Starting a catering business can be a great way to create your own business, be your own boss and make money.
Catering provides a steady income stream and allows you to work with people from different walks of life.
Have you started to consider starting your own catering business? While it certainly isn’t easy, it is well worth the effort.
Whether you’re starting to plan it seriously or considering seeing where a catering operation would fit into your future, here are some tips and ideas that can help get the wheels turning in your head.
Table of Contents
Find Your Specialty
Catering is a very competitive industry, so finding your unique niche is crucial. To succeed, you need to identify your place within the catering industry and focus on it.
This will be the basis of your company’s reputation.
There are many different types of catering services, including:
Community caterers. These vendors provide low-cost meals to non-profit organizations and religious groups. You can also make money by working as a volunteer cook or server at community events.
Corporate catering. Companies need food for meetings and other events, so this is a common source of income for caterers. You’ll need to have a commercial kitchen space to do this type of work.
Formal event catering. Weddings, graduations, and other formal events require elaborate food service arrangements that average restaurants or other casual venues cannot handle.
Specialty food catering. This type of catering focuses on a particular cuisine, such as Mexican or Italian Food. I grew up in the south, where southern caterers rule the roost. If you know how to prepare a specific type of food well, you might be able to market yourself as an expert in that field and find customers who want what you offer.
Once you’ve figured out which type of catering business you want to start in terms of size and type of event, the next step is choosing your niche within that industry.
What kind of events do you want to cater to? Are there any special events in your area every year (such as fairs or festivals)? What kinds of foods are popular at these events? Do customers expect certain types and styles of food at these events?
Once these questions are answered, it will be easier for you to narrow down your niche.
For example, if you decide that your focus will be corporate events over private functions like weddings or birthday parties, find out what meals are most commonly requested at these events and start planning.
The catering business is one of the most popular industries for small businesses. With a bit of planning and hard work, you can have a thriving catering business that will bring in steady income yearly.
Before starting your own catering business, you need to choose what cuisine you’ll specialize in. You can serve one or several types of food, but it’s essential to pick one to build a reputation for yourself in the industry.
The best way to do this is to research different types of food, find out what people like about each class and then decide which ones would be best for your business.
Type of Functions for Your Catering Company
There are many different types of functions that you can cater to. Here are the main ones:
Birthday parties. For kids and adults, many different themes are available to choose from. You can also create your theme if you want to.
Weddings. Weddings are one of the most common types of catering jobs. Weddings can be large or small, depending on how much money the bride and groom spend on their wedding celebration. If they have plenty of money to spend, they may want a five-star catered event with only the best food and service available. If they are on a budget, they will want something more simple but elegant enough to make their guests feel special at their wedding reception.
Corporate events. Corporate events are often held off-site at hotels or convention centers because they’re usually large enough to require ample room for all attendees. Corporations often use corporate events as networking opportunities to meet other companies in their industry while enjoying good food and entertainment from their chosen caterer.
While these aren’t as common as they once were, they’re still essential in some industries. If you’re looking to cater to corporate events, then it’s necessary to understand the culture within each company so that you can tailor your approach accordingly.
Location is one of the most important factors when starting a catering business. Depending on where you locate your catering business, you can reach more clients or have access to a larger market.
The first step in choosing a location is finding out your target market and where they are located. For example, if you’re planning to cater weddings, find out where most of them take place and then choose a location close by.
Investigate Local Business Licensing and Permits
Before starting your business, check with your local government to ensure that there are no restrictions on the type of catering service you can offer. For example, some states have laws requiring caterers to have a special permit or license before serving food at private functions. In addition, some cities have zoning ordinances limiting where caterers can operate their businesses.
General Business License
When starting a catering business, one of the first things you need to do is get your general business license. The general business license is a local license that allows you to operate your business in a specific area.
It also allows you to open and close bank accounts, sign contracts, and hire employees.
A general business license covers all types of businesses, including catering companies. In the United States, most states require corporations to obtain a general business license.
These licenses are usually issued by your city or county government and are relatively easy to get.
The best way to find out what you need is to contact your state department and ask what licenses are required for your particular industry. In most cases, you’ll need to complete an application and submit it along with your payment fee to obtain your general business license.
You’ll also need to get the proper zoning permits to run a catering business.
A local zoning permit is essential when you’re running a catering business. Zoning laws protect the public by ensuring that companies operate in an appropriate location.
For instance, some businesses may not be permitted in residential areas or on main streets. In addition to protecting the public, zoning laws protect property values by ensuring that companies do not negatively impact nearby homes or businesses.
