Catering Business Plan

Market Analysis Summary

According to the Eugene Area Chamber of Commerce, "[a]t the heart of the Eugene economy are the homegrown small and medium-sized businesses. Most of Eugene's businesses employ fewer than 20 workers. From specialty retail shops to financial service firms, from management consultancies to ethnic groceries, Eugene's small business community is diverse, active, thriving and well-supported. Including sole proprietorships and limited partnerships, there are more than 10,000 businesses in and around Eugene." Eugene/Springfield's population has grown 3.95% on average since 1998 and this new growth has meant new businesses and expanding opportunities for catering companies who can serve these businesses' needs.

Catering For Kids anticipates that Eugene/Springfield businesses have unmet demand for catered lunch meetings and other events. And unlike other restaurant and food-related businesses, business to business catering is not as cyclical as business to consumer catering. Businesses continue to have lunch meetings and employees who wish to purchase their lunches year round. In order to gain some insight into the market size and demand, we undertook some limited market research. An email survey was sent to 144 Lane County nonprofit organizations that requested their current or future demand for catering services and their interest in patronizing a nonprofit catering business. We received many responses like the ones that follow.

"I think that this is a great idea and could be a good resource for the community. Springfield/Eugene Habitat for Humanity does not host many lunchtime meetings, however there is a group of about 13 or 14 Executive Directors of Habitat affiliates that meet here about every three months that might use your service." - Susan Brown, Volunteer Coordinator, Eugene/Springfield Habitat for Humanity

"...if we do have an event that we need catering we will call your program first. We have a policy of using nonprofit organizations for services first." - Bob Smith, Exec Dir, Pacific Youth Corps of Oregon

"Our needs for catering are not very large, maybe a few times a year. However, you may contact me to discuss the program. My son attends Chambers School and I would welcome hearing more details." - Mark West, Lane County Agricultural Museum

"We do have General Membership Meetings where we require a venue for 50 to 100 people. I'm not involved with arranging the meetings but do know that our organization is in need of a place to meet where food and beer can be served. Perhaps you will hear from Dave - I think the first meeting is usually in October." - Emily, Graduate Teaching Federation Office

4.1 Market Segmentation

Catering For Kids will serve three primary groups of customers. As our business grows, we will begin serving these groups in the order listed below as each new customer group represents a larger step into the community and therefore requires Catering For Kids to differentiate itself further from local for-profit caterers. All of our target customers may be defined as corporate clients who are continually looking for new, refreshing meals to eat at recurring lunchtime meetings.

1. Internal Bright Future Customers:

• Board of Directors meetings, serving 35-45 meals per month in either a buffet or lunch box format.
• Board Sub-committee meetings, serving 40-50 meals per month in either a buffet or lunch box format.
• Bright Future Counseling Center meetings, serving approximately 25 meals each week in either a buffet or lunch box format.
• Miscellaneous meetings throughout the Bright Future organization, which has over 250 employees on staff.
• Rolling cart lunch service at various Bright Future locations in Eugene/Springfield, serving boxed lunches and beverages only.

2. Nonprofit External Customers:

• Catered meetings held by other nonprofit clients.

3. For-profit External Customers:

• Rolling cart boxed lunch and College City coffee service in local government or private sector offices that are underserved by local restaurants and coffee shops.

4.2 Target Market Segment Strategy

Catering For Kids' target market segment is nonprofit customers (including internal customers). We plan to target this group for several important reasons. First, we are a nonprofit organization and believe that we are better positioned to serve the needs of other nonprofits. Secondly, we believe that nonprofit organizations are more likely to try and continue to use a fellow nonprofit for catering services. And thirdly, we do not intend to jump into the commercial catering market in direct competition with for-profit caterers. Instead, this is a long-term growth opportunity that Catering For Kids may explore in the future. By postponing this direct competition, we believe our organization will be better able to remain focused on our primary objective: serving at-risk youth in Lane County.

