Catering Report 2009
If the recession has been hard on the operators of business aircraft, it has been equally brutal on the hundreds of caterers whose livelihood depends on business aviation.
One caterer took out a mortgage on his home to keep the business afloat, and others have dipped deeply into savings accounts to keep the doors open; all are anticipating better times ahead.
One caterer who had expected to retire this year instead cashed in his 401k to keep the family-run catering firm alive. “I thought we had a good cushion put aside, and that maybe we were immune to this,” he told AIN, asking that his name not be used. “I was wrong.”
“It wasn’t a matter of whether we would make it through this recession,” said another caterer. “It was whether we would even make it through the next month.”
Some caterers have closed, among them Sky Gourmet. The company, which operated out of the Atlantic Aviation FBO at Norman Y. Mineta San Jose International Airport and served most of the northern California airports, closed its doors in October.
Air Culinaire, which has 13 kitchens across the U.S. and one in London, has a fairly broad view of what is happening in the business aviation catering industry and estimates that revenues are down “in the twenty-percent range,” according to v-p of national sales Saverio Mongelli.
Meanwhile, caterers are coping as they can. To avoid layoffs, most have reduced their workforce through attrition, replacing workers who leave only when absolutely necessary. In some cases, owners who are also chefs have returned to the kitchen.
And in an industry that took pride in providing 24/7 service, many caterers have elected to reduce hours of operation. Amina Halim of JetFinity said her San Francisco kitchen is now open from 5 a.m. to 11 p.m. Tastefully Yours of Atlanta has also cut its hours and is now open from 6 a.m. to 7 p.m. and closes at 4 p.m. on Saturday and Sunday, “unless there’s a sudden pop-up order.”
Air Culinaire hasn’t closed any of its 14 kitchens, but according to Mongelli, “We have made some changes in hours and instead of keeping a full staff on call 24/7, we’ve assigned some to an on-call status.”
Kristen Wasyliszyn, the owner of Atiki’s Flight Catering in St. Paul, Minn., had just bought a new, larger building to house her growing business when the recession hit. “It was like being dropped off a cliff,” she recalled. “Two companies with flight departments went bankrupt owing me.
“I had always heard that you had to learn to work smarter, not harder,” said Wasyliszyn. “Now I’m doing both. September is usually the start of my busy season,” she said. “Now it’s November and I’m still waiting.”
To make ends meet, she has begun leasing a catering kitchen now much too large for the amount of business being generated. “I’m renting it out per-hour to other caterers who are focused on weddings and the like,” she said.
The catering industry is reporting business revenues down by as much as 40 percent from a year ago, and things are no better among their customers, fractional and charter operators, flight departments and private operators. Many of those customers, under pressure themselves, are squeezing the caterers.
Budgets and Local Market Alternatives
“We’ve had some charter operators and flight departments ask us to manage their catering in an effort to cut costs,” said Mongelli. Others have taken a different tack. In Las Vegas, for example, the executives from the various casinos and major hotels began using their in-house kitchens to cater flights in their own as well as charter aircraft, he added.
Some flight departments have asked a regular caterer to create a standard menu to which their passengers are restricted as a way to stay within budget. Flight departments and charter operators are also asking flight attendants to shop at local markets for standard items–soft drinks, bottled water, table wines, and fruits, vegetables and cheeses for various platters, further cutting into catering revenues.
Richard Bier of Isaac’s Inflight Catering in Carlsbad, Calif., said he has seen flight attendants picking up meals for flights at local fast-food restaurants such as Subway sandwich shops and El Pollo Loco.
But client efforts at saving money occasionally leave caterers confounded. One caterer recalled an executive who insisted on a particular Turkish bagel with his breakfast. The caterer figured the cost of sending a driver on that single errand, including salary and gas, was close to $60. She priced the bagel at $5. “They still complained that it was too expensive and asked where we got [it] so they could send someone from their staff to pick [it] up,” she said. “So now they have someone from the company doing the same thing, and it’s costing them $60 instead of $5. But it doesn’t show up as a line item on an invoice anymore, so I suppose they’re happy. Actually, I think I got the better end of that one.”
Cost Is a Concern
Everybody is asking about the price, said one caterer, “and they’re asking for quotes, especially for more extravagant items–wines, champagnes, caviar. Or they’ll give us a ‘not-to-exceed’ cost and ask us to get together the order.”
If there’s a single complaint that caterers seem to have in common it is with the fractional and larger charter operators.
“We don’t mind bidding on a contract,” said one caterer, who preferred to remain anonymous. “But what some of them are doing is asking for a bid, and then shopping it to other caterers until they get something better.”
Another problem is the lengthy contracts. “Because we bid as low as possible, the profit margin is minimal, and with the rising cost of produce and packaging, not to mention insurance and gas, and the drop in demand, we’re actually losing money. A number of caterers are trying to get out of their contracts, or asking the customer to renegotiate the cost of the catering.”
It hasn’t been easy, but in the past few months business appears to be improving, if only slowly.
With the gradual increase in flight activity reported by companies such as Aviation Research Group/U.S. (ARG/ US), caterers are starting to see a slow climb in demand for their services.
“I feel like it’s getting better,” said Wasyliszyn. “This is supposed to be the start of my busy season. I don’t feel like it’s the busy season, but I have hopes.”
Mongelli of Air Culinaire was more optimistic. “I think we’ve seen the bottom and aircraft movements in general seem to be increasing. It was a rough summer for our London kitchen, but in the past couple of months, with international charter flights increasing, it’s been an amazing turnaround. From the summer, business is up about five to seven percent in London.”
“I think the worst of the flight hour cuts is behind us,” said Halim of JetFinity. “It started last November and lasted until this July, and now it’s starting to pick up again.” But she offered a note of caution as well, pointing out that while orders are increasing, “they are much more conservative.”
Kraft at Tastefully Yours agrees. “Orders are nothing like they used to be, but the total number of orders is up. Just a little, but up, so I’m pleased with that.”
A few caterers have been surviving and even expanding. Sky Gourmet had barely had time to lock the doors for the last time when competitor Stevie’s Aviation Catering picked up the key and began moving in.
Stevie’s is one of the few catering operations that appears to be not merely doing well but expanding. The company, owned by Steve and Julie Sipprell and v-p and corporate chef Charles Lewis, has not only taken over at the former Sky Gourmet location, but has also acquired Lindy’s Premier Inflight Cuisine at San Diego International Airport (Lindbergh Field). The facility was at the former Jimsair FBO, now a Landmark FBO.
Those caterers who have been hanging on remain hopeful, but cautious. And some are already starting to look back and try to understand what happened and what they could do to lessen the trauma of another recession.