To apply for a zoning permit, contact your local government office or building department and request information about what is required for your type of business. You may need to submit an application form and pay a fee before processing your request.
The health department is one of the most crucial departments you’ll deal with when starting a catering business. If you plan to sell food, you’ll need a health permit. This is not the same as a business license, but it’s an important document nonetheless.
The health department requires that all food establishments have a permit to operate legally. You can’t serve food without it, and you need to know the rules and regulations before you begin.
The health department is your primary contact when getting a permit for your catering business. These permits are necessary to operate in any state or city and are generally required by law.
You can check with your local health department to find out what permits you need, how much they cost, and what requirements you must meet to obtain them.
Some states require that you obtain a temporary permit before getting an annual one, while others do not require this step at all.
If you plan to serve alcohol, you must also get a liquor license.
Create Your Catering Menu
When starting a catering business, you’ll also need to create your menu. This is the foundation of your catering company and your opportunities as an entrepreneur; it will give you a sense of direction regarding what type of events you want to cater, how much time you have to prepare, and what kinds of foods you’ll offer.
A menu can be anything from a list of food items on paper to a detailed description of the dishes you’ll be serving. When creating your menu, keep these things in mind:
Limit the number of items on your menu when first starting. You don’t want to overwhelm potential customers with too many choices. Instead, let them know that if they don’t see something on your list that they’re looking for, then ask them what they’re interested in eating and try to accommodate their request if possible.
Include prices for each item on your menu. That way, customers know how much each dish costs before ordering it for their event. If there are multiple options for an object — such as chicken breast or leg quarters — include both prices, so people know how much they’ll save by choosing one over another option.
Decide on the type of food you want to serve. Do you want to specialize in a kind of cuisine or serve a variety of cooking? If you want to cater to all types of occasions, then it might be best to choose a mix of foods like Mexican or Chinese Food. However, if you only want to cater for a specific event or type of event, then focus on that type of food instead.
Once you’ve chosen your niche, create a menu based on what people want from your catering services — don’t just create something that sounds good to you! Create at least three potential menus (with prices) so customers have options when they call in orders or come in person to place orders. That way, you can determine what menu sells best and what customers enjoy.
Plan Your Catering Location
Location is key to any business, but it’s vital for catering. You’ll need a place to prepare and store food. If you’re just starting, this could be in your kitchen or a commercial kitchen shared with other small businesses.
You’ll also need space for equipment such as stoves, ovens, and refrigerators.
Most catering businesses have at least one vehicle for deliveries and pickups, so consider parking space when choosing your location.
Here are some things to consider when planning for your new catering business.
A commercial kitchen can be expensive and difficult to find. If your catering business is based out of your home, it’s probably best to stay there. You’ll save on the hassle of moving everything into a new location.
If that’s not an option for you, think about renting temporary space for events that aren’t as frequent as regular catering jobs.
If you’re planning on running your business out of your home, check with your local government first to see if there are any regulations against it. If it’s permitted, ensure you have adequate space for storing food and cooking equipment before jumping into this step.
The location should also be close to your target market, so customers don’t have to drive too far for their meals. You don’t want them to spend more time traveling than eating.
Off-site catering is an excellent way to expand your catering business. You can serve clients at their offices, outdoor venues, or other locations.
Catering off-site can be more profitable than catering onsite because the overhead costs are lower, and you don’t have to worry about cleanup or renting space for your operation.
Off-site catering is also a great way to showcase your business to potential customers in other markets. If you’re in a small town, it may not be easy for people from different areas to try your food unless they visit your restaurant or catering operation.
Offering off-site catering allows people who might have never heard of your business to sample your food and experience your services firsthand.
Offering off-site catering also allows you to take advantage of special events that aren’t usually part of the regular business cycle.
For instance, if there’s a conference or trade show in another state or even another country, you can offer off-site catering that provides meals and snacks during breaks between sessions or after hours at night when the event is over.
Once you’ve found the right location, ensure it meets health department regulations for food preparation and storage. Health inspectors want to provide your food and working space are in order and up to industry standards.
Build a Preopening Budget
One of the most critical steps in starting a catering business is knowing how much cash you’ll need. You can begin by creating a preopening budget covering everything from your marketing and advertising costs to your initial inventory and equipment purchases.
Once you’ve created your preopening budget, you can use it to help determine whether or not starting a catering business is right for you.
If you can cover all of your expenses with the income generated by your first few jobs, consider using this as an indication that it’s time to sign up for health insurance and start paying
If not, consider scaling back on some of your plans until more money is saved.
