and freezers, Water, sewer, trash removal, pest control). Employees; your paying them if you're busy or not!
Then lets take a look at supplies, plates, flatware glasses, and the repacement of all that stuff when it gets broken, stolen, or accidentally tossed in the trash by that special-needs dishwasher you decided to hire for a tax-break.
if you decide to use a POS system, that is a fairly large chunk of coin for start-up, then consider the maintenance plan for that too. Security system, pay-offs to planning zoning committee (Where applicable), Sign permits and taxes. advertising, phone, internet, cable TV or satellite, or maybe just satellite radio. Once the words 'Commercial Account" get tacked on it takes a huge price hike!
Equipment, it will be running nearly 24 hours a day if your feeding people or not. All these are extra cost's that alot of people seem to overlook when considering a restaurant. Once you get into the daily inventory you must carry, labor & maintinence costs, you'll see how those 93-97 cents of each dollar you bring in gets eaten up real quick.

I am sure hope Tony & Cape Fisherman will chime in with the items I overlooked.

Did I mention a grease-trap?? Oh, I love to see the looks on peoples faces the first time they open that little box containing 2 backstage passes through hell to clean it!!

I had a DMO open a grease trap during dinner service one night becuase he was curious. We had to shut down the dining room becuase of it. I also had another DMO pull the manual trigger on the ansul dry-chem system at the same place a month later, that one shut us down for 3 days.

I am not trying to spread doom & gloom, just trying help make people more aware of the things that get overlooked by people that have never held a key management position in the food service industry.

I had a close friend that went against my advice, bought a location and figured he would serve breakfast, lunch and dinner 6 days a week. Him nor his wife had ever been in foodservice and figured the wife would cook, and he would wait tables for their little northwoods bistro. When reality struck e mortgaged his house and leveraged his retirement to try and stay afloat. his children were able to save the home, but he lost everything else in this little romantic venture that he thought was a great idea.

I wish anyone the best of luck and ask that they please research for at least 1 year and work in the industry themselves before trying to make a go of it. Chances are the truth will reveal itself before you lose a bunch of money.
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Just remember that the toes you may step on during your climb to the top will also be attached to the a$$es you'll be forced to kiss on your way back down!

[Pit Boss]

LOL @ the grease trap. Most people don't even know what that is! I'd like to see the face of any individual who doesn't know the first time they pop the top on one that hasn't been serviced in about a year. Oh my...lmfao twisted...very twisted.

One more thing to mention since we're dealing with personal experiences. About a year before I got out of my last venture I had to replace the septic system. It seemed that over time there was grease buildup in the drain field that just couldn't be cleaned. We were lucky in the fact that the top of the lines were a full 36" under ground so the county allowed us to install the new system right on top of the old. We were also able to use our original septic tank and grease trap. But because of the now higher drain field we had to install a pretty large lift tank and pump. When it was all said and done my wallet was $18k+ lighter.

I doubt many caterers with commissaries or vendors who work out of their trucks have to deal with expenses like that. Lucky them. Seriously.
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Somewhere in Kenya...a village is missing their idiot.

[Joe Bryant]

Thanks a lot harry and cape.

Does it boil down to the catering gig is

Upsides:

way less investment
way less time involved
way less headaches
way more profitable


Downsides:

way less volume

J

[SoEzzy]

[Pit Boss]

I wouldn't even say that the less volume for caterers is a downside. Heck, if you can make a good living off of it I'd say it's much better! Restaurants are a pain in the ass...seriously. It's just that some of us love it.

You can also add catering to a restaurant. It certainly does help streamline the catering prep. I worked at a place once that did a TON of bbq catering gigs...as a matter of fact they did as much out the back door (catering and take-out) as they did in the front of the house (and this was a busy 300 seat place). Every morning they had their catering sheets hung up (put up the night before) so that each prep cook knew how much food to prepare over and above their normal in-house amounts. About an hour or an hour and a half before any catering leave-time the person assigned to deliver and serve that job would come in, get their dry good together and loaded in the vehicle, get their food in pots & pans, double check their loading, and leave. It really makes catering easier having a restaurant staff available to prep the food along with the normal days cooking.
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Somewhere in Kenya...a village is missing their idiot.