Innovation and Entrepreneurship
Alicia Escobosa's Catering: Sustaining a BusinessPublished: June 07, 2011
At the beginning of the 1980s, in Culiacan, Mexico, Alicia Escobosa managed her household and took care of her children while her husband was away for work.
In the summer of 1992, a tragic accident led to the death of Escobosa's husband. Suddenly, she was left with five young children to raise and support. "I was faced with one of the greatest challenges in my life. We had invested most of our life savings into a new house, and all the children were in private schools." After her husband passed away, "I had no choice but to work hard to give them the best I could provide." After assessing her options, Escobosa, an accomplished cook, realized that she would need to start a food service business to raise enough money for her children. Her kitchen at home was a standard residential kitchen; but it was all she had, and it would have to do.
Even though the small business, which started out catering family gatherings and simple events, relied on word of mouth to attract new clients, it became well known for its superior food quality and genuinely caring service. Soon Escobosa started getting calls for larger weddings, conventions and conferences; and she saw the need to expand, first by hiring full-time staff. As she recalls, "in my first years, most of the changes made to my business were small but constant, as I adjusted the business to the growing demand and the general environment." Some of her clients were also not skilled enough to serve the prepared food at their events or would make mistakes and spoil the food. At this point, Escobosa noticed the great potential in her blossoming business and set to become the premier food caterer in the region.
The first thing Escobosa realized was that clients were eager to receive a full catering service instead of simple food delivery and that they would be willing to pay a premium for it. Escobosa decided to renovate all of her equipment, replacing it with professional- and industrial-grade gear. Although she had considered eventually relocating the business outside her family's house, it was much easier to improve her current plant rather than undergo a more aggressive investment. At this point, only the portable equipment were the latest models, and the business plant still used some consumer-grade stoves and appliances.
Growing the Business
Escobosa looked everywhere for opportunities to develop new ideas or improve the business, which she called Alicia Escobosa Banquetes. "In 2004, while on a cruise to Alaska, I was allowed into the ship's central kitchen to figure out how the crew could cater to 4,500 passengers around the clock with different menus every day," she says. "The most striking feature was the highly organized, systematic approach to food preparation that allowed for gourmet food production at such large amounts. With the proper facilities, following a similar approach at home would be easy to implement. Just a couple years earlier I had also visited many cities in Europe, where I frequented the most distinctive restaurants to learn of gourmet cuisine firsthand."
In January 2005, Escobosa attended Catersource, a professional catering conference in Las Vegas, to learn the latest organizational and logistical designs. As with any other company in the catering business, Escobosa and her employees had to work long hours for prolonged periods of time, especially when there were four events to be served in three different cities on the same day. Any logistical advances that Escobosa learned or devised were instrumental for increasing the scale of her business.
"After the conference, I returned with a firm goal to revolutionize the business," she says. "I was looking forward to the summer, when people are away and there are few events, so that I could carry out some kind of expansion. Every aspect of the company seemed to have performed remarkably over the years, and we had experienced sales increases of 20% to 25% for over five years."
Escobosa expanded the business fleet with two pick-up trucks and planned for the most ambitious expansion to date. "While I could have finally moved the business into its own lot, I decided to keep the plant where it was, right at home. Having my work right where my children are has proved invaluable in allowing me to perform both roles of parenthood." With this in mind, Escobosa began the expansion, revamping the office and storage space and scrapping the whole kitchen to replace it with top-of-the-line equipment and a professional design that would optimize worker productivity and ensure the best food quality.
Before the renovation, all the business growth had been financed through business earnings. As Escobosa puts it, "The business had always provided enough return to be able to expand with its own profits, but suddenly I was over $100,000 short. I decided to take on a loan and set my business to new challenges." The renovation ended up costing US$120,000 for new equipment and remodeling, US$60,000 of which was taken as a loan, leveraging the business substantially for the first time. All the profits were always reinvested.
In September 2009, Escobosa achieved one of her key goals, having finally taken two courses at the Culinary Institute, one of which focused solely on catering costs and managerial controls. "More than ever, I now realize the importance of preparation and innovation, and I will surely be taking more courses on catering and the food service business."
More recent events tested Escobosa's hard-earned catering business in novel ways. The number of orders had comfortably expanded by more than 25% on average for over five years. In the second half of 2008, however, the ongoing financial crisis cut families' discretionary spending and drove them back home and away from Culiacan, where the events were to be held. Even though the initial months of the year brought customary sales expansions, the business grossed a total of 5.7 million pesos in 2008, (roughly US$500,000 at 2008 rates), 10% lower than sales in 2007. For the first half of 2009, sales declined 10% when compared to the same period the year before. Escobosa, with her business currently focused on event catering, suffered from the sudden decrease in the number of events being hosted in the city and the concurrent decrease in willingness to spend at those events, resulting in a decline in sales for the first time in the history of her business. Over the next few years, she would have to explore her options.