Four Tips for Building Resilience in Highly-Impacted Markets
How one software company reversed a challenging situation during the pandemic
Software entrepreneurs and operators have a reputation for being spirited, determined and inventive – making them well-positioned to persist, thrive and even innovate even if they are dealt a challenging hand. This week we share the experience of CaterTrax, a software provider that grew its revenue in 2020 after the pandemic prompted the company to make a pivot.
Their experience can be illuminating for any company that has been highly impacted by the pandemic, or is otherwise looking at evolving their approach to operations.
Impacts to the foodservice sector during COVID-19
The foodservice industry has been one of the hardest-hit during the pandemic, as cafeterias, dining halls, cafes, and restaurants closed their doors and unemployment levels in the U.S. climbed to around 35% in April 2020.
While the industry has not fully recovered, vaccination rates continue to rise and the unemployment rate has decreased to 12% as of March 2021, according to the U.S. Bureau of Labor Statistics. The data hints at resiliency for a sector that endured frequent changes to public health guidance and policy, forced closures, layoffs, furloughs, and reductions in hours or pay for employees.
To persist, most providers in the space have had to evolve and identify new opportunities to capture revenue. This activity extends to software providers to the field, including CaterTrax, a Volaris company that made a successful pandemic pivot.
What software companies can learn from CaterTrax’s resilient year
CaterTrax is a software provider in the Volaris portfolio whose catering management platform supports the non-commercial foodservice sector. The company counts several of the world’s largest foodservice management providers among its clients, with a primary focus in the business and industry, higher education, and healthcare market segments.
“The large foodservice management providers typically employ several hundred thousand people in support of their clients, and the catering channel generates several billion dollars in revenue. But when COVID hit, and businesses and universities began to close, a reduction of 30-40% of their staff was not atypical, specifically within the North American market,” says Clint Tyler, Chief Operating Officer of CaterTrax.
As a result of these shifts in the marketplace, CaterTrax observed the immediate impact of the pandemic through its customer base, with a decrease in its catering revenue channel by more than 60%. However, by leveraging their client relationships and identifying opportunities for value-creating pivots, the company reversed a challenging situation and was able to grow in 2020.
How did they do it? CaterTrax shares four lessons that could be helpful to other software companies.
1. Meet customers where they are.
The immediate impact of health and safety precautions forced catering providers to explore thoughtful alternatives to traditional foodservice channels. Early on in the pandemic, the company engaged with customers to quickly identify opportunities to service the end customer and capture new revenue streams.
“We have fluid daily and weekly conversations with our clients,” says Tyler. “We draw on our empathy and humanity when listening to clients and have been thoughtful and flexible in working with them.”
Partnering with clients, CaterTrax was able to identify and develop several new revenue growth channels including takeout, pre-packaged meals, and grocery services, that aligned with evolving COVID protocols and continued to support their end customers – including frontline healthcare workers whose hospital systems did not close.
2. Think, then pivot.
After identifying areas of potential growth, the company adapted its workflow management software outside their core niche market of catering, in areas they knew they could continue to provide support. CaterTrax extended its core offering by adding unique modules which were well within the capability of the software.
“We’re not rushing to change our name from CaterTrax but diversifying our product offering is a strategic objective and will continue as we exit this crisis. We’ve also evolved our internal operating model quite a bit over the last year,” says Tyler.
Tyler’s advice on making a successful pivot? “Do it without compromising your ability to deliver an exceptional client experience. We invested the time to analyze the impact on our existing architecture, data, and operating models and had a high degree of confidence in our design. There are areas of the foodservice marketplace that we recognize could create value for us but are presently outside our core competency and we will not pursue. We’re okay with that, for now.”
3. Know your business cycle and trend forecasts.
CaterTrax keeps an eye on economic data to support its business planning and forecasting. Drawing from experience, the company’s nearest point of economic comparison to the pandemic was the 2008 financial crisis, which put the company in the mindset to be prepared for major, unpredictable events, but provides optimism about longer-term stability.
“Foodservice, specifically catering, will return, but I think there will be dimensions of catering that will look and feel a little different for quite a while. In a traditional catering environment, there might be a buffet and common serving utensils with long lines of people shoulder-to-shoulder. Those things will change, though perhaps not permanently, and we’ll continue to drive our company’s evolution in terms of how we solve our clients’ problems,” says Tyler.
“We suspect, social beings that we are, we’re going to have a business cycle coming where people are eager to get back to the office. In many cases, we are already seeing this trend develop. We’re paying attention and being thoughtful about how we might adapt if a hybrid implementation of a work-from-home model becomes commonplace, but we’re not overreacting. This is the food industry – and food brings people together.”
4. Develop a thought leadership position.
The company’s service-centric ethos and expertise naturally put them in a role to guide customers during an uncertain time. In a time of rapid change, such as when health guidance seemed to change every few weeks, they saw an opportunity to fill a gap in thought leadership. CaterTrax publishes regular blogs, that showcase the depth of knowledge and experience across industries, on topical subjects with the consumer in mind.
“The breadth of our client base puts us in a unique position to observe multiple vectors across our market. We want to continue to participate in, lead, guide, consult, and listen as this space continues to evolve,” Tyler says.
Renewed optimism for the future
CaterTrax is optimistic that the catering industry will bounce back. A recent blog from the company cites the Business Research Company’s 2021 Catering Services and Food Contractors Global Market Report predicting a 7.4% compound annual growth rate which would drive a global market resurgence to $251.82 billion. The industry is looking ahead to that as re-openings begin in the UK and U.S.
In the meantime, the company has displayed immense resiliency by growing from the challenges thrown their way. Their diversified business model looks poised to emerge from the pandemic even stronger.