If opening an upscale restaurant, you’ll need top-quality cookware and appliances, including commercial ovens, ranges, refrigerators, and dishwashers.
Invest in specialty items like commercial mixers or juicers if they save time or money during preparation.
Your staffing costs will likely be one of the most significant expenses when starting your new business.
You’ll want to spend some time looking at staffing costs in similar companies in your area before making any decisions about hiring staff or recruiting volunteers.
Consider hiring temporary workers during peak times and using volunteers during less busy periods.
Hiring people and paying them can get expensive fast. When you’re starting, it might be best only to employ on-call employees who only work when needed rather than hiring full-time employees who take up a portion of your weekly revenue (even if it’s just minimum wage). This will allow you to keep costs low while providing excellent customer service.
Prepare a Catering Business Plan
If you’re interested in starting a catering business, you should first develop a business plan. To create a catering business, start by writing a business plan.
A business plan is a written document that describes the goals, strategies, and actions necessary to achieve your goals. It helps you organize your thoughts and put them down on paper so that you can see where you’re going with your new venture.
A good business plan will help guide you through developing your catering business, from choosing a name and location to hiring employees and marketing your services.
Here’s how to write one:
1. Identify your target market
2. Determine your niche
3. Define your product or service offering
4. What are the benefits of what you’re selling?
5. What’s the competition?
6. How much money will it take to start and run this business?
You don’t need to spend months writing an elaborate plan — just put together a short document that outlines who your target clients are, what services they’ll receive, how much money you expect to make, and how much it will take to get started.
Create an Affordable Marketing Strategy
One of the biggest mistakes that new businesses make is spending too much money on advertising. By creating an affordable marketing strategy, you can develop your brand and promote it without spending a lot of money.
First, you should decide where you want to advertise. It may be in local newspapers or magazines or on television and radio spots. You can also use social media sites like Twitter and Facebook to promote your business.
The next step is to develop your own brand identity. This means creating a logo, slogan, and color scheme that will represent your catering business.
You can then use these items as part of your marketing strategy to create a consistent experience for customers when they see them repeatedly.
Once you know what you want to achieve, it’s time to start with cheap marketing tactics for start-ups. Here are some ideas:
Create a website for your business. Even if you don’t have a lot of money to spend on marketing, having a website is essential because it gives customers easy access to information about your company and its services.
Join networking groups (leverage word of mouth). Networking with other business owners in your industry helps build connections that can lead to referrals and new clients. Plus, networking groups can give you access to workshops or seminars on how to get more out of social media marketing or public relations campaigns.
Get listed on local directories. Getting listed on local directories such as Yelp and Google My Business will expose your business name and contact details to potential customers who might otherwise never find out about your catering business.
Choose a Business Structure
An essential step in starting a catering business is deciding what type of business structure will work best for you. The most common types of businesses are sole proprietorship, partnership, and corporation.
A sole proprietorship is the simplest form of organization, with one owner-operator running the show. Because it’s easy to set up, this type of business structure is often chosen by those just beginning their careers as caterers.
The partnership involves two or more people sharing ownership and profits (and losses). For example, if you want to start a catering business with your brother-in-law but don’t want to risk any of his money in the venture, you may decide to form a partnership instead. A corporation is a legal entity that separates personal assets from company assets if things go wrong financially (and vice versa).
Corporations are more complicated than either sole proprietorships or partnerships because they require more paperwork and taxes; however, if you plan on growing your business into something significant someday, incorporating could be worth it down the road when it comes time for expansion plans.
A sole proprietorship is the most accessible type of business to start and maintain because it doesn’t require any special paperwork or legal filings with the state. However, there are some severe drawbacks to being a sole proprietor.
You’re personally liable for all debts your business incurs, including those related to tax obligations —which means that if your company goes bankrupt, you lose all assets in your name. If this is an issue for you, consider another type of structure.
You also can’t raise capital by selling shares in the company; there’s no way for investors to share in the profits (or losses). Your assets could also be at risk if your business fails; even with insurance coverage, it may not be enough to cover all losses.
Partnerships (Limited Liability Company)
A partnership is a business entity in which two or more people agree to share ownership and run a company together. Partnerships are formed when two or more people sign a partnership agreement detailing how the partnership will be run, their responsibilities, and how profits will be distributed among the partners.
Like sole proprietorships, partnerships do not have separate legal existence from their owners. The partners agree to share responsibility for managing and financing the business and sharing profits from the venture’s operations.
In addition, each partner is personally liable for any debts or obligations incurred by all partners on behalf of their business unless otherwise agreed upon by all partners.
