Starting a catering business is a great way to make money from your love of cooking and event planning. A food catering business requires a lower start-up cost than other businesses in the food and beverage industry.
Key Takeaway - Unlike running a restaurant business, you do not need a brick and mortar store to begin your catering business. The catering industry is very lucrative. It’s easy to scale up your business after a few years and even diversify into the event planning industry.
However, before we get ahead, let’s discuss how to start a catering business. Starting a catering business is more than simply cooking and serving food on plates. Anyone can cook, but it takes someone with an entrepreneurial mind to start a catering business.
If you are an entrepreneur or a business owner interested in starting a catering business, you have come to the right place. Let’s discuss a step-by-step guide on how to start a catering business.
How to Start a Catering Business in 8 Steps
Starting a catering business is no easy task. It takes a lot of careful planning to run a successful restaurant business. The same goes for starting a catering business.
Here’s how to start an at-home catering business in eight steps:
- Select Your Catering Business Ideas
The first step to starting your catering business is choosing your niche. There are different types of catering businesses, and selecting one makes it easy to build your catering brand.
Some caterers exclusively serve small finger appetizers and drinks for cocktail receptions, while others specialize in sit-down catering for banquets and weddings. Before choosing your specialty, ask these questions:
- What type of events will you cater? Social event catering, wedding catering, corporate catering, or concession catering. When just starting a catering business, serving small parties and events like cocktail parties, staff functions, and other social events is easy.
- What type of food will you serve? Will you target a niche market, like vegan food, gluten-free delicacies, baked goods, or snacks?
It is essential to research your target market and the competition before making any solid plans. This will make it easier to strategize and create your unique selling proposition to stand out in the eyes of potential customers.
For instance, a dozen other caterers in your city specialize in catering for weddings. These caterers may have carved a name for themselves in the wedding catering industry.
It is easier to grow your catering business when you specialize. This way, you can become a brand name in your selected niche.
- Write a Business Plan
A catering business plan is a document that helps you map your goals and objectives. A well-written business plan will include strategies to actualize these goals and make your business ideas a reality.
Having a clear catering business plan is essential to running a successful catering business. Just “going with the flow” is a recipe for failure. Similar to writing a bakery business plan or a restaurant business plan, your catering business plan should have the following sections:
- Executive Summary: Summarize your business plan, concept, and ideas. Keep it as simple as possible.
- Company Overview: Explain what sets your business apart from your competitors. Include your company profile and history. Expand your business ideas and talk about your goals.
- Market Analysis: Describe your potential customers, industry trends, your strengths, weaknesses, opportunities, and threats.
- Business Offerings: Include a list of your catering services and what you plan to offer customers. You can also highlight your prices and package plans.
- Management and Organization: Highlight members of your management team and details of your eCommerce team structure.
- Operations and Logistics: Explain your business process flow, order management plan, food delivery route optimization, and payment processing activities.
- Marketing Plan: Describe your eCommerce marketing plan and strategies to grow catering business.
- Financial Plan: Draw out your financial projections and eCommerce accounting plan, estimated costs for starting a catering business, and cash flow statement.
- Choose Your Business Structure
Choosing your business name and structure is essential. Your business structure determines your legal system and how your business will be taxed.
Make sure the business name you choose is available in the state your business will operate. You can search online for a domain or business name to ensure no one else is using the name. Simply check online with the Secretary of State for more information.
There are a few options to choose from when selecting your business entity and structure type, depending on if you want to run your catering business alone.
A sole proprietorship business structure means your business will be unincorporated and owned by you alone. On the other hand, if you have a partner, you can register your catering business as a general partnership, limited liability company, limited partnership, or limited liability partnership.
- Obtain Your Catering Business Licenses
Businesses in the food service and restaurant industry need to obtain a business and food handling license from the State. In addition, you may be required to pass a health inspection as well. To make it easier to pass the health inspection, you can rent a commercial kitchen that has already been approved.
Consulting a local law firm is a great idea. There are some other licenses you may need to obtain, and getting in touch with a lawyer will get you started in the right direction.
- Get Your Catering Equipment
Running a successful catering business requires several things. One of these things is catering equipment. Depending on the scale of your business and your customers, your equipment needs may range from essential bakery equipment to serving plates.
Purchasing equipment will cost a hefty sum of money. As a tip, prepare a list of all the necessary equipment and tools. You can then reach out to a wholesale restaurant supplies company or catering equipment wholesale distribution company to get a quote.
Consider taking a small business loan or buying used equipment if the cost exceeds your budget. Take note of these when preparing your catering business plan.
- Create Your Menu
Starting a catering business is one thing. Creating a menu your customers will love is another. Consider your target market, cooking facilities, and capacity when creating your menu. You should also consider the availability of restaurant supplies and food ingredients.
For instance, your menu only serves intercontinental cuisines. In addition, purchasing wholesale produce from international suppliers may become challenging if there is a food supply chain disruption.
- Pick Your Team
Selecting the right team is critical to the success of your catering business. Your team includes the in-house staff to help you cater events and cook meals. You’ll also need to partner with wholesale distributorships, distribution warehouses, and wholesale food distributors that supply wholesale food ingredients.
You can train your in-house team on how to cook your menu delicacies and serve guests. Having a working business process flow chart will help you explain your business operations to new hires.
Additionally, a supplier relationship management system will streamline the way you manage your vendors. Developing a good relationship with your suppliers and team members is essential.
- Market Your Business
From building a website to implementing social media marketing for restaurants, marketing your business is crucial to your success. Here are a few tips for running an affordable but effective marketing and sales campaign for your catering business:
- Launch a catering website: An eCommerce website, such as a bakery website, will help you reach a wider audience and grow your catering brand.
- Use a digital catalog: A digital catalog will improve your menu and make it easier for your customers to access it on the go. For example, you can add a restaurant QR code to your website or store for easier access.
- Integrate restaurant technologies: Restaurant technologies like contactless payments, restaurant POS systems, inventory management systems, and restaurant management software will streamline your business activities and improve customer experience.
- Implement billing management solutions: Payment processing software, invoice processing tools, and invoice management software will make it easy to process and accept payments online. This will also improve customer satisfaction and help grow your catering business.
Frequently Asked Questions About How to Start a Catering Business
Starting a catering business requires careful planning, from having the right equipment to hiring the right people. First, let’s answer some frequently asked questions about how to start a catering business.
How Profitable is a Catering Business?
A catering business is very profitable. On average, catering businesses have profit margins of 7.5%. Successful catering businesses have profit margins of around 15%.
How Do I Get Clients for Catering?
Follow these steps to get clients for your catering business:
- Build your catering website
- Invest in eCommerce marketing and automation tools
- Share your information with people at trade events and conferences
- Use social media marketing strategies to reach new customers
- Try eCommerce email marketing
- Reach out to event planners and vendors
- Register your business on marketplace online
How Big is the Catering Industry?
According to statistics, a decrease from the 15.72 billion U.S. dollar market size the year before resulted in the catering sector's market size in the United States falling to 14.22 billion in 2020. The industry was expected to generate $15.36 billion in revenue in 2021. In 2022, the catering industry will have a market worth $10.6 billion, according to revenue. According to market size, the US catering industry ranks 10th among the hospitality and food services sectors.
Let’s Get Cooking
Starting a catering business is challenging if you don’t know what to do. The tips and recommendations in this guide will help you hit the ground running. Integrating catering management software will also streamline your catering business.