Commercial catering services
LOROS developed a commercial catering service to help provide a sustainable source of income.
Project and outcomes
LOROS began thinking about sustainable income in 2019 and formalised its Business Development team in 2020. The team’s key aim is to look at the existing skillset in the hospice and identify what can be commercialised.
After considering a range of options, catering was identified as a good opportunity. The team developed a business case, which was approved by the Board of Trustees’ Business Development Committee. The hospice began the process of seeking out opportunities to tender for contracts.
This involved looking at tender websites, networking in the local area, and making applications.
LOROS now has:
- a catering contract with the local university (this is a three-year contract that began in December 2020)
- a café in the local Crown Court (this is also on a three-year contract)
- a mobile drinks van (this was initially intended to cater for the hospice’s own outdoor events, but during the COVID pandemic the team were able to secure pitches in local beauty spots)
- acquired an existing catering business – including two cafés and a catering company
- an external catering service which is used for wedding, funerals, birthday parties etc (the mobile van has an alcohol licence and is also available for private hire)
The original business plan had provision for a two-year return on investment. Due to the pandemic this has been delayed slightly, but the service will be very close to making a profit in two years.
Facilitators, challenges and advice
The commercial catering service is staffed and managed separately to the in-house catering team (this stops any commercial catering events or activities from impacting on the catering service for patients and families). However both services do use the same purchasing account for food, to benefit from economies of scale.
The COVID-19 pandemic has had a big impact on the catering industry, but LOROS was also able mitigate some of this by taking advantage of opportunities to secure pitches for the mobile drinks van in local outdoor spots. One of the cafés is located in a local park, which had a lot of footfall during the pandemic.
LOROS has employed staff from the business they purchased, and has taken steps to make sure they feel like full members of the hospice team. There has been a process of transition which has included induction sessions at the hospice.
Any commercial project has the possibility for reputational risk, and the hospice has taken steps to mitigate this (for example by operating the commercial service as a separate trading company).
LOROS carried out market research which found that people were opposed to the cafés looking and feeling ‘too similar to charity shops’. However it is also important for customers to know the cafés support LOROS. Each café stocks leaflets about the hospice lottery, promotes events and displays information about “what has your coffee bought today?”
Running costs are increasing at an alarming rate due to the cost of living crisis, and this will have a significant impact on profit margins.
Tips and advice
Think outside the box – go out into the community and network to find out what is going on and what people need.
Take time putting a comprehensive business case together and present it to the Board of Trustees. You need to get their support and take them on the journey with you.
Be transparent - consider the risks of any projects as well as the potential benefits.
LOROS plans to develop the cafés as a community resource, using them for hospice events and local community groups.
In 2023/24 the team aims to secure a tender for a third café and increase sales (as much as is possible in the cost of living crisis). The hospice would also like to investigate the possibility of recruiting volunteers to help in the cafés.