Table of content
- How to Start a Catering Business
- Find your speciality
- Investigate local licensing and permits
- Create your menu
- Plan your location
- Get ready to buy equipment
- Prepare a business plan
- Develop a marketing plan for your catering business that is within your budget.
- Choose a business structure
- Name your business
- Get insured
- Start bookkeeping ASAP
How to Start a Catering Business
It could be time to launch your own catering company if you have a knack for elegant cooking and entertaining and are ready to work for yourself. But what elements go into a good catering service? How can you make sure yours is effective, too? Here are simple steps Corriander Leaf mentioned to starting your own catering business.
1. Find your speciality
When your catering company occupies a particular niche, you will have less competition from the large, universal catering services in the area. Additionally, word-of-mouth advertising makes it simpler to establish a strong foundation of loyal customers.
Think about it:
- Which cuisine will you serve? Can you accommodate everyone? Or concentrate on a certain niche market, such as vegan or gluten-free food.
- What kinds of roles will you play? Smaller gatherings like cocktail parties, staff lunches, and bridal showers could be the easiest when you’re just getting started. You can broaden your catering service as your company develops to accommodate bigger occasions.
- What are you capable of? If you’re committing to this full-time, you might be prepared to serve several functions each week. However, if catering is a side business, you might need to restrict business hours to the weekends.
- Who will perform the work? Draw up a hiring strategy, taking into account who will handle food preparation, sales, accounting, etc.
2. Investigating the market and the competition
It’s best to do some groundwork before creating your menu and beginning your equipment purchases. You’ll have a lot of competition in that market, for example, if there are six other caterers in your small city who specialize on Sikh weddings. Consider concentrating on something nobody else is attempting, like vegan pub food.
Your initial action should be to look up nearby caterers. Check over the menus and size functions that your competitors are serving. Consider phoning to get quotations if their websites don’t provide rough costs.
After that, speaking with their clients is the greatest approach to learn more about regional caterers. You will be undertaking customer research in addition to learning what your rivals are doing properly or wrong. That will support your future marketing strategy planning.
Here are few ideas that you should consider:
- Speak to loved ones and friends. There’s a good possibility that you know someone who has had to organize a baptism, wedding, or wake. Find out who they selected as the caterer, why, and how the experience went. It could help you determine the kinds of services your company should provide.
- Contact those who utilize caterers most frequently. These people are a gold mine of potential consumers for you. Everyone has a favorite caterer, whether they are wedding planners, office managers, or event coordinators. Who is the town’s most well-liked caterer? Who is not a good person? What qualities do they want in a caterer?
- Read the evaluations. This may sound obvious, but in your haste to launch your company, you can overlook the importance of finding out what customers think. You can learn some things about what clients enjoy and don’t like by reading Google, Yelp, and Facebook reviews for nearby catering businesses.
- Consider the overall picture. You may get a better understanding of how the industry functions and current trends by reading reports and information on catering businesses across the country. Check out Catersource’s study on the state of the catering business to get started.
3. Investigate local licensing and permits
State-by-state differences exist in catering company licensing and permits. You may or may not be permitted to prepare meals in your own kitchen using tools you also use for preparing personal meals, depending on your state. Additionally, the standards for liquor licenses vary by state.
Despite differences from state to state, there are a few licenses and permissions that are available in every state, some of which you’ll probably need to launch your business:
- A general business permit from your state, local government, city, or county.
- Depending on where you plan to put your cooking facilities, a zoning permission may be required.
- Health permits, depending on where and if you’ll be cooking and carrying food.
To find out about licenses and permissions that apply to you, get in touch with your Secretary of State and the local health authority. Or you can reach out to Corriander Leaf for more relevant information.
4. Create your menu
If you enjoy cooking and are considering opening your own catering company, it’s likely that you’ve stayed up late thinking about the delectable foods you’ll offer.
It’s time to compose a rough draft of your menu now that you’ve done some research, found the answers to some crucial questions regarding your company, and looked into local licenses.
It’s wise to start out with a predetermined list of selections even though you can customize afterwards. You may then fine-tune the supply orders and preparation procedures for each meal you serve well in advance. Once clients have selected their things, all that remains is to combine and match the previously planned criteria.
Your capacity and cooking capabilities will determine your menu. Less obviously, it will be influenced by the kinds of meals you feel comfortable providing and the target market you’re targeting. For instance, your winter menu won’t include freshly squeezed orange juice if you exclusively serve dishes made with regional, seasonal products.
5. Plan your location
Local zoning restrictions and laws governing catering enterprises will determine where you should locate your firm.
You might not be able to cook in your house in some states. You can either rent a commercial kitchen in that situation, or you can make food on-site.
Although renting a commercial kitchen raises your operational expenses, it also allows you flexibility because you can always make meals for your clients no matter where they are. Additionally, you’ll be able to perform it more effectively than you could at home. However, you’ll also be in charge of delivering food, so you’ll need sturdy cars and tools.
By preparing meals on-site, you are utilizing the kitchens of your clients. That restricts your ability to serve clients who rent or own kitchen-equipped spaces, such as churches, community centers, and residences. Operating expenses will decrease, but you’ll pay a price in other areas if you don’t adjust to the kitchen you’re using. Additionally, you won’t be able to cater to certain occasions, such as work lunches, outdoor gatherings, and gallery openings.
The ideal strategy is to decide what you’re going to serve, who you’re going to serve it to, where you’re going to serve it, and how much it will cost. All the information and assistance will be provided to you by Corriander Leaf.
6. Get ready to buy equipment
A new egg whisk, an industrial mixer, a few Yeti coolers, or half a dozen chest freezers can be among the items you need. Your business’s size and the size of your clientele will determine this.
