Prepared foods are typically the most profitable items in a grocery store, so many grocers are eager to expand that area of their business. But what does it take to add catering and prepared foods to your grocery business? In this article we will cover a basic process for grocers to follow to understand how to add this lucrative revenue stream to their existing grocery business.
Develop no more than 3 customer profiles covering the types of individuals that frequently patronize your store(s). This is important because it allows you to understand their wants, needs, preferences and interest in catering and prepared foods. Detail your customer profiles, inclusive of the following information appropriate to your customer base:
Additionally, you could create a simple poll for your customers to be asked at check-out or another avenue asking anecdotal questions such as, would you purchase catering and/or prepared foods for this business?
After your customer profiles are complete, research competitors or similar brands with similar target markets to understand if they offer catering and/or prepared foods. You could start by answering the following questions:
Ensure you also note what the other brands are doing that differentiates their offerings from others so you can begin to develop your own unique, standout selling points. After your research is complete, if you find your target market(s) would be receptive to a catering and/or prepared foods offering at your grocery business and like brands/competitors currently offer these services, then you’re on a good track!
Next, create Project and Financial Forecasting Plans to understand what it would take to develop and launch your offering. Templates and examples of Project and Financial Planning documents can be found via resources such as ProjectManager.com, Smartsheet.com, or through a simple online search.
In your Project and Financial Forecasting Plans, ensure you cover the following:
Meet with your important stakeholders to decide if undertaking this new business operation is truly viable. If you have an internal management team, take the information gathered in the previous steps (i.e. your business case) and discuss the final decision on adding catering/prepared foods to your business. If you and your team decide this is a viable business case, you may also need to meet with other external stakeholders, such as your accountant or lawyer, to provide additional support in expanding your business.
Understand what your unique food products could be either from your grocery business’s brand and/or from your target markets’ preferred tastes. For example:
After you know what your unique offering could be, start to brainstorm menu options within that theme and feasibility of creating them with the equipment, staff and space you will have.
Start small and test, test, test. As you are beginning your catering and prepared foods business, it would be wise not to start with a massive holiday, such as Thanksgiving, which could overwhelm your operations and lead to unsatisfied customers.
Instead, you could start by offering a limited holiday catering menu to your customers, such as BBQ boxes for 4th of July or steak dinners for 2 over Valentine’s day. You could even start with specific items, such as custom cakes, prepared family meals or trays of sandwiches. Test your newly developed menus/items by offering free samples in your stores or getting feedback from your employees.
After you have your first menu, consider creating dietary restriction alternatives so you can capture a bigger audience from the beginning. These options could include:
Use your budget from Step 1 to create your costs for making each menu item, inclusive of raw ingredients, equipment, staff hours and space usage. Mark up your prices per industry standard in your area and be sure to include service charges for delivery, late cancellation, or other local ordinances.
Confirm what channels you will promote and sell your new catering/prepared food offering and the management process needed for them. Start by answering the following questions:
Once you figure out your promotional and selling channels, write out your processes and procedures for taking and fulfilling orders via your various channels so you and staff can successfully manage them.
Ensure you have your payment or point-of-sale system set up so purchases are smooth. Linking up your financial accounts to a website or eCommerce system is quick and easy on most modern platforms. Point-of-sale integrations may take longer, so give yourself time to have these properly set up before launching and taking orders.
Consider purchasing software to manage everything in one location. There are dozens of systems on the market to fit your business’s needs, so take time to research and understand if a specific software suits your operations. If the software you want to implement comes with a cost, ensure it is no more than 10% of your projected catering sales.
Develop and create the needed marketing assets to sell your new catering on your chosen channels. These assets could include:
After you’ve set up your kitchen, production, staffing, ordering, payment and fulfilment processes, you are ready to launch! Publish your menu, announce your new service line and launch your catering/prepared foods offering! Congratulations, you’ve added catering and prepared foods to your grocery business!
FoodStorm has been delivering world leading, all-in-one grocery software for over 15 years, bringing expertize and unique industry understanding to customers. Contact us today to learn how FoodStorm can help manage your grocery catering and prepared foods business.