How to Build a Catering Business with Businesses and Organizations

Many startups incorporate private party and banquet facilities into the floor plan, and for good reason. The meeting marketplace (hotels, restaurants and events facilities) in the United States is estimated to be more than $100 billion.

This includes everything from sales meetings at small companies to week-long association conferences at hotels in major cities. And during the winter holidays, office parties can be a boon to your total year-end revenues.

There is money to be made in the banquet business through events, such as wedding, Bar Mitzvah, graduation and retirement parties, for example. We'll cover that in a future article; however, the purpose of this piece is to help you understand and set up your startup to capture a share of business banquet dollars from local businesses, government offices, and other places of commerce and employment. (Consider, however, that businesspeople happy with your meeting service might want to stage their personal events at your restaurant.)

The reasons to include business-to-business (B2B) or any banquet service for that matter, in your startup are seductive, indeed. Banquets have as much as a 20 percent to 30 percent return on sales whereas on-demand restaurants are in the 4 percent to 10 percent range. One of the reasons for that is the ability to know in advance exactly what kind of food and beverage are going to be served. For example, the wine will all be the same kind in most cases so you don't have to stock a bunch of different brands. You can order what the client chooses by the case for that specific party.

Also, the choices of entrees are generally limited to two or three items, which means food ordering is simpler and not as many cooks are needed in the kitchen, which reduces labor cost. Often you can charge for a room and add a service fee to the final bill. The tip is also included in the final bill and is generally at a higher percentage than normal table service. The servers generally prefer banquets because they find them easier to work and they make more money.

. . . Inside your four walls, your primary mission is to educate your customers to your banquet room offerings and use or refer you when the need arises.

Another upside to the banquet business is the opportunity to promote your restaurant to people who may return with friends and family, and tell their co-workers about your restaurant. In short, you can impress dozens of diners in one fell swoop. Unfortunately, the downside is that you can disappoint just as many covers in an evening.

All of these factors make banquets a very desirable business for restaurants, so making sure early in your startup that you have room for them is important. In fact a number of restaurants are starting to dedicate areas in their restaurants strictly for banquets and seek out this kind of business. For example, in Kansas City, Starkers Restaurant now has only a small place for its on-demand restaurant and has set aside the rest of its space for banquets only. Another restaurant in a scenic Kansas City suburb dedicated the entire operation to banquets, leveraging its magnificent view.

Whether your restaurant includes a private party room for 50 or you have plans for a larger banquet facility to accommodate 500, this source of add-on business can turn out to be a new vein of profits and help cross-promote your regular service. Right now, thousands of companies, civic groups and nonprofits plan meetings and events around breakfasts, lunches, dinners and cocktail receptions. You can get a piece of the action. Just make sure you do your homework before committing your time, energy and financial resources.

Plan to Succeed

You need to consider your banquet business a distinct and separate enterprise from your regular dining service, even though both will share management and other resources. Start by assembling your business partners, managers and key employees to create an exhaustive list of your restaurant's strengths, weaknesses, opportunities and threats as it would relate to operating a banquet facility or private party room. You'll be amazed how many important details will be pointed out from the front and back of the house.