How to build a $4M+ catering business
š business philosophies with 'Revol Events' co-founders Jonathan Leaman & Ross Collins.
The Come Up highlights successful business ownersā & operators ācome-upā stories in an easy-to-read, written interview format.
All content is transcribed from live interviews, this one, from Nov. 2022.
Iāve removed the interviewer's questions and replaced them with headers reflecting the topic discussed, because letās face it, this isnāt about me!Ā
For the third issue - an interview with āRevol Eventsā co-founders Jonathan Leaman & Ross Collins.
Revol Quick Stats:
š¤Business: Catering
šFounders: 2
š„Headcount: 50+ employees
š°Annual Revenue: $4.2M+
šTarget Profit Margin: 35%
ā©Best Growth Channels:
RFP Response
B2B Outbound
#ļøā£Businesses Started Prior to Revol: āthis is our first and will be our lastā
ā³Time In Business: 7 years
šRead the full interview belowā¦
Starting the businessā¦
Ross: November 2015, Jon and I were working for another catering company, but the owner was going down on tax evasion chargesā¦Ā
We started getting head hunted by other companies; but one day over peameal bacon sandwiches, decided it was best to take all our contracts and start our own company - so thatās what we did.Ā
And now weāre on to our second kitchen.
We didnāt get any bank loans or anything like that - we funded the whole thing ourselves and now have built it up into a $4M business with 51 employees.
Jonathan: Yeah, I was in Munich at the time, and Ross pulled the trigger on a catering kitchen - well, I guess he thought it was a catering kitchen, but it was far from itā¦Ā
Itās a really small kitchen storefront outfit, and it turned out to be a lot more headache than it was worth, but that was our first spot.Ā
We probably spent $100kā¦money we didnāt really have - maybe it was HST dollars we hadnāt remitted or money we were supposed to pay ourselves - but it all went into this kitchen to get us up and running.Ā
And unfortunately, we outgrew it before we could even justify leaving the place.
Luckily, we were able to sublease a lot of it, sell some of the equipment and took the space of another catering company that was going in a different direction.
So we ended up moving from that really small kitchen space to a much larger building that was already a functioning catering kitchen - though not a very well-functioning catering kitchen - and we've been trying to improve it ever since.
I think we've been here since 2018 or 2019, and we're still not done retrofitting this place. It's still a work in progress, but we're getting there.Ā
The pros & cons of cateringā¦
Ross: I think the restaurant business is kind of a terrible businessā¦itās like owning a bar - youāve got to stock up and hope that youāre in a place that people want to go.
Whereas we donāt have to bring anyone in or pay any money until we know weāre doing something.Ā
Weāre not setting up tables and hiring a DJ, hoping that we have a good night - we have it all scheduled, we KNOW when weāre going to have a good night and we can staff accordingly and buy everything you need per job.Ā
And most of the time, you can price out a job before you do it.Ā
Obviously, there are things that are hard to assign a cost to, but you just have to constantly study those trends and find out ways that youāre misapplying revenue.
So generally, things are a lot easier to predictā¦except for that huge fuel cost spike - that was pretty painful.
Jonathan: The downside to catering is the menu is completely different every single dayā¦
We just expanded our pantry storage by 1000 square feet because we have so many SKUs we have to keep, just in case someone places an order for 9AM the next morning.Ā
Itās a constant battle between having too much inventory and not enough inventoryā¦and thatās really a function of how demanding our corporate clients are, with what they expect at the drop of a hat.
On surviving the pandemicā¦
Ross: The pandemic was painful, but we promised our staff to keep everybody employed. And we actually managed to win a government RFP right before the pandemic started, which turned out to be massively fortuitous.Ā
Jonny knew about the tender, so he hired a guy who writes RFP responses and we submitted it. So because we had municipal, federal, institutional-type contracts, we kept workingā¦Ā
It was kind of like communism - we were working just to pay the bills and keep everybody employed.Ā
Jonathan: RFPs arenāt a core piece of our strategy - they're usually pretty time consuming, tough to win and we've never had the luxury of enough administrative staff to tackle them, but we gave this one a go and won.