Make a list of all the supplies you will require to get going. Solicit a quote for your shopping list from a supplier of restaurant supplies. That will be used to assist you in creating the budget for your business strategy.
Check out all your alternatives before financing any equipment if you’re thinking about it. In terms of interest payments, a small business loan or line of credit could be less expensive than a finance plan. Additionally, if you pay cash up front, you might be able to purchase old equipment, which might end up costing you less overall.
7. Prepare a business plan
Your business plan should cover the following in addition to market and competitor research, a startup budget, and financial projections:
- The issues you redress for customers and clients
- What distinguishes you from the competitors
- Your mission statement and future vision are dependent on the resources you have available to your company.
- What motivated you to launch a business?
This is merely a quick summary. For step-by-step instructions on how to put everything together, see Corriander Leaf’s blog on how to develop a business plan. Don’t forget to include an attention-grabbing cover page as well.
A word on startup costs for catering businesses
The experts advise that you should budget between $10,000 and $50,000 for your catering business’s initial costs. Naturally, startup costs differ from company to company. You must consider your demands for marketing, transportation, and equipment. Whatever your beginning costs, your initial budget should be sufficient to pay for your company’s operational expenses for 12 months without regard to revenue.
8. Develop a marketing plan for your catering business that is within your budget.
Fortunately, you don’t have to spend money on a Super Bowl advertisement to promote your catering service or company. A few simple, affordable methods will work.
Keep pricing and menus current.
Customers that are searching for your company are probably already considering having an event catered. That indicates that they are interested in your menu options, the occasions you cater, and the price.
Maintaining current menus and price lists on your website enables customers to make plans before contacting you. Offering price ranges up front may influence a couple planning their wedding to pick you over a competitor whose website still reads “under construction.” A couple would prefer to know whether your services are within their budget before contacting you.
Curate your social media reviews.
A social media profile with recent evaluations demonstrates that business is active and well-liked and that the lights are on. Encourage consumers to submit reviews, and be careful to respond to any bad ones. It’s frequently preferable to issue a refund to a customer who has unreasonable expectations than to risk having a one-star review hurt your reputation.
Upload tempting food images
Photos of the dishes you’re most proud of can whet followers’ appetites on social media and demonstrate to them your presenting skills. Occasionally posting food images to social media is a fantastic, low-cost method to stay active. Just remember that a bad photo of your food is worse than none at all. You might want to seek the assistance of a specialist if each picture you snap resembles a public health warning banner about food poisoning.
Your best friend in marketing is word of mouth
Whether a customer has a positive, negative, or memorable experience with catering, they are more than happy to spread the word about it. The best action you can take is to ensure that your clients are complimentary of you.
Among the ways to achieve this is to consistently deliver first-rate service. The alternative is to provide referral discounts. If a consumer recommends someone, they might receive 15% off their subsequent purchase or, as a thank-you gift, freshly baked breakfast muffins and coffee for their workplace. You’ll increase your customers more quickly than with any print advertisement or flier by cultivating and keeping positive relationships and rewarding recommendations.
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9. Choose a business structure
Your business structure affects your personal liability for debts and legal actions as well as how your catering company will be taxed.
The moment you start working for yourself, the IRS classifies you as a sole proprietorship. No forms to complete and no choice of business structure makes for amazing ease. However, it’s not so fantastic if you find yourself in financial trouble or if someone sues you.
A sole proprietorship is followed by a single member limited liability company (LLC). Similar to a sole proprietorship, an LLC establishes your firm as a separate legal entity from you personally. In other words, you receive greater liability protection than you would from a single prop.
Visit Corriander Leaf’s blogs to learn about all the many business entity kinds you can pick from and how to select each one.
10. Name your business
It’s not necessary to register a business name if you’re a sole proprietorship and you’re using your own name to do business, like Monica Geller. However, you’ll need to register it as soon as you decide to use a different name for your business, such as Monica’s Catering service with a Smile.
You must register your business name regardless of whether it is the same as your given name if your company chooses a structure other than a sole proprietorship.
You must submit a business as (DBA) form to your state and county in order to register your business name in either of these situations.
11. Get insured
Your catering company is covered by business insurance in case something unfortunate occurs. You should get as many different types of insurance as you require to safeguard your assets and prevent you from being sued, even if your state does not mandate that you do so.
General liability insurance is the most important kind of insurance for a catering company. Has your client’s priceless Persian rug been irreversibly ruined by a chocolate fountain overflow? Some wedding guests became sick because your supplier’s oysters were in a bad batch. Someone’s eyebrows were removed by an overzealous flambé? You are covered by general insurance.
Then, you might wish to take into account the following:
- Insurance for commercial vehicles, for your catering van.
- Commercial property insurance will safeguard you in case your kitchen or equipment is harmed.
- If you have employees, unemployment insurance is frequently legally mandated. Additionally, it safeguards you from damage claims in the event that an employee leaves their job.
- Wrongful termination insurance shields you from legal action if a fired employee feels they were handled unfairly.
- Key person insurance is a good idea in case your top chef gets sick and you lose business.
Use Corriander Leaf’s comprehensive guide on small business insurance to go further.
12. Start book-keeping ASAP
It may seem like a long way from the sights, sounds, and tastes of the kitchen to be doing your books. However, it’s essential when you first launch your own company. Everything suffers when your book-keeping is unorganized.
In order to ensure that you are getting paid by consumers, that you have paid suppliers, and that you are keeping track of your available cash, good book-keeping is essential. If you’re having difficulties paying your bills, it can help you figure out how to grow your business or make it more profitable. Additionally, you can benefit from all tax deductions at the end of the year when you have a thorough record of spending on the books.