How to Start a Catering Business: Everything You Need to Know
Starting a catering business is not that difficult for people who love preparing food for friends and families & take charge of a kitchen during dinner parties.9 min read
How to Start a Catering Business?
Starting a catering business is not that difficult for people who love preparing food for friends and families. If they always take charge of the kitchen during dinner parties and reunions, there's a greater chance that they are updated on latest food trends. These qualities, plus an entrepreneurial spirit, are good foundations to start a catering business.
Catering is not always synonymous with parties with a crowd of 200 or more. It could just simply be a lunch event for 12 people or a birthday celebration for less than 50 guests. Caterers can start small by simply marketing their services to their friends. They can still decide though, whether to grow bigger or support a smaller and tight-knit scope. One advantage of the latter makes the business a nice venue in building a stronger relationship with clients that will allow them to go back and ask for catering services.
An Introduction to Starting a Catering Business
Successful caterers in the market bear similar features; organized, consistent, and creative. But there is no strict formula to have a successful home catering service business. The only item needed is a culinary skill that could go with someone's determination and will to survive such pressure of delivering amazing meals and services to their clients.
With Americans' love for dining and entertaining, several social and business events opened the gates for caterers to offer delightful meals while earning decent profits. Social catering has the strongest growth in the food service industry in recent years, and it is predicted to increase in few more years.
Starting capital will be a great reason in determining the type of catering service that a caterer plans to offer. The investment could range from $10,000 to $50,000, according to Entrepreneur.com, but starting it with small events requires lesser money. In terms of catering equipment, startup caterers can simply rent items like crêpe machines or chocolate fountains for some events than purchasing their own. Most of the time, the niche of the catering service dictates the catering machinery needed.
Finding a Catering Niche
A recent trend on parties and events is having a stylish and festive atmosphere by considering one food type with beverage-like cocktails. This is one of the possible niches that caterers would like to consider. Having a niche makes it easier for caterers to focus on a small and manageable menu for uncomplicated preparations and sourcing of ingredients. Combining different types of food is fine to give a wider range of options for the clients.
In finding a catering niche, caterers need to stick with what food they love to prepare and cook. It should be their genuine interest and passion. If a person loves baking and making cookies and cakes, a desserts-only catering is a possible niche she wants to pursue. In terms of target market, it might be smaller than the others, but the equipment needed is not that much. But if someone enjoys making sandwiches, quiches, tarts, and salads, then a business model around lunchtime services is a better. Another tip when picking the right niche is to analyze the possible competitors and check the details that were overlooked that could start the development of the desired niche.
After picking the right food group, next step is to create a menu. The first step is to determine the kitchen space if all appliances needed can be accommodated and if the starting capital is enough to buy such appliances. Having a balanced set of meals in the menu is also a good thing to check. Caterers should offer a variety of meals that could fit with everyone's taste. Even if the menu will focus on a single type of food, you should add other options to cater other preferences. One example is to consider adding vegan options for clients or guests who are not eating meat and dairy products.
Once the menu is settled, the meals should be tested to a group to get honest feedbacks and to identify rooms for improvement. The last step will be pricing. Caterers should identify the right pricing for them to be competitive with the market but at the same time earns profit from it. In creating the price list, take into account the sourcing and cost of the ingredients, preparation times, the distance of the event, and the target profit margin.
Setting up the Business
If you already finalized the catering niche, menu, and pricing, setting up the business in papers will follow. At the end of the day, you still want to be recognized and operate legally to reach a larger and wider network. Start to write all the ideas and create a business plan. You also need to have a name for your company and picking one should embody the food you're intending to serve together with your location.
If you'll be using your home address as your place of business, try to contact your insurance agency because the coverage might change. You also need to check if you need liability coverage for accidents or if anyone gets sick from the food you offer. A broader spectrum on this idea is to protect your personal assets from the business. With this, you may consider setting up a limited liability company. If you will be working with someone else, you may set up a partnership.
Further steps might be applying for permits and licenses about laws on food distribution. Some cities have different prohibitions on alcohol and other stuff and bypassing the law won't help the growth of your business. Your kitchen should also pass and meet the requirements of the county or state's health department to make sure products safety.
Inflow and outflow of money and all numbers related to the business, from a day-to-day basis, should be tracked. And the process of monitoring all expenses, invoices, and income sometimes gets tedious. Getting an accountant or a bookkeeper to manage this aspect of the business will make you focus on maintaining the quality of what you do and deliver to your clients.
With dedication and effort, you'll surely reach a point where events will be everywhere, left and right. If that time comes, it will require you to hire and add more people to your team who can focus on segments of the catering service. In terms of looking for the right people, you have the right to identify what aspects of the business need reinforcement and start the recruitment from that point. Once you have your crew, next step would be training them on how you provide quality services to your clients.
