Profits taste good in B2B catering

Newsroom 21/07/2008 | 16:30

No flexibility, no future
A minimum investment in starting a catering business would be about EUR 30,000 to EUR 40,000, says Liviu Moreanu, owner of Argentin restaurant, who also runs Argentin Events, the catering division. “This sum would cover the minimum investment in some equipment, not including the money spent on renting the space, the cars and the employees.”
Moreanu is new to the corporate catering business and is lucky to have use of the already developed logistics of his restaurant. So far, he has organized corporate events only in his restaurant, with the first “outdoor” event planned in a couple of weeks.
So far, clients include Marlboro and Zapp. “Actually, I wouldn't be wrong to say that, for a safe start in this business, you need at least EUR 100,000, ” Moreanu said. The trick is attracting big corporate names on the market, keeping the status in shape and investing in advertising. For instance, Moreanu reinvests 30 percent of the annual profit in marketing and advertising tools, such as direct mailing. He made a deal with ABN Amro which provides him with the bank's client database to which to send direct mailing offers, and in return, Moreanu offers a discount at the restaurant for the bank.
The businessman's ambition is to cater for at least one event per month and for this first operational year, to attain a turnover of EUR 100,000 from corporate catering alone. This will be the only catering he provides, as he won't target social events, he said. The costs of organizing an event of this type are estimated at about EUR 50 per person.
Ana Catering is not a new name, but one of the pioneers on the local market with roots in the early 90s. The owner, Ana Oprescu, said that while in 1993, such a business had start-up costs of EUR 15,000, now the necessary sum if thinking of catering as a serious business is estimated at around EUR 200,000. The firm reached a turnover of EUR 500,000 in 2007, after EUR 300,000 attained in 2006, according to Oprescu. “We do only events catering, of which 50 percent are corporate and the other half is family events,” said the owner. The corporate side of the business includes the embassies of France and Germany, plus companies such as Siveco, Deloitte, Mercedes, Unicredit and Rom Silva. The company has also signed deals with event organizers such as Bon Mariage and Cochet company for the family events business division. “The local market does not accept standard products and services. If a company doesn't show flexibility on this market, it has no future,” said Oprescu.
Lack of specialized personnel is seen by players as the main problem of this profitable market. According to Anca Mitu, director of Privileg in Bucharest, the best chefs are leaving for outside markets, especially with the growing market of cruise services. Besides HR, the big investment needed for the start-up are an impediment, and it is not only the money, but also the acquiring of certificates and accreditations, according to Ana Catering representatives.
Due to the increasing competition, companies in this field learn from the system of “seeing and doing” about the preferences of their clients, and try to stand out from the crowd with new services. For example, Moreanu of Argentin Events said that with an event organized outside the restaurant, the company delivers all the kitchen equipment to the event location and the food is prepared ad hoc.

Mostly a business for business
Apart from home delivery services provided by many restaurants, corporate catering is mainly part of the B2B segment, with 90 percent of the clients being companies and only 10 percent individuals, according to sources. This segment registers a yearly growth of 15 percent and estimated overall revenues totaling almost EUR 30,000 per day.
An imported business like many others, catering has none-the-less started to find its own rules on the local market. Even on the corporate side, incomes fluctuate with the seasons. Catering services providers mostly shut their doors during the summer holiday and re-open them in September, with the peak in winter or Easter.
“At the moment, the market consists of companies with a history on the market which have already formed their client base, as well as companies that are testing the market. Their development is like the wild capitalist economy: unequal and fluctuating,” said Florin Pitis, member of the Romanian Catering Association.
With all the other niches of the segment, such as industrial catering (for hospitals, the army or other industries), the most common are catering services for lunchtime within companies. But the most profitable is event catering It is also the most demanding for logistical resources, much like another business, that of event organizers. The profit margins of event catering range from 15 to 25 percent, according to companies operating on this market.

By Magda Purice

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