Ross:Ā And it was a contract for the Canadian army, so when they mobilized the army to help out at the long-term care homes, things really started to ramp upā¦
So, the pandemic hit and for six weeks we didnāt know exactly what to do but suddenly we were just going balls to the walls supporting military deployment in the old folksā homes.
Jonathan: We had suppliers coming in and dropping off pretty close to our regular order volumesā¦
They kept asking like,Ā
āHow are you guys out here?ā
āHow have you stayed so consistent?āĀ
So, we definitely got a little bit lucky to plateau throughout the whole COVID experience.
Ross:Ā That said - weāre still down by 25%...Ā
I did a report the other day - weāre down by 25% of corporate events from 2019, but I mean itās a heck of a lot better than the pandemic where we had none.
I think it will all be back, but Iām surprised itās not coming back as quickly as I thoughtā¦
Normally, our Christmas party sales are about $1.3M, but as of yesterday weāre at $490k, which is a huge hit.
I remember when we first shut down the kitchen, when we were all ordered to go home and we didnāt know what was going to happen; and itās like,Ā
āweāll be back in six weeksā¦ā
I could have never imagined that it was going to be like this.
On post COVID challengesā¦
Ross: Itās a constant struggleā¦Ā
In 2019, if we needed to put 50 people on the ground, youād call one staffing agency and youād be done. We had developed relationships with staffing agencies, and thatās all gone now.
Thereās not the availability of general labour that there used to be, so we have to spread out our team as much as possible. We had to use multiple different staffing agencies this year, and ask everyone who works for us to help find more staff.Ā
Staffing has been a major, major issue this year and labour has just explodedā¦
In 2019, a dishwasher made $18 an hour and that was considered a very good industry rateā¦now, 22 to 24 dollars is like the new minimum wage.Ā
Itās crazy.
Thoughts on growthā¦
Jonathan: It sounds simple but really just going after it and just hitting it hard season after season. Because of the seasonal nature of the business weāre always pushing towards one of the big upcoming event typesā¦
If itās barbecue season coming up, you go after everyone to book their summer event or picnic, and Christmas always comes up faster than expected - there is always a big push to get all the seasonal business through the door before you start chasing that next season.Ā
It's predictable in a way, especially on the corporate side because you know companies budget for it. They have resources to plan & execute these events - youāve just got to find the decision makers.Ā
Ross: We are also founding partners of āHoliday Fair in the Squareā, which is the Nathan Phillips Christmas market.Ā
We're involved to various degrees of all sorts of different public events - weāve got a ton of different partners and have got ourselves into all sorts of weird s*** by design.
I have a really good relationship with a guy who is deeply involved in a lot of Toronto events - we even formed a supper club that involves a few people whoāve got their hands in all sorts of pots and by virtue of that, it gets our hands in all sorts of potsā¦.
Jonathan: And our website was designed at a time where we were trying to position ourselves as an up-and-coming event group with all these different contacts.Ā
So we sort of willed it into existence I think a little bit.Ā
We wanted people to take us seriously out of the gate, so we intentionally formed some of these partnerships which made our website sound fancier than it actually was.Ā
And then - seven years later, finally ended up executing a bunch of public events and doing all the stuff that we sort of positioned ourselves to facilitate or to execute.Ā
I donāt think we were capable of a third of what we were saying we were capable of at the very beginningā¦I mean - we probably couldāve figured out, but weāve just kind of got into all of these different opportunities because of how we positioned ourselves early onā¦
Ross: We manifested itā¦
Jonathan: You sound like a crazy person, Ross.
On the biggest challenges theyāve facedā¦
Jonathan:Ā The biggest challenge I face is, I may have a good rapport with someone and become their turnkey vendor, but then someone jumps ship and you're kind of starting all over againā¦
So itās a challenge keeping on top of all these people that are a part of your funnel in different ways.