4.2.1 Market Trends

Significant market trends for caterers are as follows:

• Consumers are value-conscious, especially during the current economic climate.
• Consumers are health-conscious with an increasing number expecting vegetarian, dairy-free, low-fat, sugar-free and organic options to be available.
• Consumers are eating less red meat and eggs and more poultry, fish, grains, fruit and vegetables (Oklahoma Cooperative Extension Service http://www.dasnr.okstate.edu/oces/).
• Increasing numbers of households are choosing to buy prepared food rather than cook at home, which may indicate that fewer employees are bringing lunches to work.
  

4.2.2 Market Growth

According to the National Restaurant Association, the restaurant industry's share of the food dollar is currently 46.1 percent and is expected to reach 53 percent in 2010. More and more Americans are choosing to buy prepared food, rather than make it themselves. As caterers are a part of this industry, they are also likely to see an increase in the number of traditional meal catering engagements as fewer business people bring a lunch to work each day.

Nonprofit or tax-exempt organizations have also grown in number across the country, up 34% since 1982 according to The New Nonprofit Almanac by Independent Sector.org. On average, the number of nonprofits increases by 12.6% every five years and as Catering For Kids' primary target market, this means that the potential for new customers and increased revenue is growing.

4.2.3 Market Needs

The Eugene/Springfield market has an ongoing need for consistently good quality, healthy food at competitive prices. When customers can fulfill this need and at the same time, believe that they are making a difference in their community, the choice of caterers becomes obvious. They will choose Catering For Kids over the competition.

4.3 Service Providers Analysis

The catering industry is highly competitive and is made up of large numbers of independent participants. These participants serve the local corporate, social and/or cultural clientele, though some find unique niches such as a local university or school district. Food costs are generally quite low, with most of a caterer's expenses attributed to labor and overhead. Demand for catering services depends on local population size, number of businesses and cultural institutions and standard of living. However, over time, more Americans are choosing to pay for prepared food rather then cooking at home - a positive sign for the catering and restaurant industries alike. Some experts predict that by 2010, 53% of American's food budgets will be spent on food prepared outside of their own kitchens, presenting an interesting opportunity for caterers (Nat'l. Restaurant Association, http://www.restaurant.org/).

4.3.1 Distribution Patterns

All Catering For Kids boxed or buffet style catered lunches will be prepared on-site at the Chambers School and Career Center. From there, food will be loaded into coolers and transported by a staff person to the delivery site. Future plans call for boxed lunches that are sold by rolling cart within individual office buildings and will be prepared and transported in the same manner. However, they will be sold at a pre-determined time at local offices and parked or rolled through pre-arranged areas and will consist primarily of meals that were not pre-ordered.

Other industry participants operate in much the same manner. In the Eugene/Springfield area, caterers are primarily operated under the auspices of a restaurant or cafe. Food is ordered through the restaurant's staff, or sometimes a separate staff, and food is prepared in the restaurant kitchen.

4.3.2 Alternatives and Usage Patterns

Corporate customers look for several qualities in caterers including:

• Good quality foods.
• Reliable and consistently high-quality service.
• Good value for money.
• Reputation and positioning of caterer.

Although a number of caterers are currently serving the Eugene/Springfield market, Chambers School is in a unique position to provide its clients with all of the above qualities plus the benefit of knowing that they are helping at-risk youth and a fellow nonprofit organization. Because principles are very important to most nonprofit organizations, we believe that as long as we can maintain the above characteristics, nonprofit catering customers will choose our service over other local services because of the benefit it has for the community.

4.3.3 Main Alternatives

There are several caterers in town that will compete directly with Catering For Kids for business, once we grow beyond serving our internal organization customers only. The key alternative caterers are:

• Of Grape & Grain, which specializes in deli style boxed lunches and cafe-style dining. This is the caterer currently used by Bright Future.
• Cravings Fine Foods, which specializes in event planning and cafe-style dining but which also offers deli style corporate boxed lunches.
• Ariana's Deli (owned by Alpine Catering), which features online ordering of deli style boxed lunches for delivery.
• Fetuccini and Co. , which also features online ordering of deli style boxed lunches for delivery.
• The Garden Deli, which also features online ordering of deli style boxed lunches for delivery.
• Napoli Restaurant, which features Italian style boxed lunches with a limited menu and no delivery.
• Brindiamo Catering, which features high-end boxed lunches with delivery, table decor and waitstaff.
• Wild Duck Brewery, which features hot and cold boxed lunches as well as boxed salads and offers delivery for a small fee.
• Oregon Electric Station, which specializes in high-end events such as weddings and corporate parties.
• Alpine Catering, a full service caterer.
• Oakway Caterers

