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For many, catering is the dream job. You have creative control, freedom, and flexibility, and you get to watch your business bring people joy. However, starting a catering business requires a lot of admin and upfront investment, which is why most people never try. To be successful as a caterer, you need to follow certain rules, take the right steps, and be willing to spend some time planning before you get anywhere near the kitchen.
Why Starting a Catering Business is Worth It
One of the best parts of starting a catering business is that you never have to worry about business drying up. There will always be events, like weddings, birthdays, and funerals, no matter how much the market or world changes. Food will never become a service people don’t need or want, so once you establish your catering business, you’ll never go out of style.
Another reason that catering is a great choice for a business is because of its versatility. Not only do you have hundreds of types of cuisine to choose from, but you can also quickly pivot and change your business in response to emergencies. For instance, many catering businesses moved to home deliveries in the pandemic and continued working, something not all businesses could do.
You’ll also get the satisfaction of providing a service people can’t live without while also taking control of your future and becoming an entrepreneur. Like starting any business, you’ll face challenges, but you’ll be rewarded with the freedom that comes with being your own boss.
The Investment Needed to Start a Catering Business
The downside of starting a catering business is that it’s impossible to do without an upfront investment. With digital businesses, you can get started without investing ANY money, but as catering revolves around a tangible product (food), you need to buy stock and equipment.
The startup costs depend on the scale of your operation, but you’ll have to invest in equipment, kitchen space, transportation, and food stock. There could also be other costs related to licensing, forming your business, and training employees–all of which can add up to tens of thousands of dollars.
It’s not a business to start if you have no money to invest because there are many rules caterers must follow to stay legal. You can’t make it up as you go along or avoid any costs, so only start a catering business if you’re confident it’s worth the investment.
6 Steps to Start a Catering Business
Although catering is a competitive industry, it’s also constantly in demand. With the right strategies, it’s easy to create a successful business that stays profitable. However, due to the safety requirements surrounding food, you’ll need to deal with a lot of red tape when setting up your catering business.
Let’s look at the steps you need to follow if you want to start the right way.
Step 1 – Get Organized
As with any successful business, you need to have a plan in mind before you get started. This includes knowing your target audience, what you’re niching down into, and how you plan to run your business.
This is important because it will affect all the other steps for setting up your catering business, including your marketing, budget, and legal requirements.
Here are some of the things you need to organize before you even get started:
The key to any successful business is niching down, and catering is no exception. You need to choose one area of the market and focus on that.
For catering, there’s a lot of ways you can niche down. For instance, you might decide to only focus on one type of event, like weddings, corporate events, or funerals. Or, you can focus on one type of cuisine, like Mexican or Italian.
You can also combine different niches to target an even more specific section of the market. For example, you might decide that you will serve French food at weddings for a seated reception. When choosing your niche, just make sure that it’s something you’re confident in, enjoy, and fits within your budget.
A Business Plan
You’ll also need to spend some time creating a plan once you know what you’ll niche into. This will include setting yourself a budget, goals for the first, third, sixth, and twelfth-month marks, and your marketing plan.
Your business plan will be helpful when it comes to registering your business, so it’s worth investing time into this. If you’re not sure what to include, a formation service like LegalZoom can help.
You should always do market research before launching any business. That way, you can check that your niche has the potential to be profitable and plan your branding around your target demographic.
Define your target audience in as much detail as you can. Then, look through your competitors’ sites, social media groups, and online forums to see what people are saying about catering in your niche. Social media comments and reviews are an especially great place to do this, as people are usually very honest about what they don’t like, showing you what’s missing in your chosen niche.
Once you’re clear on your niche, you’ll need to create your menu. This can be as complicated or simple as you want, but you should keep the cost of ingredients and logistics in the back of your mind. For instance, if you need to transport the food after cooking it, you’ll need to avoid easily perishable meals and ingredients or invest in refrigerated transport.
Once you’ve decided on a plan and a niche, you can start to focus on branding. This will include things like your company name, brand colors, logo, and brand voice.
Make sure that everything here is done with your target audience in mind and relevant to your niche. Catering is a competitive industry, so branding might be the only way customers can separate you from your competitors.
Step 2 – Register Your Business
The next step is to register your business. This includes registering with your state, getting a business license, and the correct tax information.
Although it’s possible to have a sole proprietorship as a caterer, you should form an LLC or corporation. This is because catering businesses run a much higher risk of accidents or liability than other businesses, so you need to have liability protection to protect yourself and the company from employee injuries or customer complaints.
An LLC and a corporation are great options, although an LLC is a little easier and has less paperwork. It’s a good idea to create an operating agreement at this stage, especially if you’re starting your business in a partnership. This can help you apply for your business license and get approved by your state.
You’ll then need to register your business with your local government and apply for a business license and the correct tax number for your business type. If you’re hiring employees, this will include an EIN.
If you want to save yourself a lot of time, you can use a formation service, like LegalZoom. Different states will have different laws for catering businesses, employer registration, and taxes, so working with someone who understands these laws will reduce your stress and guarantee you do everything right.
