Foodservice, we believe, consists of two separate areas of the industry: Catering and Special Events; and Institutional Foodservice. Within each area, unique pressures come to bear upon individual entities. External influences may adversely affect these entities, where planning has not been properly invoked to cover contingencies that are unforseen.
Let’s examine what each area consists of to gain a better understanding. Catering and Special Events includes mostly small to mid-size companies, hotels, social organizations and other entities where catering sales or the development of events from birthday parties to weddings and corporate events is the core business.
Institutional Foodservice consists of production operations for corporate dining rooms, schools, prisons, hospitals and other mass production foodservice operations.
What worries CEOs
Both these areas faces a unique challenge. Maintaining theoperation within reasonable costs while still maintaining a high level of customer satisfaction.
“For caterers, it is much easier and safer to produce high quality food product, though costs can more readily get away from you…” notes Elizabeth Kiken, an Associate in the Washington, DC office. “In due consideration though, it is important to note that institutional foodservice faces many serious risks ranging from employee dissatisfaction to prison riots based solely on the quality of food production. Each has its critical points, but in a risk assessment, institutional foodservice wins hands down. For companies providing institutional foodservice, preparedness and awareness of the target audience are key, critical considerations.”
Foodservice companies in either area must grow in ways that sharpen their brand image. Even a company which provides campus or other institutional foodservice must have a public brand image. That requires greater customer insight and a clear plan to capture and maintain the audience they serve. In this way, they will maintain and renew long-term contracts. For caterers, especially special event planners for corporations, it is essential to provide a successful outcome to capture renewed business and to maintain a positive reputation in the industry.
Four levers for intelligent growth
CEOs can use four levers to deliver more capital-efficient, customer-centered growth.
- Lean production. Extensive supply chains, complex production processes, large, semi-skilled work forces, and other hallmarks of foodservice have clear counterparts in manufacturing environments. Techniques pioneered by the world’s most efficient factories can dramatically reduce foodservice cost structures, improve production quality, and help finance growth.
- Format renewal. Menu and Event Planning – keep the interest of clients and guests, ensuring satisfaction and return business. This in turn provides the revenue necessary to continue growth and brand development.
- Sourcing and supply management. As foodservice networks grow, it’s important to know how, when, and where to relocate links in a supply chain. Late or defective merchandise can wipe out the potential savings from suppliers. In addition, foodservice operators must maintain collaborative relationships with key suppliers, even while pushing for lower costs.
- Delivering customer value. Foodservice operators need not necessarily promise the lowest prices. But they must provide distinctive value in something – for instance, quality, service, or comfort. Convenience, diversity, selection, excitement, and creativity also are part of the value equation.
To sustain growth, caterers and foodservice operators, even institutional ones, ultimately must build relationships with the customer, not just sell them meals. “When consumers trust a brand, they are willing to purchase a stunning variety off the menu,” says John Lang, an associate in our Chicago office. “For example, we now see leading chef-owned branching into management services, travel services, kitchenwares, beverages, even consumer product sales. A few market leaders in every segment are pulling away from the crowd – in terms of innovation as well as scale of operations. Those that don’t respond will have a hard time catching up.”