One thing that caterers need to do after setting up the core business is to market it. Word-of-mouth is the best and cheapest way to promote your catering service business, and it is a tough job to meet the standards of everyone. For the first few events, you need to ensure a top-notch and excellent quality of service because everyone trying out the food is a potential client. Another option is to distribute fliers and menus or use the internet for online promotions. Submitting the business information to wedding portals and teaming up with banquet halls and wedding venues are also a great approach to get customers. Extend the marketing program by making your business card and brochures and if possible, build a website.
Another important thing to do is to build a good working relationship with your clients. One might be different from another, and it's better for you to know them to have their preferences considered on the events they ask you to do. And at the end of every project, it's proper to ask them for testimonials and feedback. Positive or negative, it will motivate you to exert more effort and improve the products and services you offer.
Securing Space and Supplies
Renting a space for your business may look simple, but most local laws prohibit everyone to operate a catering business from their home kitchen. Looking for one will require you to check the jurisdiction's health codes, the need for permanent storage and cooking facility, and the installation of equipment such as ventilation hoods and grease traps.
In purchasing kitchen equipment, it is better to consult your menu and the focus of food service you plan to offer. If most of the items will deal with baking, then installing more than one oven is necessary or if more frying is needed then avail two fryers. Other caterers also consider installing multiple sinks to make the food preparation more efficient.
In addition to this kitchen equipment is the serving material, because most caterers are tasked to provide the silverware, glassware, or disposable plates and utensils. For event's set-up, linens, napkins, table decorations, and centerpieces will also part of the service that the caterers need to deliver. Maintaining a list of needed items for inventory is a good skill to develop at an early stage.
For food supplies, some caterers apply for accounts with food suppliers and sometimes sign up to wholesale clubs for their supplies. But if the business peaks at a point where it's already tiring to do it on your own, it is better to work with larger supply companies who can do the work for you.
Pros and Cons of a Catering Service Home Business
Catering service also has its own set of advantages and disadvantages. Some of these are listed below:
- Amateur chefs may consider operating a catering service as a perfect job for them.
- Catering service provides an opportunity to advertise on the job -- people trying your food are potential customers.
- According to Business Wire, the top 50 US caterers generate less than 15 percent of the industry revenue which means a smaller room for operations.
- The job can serve just as part-time, working only weekends, and slowly expanding the business as you get clients.
- Bad publicity can easily spread just from a bad meal.
- Working with demanding clients and has difficulty to work with might be really challenging.
- Mishandled food can get guests sick that could lead to potential liability issues.
- Involvement of organization and planning skills, plus a commitment to being on time need to be dealt every day. Clients are expecting caterers to bring food and service it. Caterers have no reason not to show up if they plan to have a successful business.
The Three Major Markets for Off-Premises Caterers
There are three major markets you can target for your off-premises catering service. It includes corporate clients, social events, and cultural organization. There might be cross overs on the three markets, and these might arise based on how good you are as a caterer.
Corporate clients are considered as one of the biggest markets for off-premise catering because the primary need for food goes around only for breakfast and lunch especially catered for meetings. Others asked for some cocktail and dinner parties while for some a simple platter of bite-sized snacks.
Spending on social events, particularly weddings, reaches millions of dollars every year with much of the budget reserved for food at receptions. Other celebrations under this scope include birthdays, baptisms, anniversary dinners, and sometimes graduation parties.
Last is the cultural organization that usually covers opera house or symphonies, museum, and community organization gatherings. The set-up can be as simple as an hors d'oeuvers or formal dinners that require you to serve just tens or up to thousands of people.
Starting from corporate clients, you can cross over to social events where basically the people on the company will ask you to handle their personal events like dinners, anniversaries, and birthdays.
With the current trend on food delivery, there are a lot of opportunities and additional markets and specialties opened for people involved in the catering business industry. Some of this craze is several days' or a week's worth of meals prepared in advance where clients store it in their fridge and can just simply reheat it afterward. In addition to this are those dual-career couples who have no enough time to cook for themselves that they hire someone to prepare their meals.
Observing the general market trend is one of the challenges of caterers for them to be updated and be competitive with other businesses in the catering industry. In the past, people are hooked with extravagant meals, but in recent years, people tend to divert on eating and consuming healthy meals, less meat, dairy, and hard liquor. These challenges will not only benefit the clients but also the caterers in improving their crafts and be more creative on the services they offer. Always keep in mind that top-rated products and services will also equate to bigger dollar returns.
As per Denise Vivaldo, in her book How to Start a Home-Based Catering Business, "Catering is more than cooking." It is not an easy business to manage yet not too complex if you're really passionate about delivering quality products and services to your clients.
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