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Expansion 22 Aug 2017

How is catering changing the business of restaurants

The catering industry in India is worth INR 200 billion and the majority proportion of the business is unorganised.

By Chef Gautam Chaudhry Demiurgic Hospitality Pvt. Ltd.

Catering as a segment refers to creating a special experience for clients/diners, wherein they visit a restaurant to relish specialties of a particular food concept in a pre-defined set ambience. Therefore, catering represents the art of bringing a unique food concept to the table. Today, caterers have become very experimental with the food choices that they promise to offer, coupled with innovative presentations that speak volume of their expertise in food business. On the other hand, restaurants offer a permanent aesthetics that cannot be customised.

I remember, a few years ago, restaurants used to be the trendsetters in dining concepts, driving the quality, consistency and swag quotients of cuisines. However, today, the situation has completely reversed. Now, catering industry is flourishing and defining trends, and driving the product and consistency factors. Hence, catering is adversely affecting the restaurant business. Following are the some of the reasons for this development:

Generating Higher Volumes: In the catering industry, as you deal in larger volumes, the scope for financial gains increases. When you serve a large number of people, it yields higher margins. Whereas a restaurant is not equipped to generate high revenues due to restricted customers, menu and space.

Room for Variety: A caterer delivers myriad choices and spends high to be able to churn high profitability, which in turn gives a free spending hand to him/her.

Trading on Revenues: A restaurant generates lesser revenues on everyday basis under the same condition vis-a-vis a caterer. A caterer puts into constant efforts under different circumstances with every single event—from selecting a menu, choosing a set-up to handpicking ingredients and allocating manpower. It is a difficult task at each stage, but brings in an element of surprise as diners get the opportunity to see and explore something unique for the first time.

I once ventured into a catering company to offer niche concepts to customers and my approach was appreciated by all. In fact, I was bestowed with the prestigious ‘The most promising entrepreneur’ award by The Economic Times in 2015.

The catering industry in India is worth INR 200 billion and the majority proportion of the business herein is unstructured/unorganized. The business gives high returns, and hence becoming a very lucrative opportunity for today’s generation who want to delve in food business. Chefs are coming up with new strategies and concepts that are creating a buzz in the market with each occasion with the freedom to tweak a concept to serve to clients’ (read customers’) needs. This way they are able to explore more opportunities of showing their talent.

As every positive comes with a rider, the opportunities of making easy money in the catering industry come with some challenges, which are as follows:

1. The competition has started mushrooming, and hence giving rise to buyers’ market.

2. When the scope is with the buyer, he takes the liberty to reap maximum benefits from the seller, leaving less room for the latter to gain profits.

3. The customer gets into details and the menu items keep adding up, with high demands for best quality food. This leads to the need for specialist chefs for each cuisine or even sub-cuisines, which increases the cost.

4. The arrangement of a set-up is another big ticket. The investment that a caterer has to do in a fancy set-up is very high and is getting dearer with each passing day.

5. Each and every cuisine is handled with kids gloves and the buffet space is set up like a five-star specialty restaurant. In any luxury catering set-up, there are at least six international and four–six local cuisines or sub-cuisines.

6. Owing to customers’ demands, caterers are forced to get the best team members (right talents) and hence the human resource expense is very high.

The difference between ‘good’ and ‘great’ has always been attention given to details in whatever you do. In catering business, attention becomes a priority—a necessity that cannot be ignored if you wish to succeed.

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