What You Need to Know About Starting a Catering Business
No one will tell you that starting a catering business is easy, but it can also be deeply rewarding work. With all the different niche catering needs, there’s a lot of flexibility when it comes to building your business. There are endless options about what kind of food to focus on, who your audience is, and the size of your operation.
However, anyone seriously considering starting a catering business should also be aware of the challenges. For starters, anyone running a catering business should be organized, creative, and have a ton of energy. Catering businesses often operate at odd hours at night and weekends, so at least while your business is growing, you should be prepared to work during those times.
Early Decisions for Your Business
As mentioned, a catering company can look very different, depending on the structure of the business. And while it’s entirely possible, even likely, that your business will evolve, making a few decisions early on can help guide you as you start your company.
Will you be home-based or brick-and-mortar?
While many traditional catering companies work out of a commercial space, you can also run a successful catering company from your own kitchen. Which route you choose is entirely up to you and will steer future decisions about the size of your operation, the kind of food you make, and who you serve. It’s also possible to rent a commercial kitchen on an as-needed basis. Keep in mind that if you do run your business from your kitchen, there will likely be additional licensing requirements to meet.
Tailored Funding Options for You
Will you offer bartending services?
Many catering companies also offering bartending services to fully staff events. Bar service can be a great way to boost your business but does require additional staff, training, and licenses. If you do want to serve alcohol, start the process early because the wait time for a liquor license can vary greatly by state.
Who is your target audience?
Determining your target audience will also help you narrow your business objectives. Maybe you’re looking to make specific types of foods like low-carb or gluten-free, or maybe you want to focus on corporate lunches, or possibly big fancy events with a wide variety is your dream. Whatever you choose, decide early so you can build your business to meet those needs.
Biggest Catering Business Costs
No doubt, one of the first steps in building your catering business will be determining your budget. As you work through the numbers, consider these top expenses.
- Catering staff. Most catering companies hire event workers, like wait staff, on a contract basis. But it’s still an upfront cost, and you may need additional help running operations behind the scenes such as a salesperson or event manager.
- Commercial kitchen. If you opt for a commercial kitchen, this is likely going to be one of the largest expenses.
- Equipment. Make a detailed list of the equipment you need for the food preparation, delivery, and service for the items you’ll offer regularly. Use this list for planning to rent equipment for special needs, such as a chocolate fountain.
- Linens and silverware. Often catering companies provided linens, drinkware, and silverware for events.
- Food. Clients generally cover the bulk of food costs, but you still need to have a stocked pantry before you even book a customer. You’ll also need extra food on hand for tastings.
Keep Your Catering Business Legal
Anytime a business is in the foodservice industry, business owners should pay extra attention to ensuring the right local, state, and federal licenses are in place. As you set up your business, make sure you have the following types of licenses, paperwork, and insurance in place.
- General liability insurance. Work with your insurance broker to get the right general liability insurance. Being correctly insured can be extremely important for catering businesses in the case someone becomes ill after eating your food.
- Liquor license. If serving liquor is a part of your business plan, you’ll need specific licenses based on your city and state.
- Food service and liquor permits. Anyone preparing or serving food or serving drinks should have the proper training and permits.
- Vendor contracts. Always make sure that any event space you partner with also has the appropriate licenses and permits.
Make Your Catering Business Stand Out
One of the great things about starting a catering business is that food is personal. So even if there are a lot of caterers in your area, you still have the opportunity to offer something unique. Consider these tips when working to make your catering business stand out.
- Specialty food offerings. Consider menu items that appeal to niche crowds. Vegan, gluten-free, low-carb options are currently popular. You can also focus on the way you present your food with offerings like a champagne display, a chocolate fountain, or a raw bar.
- Food truck. Operating out of a food truck is a great way to stay mobile and to expand your client base. Also, many even spaces will allow you to serve from a food truck. A food truck can also be a way to save on commercial kitchen and equipment costs, though a food truck comes with costs (such as maintenance) of its own.
- Industry trends. Stay current by attending trade shows or taking cooking classes. Not only do you learn about new foods, but it’s a great way to expand your network and client base.
- Vendor relationships. Building relationships with event spaces and vendors is a great way to get the word out about your business – and to get your business to become a recommendation for the people who need it.
- Word of mouth. The best way to stand out as a catering business is by accumulating great reviews. Make your business easily found online and encourage patrons to leave reviews on Google and Yelp.
Start Your Catering Business
If reading this article has your head buzzing with ideas for your catering business, there’s no reason to wait. Whether you start small from your kitchen or launch a full-scale operation, there are many ways to succeed. Take the first step today by pre-qualifying for small business financing to find out both how much and what types of funding you’re eligible for.