Catering Increases Eateries' Finances

September 9, 2007
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GRAND RAPIDS — Some restaurants frequently cater outside events. Others don't like to bother schlepping tablecloths, plates, glasses, silverware, food,  beverages — and employees — outside their own establishments.

Then there's The Gilmore Collection, which this summer catered an "Up North" wedding reception for 300 on a Glen Lake deck, built especially for the occasion and then removed the next day.

"It was phenomenal," said CEO Gregory Gilmore. "The staff had to work hard to make it happen."

Restaurants have catered for years, but now are turning to that side of the business to weather the downturn in Michigan's economy, said Andy Deloney, director of public affairs for the Michigan Restaurant Association.

"Some folks have gotten into catering to reach more potential customers, particularly as the economy soured and continued to stay down," Deloney said. "Restaurants are doing every single thing they can do to keep their heads above water. By catering off-site or having part of the menu devoted to trays is a way for them to reach and keep customers. That's particularly been true for smaller companies."

Gilmore said that catering has played a role in his 27 years of running restaurants, but about 10 years ago it became a bigger part of the business. He said catering can be an attractive way of expanding business, but it carries its own expenses.

"It's an easier way to grow the business, as opposed to building another restaurant," Gilmore said. "There's certain times of the year, such as holidays, that are extremely attractive for catering. It's definitely easier to grow the business, but it's an extremely difficult business, as well. You're constantly loading and unloading and transferring. It's a lot of work to set something up and a lot of work to break it down."

Gilmore employs a staff devoted to managing catering and special events in the company's 15 locations, some of which include banquet space. Catering and special events may account for 10 to 30 percent of the business, he said. The BOB's two kitchens were built with the idea of supporting catering as well as restaurant traffic, he noted.

But, like sit-down restaurants, catering has its ups and downs that are tied to the economy.

"In the last year and a half, I've noticed there has been a trend toward spending a little less, and also there's been some more cash bars as opposed to hosted bars," Gilmore said. "But overall, business is outstanding. While people may have cut back in some respects, they're still entertaining friends, guests and staffs."

Deloney estimated that Michigan has 17,000 to 19,000 restaurants. Michigan's restaurant business has become tough, as layoffs, buyouts and rising gasoline prices have cut into income, he said.

"For 2007, we forecast the slowest rate of growth of any state in the nation: 3.7 percent," Deloney said. "We're 50th out of the 50 states. Every day, it seems we are hearing about another restaurant business that's closing up their doors."

Each restaurant must decide whether catering should be part of its business plan, he added.

"You have to prepare the food in your licensed premises, a facility that's been inspected and licensed and regulated," Deloney said. "Then you have to be able to transport it. If you're serving both hot and cold food, you have to demonstrate you are keeping the food at the proper temperatures and you might need special equipment for that, special transportation, things like heating trays. Now you're talking labor costs, transportation costs. You may have to consider insurance costs with that, now that you are engaged in operations that are not part of your establishment.

"There's a lot of different things. It's not just a matter of, 'I'm going to go out and do catering.' It's the classic throw the pros and cons on the board and see which outweighs the other.

"It's all about doing everything they can in this economy to find a couple extra dollars in sales."

To help restaurants squeeze every buck out of their catering jobs, Deloney and the Michigan Restaurant Association is lobbying for a law that would allow owners of a Class C liquor license — which allows restaurants to sell and serve beer, wine and spirits for on-site consumption — to provide spirits for off-site catering events, as well, with a catering permit that would be renewable annually. Currently the caterer may sell and serve beer and wine for off-site events, but the host must purchase liquor elsewhere, although the caterer may serve it.

Deloney said beer and wine take-out licenses are cheap and easy to obtain, but the SDD (Specially Designated Distributor) license, which also allows liquor take-out, is regulated by numbers and so is expensive to purchase. The annual catering permit would be an alternative for catering operations that also hold a Class C license.

"We have been pushing legislation in Lansing so those who have a take-out license can apply for and receive a permit that allows you to sell and service liquor at a catered event. This (current law) kind of holds Michigan back to a degree here," Deloney said.

Deloney said the legislation has been approved by the state Senate, and now awaits actions by the House. It's been introduced several times before, but has yet to become law, he added.     

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