Why the Commissary Kitchen is a Hidden-Profit Gem
Most caterers start out pretty simple with one line of business, whether it is baking for wholesale accounts or doing on-site events. This simple model starts from a small kitchen that seems impossible to ever outgrow. The thought is that usually if it starts to feel cramped, staff can work two or three shifts per day and it will not be a problem.
But then success steps in and this small catering company is suddenly running multiple revenue streams that require more kitchen space. For the sake of example, imagine this caterer’s revenue streams include a contract as the exclusive caterer for a museum that stipulates operations must use the small café in the museum. In addition, there is an events catering revenue stream, and jams plus homemade desserts are sold to various wholesale accounts.
As a caterer juggles where to make all this food, a local baker goes out of business and the kitchen and equipment are the perfect place to produce all of the jams and desserts. While still operating the catering kitchen, the caterer decides to produce all the museum café food from the café kitchen. The plan is to keep everything separate.
Stop right there! All these revenue streams are part of one business and overhead must be maximized using one kitchen to maximize company profits. How is that done? With a commissary kitchen. A “commissary” is the point person for a certain project. A commissary kitchen is the point, the center, the hub, that keeps the main wheels turning and maximizes efficiencies in a food business.
Here’s an example: A caterer sells brownies for catered events, to wholesale accounts, in a tiny kiosk to retail customers, and on the café dessert menu. In the scenario above, the brownie is being made at all three kitchen locations. This is inefficient because the caterer is:
- Employing and training three bakers plus various other employees at the three locations
- Purchasing equipment, mixers, baking pans and ovens at all three locations
- Paying the lease, electricity, water, insurance, etc., at three locations
- Hiring a driver or drivers to go between the three locations to pick up brownies for events/accounts
- Transferring a stock of brownies from the bakery kitchen to the catering kitchen so the catering staff can provide brownies to the wholesale accounts when an employee is out unexpectedly for a few days (it happens!)
- Running out of brownies during the mid-lunch rush at the café on Friday and then having to race across town to get some more from the bakery freezer
- And the “profit leak” goes on and on and on …
Wow! Those are some expensive brownies. It’s a good thing they are the best seller and bring in so much profit. But could they be more profitable? The answer is yes. That is where the commissary kitchen comes in. This is one large kitchen that can produce all the food for all locations and events. The small café kitchen can still make the salads and fruit offerings but everything else, the baked goods, the grilled meats, the homemade rolls, the handcrafted granola, all of it is produced in the commissary kitchen.
The pros of a commissary kitchen:
- One lease, one utility bill, one bill for Internet service, one bill for pest control
- One baker, fewer dishwashers, plus less than half the management team and drivers
- Savings on van expenses and repairs, plus your deliveries have a higher on time delivery record because you have cross trained employees working from one location who can fill in unexpectedly
- More depth of inventory and a par level that is more accurately monitored for weekly food purchases.
- Cheaper insurance premiums because there are fewer locations with less equipment.
- Lower food cost and a better cost of goods sold percentage because it’s all in one location. If managed correctly, profits should be at least three points better on gross sales.
The cons of a commissary kitchen:
- There aren’t any!
For the past three years my catering company has had a commissary kitchen that consolidated many of these costs and the company’s net profits soared. It’s been a game-changer, a company-changer, not to mention a personal life-changer for me, the CEO of a catering company with multiple revenue streams. Since you’re in the business of profits, not sales, I urge you to consider a commissary kitchen for your various revenue streams.
Sandy Korem is the owner of the Dallas-based catering company, The Festive Kitchen, which operates multiple food divisions, catering, food manufacturing and gourmet food shops. Sandy and The Festive Kitchen have received numerous awards, including “The White House Food Service Medallion” for outstanding service to a sitting president. She is a frequent speaker at national restaurant shows, a contributor to several national food publications and coaches restaurant owners and caterers on developing a profitable catering revenue stream. For more information about Sandy, visit www.thecateringcoach.com.