Are you someone with a special interest in foods or do you have decent culinary skills and you’re looking to cash in on that experience? Then it may behoove you to know that starting a catering business isn’t the most complicated process out there. Might turn out to be easier than you think, if you read to the end of this post.
But before we bite into the meat of the issue I think it’s worth acquainting you with how important the service is to modern society.
What is the History of a Catering Business?
The catering industry that we know and love today actually began its evolution a long time ago. How long ago exactly? Could be anyone’s guess. The earliest accounts of the service dates back to the 4th millennium BC in China, but even then, the tradition of grand feasting and drinking was already a widespread practice across civilizations.
Such events were usually centered around the monarchs and nobility with the services—more often than not— rendered by slaves or servants.
In America, the service became a respectable and lucrative business career somewhere in the nineteenth century and was pioneered by catering entrepreneur Robert Bogle in Philadelphia. Since then, the service has become an integral part of modern society.
The lifestyle of the general population in this day and age has geared towards the efficient use of time.
Most people nowadays who are too busy with work and other daily activities would prefer to pay for an already made meal to save time rather than suffer the inconvenience of preparing it themselves. This trend is what’s creates the ever-rising demand for professional catering services, and its what makes it a highly profitable business.
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How to Start a Catering Business in 2022 | Full Guide
According to statistics, the U.S. catering industry has generated some $11.35 billion in revenue in 2019 alone. And then the average earnings of a full-time caterer is estimated to be around $53,000 a year.
Now you may be asking yourself, how do I start a catering business? How much does it cost? What does it entail?
Here’s how to start a cooking business in 8 steps.
1. Do your research
Before opening a catering company it’s important that you first familiarize yourself with the market and all the current trends that may affect the business. You can easily do this by scoping out the competition. finding out how they operate, what foods they are selling and at what price. Once you’ve done that you can look into your potential customers and their preferences. This information might help you decide on a niche, which could be the local cuisine that’s very popular in the community or a list of obscure delicacies that are no less highly sought after.
You can also decide on what type of catering service you’re going for, a few of which are-
- Homebased catering.
- Remote catering.
- Mobile catering.
- Contract catering service (events, parties, weddings and receptions).
- Boxed lunches, etcetera.
2. Create a business strategy
A good strategy is needed to succeed in a competitive industry such as catering.
To do this properly, you would first have to identify your competitive advantage. This could be anything from employing cost effective ways of making meals to inhouse and complimentary services, deliveries etc.
Naturally, this will help you establish a budget which, would in turn enable you set your pricing.
Also note that the average cost of starting a small catering business should be around $10,000 according to analysts at the entrepreneur.com. You’ll need to take into account your equipment, transportation, and marketing needs.
3. Decide on a location
The location of your catering business can have a significant impact on the quality of your services.
For example, if your restaurant is located in an unsanitary environment, you won’t attract the amount of customers you will need in order to stay in business. The same is true if your location is overwhelmed with competitors, or has poor visibility, or is not easily accessible. These are factors to be considered when searching for a location in which to open your catering business.
It is therefore advisable to set up close to your target market, preferably in an area high in traffic and easily accessible as this would increase your chances with potential customers.
there are usually commercial kitchens available for rent in this kind of place but keep in mind that this will increase your operating cost.
4. Obtain license and permits
Licensing and permits are required to conduct business in any area and these vary from state to state, and depending on if your plan on adding alcoholic beverages to your menu, you might need to acquire a separate permit for that, as It is illegal in many states across the U.S. to serve alcohol unless you have approval from the states regulatory body.
You can learn more about the License requirements of your state by check with your local branch of the U.S. Small Business Administration (SBA).
5. Get all the equipment
Your equipment needs might range from the portable racks of utensils, kitchen wares, etc to bulky appliances like refrigerators, mixers, ovens, and so on.
The decision to either purchase or rent this equipment may be influenced by your budget or long-term plans. It’s highly recommended that you visit Amazon.com or eBay if you decide to purchase your equipment in bulk.
6. Create a menu
One of the most fun steps when considering how to start a catering business is creating your menu and then testing your own dishes!
When creating your menu be sure to offer a variety of options to accommodate different customer tastes and preferences, like spicy and non-spicy options. Even if you only specialize in a specific cuisine, ensure that your menu appeals to the majority.
After organizing your menu it would be appropriate to host an opening party with family, friends, and potential customers to sample your cooking. Be sure to get an honest review out of them and based on their feedback you can make adjustments to the menu and dishes to ensure consumer satisfaction.
7. Hire your staff
The next logical step in setting up your cooking business would be to recruit extra hands to maximize productivity and efficiency.
Admittedly, this step isn’t a one-shot process and it may take some time sorting through and training employees before your business will reach the desired peak efficiency. Do try to be patient in this regard.
8. Get Insured
This might not make any sense to those operating a small-scale catering service but as your business grows it would be especially prudent to get your company insured since unexpected events tend to happen at inopportune times as stated in Murphy’s law.
On that note, you should try to buy as many types of insurance as you need to cover your assets and shield you from lawsuits.
Here is a list of insurance covers you might want to consider for your business;
Public liability insurance:
This one covers legal expenses or compensation claims if clients or suppliers suffer personal injury or property damage because of your business.
Employers’ liability insurance:
Covers compensation claims by employees in the event that suffer illness or injury in the course of working for you.
Protects your stocks and equipment from damage and theft.
Business buildings insurance:
Exactly as stated. Protects your establishment from damage.
Frequently Asked Questions
You will need state-level licenses, a business license and local county or city-based licenses and permits. In addition to licenses and permits specifically related to serving food, such as health permits and food-handling licenses, you may also need to obtain a liquor license.
Yes, you will need a license to start a catering business.
Get the needed clearance and permits
Purchasing cooking wares, serving wares, and other catering accessories
Source for contracts/Promote and Market your business
On average, you can expect to invest $10,000 to $50,000 to start a standard catering business. But if you start with small events, you should be able to open your business for less.
Excellent food presentations and serving skills
Reasonable charges et al
Going by the report from our research and feasibility studies, it is estimated that a catering business would cost about $10,000 – $44,000 to start.
According to the studies, you should be prepared to budget $10,000 to $50,000 in startup costs for your catering company. Naturally, startup costs vary from business to business. You’ll need to take into account your equipment, transportation, and marketing needs.
Get creative with your marketing.
Host tasting events.
Build trust with your clientele.
Don’t lose out on walk-in customers.
Reward customers who refer others to your business.
The market size of the catering sector in the United States reached 11.35 billion U.S. dollars in 2020, reflecting a decline over the previous year’s size of 12.97 billion U.S dollars. The sector was forecast to reach approximately 12 billion U.S. dollars in 2021.