Not so festive season for caterers as orders lag

Catering firms expect their corporate clients to stage more modest festive celebrations this Christmas compared to past years. Cutbacks by many companies on food, alcohol and service staff mean that profit margins and turnover will plunge many caterers into the red this year.

The business confidence index compiled by the Central Statistical Office (GUS) last week fell to minus 18 - the lowest level of confidence among Polish companies since 1993. With their order books thinning, many catering companies are losing business during peak season.

"This year's events will certainly not be as spectacular as last year," said Ewa Spodarzewska, owner of Bon Appetit Catering, which has catered events for Finnish mobile phone producer Nokia, state television company Telewizja Polska and French hardware chain Leroy Merlin. She said the peak party period of December 2000 was a hectic time for the firm, which catered as many as 20 events a day, with its biggest clients spending around zł. 10,000.

"There will still be a lot of parties because firms are already placing orders, but the budgets will be smaller compared to last year," Spodarzewska said. While firms may be hesitant to cut out parties altogether, this year will see more modest spending on food, drink and service staff, putting pressure on Bon Appetit Catering to lower prices.

Other caterers are also feeling the pinch. "The value of orders this year is definitely lower," said Zapart Catering owner Ludwika Zapart, who is disappointed with the overall value of Christmas bookings. "The number of events is about the same, but they will have more modest food and decorations this year."

Zapart Catering specializes in large events for 1,500 to 2,000 guests, which can gross up to zł. 140,000 on food alone. The firm organized up to six events a day last Christmas, including a party for telephone giant Telekomunikacja Polska (TPSA).

Nevertheless, caterers with a string of regular multinational clients are more optimistic about this year's corporate festivities. According to Wiesława Szczep, managing director of Santa Fe Partners, the firm has a flow of Christmas bookings this year. "We're observing a steady growth of corporate reservations compared to last year," Szczep said. "We have a well-established relationship with our clients and I'm sure this is helping us right now."

Santa Fe Partners specializes in restaurant service, offering a special Christmas menu for corporate clients at its Boathouse, Blue Cactus and Heaven on Seven restaurants as well as outside catering for up to 500 people. Last year, Santa Fe Partners organized Christmas parties for mobile telephone operator Era GSM, digital television platform Wizja TV, U.K. consultancy group Andersen Consulting and U.S. software giant Microsoft.

But Szczep admitted the number of outside catering contracts has fallen this year. Santa Fe Partners has seen pressure from corporate customers to keep down their Christmas party costs by cutting back on alcohol spending. "We're getting more requests for an exact number of drinks, with fewer clients going for an open bar," Szczep said. "We even had a party recently with the organizer giving out drink coupons." With clients increasingly bringing their own alcohol, Szczep estimates that average revenue per customer could fall by as much as 15%, and the company has responded by adding charges for serving clients' own alcohol to compensate for loss of profits.

Meanwhile, at the premium end of catering some have seen no drop in business. Richard Lyon, general manager of the Warsaw Marriott Hotel, said there are no signs that demand for festive catering services is slackening this year. "Everybody recognizes the need for life to go on as normal so many people are going ahead with their Christmas celebrations, even though times are challenging business-wise," Lyon said. "It would appear that the majority of the functions that we have anticipated will be taking place, although it would be natural to expect some reduction from last year."

Lyon said the current economic climate calls for closer cooperation with clients on Christmas party budgets, but that these savings would not leave staff disappointed. "You can always scale down a function if somebody says they want to make a 10-15% savings," Lyon said. "Even if there are cutbacks, it doesn't mean it won't be a memorable event."

Greg Goodale