Partnerships may be formed by oral agreement or written contract, but they must register with the state after being in operation for one year or more. Unless you take steps to protect yourself by creating an operating agreement, a partnership may dissolve if one partner leaves or dies.
A corporation is a legal business entity owned by shareholders and is the most complex of the four types of businesses. The owners are called shareholders and are responsible for making decisions about the company. Corporations sometimes must have directors representing the shareholders in these decisions.
Corporations have many advantages over other business entities. They can raise more capital than their counterparts because investors tend to feel safer investing in corporations than in sole proprietorships or partnerships.
Corporations also have limited liability, which means that if the business is sued, the owner’s assets aren’t at risk unless they’ve personally guaranteed a loan or some other obligation of the company.
The downside of using a corporation is that you must file additional paperwork with state and federal governments and pay extra taxes on your profits. This isn’t an issue if you’re just starting and don’t expect your business to make much money right away — but once your catering business has become successful, it might be worth considering converting into an LLC or another form of business structure easier to manage.
Name Your Business
Your catering business name is the first introduction your customers have to your company, so it’s essential to get it right.
Think about how you want your customers to perceive your catering business. If you’re a family-owned business, use a name that reflects that.
Consider using a more severe name if you’re trying to convey an upscale or formal atmosphere. Naming a catering business is a lot like calling any other type of business — you need to consider what your target audience wants and how it will help them find you on Google searches.
Here are some things to keep in mind when naming your catering company:
Make it easy for people to remember. Consider what makes your business different from the competition, and ensure that your name says precisely that! For example, if you specialize in corporate events at golf courses, call yourself a Golf Catering Company.
Consider the food You’ll Be Serving. If you’re planning on serving a specific type of cuisine or food, it may be worth considering incorporating this into the name of your business. For example, consider calling yourself “The Burger Catering Company if you plan on serving gourmet hamburgers.” This can help people find you online and on search engines like Google.
Think about Your Target Audience. Make sure your target audience can relate to your name and understand what you do based on it. If you’re targeting young adults who love sushi, a name like “Sushi Catering Company.”
Consider What Else is Out There. Take some time to do an extensive search online and see what other businesses have similar names as yours. This will help give you an idea of whether or not there are any legal issues with using a specific character before spending time and money. This will also give you ideas on what to name your own company.
Catering is risky; if something goes wrong, you could be liable for damages. This includes anything from food poisoning to injuring someone on your property.
An important step is to get insured. This is critical because it protects you and your business in case anything goes wrong while you’re working.
For example, if a guest gets sick after eating at one of your events and sues you for medical bills, an insurance policy can help cover those costs.
Some insurance agents recommend that caterers carry general liability insurance (which provides coverage for bodily injury and property damage), workers’ compensation insurance (which covers medical expenses for employees who get hurt on the job), and umbrella liability coverage (which provides additional protection if you have an accident involving multiple people).
Consider getting auto insurance if your employees will be driving or if they’ll be using a car from your fleet.
General liability is a basic insurance policy covering injuries or property damage you may cause to others. It also protects your business from certain losses caused by your employees.
If you own your own catering business, you are likely at risk of being sued by injured customers or whose property is damaged while they are on the premises of one of your events.
This is why it is essential to consider purchasing general liability insurance for your catering business. Public liability insurance will cover any lawsuits against you due to accidents that occur in your business operations.
General Liability policies typically provide two types of coverage:
Bodily Injury Liability Coverage. This pays for any damages you cause to another party. This includes medical expenses, legal fees, and court costs. It also covers the cost of any settlements a judge or jury orders.
Property Damage Liability Coverage. This pays for damage you cause to another party’s property while operating your business. Examples include damage caused by your employees or contractors while they’re doing work at your company’s location on behalf of you, as well as damage caused by your vehicles. At the same time, they’re being used in connection with your business activities (if they are not owned or leased by another party).
Commercial Automotive Insurance
Your catering business likely has various vehicles used to transport food, supplies, and equipment. If you don’t have commercial auto insurance, your car may not be covered in the event of an accident or damage.
Commercial auto insurance can protect your business from liability regarding accidents involving your company’s vehicles.
Commercial auto insurance provides liability and physical damage to others if you’re at fault in an accident or if your vehicle is damaged in a collision. The policy covers damages up to the total limits specified on the policy.
It also covers bodily injury and property damage caused by another driver who has committed an uninsured or underinsured motorist violation. This can include medical expenses, lost wages, and other costs related to injuries suffered by others as a result of an accident.
Commercial Property Insurance
Commercial property insurance covers your business’s physical assets, such as equipment, inventory, and buildings. It also covers liability for any injuries or damages you cause to others and their property.
