Operations

Urban revival brings a big win for catering

As employees returned to offices this fall, restaurants saw double-digit jumps in catering sales. Bookings through ezCater are up 91% this year.
catering setup
EzCater now fulfills individual daily lunch orders with its Relish program. / Photograph courtesy of ezCater

Online catering marketplace ezCater was already having a pretty good year. Then Labor Day passed, and business really picked up. 

“It was almost like we were shedding the pandemic from the way we behave, both as people and professionals,” said Chief Customer Care and Operations Officer Mike O’Hanlon.

Fall brought a return of office workers in many cities as companies ended hybrid work policies and kids went back to school. That’s been good for restaurants that appeal to the lunch crowd in general, and for catering in particular. 

The service, in fact, has been one of the highlights of an otherwise lukewarm restaurant earnings season. At BJ’s Restaurants, catering sales rose 75% year over year in the period. At Potbelly, they were up 60%. At Sweetgreen, which is testing the service at 20 stores, weekly sales tripled throughout the quarter. It has gone from a nice piece of incremental sales to a bonafide growth pillar that brands are beginning to invest in. 

“We see real growth opportunities with [office pickup program] Outpost and catering as return to office trends upward and group gatherings increase,” said Sweetgreen CEO Jonathan Neman during an earnings call Wednesday, according to a transcript from financial services site Sentieo.

That growth has been reflected at ezCater, which on Thursday said it had surpassed 100,000 restaurants on its platform. Bookings were up 91% year over year through Q3, and inbound interest from restaurants has accelerated since Labor Day. Some of it has come from restaurants that hadn’t really considered catering before.

Outback Steakhouse parent Bloomin’ Brands, for instance, partnered with ezCater as it quickly expanded catering to all four of its concepts in recent months. Before the pandemic, Bloomin’s catering sales were “virtually negligible,” executives said; in 2021, they were up 46% on a two-year basis.

“Restaurants are coming to us and saying, ‘Hey, either help us enter this market or help us grow,’” O’Hanlon said.

Catering offers an intriguing proposition for foodservice operators. Orders are large (at ezCater, the average ticket is $350), which makes them more profitable, and tend to be prepped earlier in the day when operations are less busy.

“That’s a really interesting order to send a restaurant one or two times a week,” O’Hanlon said.

What’s more, he said, EzCater worked to expand the use case for catering during the pandemic when the traditional occasions—one-off meetings and parties—were off limits. It began focusing on daily lunch with a product called Relish that allows workers to order lunch from one or more restaurants, fully or partially subsidized by the company. Companies can use this is a perk to entice employees back to the office, he said. And it represents a whole new market for catering.

“Once you’re feeding people at their desk for lunch, you’re really bringing restaurant food into a workplace and displacing cafeterias, canteens, vending machines” as well as the old-fashioned brown bag lunch, he said.

Even with the influx of office workers in recent months, occupancy rates in major U.S. cities still remain relatively low. New York City, Los Angeles and Chicago were all around 45% at the start of November, according to data from Kastle and the National Restaurant Association. Austin, Texas, led the way among big cities with a 62% occupancy rate. That suggests there’s room for even more catering sales if workers continue to return.

But catering’s growth is not necessarily confined to urban centers. Potbelly noted that businesses near its more suburban shops have also shown demand for group orders, for instance.

“The retail sector can be a good source of catering business for us,” CEO Robert Wright told investors last week, according to a Sentieo transcript. “We expect that that will be significantly better this year as we go back to that.”

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