There are 3 ways to win in catering:
- Have the biggest marketing budget
- Have long-term contracts
- The Snowball Effect (aka James Clear’s 1% better)
Doing #1 and #2 is virtually impossible for us SMBs …so today I’ll tell you EXACTLY how to dominate catering by doing #3
The Snowball Effect refers to the power of compounding.
A Brief Overview
Albert Einstein once said:
Compound interest is the eighth wonder of the world.
Albert Einstein
He’s right. To illustrate this remarkable power, would you rather have a penny that doubles every day for a month, or $5M? After a month, the penny doubled is worth over $10M.
Incremental changes that are continually made will lead to unexpected results.
If you just get 1% better each day, at the end of the year, you improved 37x.
James Clear, Atomic Habits.
Now, how does this relate to catering? I’m so glad you asked. There are two main areas…
Continual Sales Growth
For catering sales, the name of the game is compounding.
In the beginning, if you get one decision maker (here on out referred to as DM) who orders 1x / month, that isn’t particularly valuable in itself.
But once you get 100 DMs ordering 1x / month, now its getting pretty lucrative.
Let’s run some quick math.
If we assume an average order value of $250:
→ 100 DMs order 1x/mo @ $250 = $25,000 / month
→ @ 30% margin, you are profiting $7,500 each month.
Now, let’s expand on that. If you can grow your monthly DMs to 200 / month or have 100 DMs order 2x:
→ $50,000 / month revenue
→ $15,000 / profit If you can get to 500 DMs 1x/ month:
→ $125,000 / month revenue → $37,500 / profit
You can quickly see how the power of compounding in catering sales growth is absolutely astounding.
Operational Excellence
When you first start out in catering, you don’t know what you don’t know.
However, after a few weeks / months, you begin to pick up on the small things. And let me tell you.
The small things are everything.
If you can find a way to improve your operational systems, you can scale to unbelievable lengths:
→ Produce more food
→ Deliver more orders
→ Make more money
Most people are solely focused on revenue growth.
Savvy operators are focused on building teams and systems to sustain growth.
What’s the point of marketing like a madman to only lose the repeat order due to operational failures (late, poor food quality, etc.)?
There’s a reason many of the best business leaders emphasize the necessity of a great team.
Takeaway
To recap, if you can get 1% better each day at:
- Building strong sales (leading to repeat orders)
- Developing exceptional teams backed by powerful systems
You’ll make more money in the catering game than you can imagine.