Commercial property insurance covers losses due to fire, theft, vandalism, storms, wind damage, and other disasters that could damage your building and its contents.
In addition to covering the cost of repairs or replacement of damaged property, it also helps protect against loss of income while your business is out of commission.
Your commercial property insurance will protect your business against a wide range of potential losses, including:
Property damage. This includes damage to your building, its contents, and the land it is on. Your policy will also cover other structures such as greenhouses and fences. You should have enough coverage to replace your property in full if a covered loss destroyed it.
Business interruption. This can be essential protection for your catering business because it will reimburse you for lost revenue if you cannot operate due to a covered loss. Business interruption coverage provides up to 12 months of income protection — meaning you could receive money if your business is shut down for more than one month.
Liability coverage. This protects your business against claims made by injured people or their families who sue your company after an accident caused by something related to your catering business, such as serving food at an event where someone got sick from eating it. Liability coverage also covers legal defense fees in these cases.
The type of policy you need depends on the business you’re running and the value of your assets.
Unemployment insurance is a government program that pays benefits to eligible workers who become unemployed through no fault. Taxes paid by employers fund it, so if you’re self-employed, you’re responsible for paying into the system yourself.
In most states, unemployment insurance requires you to seek employment and work to receive benefits.
If you are paying employees, you will likely be required to pay unemployment insurance. In most states, this is a percentage paid out in wages each month.
If an employee quits or is fired, UI benefits can be used by the former employee until he finds new employment.
Wrongful Termination Insurance
A wrongful termination insurance policy can help protect your business from the cost of a wrongful termination lawsuit.
Wrongful termination is any termination of employment that violates particular laws or regulations. There’s no uncommon disagreement over whether a termination was justified, and many employees who feel they’ve been mistreated will file lawsuits against their former employers.
If you’re worried about being sued for wrongful termination, you may want to consider purchasing an insurance policy that covers claims related to this issue. There are several types of policies available, including:
Wrongful termination insurance: Also known as “at-will” insurance, this type of policy provides coverage if an employee files a lawsuit against you alleging wrongful termination. It typically includes coverage for attorney fees and settlement costs if you lose the case.
Key Person Insurance
For your catering business, critical person insurance is a type of life insurance policy that provides financial protection to the company if you cannot continue working.
Critical person insurance can help your business save money by filling in for you during your absence. In addition to covering any lost income due to illness, injury, or even death of the insured person, critical person insurance can also provide coverage for other expenses related to the loss of that particular employee.
You should consider buying key person insurance if you have employees who are critical to the success of your business and if those employees would be difficult or impossible to replace quickly.
If they were out sick with one illness for an extended period or died suddenly, your entire operation could be at risk.
Open a Bank Account
A critical step to starting any business is to open a bank account for it. You will need this account to deposit all of your catering money into to keep track of it.
You can also use this account to pay your employees and buy supplies with it as well. If you are doing any large-scale catering, you will want an account with more than one bank so that you have more options when it comes time to deposit money into them.
Many banks will offer different kinds of accounts based on the business you are starting with and how much money you want them to hold onto for you at any given time.
When deciding which one is right for you, consider how many employees and how much money your catering company will regularly generate when making this decision.
To get your catering business rolling, you’ll need to get yourself out there and get some customers! Start by making sure your website has all of your contact information:
- Website address
- Phone number(s)
- E-mail address(es)
- Social media profiles (if applicable)
Then get out there and talk to people!
You can find potential clients by networking at local events or networking groups or by advertising online or in print publications like newspapers and magazines. Post flyers at places where people gather or leave cards for local businesses that might need additional help with meeting planning or other needs outside their regular day-to-day operations.
Start Accounting Immediately
The catering business is one of the fastest-growing industries in the world. It’s also a great way to make money, meet people and have fun. However, starting a catering business isn’t as easy as it sounds. You need to consider many things before you open your doors for business.
Start by researching the competition in your area and what kind of services they offer. You’ll want to determine what menu items work best for your clients, how much your food should cost per plate, and what kind of equipment you’ll need.
If you don’t already have a commercial kitchen available, find one that meets all health department regulations. Also, remember that most catering businesses require permits and licenses from local government agencies like the Health Department before they can legally operate as a business.
Once you’ve done all this research, it’s time to start! Get a website so people can find out about your services online or send out mailings to local businesses asking if they’d be interested in using your services for events such as weddings or corporate parties.
Please ensure you have plenty of business cards on hand so that when people ask who catered an event they attended recently, you can pass along contact information for the future.