Catering to a Need

Competition is heating up, energy prices are going up, and margins seem to be the only thing shrinking.
Dismal days for the run-of-the-mill pizzeria owner…

Competition is heating up, energy prices are going up, and margins seem to be the only thing shrinking.
Dismal days for the run-of-the-mill pizzeria owner…

But Michael Attias thinks he has the answers to a lot of the problems facing independent pizzaiolos today: catering. “It’s the only marketing tool that pays you,” he says. “People will actually pay for the privilege of sampling your product.”

It’s a bold statement that he makes, standing in front of group of pizzeria operators who have opted to hear what this 14-year restaurateur has to say instead of dropping what little profits they have left into the slot machines on the casino floor.

It’s springtime in Las Vegas … and Attias’ statement is not unusual among the brazen, confident and successful. And while others will wait until the doors open on the only North American pizza show to open the day after, this crowd is gambling on the math Attias is offering.

“With catering, you maximize the long-term value of your customer, and you lower your costs of acquiring new customers. Percentage-wise, I like the math.”

Sounds like better odds than the craps table at Caesars, but it’s not hard to see that more than a few are skeptical about the idea.

But what Attias is really talking about in this session at the International Pizza Expo, is how owners that may be looking at ways to expand their pizza operations can maximize the leverage their assets already hold with almost no risk.

“When you open a second location, you double your overhead and financial exposure,” he explains. “But with just a 10 per cent increase in sales through catering, you can double your profits.”

OK Mike, it’s Vegas and we’ve heard the snake-oil sales pitch for timeshares, show tickets and nightclub admissions. It’s not called “the Strip” just because it’s a long-narrow stretch of pavement.

Attias has seen the skepticism before. “Look, I did $3 million in one year. And $1 million of that was just in catering,” he offers.

An eyebrow goes up here and there … a couple others lean forward in their seats. Catering, he explains, isn’t just the Saturday afternoon wedding stuff … although if you can talk the parents of the bride into pizza, you’ve got it made. Catering, in his discussion on this day, is the idea of utilizing what is already paid for – or being paid for – by the traditional revenue streams to make more money and improve the margins across the board.

“What is the industry average for margins right now? About five cents of every dollar onto the bottom line? With catering, the only costs now are in food and packaging. You should be able to come in at 50 cents of every dollar – because all of the overhead is already looked after at the restaurant end.”

Still some skepticism…

Attias pauses for a moment, talks about some of the trips he has made around the northeast part of the United States.

There’s a big real estate mogul out that way, he says; someone who has also become a pop culture icon unto his own self … Donald Trump. Attias asks the crowd to think for a moment about Trump’s lesson of highest value use of property.

“Maximize the space you have.” The ovens, the cooler, the kitchen equipment, the office equipment … right down to the marketing savvy … are waiting to be pushed into use even further. “Most of the catering side takes place before the other part of the business gets going.”

CATERING TO CANADA
In Canada there is plenty of reason for pizzeria owners to take heed. While Attias is pointing out the impact it can have on the operator’s margins, the Canadian Restaurant and Foodservice Association backs up the economic value with some cold hard statistics.

In 2006, contract and social catering sales rose 7.7 per cent, after a healthy climb of 17.6 per cent between 2003 and 2005. The average unit volume for catering, according to Statistics Canada, was $516,979. Sales are expected to increase again by 3.6 per cent by 2010.

In conversation recently with Mario and Joe Sinopoli, owners of Sinopoli’s in Maple, Ont., Joe said social catering is a staple part of the urban lifestyle.

He says growing up in an Italian family meant lots of gatherings of family and friends. His mother, who works in the restaurant today, would cook, and everyone would gather around the kitchen. It was a focal point of community, and the strength of the family.

“But no one wants to cook today … no one is cooking at home anymore.”

And in that cultural shift, he and his brother recognized the opportunity to do exactly what Attias was saying some 3,600 kilometres away: pizzeria owners have a huge advantage over a lot of caterers because they have distinguishable brands and a built-in customer base. The fact that there is an existing storefront and available labour add to the strength of branching out.

In terms of the pizzeria’s existing customer base, Attias suggests the concept of four-walls marketing. Use signage opportunities in virtually all corners of the pizzeria to promote the catering business.

“The easiest customer to sell is the customer who already likes you,” he says. Besides, he adds, your customers all work somewhere. And they like the idea of having food they are already comfortable with being offered in a business setting – lunches, employee training, whatever it is.

He suggests another factor to improving the bottom line, is that pizzeria operators also have existing food and packaging suppliers. Using their expertise – by asking them about what might be available for a catering venture – is a key component to making it work.

“Not to mention, the more you buy, probably the better deals you are going to get.”

Attias keeps the focus on the mathematics of the suggestion when he touches on pricing. Caterers are at an equal disadvantage because they have to price based on their business overhead, whereas a pizzeria operator has that overhead covered by the primary business unit – the pizzeria. “You are already a specialist, and you have very low costs to go after this business.”•