How to Start a Meal Prep Business
If you're wondering how to start a meal prep business, all you need is a love of cooking and the ability to find deals at grocery stores.6 min read
2. Starting Meals To-Go Business
Updated August 17, 2020:
How to Start a Meal Prep Business
Families across the country are simply too busy to take the time to prepare tasty, nutritious meals every day. Because of this lack of time, meal prep businesses have become extremely popular. A large number of people suffer from stress when it comes to making meals. In addition to worrying about what dish they should make, people worry about having the right ingredients and the time they will need to spend making their meals.
Everyone needs help making meals, and meal prep businesses provide this assistance. A large number of meal prep businesses offer meals for customers with special diets, including gluten-free and dairy-free dietary plans.
Anyone who's interested in taking advantage of this growing industry can start their own meal prep business in their town. Establishing a meal prep business in your neighborhood or town will provide you with a built-in customer base, reducing both your start-up costs and the amount of money you'll need to spend delivering meals. Choosing a local business will also make it easier for you to identify and respond to customer needs.
A meal prep business provides its customers with:
- A workspace
All the customer has to do is stop by the meal prep business and make their meal.
Some meal prep businesses provide meals that are pre-made and can be taken home for reheating. Meal prep businesses that have experienced the most success provide their customers with nutritious meals that promote a healthier lifestyle. Customers prefer meal prep businesses that provide healthy options, and many of these businesses are reporting impressive profits.
Starting Meals To-Go Business
Create a Business Plan
Before you get too far into the process of starting your business, it's important to have a solid business plan. In the food industry especially, a business plan is necessary to define how much money is needed in order to get the business to operational status and off the ground. The plan should also include how many clients will be needed for the business to become profitable. Outline reasonable price points for grocery items, sometimes it is worthwhile to stock up on certain items versus buying things as needed. The business plan should also discuss any planned expenses, revenues, investments, and profits.
Your business plan should provide an outline of monthly estimates for recurring expenses, investment costs, and projected sales. Using your plan will help you secure potential funding and come up with the details on what would happen if the business becomes extremely successful for any employees, partners, and investors.
Laws and Location
Visiting your county or state health department is the next step in starting your meal prep business. You need to find out where the health department will allow your meals to be prepared. For instance, you will usually not be allowed to sell food that has been prepared in your home.
To be able to open your meal prep business, you will need to find a test kitchen. Your test kitchen can be in a restaurant that's closed to the public, a church, or a community center. If you use a commercial kitchen, you can negotiate an hourly rate that's included in the cost of your food. Generally, you can find affordable rates for a commercial kitchen as long as you are using it during off-peak hours. This will usually mean that whoever is using the kitchen will be cooking late at night or on days where the kitchen is typically closed.
Certain cities and states have laws known as Cottage Food Laws. If you want to start a meal prep business in an area with Cottage Food Laws, you should be able to prepare food in your home kitchen that will later be sold to customers. California, for example, has a number of Cottage Food Laws.
When preparing food for sale in a home kitchen, there will be limits on what foodstuffs you can sell. For instance, baked goods are considered safe for sale while meat and vegetables usually are not. Because these food limitations will restrict the menu of your meal prep business, it's a good idea to find a commercial kitchen.
Step two of starting your business is acquiring a license. In addition to your business license, you will also need a food handler's license and a sales tax license. It may also be a good idea to form your business as an LLC. When you incorporate as an LLC your personal assets will be protected if your meal prep business is sued, which can be a concern in this field. If the food you deliver to a customer contains an ingredient to which they are allergic, or one of your meals causes food poisoning, you may face a lawsuit.
To be able to correctly fill out your business forms, you will need to obtain an Employer Identification Number (EIN) from the Internal Revenue Service. Get in touch with your local health department so that you can find out exactly what permits and licenses you'll need to start your business.
Requirements for Business Owners
If you plan to operate your business out of a physical location, you will likely need a certificate of occupancy (CO). A CO confirms that zoning laws, government regulations, and building codes are met on the structure and it is safe for occupancy. If you plan to lease the location you will use for the business, the building or property owner is responsible for obtaining the CO. Before you sign a lease agreement, make sure to get a copy of the CO that applies to a business that is in the food preparation or service industry.
If a building undergoes a major renovation, it will need to have a new CO issued. A lease agreement should include language stating that payments will not be required until the owner receives a valid CO. If your business plan includes purchasing a location to use for food service or preparation, you will need to make sure to get the CO prior to beginning operations. The building must meet all zoning requirements and building codes in order to function as the facility for a food preparation business.
Consider Your Niche
In a meal preparation business, you may want to consider finding a niche to attract a customer base that is more likely to be motivated to purchase your products. Your customers can become very loyal, which could mean recurring sales in the future. Creating an enrollment program for meals might make sense in this industry, and it can help you retain customers when they receive food on a daily, weekly, or monthly basis.
When you're considering the niche for your business, make sure to analyze the competition. You will need to stand out from other companies offering similar services, which is why it's so critical to spend some time understanding what competitors are currently offering to their customers. Some of the popular niche options include:
Gaining some insight will be beneficial before you begin acquiring customers, offering products, and handling pricing issues. For example, you will need to know what types of requests for refunds would be reasonable and what types are not.
Marketing Your Business
One of the most important steps in starting a meal prep business is getting the word out about the company. Without customers, your business won't succeed. It does take some time to develop a solid marketing strategy. However, you don't have to spend a lot of capital as some of the best marketing methods are free. Several free or low-cost options include:
- Offering cooking demonstrations at community and senior centers
- Creating a business website
- Passing out business cards and flyers
- Creating social media pages and sharing announcements, product information, promotions, etc.
If you have more money to spend on marketing, you can also look into marketing avenues that are a bit more expensive, such as:
- Advertising in the local newspaper
- Catering community meetings and events
- Television or radio ads
- Using Google AdWords to post advertisements
As you develop your marketing plan, make sure to track the costs of marketing versus the profits returned on each initiative. Don't get too wrapped up in spending money on marketing, inventory, or other business needs that you overlook the financials of the business.
As your business grows, you may find yourself in need of additional help. In this type of business, you might need employees to supervise customers during meal preparation, prepare the ingredients, and clean the workstations and kitchen area after the demonstration is complete. Depending on the needs of the business and the number of customers, you may need a couple of employees or quite a few.
As you start the hiring process, make sure to choose delivery drivers with good customer service skills and who are trustworthy, as well as chefs that create high-quality food products. Your employees could make or break the business.
If you need help to start a meal prep business, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.