Catersource is part of the Informa Connect Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Recession-Proofing Your Business

If you listen to or watch the news, you’ve surely heard talk about a coming recession. There is no shortage of fearful headlines predicting a pullback in spending, a crashing stock market, and continued inflation. But as I talk to caterers across the county, the main challenges they are facing don’t correlate with a recession. Challenges, like finding enough employees and keeping up with demand and supply chain issues, are reflective of a different story. 

There are many additional indicators that future demand for our services continues to be strong. So, what do we make of these conflicting points? And what do caterers need to do moving forward? Here are a few of my thoughts. 

How bad can it be?

It’s hard to imagine any situation being worse than what we just went through. Going through the pandemic was crushing for an industry that thrives on large gatherings of people. As we continue to recover, those who have made it through find themselves with thicker skin and a greater sense of resiliency. One caterer told me: “Even if a recession does come, a 20–30% pull back in sales is nothing compared to being shut down.” I suggest caterers keep it in perspective and know that they can probably handle whatever pullback comes our way after navigating COVID.

Protect your reputation

Demand is high for caterers. There is pent up demand for gatherings, a backlog of weddings, and fatigue around virtual gatherings. Between the quick return of business and fear of a downturn, it’s tempting to take on as much as possible. This is a risky proposition though. Understanding capacity will make or break caterers over the next six to 12 months. Overextending yourself on key days can have a lasting impact on your reputation as a business. While the effects of that now might be small, it gets magnified if a recession does indeed come. With the proliferation of the internet, caterers are publicly being judged every day by clients and guests. I recently heard a story about a caterer being removed from three preferred venue lists in one week because of their inability to fully staff their events. When there is a risk of sacrificing the quality of food and service, it’s time to see the bigger picture and politely decline that additional event.

Raise your prices

Increasing costs continue to be a challenge for companies that bid for events months and sometimes years in advance. I read a recent article that showed overall food prices have increased by at least 10% in 2022. At the same time, I continue to hear caterers are turning away business, sometimes up to 50% of what is coming in. Basic economics instructs that when demand is high, price sensitivity declines. Increasing prices protects what are already slim margins for caterers and doing so when demand is high limits the amount of pushback received from clients. Instead of asking for discounts, clients are just thankful when their event can be accommodated. If you haven’t raised your prices, now is the time to do it. You can always reduce them in the future, but I’ve found that discounting tends to cause more problems for businesses than the benefits it brings.

Build your savings

If you are worried about an upcoming recession, there are steps you can take to minimize the impact it will have on your business. If your savings got depleted, it might be a good time to build up three to six months of fixed expenses. This provides flexibility for a wide variety of situations (positive and negative) that come your way. When the economy pulls back it can present a great opportunity to add talent or invest in equipment or real estate at a reduced price. When others are contracting it presents an opportune time to expand and businesses with a healthy balance sheet can take advantage of these situations. Additionally, businesses that have strong savings aren’t prone to knee jerk reactions when costs increase or sales decrease. They can weather a storm and not have to significantly cut expenses or people. 

I’m not so sure that catastrophic impacts of a recession are as imminent as the media suggests.  There were many industries that were not negatively impacted by the pandemic. They actually had record years and maybe this is more of a correction for those industries. A minor pull-back might not be the worst thing. Many of us would welcome a labor market that loosened up and an easing of supply chain issues. Regardless of what happens, conscientiously operating a business is one of the biggest responsibilities of CEOs and business owners. It’s important to be aware of outside forces, but not let them dictate and interfere with the overall vision and direction of the company. It can be tough to spend time working on the business when the craziness of the day-to-day seems to have a gravitational pull on our time. It is precisely these times though that produce long term results and set caterers on a successful path for many years to come.  

Anthony Lambatos

Owner/CEO, Footers Catering, Denver, CO

Anthony Lambatos grew up in the catering business working for his father and founder of Footers Catering in Denver, Colorado.  Anthony and his wife, April, purchased the business in 2010 and have successfully made the transition to a second-generation family business.  They recently moved Footers Catering into a new facility that will also house their newest venture – an event center called Social Capitol.  Anthony is passionate about helping other companies create great places to work and inspiring people with heart leadership and does that through his sister company MIBE (acronym for make it better...