Several of the above caterers, such as Napoli Restaurant, have a primary focus of operating their restaurant and may not put as much emphasis on catering details. Others, like Wild Duck Brewery, are focused primarily on large events and require a 15 person minimum for service. Still others, like Brindiamo Catering, are focused on very high-end customers and are out of the price range of many nonprofit organizations at over $12 per person. Therefore, Catering For Kids's primary competitors are the smaller, deli-style caterers, such as Of Grape & Grain and Ariana's Deli, whose prices are around $5-7 per person and who can be flexible with catering to small, less formal meetings.

There are also a number of low-end caterers that will compete with Catering For Kids even before we grow beyond our internal clients, as these caterers are currently used by some Bright Future programs now. These include:

• Local and national grocery stores chains such as Albertson's that will make made-to-order deli submarine sandwiches, chips and sides.
• Local and national sandwich fast-food chains such as Togo's and Quizno's. Like grocery stores, these stores will also make made-to-order sandwich based meals that include chips and a beverage.

Although these providers offer low-cost fare, they are unable to offer much in the way of custom menu planning and do not differentiate between retail consumers and business or nonprofit customers. Thus, their services are one size fits all - they have a fixed and limited menu and their delivery hours are restricted to their normal hours of operation. Patronizing this type of business also does not benefit the community directly as does the Catering For Kids.

4.3.4 Promotion Strategy

Catering For Kids plans to utilize a low-cost, low-visibility promotion program because of our limited ability to grow rapidly in the first year. This promotion program includes the following materials.

We have already introduced our service to a number of Lane County nonprofits via an email campaign. We plan to continue this campaign as we move closer to launching the business, keeping potential customers apprised of our development and eventually, of the menu and services we offer. Then, once a service contract has been agreed upon with a customer, each person served during the event receives our thoughtfully prepared marketing information inside their boxed lunch. This includes a small thank you card, which briefly outlines the goals of our program. The benefits that the customer is providing to the larger community are stressed and our contact information is there for future reference. We will also make use of small promotion materials such as file cabinet magnets, customized pens and printed paper menus.

Once Catering For Kids is successfully serving its internal customers and is ready to expand into our second target market (external nonprofit events and meetings), we will undertake a simple direct mail promotion targeting local nonprofits. This will likely involve a simple postcard with a sample menu and an invitation to try our service.  This will be in addition to an ongoing email campaign.

In general, our promotions will center on:

• Observation: meeting attendees experience our high-quality and thoughtfully prepared meal service.
• Visibility: each lunch box or buffet includes thank you cards, so that our presence and name is noticed by everyone.
• Word of mouth: professionals who use are service tell their colleagues. Those with friends at other nonprofits tell them about our service.
• Community service public relations: we maintain a good relationship with the local media, and have received some very flattering and beneficial exposure in the Community Service sections of the newspaper and TV coverage of our other programs. We will look for any opportunities to publicize the Catering For Kids program as well.

4.3.5 Organization Participants

The catering industry is highly fragmented, with numerous small companies serving each market. The number of caterers surviving in a market will generally be determined by population size and income level as the majority of caterers focus on special event planning, or social catering for individual households. For example, in the Eugene/Springfield area, there are over 40 caterers and personal chefs serving the needs of a community of approximately 190,700 people. The Eugene/Springfield population is expected to grow to 266,700 by 2005.

However, many of these caterers welcome corporate clients in order to broaden their market. There are currently no caterers focusing on the needs of nonprofit organizations in specific, nor are there any caterers operating as nonprofits. Catering For Kids has the opportunity to fill this niche.