Ross: I think the biggest thing that shocked me and continues to shock me, is how much you have to walk a line between trying to push your objectives and corralling your staff.Ā
Because of the nature of our business, we have to rely on them so much to take good care of all the equipment and not break thingsā¦
To them, if something breaks, it magically gets fixed, and itās a real challenge to get staff to see our perspective.
We have to communicate things like,Ā
ādon't slam equipment around because it's going to break and then weāve got to replace itā¦Ā
and you want a raise and a Christmas bonusā¦
and we want to give you oneā¦
but we canāt when we're constantly adding up all the **** that gets wrecked through stupidity or negligenceā¦ā
There's just so many ways you get ****ed.
So it creates a weird relationship with your staff - they have to believe in what you're doing so that you can perpetuate itā¦and itās shockingly hard.Ā
And then, once we hit 50+ staff - suddenly weāre managing personalities and in-fightingā¦just all the stuff that I never really imagined having to facilitateā¦Ā
We've gotten to the point now where we have inter-office politics and manage who likes working with who; because if they don't like working together, they don't work well.Ā It's crazyā¦.
You really start to see how in larger corporations, they have to do all those team-building seminars just to keep everybody on the same page.Ā
I always thought that stuff was ridiculous, but we have meetings now where we talk about how we're going to use the washroom or how to park the trucks - just this stuff that seems obvious and you would never imagine would come up, but inevitably has to be addressedĀ because we're at the mercy of the staff.Ā
It's a lot to deal withā¦
So much of your time gets sucked into managing people's personalities, because if you look away for a second, there's pee on the floor and a van crashes through the wall.
It's crazyā¦
Thoughts on the futureā¦
Ross: I think doubling our sales at this point would be pretty daunting unless we landed some sort of crazy single contract.Ā
I would like to double our corporate work though, now that we have the facility and core staff to do soā¦
You've just always got to be looking to add people - like I need more drivers right now so I don't push my existing staff to the point of exhaustion and then their performance suffers, and they don't want to do it anymore and quit.Ā
So, now we can focus on the team; having the right people in place to do the right thing, so we can provide a better product which perpetuates more business and move on from thereā¦
There's always stuff that we're missing - like our Instagram game is terrible, so, we have to address that because we're falling behind there.Ā We probably need to do more with the website, but it's Jonny and I leading the ship, so if we're focused on one thing, that means we're not focusing on something else.Ā
I don't know at what point you actually move to having an HR person and a dedicated social media person and all that other crap for you, but those are things we have to discussā¦
Jonathan: Yeah and when we finish a project, weāll say āOkay, that's it, we just spent $25k - no more projectsā¦āĀ
And then, three months go by and we run into another problem and before you know it we're into another project, so it's never-ending, reallyā¦
It just feels like consistently putting out fires across the boardā¦
For example - all of a sudden our sandwich production is through the roof, so now we need more prep space, more cold storageā¦
Then four months later, the large events take off a little bit more than expected and suddenly, weāre out of bigger equipment - so itās just constantā¦Ā
I think weāre definitely over the hump, the projects arenāt massive to us anymore, but thereās always something ready to take your attention away from whatever you were hoping to doā¦
What you wish you knew when you startedā¦
Jonathan: Take some funding if it ever becomes available, before killing yourself to use your own resources to make everything happen all in one fast swoop.
We took on some debt eventually to get ourselves out of our expansion projects, but if we had just done it from the beginning instead of trying to kill ourselves, by using our own money, I think it wouldāve been further ahead today.
If we wouldāve just taken out $250k at the very, very beginning, we would have been able to set ourselves up for an easier time growing into where we are.Ā
It ended up getting done and weāre now where we envisioned ourselves, but I think having tried to use all our own money was a little bit foolish, looking back on it.
