Cornering the Business Catering Market

The catering market in the United States continues to grow. According to Technomic’s August 2019 Catering Usage and Preferences Report, the catering market is nearly $65 billion—an increase of more than 5% from the year before. More than a third of that revenue, over $25 billion, went to business catering, while the balance went toward social catering. And these numbers are only going to get bigger over time.

Taking their cue from restaurants, convenience and grocery stores are tapping into the growing demand for convenient, freshly prepared meals and catering. Take Wawa, for example. The Pennsylvania-based convenience store chain now offers food and beverages for private events through its new catering business. And Kroger, one of the largest supermarket chains in the country, recently partnered with Cluster Truck to launch on-demand delivery of meals made at “ghost kitchens”—kitchens that prepare food solely for delivery and aren’t used for serving dine-in customers. 

According to Frank Beard, convenience store and retail trends analyst for GasBuddy, "You have to differentiate yourself, and foodservice is kind of the way to do this. You see the industry transitioning into becoming more like restaurants. If you look at the in-store sales data from the past 10 years, the biggest change has been in foodservice."

These stores aren’t just blurring the lines between convenience stores and quick-service restaurants—they’re also changing the catering industry. So how can stores grow their bottom lines through off-premise channels?

The case for business catering

To build a catering operation, operators first need to understand the customer segments they want to reach. While they’re probably familiar with consumer delivery and social catering (think buckets of wings and platters of sliders), it's worth considering business catering, too, and what those clients prefer to order.

Business catering has grown by nearly 15% since 2017, according to Technomic, and is growing more quickly than both social catering and the broader restaurant industry. What’s more, social catering customers often order for one-time events. Business catering consumers are likely to place repeat orders. That's a better return on investment.

Changes in business fuel catering opportunities

Changes in how people work are fueling the business-catering market. The rise of the gig economy and more flexible work arrangements mean employers need incentives to keep talented team members, and they've learned that food is one way to do it. Studies show that productivity rises when workers eat at the office and don't leave for a long lunch break.

As such, more businesses are spending money on office catering. Employers see catering as an investment in employee retention rather than a rare perk. According to Technomic, 45% of businesses are ordering more catering than they were a year ago. And 50% say they place an order at least once a week, up from 41% in 2018.

Business catering is also important for HR and sales needs. Food is an expected fixture at training sessions, client meetings, pitch sessions and other corporate gatherings. Office meals keep a team engaged and add value to a presentation or pitch.

A split consumer market

If an operator is just entering the catering market, the good news is that the $25 billion industry is fragmented. The market segment is still evolving, and because the market isn’t dominated by any one brand, any business can find its niche.

The key is to stand out from the restaurants and grocery stores already playing in this space. Operators can do that by considering these four factors:

Convenience stores already have an advantage here. "Convenience stores … are really sitting on probably the largest untapped distribution network[JK1]  in the country,” Beard says. “They occupy the best streets, the best corners in every town across the United States. They have proximity to customers and they have the ability to deliver."

If stores can outperform their competitors on these fronts, they can corner the local market. And if they already have the location advantage, why wouldn’t they want to join the catering space?

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