There are very few scientifically obtained industry statistics available on the catering segment of the foodservice industry. At present, approximately 53,000 caterers are listed in the U.S. yellow pages. These are off-premise and banquet facility caterers. This doesn't include hotels. The annual sales of these 53,000 caterers, in catersource's estimate, is between 6 and 8 billion dollars.

The information that follows is provided as a service to other professionals who are attempting to better understand the catering segment. Please contact Mike Roman if you wish to go deeper in your search for industry statistics and demographics.

Alex M. Susskind and Rupert L.L. Spies
Department of Food and Beverage Management School of Hotel Administration, Cornell University
with Michael Roman, President of catersource®

The catering segment of the hospitality industry continues to grow year over year, and during the mid 1990's was actually the fastest growing sector of the foodservice group. According to National Restaurant Association projections, social catering services will increase by 3.6 percent (inflation adjusted) from 1999 through 2001, and show a compound annual growth of 6.3 percent from 1998 to 2001. As of 1999, the overall catering industry (including on premise, off premise, and industrial catering) generates gross revenue in the $4 billion range. This revenue base does not include the business conducted by the large managed foodservice companies such as Aramark and Sodexho-Marriott, nor does it include on or off premise catering revenue from hotels or restaurants. These figures indicate that the catering business remains healthy and has grown steadily over the past several years.

This growth has certainly led to some opportunities and challenges for catering operators. To identify the state of the industry, and what operators view as their strengths, weaknesses, opportunities, and threats we surveyed members of catersource as well as an additional group of high profile operators. From the approximately 800-member base and 100 supplemental operators, we received responses from 340 caterers. Each caterer was asked to describe their primary catering focus, basic operational characteristics, and elements of concern for their businesses in the near future.

Caterers responded from 327 different zip codes with the first digit of the code ranging from 1 to 9, indicating a wide range of geographic participation. Twenty-eight percent of the operators reported that they had been in operation for 21 years or more, thirty-nine percent indicated they had been in business between 11 and 20 years, twenty-one percent had been in business between six and ten years, and 12 percent reported they had been in business for five years or less. Fifty-two percent of the respondents indicated that they owned their primary production facility, forty seven percent leased, and one percent reported some type of alternative structure.


Results indicated that a substantial majority of the respondents (79 percent) reported off-premise catering as their primary business focus, 20 percent indicated that on-premise catering was their primary business focus and one percent indicated that they were in the non-commercial (contract) segment. For those in the on-premise segment, 39 percent operated from a stand-alone banquet facility, 10 percent operated through hotels, four percent operated through a country club, 24 percent operated through restaurants, 12 percent were involved in corporate and institutional feeding, and 11 percent were involved with a venue contract, such as a park, stadium, or landmark. The mix of corporate to social business among these respondents was approximately 60 percent to 40 percent, with operators reporting a range of 0 percent to 100 percent in both categories.


The majority of the respondents (67.5 percent) indicated that their typical party size was between 100 and 250 guests, with 14 percent of operators reporting their typical party size as 100 or fewer guests on average, and 17 percent of the operators reporting their typical party size between 250 and 500 guests. Two operators reported average party size between 500 and 750 guests and one operator reported their typical party size as over 750 guests on average. On average the operators reported having 3.71 vehicles in use for their operation ranging from 0 to 31 (median = 3).


Respondent Characteristics: Of those who responded to this survey, 79 percent indicated that they either owned or co-owned the business: the remaining 20 percent were managers. 85 percent ranked their business in the top ten in their market, and nearly 70 percent indicated they ranked in the top five. These respondents reported they worked an average of 58.7 hours per week ranging from 18 hours to 100 hours per week (median = 60).


Office Staffing: The operators provided us with staffing information for both full-time and part-time employees for both their peak and off-peak business cycles. We asked the participants to provide information about the staffing per area (such as management, culinary, sales, operations, and party staff) to provide us with an organization-level total. The operators reported an average: (a) peak full-time staff of 15.67 employees, ranging from 0 to 112 employees (median = 10); (b) peak part-time staff of 31.12 employees, ranging from 0 to 300 employees (median = 22); (c) off-peak full-time staff of 11.00 employees, ranging from 0 to 119 employees (median = 8); and (d) off-peak part-time staff of 17.42 employees, ranging from 0 to 210 employees (median = 11).


Party Staffing: Sixty-five percent of the operators indicated that they bill separately for service. Of those operators who indicated that they charge their guests an hourly rate, the average charge was $ 18.54 per hour ranging from $ 3.45 to $35.00 per hour (median $18.00). For those who charge a flat service fee per event, the average charge was $ 116.04, ranging from a low of $40.00 to high of $300 (median = $ 97.50). For those operators who reported a percentage-based service charge the average rate was 16.6 percent, ranging from seven percent to 25 percent (median = 17 percent).

We asked the operators to report the types of products, services and amenities they offer. The results of these responses are tabulated in (Table 1.) Note: In Table 1 not all of the respondents reported for each category, and/or may have reported in multiple categories. Therefore, the percentage reported is the valid percent, based on those who reported for each category alone.

In closing we asked the operators to report their history of profitability, and their feelings about the future.


What are the biggest challenges you face as a caterer?
In response to our first inquiry an overwhelming majority of the respondents indicated labor issues as their largest concern. These concerns included hiring chefs and kitchen personnel, service staff (both full and part-time) and sales staff. With our economy's current low rate of unemployment, this response comes as no surprise. A recent report published by the National Restaurant Association, mirrored the concerns of the operators on this point. Another point of concern raised by the operators was the state of the economy. Many of the operators indicated that a shift in the economy would influence their ability to remain competitive. Lastly, on a related point the operators listed concerns over the ability to continue to grow their businesses with increased competition.


How confident do you feel about the upcoming business year?
We asked the operators to rate their confidence on a scale of 1 to 5 with 5 representing extreme confidence about their business in the upcoming year. Despite their concerns over the available labor and economy, the operators reported a generally high level of confidence for the business future in the upcoming year, with an average of 3.91, ranging from 1 to 5 (median = 4). Note that the majority of the responses were received before November of 2000, so the sharp recent downturn in many areas may not be reflected in these responses.


How many of the last five years has your firm been profitable?
In general our operators reported that they were relatively successful over the past five years. 191 respondents (60 percent) indicated earning a profit each of the preceding 5 years, 31 respondents (10 percent) indicating 4 years of profit earning, 39 respondents (12 percent) indicating 3 years in the black, 35 respondents (11 percent) indicating 2 years of earning a profit, 14 respondents (4 percent) indicated that they had only been profitable for one year, and 9 operators (2.4 percent) indicated they had not made a profit over the past five years. It is important to note that 41 of the operators have been in business for 5 years or less. Of those 41 respondents, 24 had been profitable for 2 years or less, and the remaining operators reported making a profit for 3 or more years.

In conclusion we hope that this summary information will be helpful for you to make comparison of your operation to other operators in your competitive set.