Ross: Yeah, there were definitely some painful times when things got a little bit scaryā¦and that wasnāt a conscious choice, I think at the beginning, we were just flying by the seat of our pantsā¦Ā
We had booked a bunch of business and we're just like,
āHow are we going to facilitate doing these contracts?āĀ
We put the contracts before the idea of even a companyā¦it was very strange the way we lurched into it.Ā And then, we had a huge amount of pending business and I was like,Ā
āOkay, we need our own kitchen so that we get the lion's share of all this moneyā¦ā
Unfortunately, I grossly underestimated the cost of that project which really put us behind the eight ball.Ā Really, at the beginning, when we had all those signed contracts, we should have taken that to a bank and said, āhey, give us a loanā¦āĀ
We definitely underestimated the amount of administration that is required, but if we have a problem, we immediately fix it.
If you start to realize that you canāt do something yourself anymore, fix it.
you find a better accountantā¦
you find better lawyersā¦
you find better everything.
Both Jon and I are constantly thinking about these problems and finding the right people to fix them, to allow us to carry on and grow up.Ā
And now, I overestimate the cost of everything, knowing that the cost is always more than what anyone tells youā¦
We had plumbers come in last week - the guy said, āthis is going to cost $6k,ā so we budgeted $10k because nothing's ever as easy as you think, right, Jon?Ā
Jonathan: Never as easy as you think, Rossā¦and everything costs more than you thinkā¦ And yeah - it actually did end up costing us about $10k to do the plumbing.
On Profit Marginsā¦
Ross: I built a whole model to try to achieve 35% profit, but are we consistently hitting it?Ā
Noā¦
But the larger the scale of an event, you tend to make more money - that's why I love summer barbecues.
I love all the big event workā¦
It's day-to-day catering that really sucks and brings you down - like, your 20% sandwich order going to a law firm?Ā
It's s*** businessā¦
We do it because we need to keep everything going and remain top of mind with all these businesses, but we really make our money on the large events.Ā
On big contracts creating stabilityā¦
Ross: I think the most important thing about the military contract is that it gives us a solid baseline so we know we can retain all our core staffā¦
It allows us to be fully staffed to take on all the other huge high-volume stuff that we ever have to do.Ā
Jonathan: Yeah, it stabilized our kitchen operation so we can schedule people confidently and add to that if needed, but youāre not scrambling to secure work for everyone without going broke in the process.
People want full-time work so you have to give them full-time hoursā¦
And a lot of times you're just trying to make work for people in this industry if you don't have set contracts or set business coming through the door.Ā
Ross: Well, I know that's a major struggle that other caterers talk to me about because I'm friends with people who own other catering companiesā¦
Theyāre like,
āHow do you retain full-time staff when you might not have anything going on for three days out of the week?āĀ
Luckily, we don't have that problem.Ā
Jonathan: Yeah, hopefully we can keep this government work for 10 to 15 years until they feel like they have to go back to tender.Ā
We'll see how long we can keep them appeased or happy.Ā
Tech Stack
Ross: I have a computer. laughs
Jonathan:Ā I think that is one area where weāre lacking - the tech to drive a new business.Ā
We have toyed with CRMs here and there, but weāve never really had the manpower, time or patience to implementā¦so, weāve tried a handful of things and never really stuck with it.Ā
QuickBooks is obviously a huge part of what we do - just with all of the invoicing, accounts payable, accounts receivable and so on - but admittedly we have a long way to go in terms of improving our systems with technology.
Final philosophiesā¦
Ross: I think that we learned a lot from working at our old company, so we pretty much did the opposite of everything that our old boss had done. laughs
Yeah, we paid our taxesā¦
Jonathan: Not right awayā¦
Ross: Good point - not right awayā¦Ā laughs
Jonathan: But yeah, that's the number one lesson - donāt evade taxes, because then you'll be out of business.
Ross:Ā That's what I tell everybody - it's like, for God sakes, pay your taxesā¦
As long as you pay your taxes, you'll be fine.
Thatās it for issue no. 3!
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