Everyone wants to grow their business, but understanding how to grow the mobile catering business, which is an extension of static (in-store) retail, is a new challenge. Here are a few thoughts on how to achieve it.
Mobile catering and co-branding: a business perspective
Many people in the frozen dessert industry – especially the self-employed – struggle not only with seasonal variability but also with managing the inherent growth potential and structure of their current operations. For example, should thriving retail stay in the vertical market and try to wholesale, or would franchising be a better option? Should you diversify your market segments and maybe grow your product line to another food group like hot dogs, sandwiches or grilled foods? Should you brand? Would it make more sense to increase mobile service?
If you answered “yes” to any of these questions, the next question should be “what kind of business structure should I develop to achieve this type of growth?” By business structure, I don’t mean whether you should be an LLC or a “C” Corporation – I assume everything is already in place – but more whether 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.
When you have separate SBUs in different areas of your business, you can track profit and loss much more easily and allocate funds / budgets much more efficiently. Plus, you can try different marketing or sales techniques in one SBU without affecting the other too seriously – especially if your branding is different.
Create a mobile catering SBU.
Suppose you are an “ABC Ice Cream Store” that operates a fixed-based retail business. If you create an SBU that is “ABC Ice Cream Catering”, you can track the P&L of your company’s catering division to determine the best marketing techniques, etc. While everyone wants to make money, you can turn your mobile catering business into a cost center rather than a profit center by allowing it to operate at profitability or even at a loss as part of a strategic marketing plan. Revenues should be driven back to another business unit – and this can be very lucrative. For example, suppose you had the opportunity to place an ice cream cart at a state fair. In general, participation is chargeable, and combined with the cost of employees to run the cart, this can be significant. To gain visibility and traffic, it is assumed that you sold your product at a price while giving each customer a “$ 1 discount” coupon on their next purchase at your retail store. That means you lost money in this event. However, from a marketing / conversion perspective, you can immediately tell the number of coupons redeemed how effective the transaction was for you, and at the same time you would see a significant increase in trade traffic – to the loss leader in your mobile basket. Converting a one-time customer at a outdoor event into a repeat customer for your store can be worthwhile to make a mobile catering SBU a cost center instead of trying to attract a recurring business out of product quality and goodwill alone.
Creation of a co-labeled SBU
This offers the opportunity to either do something completely different or something similar. For example, the “ABC Ice Cream Store” may offer burgers or sandwiches. Or you can open a cafe selling pies and cakes (and of course ABC ice cream!). The co-brand is not new; In the early ’90s, Miami Subs Grill began selling Baskin Robbins ice cream in its sub-stores – some say the first co-brands in the food service. Now Miami Subs Grill is owned by Nathan’s (hodars) 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 to a secondary market) allows you to smooth out the seasonality of the ice cream business if you wish. You can offer complementary products – or simply products that work well together, even if seasonal.
Sales to local hotels, restaurants, etc. From a mobile serving and marketing perspective, wholesale offers new opportunities. For example, an ice cream cart with your branding / logo but used by a restaurant or hotel at an event is a great validator of product quality.