Mobile catering and co-branding: a business perspective

  • Share this article on Facebook
  • Share this article on Twitter
  • Share this article on Linkedin

Everyone wants to grow their business, but understanding how to grow a mobile catering business that is an extension of a static (store-front) retail operation is a new challenge. Here's some thoughts on how to achieve that.

mediaimage

Mobile catering and co-branding: a business perspective

by Paul Thornton,Mobile catering and co-branding: a business perspective Articles Carts and Grills, Inc.

www.cartsandgrills.com

Many people in the frozen dessert industry – particularly the independent operators – struggle with not just a seasonal cycle, but managing the inherent growth potential of their current operation and structure of that growth. For example, should a thriving retail business stay in a vertical market and attempt wholesaling, or would franchising be a better opportunity? Should you diversify across market segments, perhaps increasing the product line to another food group, such as hotdogs, sandwiches or grilled foods? Should you co-brand? Would increasing the mobile catering part of the business make more sense?

If you answered "yes" to any of these questions, then the next question should be "what business structure should I evolve into to effect this type of growth?" By business structure I don't mean whether or not you should be an LLC or a "C" Corporation – I'm assuming all that is in place already - but more whether or not you should have separate Strategic Business Units (SBUs). An SBU can be a separate legal entity (Corporation or LLC) or a wholly-owned subsidiary of your current entity.

Having separate SBU's for different aspects of your business allows you to track profit and loss much easier, and allocate funds/budgets much more effectively. Additionally, you can try different marketing or sales techniques in one SBU without affecting the other too seriously – particularly if your branding is different.

 

Create a mobile catering SBU.

Assume you're "ABC Ice Cream Store" that's operating a fixed-base retail business. If you create an SBU that's "ABC Ice Cream Catering" you can track the P&L of the catering arm of your business to determine the best marketing techniques etc. without affecting the sales of the store – unless you specifically plan to and want to. While everybody's in business to make money, you could choose to make your mobile catering operation a cost center, rather than a profit center by allowing it to work on a break-even basis or even at a loss as part of a strategic marketing plan. The returns would have to be driven back to another business unit – and this can be very lucrative. For example, suppose you had an opportunity to place an ice cream cart at a State Fair. Generally, there is a fee to participate, and coupled with employee costs to run the cart this could be significant. To gain visibility and traffic, suppose you sold your product at cost, and at the same time gave every customer a "$1 off" coupon off their next purchase at your retail store. That means overall, you've lost money at this event. However, from a marketing/conversion perspective, you would be able to tell immediately by the numbers of redeemed coupons how effective the event was for you, and at the same time you would see a significant increase in traffic at your store – for a loss-leader on your mobile cart. Converting a one-time customer at an outdoor event into a repeat customer at your store can be worth making the mobile catering SBU a cost-center rather than trying to attract repeat business solely on product quality and goodwill. Alternatively, if you make your mobile ice cream cart a profit center, you should be able to see a higher margin on sales by virtue of the fact that there's lower overhead – no rent for a storefront etc. You should, however, create a charge-back for commissary services from your store to your mobile catering business to even the playing field.

Create a co-branded SBU

This presents an opportunity to either do something entirely different, or something similar. For example, "ABC Ice Cream Store" may want to offer hamburgers or sandwiches. Or, you could open a coffee shop selling pies and cakes (and of course, ABC Ice Cream!). Co-branding is not new; in the early 90's, Miami Subs Grill started selling Baskin Robbins ice cream in their sub shops – some say the first co-branders in food service. Now, Miami Subs Grill is owned by Nathan's (hot dogs) and co-brands with Kenny Rogers Roasters (chicken) and Arthur Treacher's Fish & Chips (they no longer sell Baskin Robbins). Co-branding (or simply moving into a lateral market) gives you the opportunity to smooth-out the seasonality of the ice cream business if you want to. You could offer complementary products – or simply products that work well together, even if seasonal. You might not think that barbecue and ice cream go together – but I've been asked several times to provide just that solution in a mobile catering environment. Having multiple product lines in a mobile environment also broadens the opportunities for revenue growth – being able to cater two lines at one event (i.e. a State Fair) or multiple events with different products simultaneously.

Going vertical

Selling to local hotels, restaurants etc. at a wholesale level will gain a new revenue stream, and again, setting up an SBU for "ABC Ice Cream Wholesalers" will allow you to directly monitor your P&L. From a mobile catering and marketing perspective, going wholesale offers new opportunities. For example, having an ice cream cart with your branding/logo on it but being used by the restaurant or hotel at an event is a great validator of your product quality. You also have the opportunity to rent your cart to your wholesale customers or even work some of their events for them for an additional revenue stream. On the flip side of the marketing coin, you can then say "We provide ice cream to the Posh Hotel on Main Street" in your advertising literature.

FranchisingCreating a franchise almost certainly means creating a separate Business Unit. From this, you can plainly see the P&L and monitor the activities of your franchisees. From a mobile catering perspective, you can opt to provide your franchisees with a cart, or set guidelines for them to purchase their own. Since franchise branding is all about a uniform "look-and-feel" it's in your interests to work directly with a cart company for consistency. The downside on franchising from a mobile catering perspective is that you have no control over how your franchisee presents your brand to the public.