Casual-dining restaurants that are struggling with a sectorwide slump as consumers rein in discretionary spending are starting to look more intensely at delivery and catering for new revenue streams.
Maggiano’s Little Italy, the 41-unit division of Brinker International Inc. of Dallas, launched home delivery in August and has promoted the service with a big marketing push for the winter holidays. Columbus, Ohio-based Damon’s Grill also has launched a companywide catering program for the 74-unit chain. And the 238 domestic units of Sizzler are watching an expansion of delivery operations by some franchisees as the nearly 35 franchisor-owned Sizzlers delve into catering through an initiative begun last month.
Although advance-ordering requirements and relatively high minimum prices differentiate those chains’ meal delivery services from spur-of-the-moment options like pizza and neighborhood Chinese food, the casual players have tallied gains from what they see as necessary initiatives.
“With the pressures of casual dining in general and the category becoming more mature, same-store sales have been sluggish for the past 18 months or more,” conceded Jon Quinn, marketing director for Damon’s Grill. “We don’t see that letting up anytime in the near future. That’s when we started to look at the off-premise opportunities.”
Edithann Ramey, marketing director of Maggiano’s, said the Italian concept’s delivery program provides guests with the value they demand and gives the chain a potential new profit center.
“We’ve got the banquet space,” she said. “We’ve got the carryout. We’ve got the dining. [Off-premise service] helps us stay on top of trends, especially with the understanding that convenience is part of everyday life for our guests. We thought, here is another touchstone—we’ll go ahead and do delivery so they can take a premium brand right into the home.”
Chris Tripoli, owner of A La Carte Consulting in Houston, said: “You are seeing a large number of restaurants expanding their sales with delivery and catering. It’s one place they can go without a large investment in real estate.”
Maggiano’s invested in training of staff and bought sign-wrapped vans to launch its delivery initiative.
“We tested it for three to four months before we took it on live,” Ramey said, adding that the reaction has been “slow but steady.”
“We classify it as successful,” she said. “All the restaurants are live, and they are executing two or three deliveries for lunch and maybe five to seven at dinner. We expect it to grow every week.”
The best-selling items are baked ziti and lasagna. Marketing is done in-store as well as through Internet search engines like Google and wedding-planning websites, Ramey said.
“It really is a service and added value for people to have a premium brand come into their home, especially during the holidays,” she said. “We’ve made it very simple.”
Maggiano’s requires a minimum $125 order and charges a delivery fee of $20 or 15 percent of the food and beverage total, whichever is higher. Orders must be placed 24 hours in advance.
By comparison, dine-in check averages at Maggiano’s are $25 per person, including beverages.
Menu items are delivered in half pans that serve eight to 10 and full pans that serve 15 to 20. Items range from half-pan orders of Parmesan garlic bread, $8.75, and chopped salad, $19.75, to full-pan orders of lobster ravioli, $137, and lasagna, $172.95. The chain’s delivery menu includes a range of appetizers, salads, pastas, entrées and desserts.
Quinn of Damon’s Grill said the company just launched catering in its home market of Columbus and runs the operation out of the company’s learning center kitchen.
“Our core menu lends itself well to catering, but we haven’t had a systemwide push on it until recently,” Quinn said. “A lot of our franchisees had been doing their own catering programs, but there wasn’t a companywide program for them to utilize.”
Damon’s last year set up an Internet site that houses all the catering materials, including an operations manual, plating guides, serving guidelines and related marketing materials, such as a direct-mail brochure and postcards.
“One of the main challenges is finding what portion of your menu travels well and holds well, but it still can offer broad appeal,” Quinn said. “Our menu is somewhat riband barbecue-focused, so it can be a bit polarizing. We make sure our menu offers other products that broaden the appeal. Damon’s catering menu includes a Southwest chopped salad, which was designed to target female customers.”
Quinn said Damon’s historically has been a destination concept. “A lot of our locations aren’t ‘A’ type locations, therefore we aren’t all that convenient for carryout,” he said. “But we do have a facility and a menu that lends itself well to catering. We can build same-store sales in a market that has become sluggish.”
Advance notice for catering is usually more than 24 hours.
“It’s not as spontaneous as a typical carryout order,” he said. “A week or more is best.”
The added benefit, Quinn explained, is that catering “can be an advertisement for the brand outside the facility.”
“You want to have a face on it that you want to be seen,” he said. “You want to freshen people’s perspective on the brand.”
The catering menu includes barbecue and ribs, wraps, deli sandwiches, soups, salads, and desserts. Newer items included Napa Valley Spinach Salad and Pecan-Crusted Sweet-Potato Casserole.
Sally Myers, who is marketing director for BMW Management Inc. of Temecula, Calif., which operates 25 Sizzler restaurants in California and Nevada, has done catering since she and her husband took over the franchise in 1983.
“We were the only real commercial-named restaurant in the Temecula area at the time,” she said. “We were doing a lot of catering for horse shows and sales and the local balloon and wine festival. Our catering is very specialized. It’s not done in every Sizzler. As an independent operator, we are very hands-on.”
She added that about eight of her Sizzlers do catering and that prime rib is the best-selling catering item.
“We pull management from all of our stores for large events,” Myers said. “It’s very customized. It really is nice exposure for the restaurant in the community. I will provide whatever the guest needs. It depends on the customer’s budget. They can pick it up, or we can deliver and serve it.”
Pricing for a restaurant’s catering services can pose some difficulties, however.
Myers said a difference in the perceptions of restaurants versus full-scale caterers is that customers expect restaurants’ catering tabs to be lower. However, “your costs are different,” she said.
“You have to take people out of your restaurant,” she said. “You have to purchase all the equipment. You have the transportation costs. There are a lot of hard costs that make it difficult to negotiate on prices for the customers. Catering is not inexpensive.”