With Legal Zoom, you get access to attorneys and registered agents who can walk you through the legal aspects of starting your business. This includes contracts and operating agreements, legal templates, formation services, and even business licenses and permits. They even have specific support for catering businesses and can help you apply for all the correct catering licenses in your state and city:
Legal Zoom is also relatively inexpensive and much cheaper than hiring an attorney. They offer packages based on your individual needs, starting at as low as $79 for LLC formation. And you’ll also be able to speak to licensed attorneys, so if you get lost at any point when starting your catering business, you’ll have access to qualified support.
Step 3 – Get Your Licenses
Getting licenses is the most complicated part of setting up a catering business. The requirements will be different depending on where you live and what your catering business will be doing. For instance, there are specific requirements for caterers who will be serving fish or milk in many US states.
You could end up having to apply for multiple different licenses, which usually include an exam and inspection as part of the process.
Most states will require a food safety certification, regardless of what type of catering business you’re running (even if it’s from your own home). If you’re serving alcohol, most states will also require you to have an alcohol safety certification.
The tricky part here is that different states have different laws, and various types of catering then have their own regulations. This is why working with a company like Legal Zoom can save you so much time–they’ll be able to help you apply for the specific licenses in your state and point you in the direction of the best colleges or culinary schools that can accredit you.
Step 4 – Set Up The Logistics
Once you’ve got all the legal aspects of your catering business out of the way, you’re ready to get equipment. This includes organizing your kitchen, transportation, training employees, and making food orders.
This doesn’t have to be complicated, but it will be the most significant investment you have to make into your business. That’s why it’s important to stay within the budget you decided on in your business plan and look for ways to cut costs.
Here are some things you’ll need to organize pre-launch:
A great way to save on costs is to find a shared-use kitchen. These allow you to rent space in a shared commercial kitchen or pay a membership for access. Most states won’t allow you to cook out of a residential address like your home, and with shared-use kitchens, you avoid the massive cost of renting a commercial kitchen for yourself.
You should be able to find commercial kitchens for rent in your local area, or you can ask bars and restaurants whether they’d consider renting to you before or after their opening hours.
Transportation and Equipment
When it comes to transport and equipment, you can choose whether buying or renting will be more cost-effective for you. If you feel that a rental van agency would work best for you, look for one with catering experience, as loading the equipment and food in and out can be complicated.
If you opt for a shared-use kitchen, you’ll find that some have equipment included already, so make sure you check what’s available before purchasing or renting your own.
Unless you plan to run your catering business entirely on your own or with a partner, you’ll need to hire and train employees. You’ll need to check if they need to be licensed in your state, train them in safety protocol, and provide them with uniforms if needed.
Step 5 – Get Set Up Online
The next step for your business is to build an online presence so customers can find you.
Setting up a website is very easy these days, with dozens of website builders that offer pre-built themes and templates. You can stick with something simple and use a template to do it yourself, or hire a web designer and copywriter to create one for you instead.
Something that you should make sure is included on your website is a menu and lots of high-quality photos of your food. Especially when you’re just starting, people will only have your menu and photos to decide whether or not they want to work with you.
Your contact information also needs to be displayed on every page of your website, and you must have an order form that makes it as easy as possible for people to buy from you. Not all themes and templates will come with this included, so try and find one that’s designed specifically for caterers through sites like Themeforest:
You can set up as many social media sites as you want, but visual platforms like Pinterest and Instagram are likely to bring you the most business. You need to consistently post content with images of your food and events and add some personality to your brand. You should also utilize hashtags in your niche to make it easier for people to find you for events.
Step 6 – Market Your Business
The last step to starting a catering business is marketing it.
As good as your food might be, there are likely hundreds of other caterers in your area. You need to use marketing to connect with potential customers and stand out. Your website and social media are helpful tools for promoting yourself, but there are many other great ways to promote your business.
Getting onto a site that lists caterers is a great way to have people find you. Although many networks take a small commission for recommending customers to you, building a steady client base is worth it.
Eventually, you might be able to transition these customers into your own by creating a loyalty program or offering exclusive discounts and deals. Some of the most popular networks include Cater2me, Fooda, and Ezcater.
Paid ads can be an inexpensive way to boost your visibility. Social media platforms like Instagram and Facebook allow you to target specific people and locations to get your ads in front of your target audience.
It’s also a good idea to offer an incentive with your ads, like a discount on their first order.
Networking (and not just with other caterers) is a great way to spread the word about your services. One way you can do this is by being present at your events and interacting with other guests–your food is your best advertisement, after all.
You should also utilize the relationships you already have. If you’re working with a rental van agency, you can partner with them to recommend each other’s business to potential clients. If your catering niche includes an event, see if you can partner with associated services to create packages, like photographers or florists.
Now that you’re up and running, you finally get to enjoy building your dream business! Of course, you’ll still face challenges like staying organized, juggling demands, and unusual client requests, but the most challenging part is over.
Focus on building strong client relationships, and eventually, you’ll be able to expand your catering business and hire more employees. Or, you can start to branch out and expand your niche into different types of events. The goal is to focus on networking, marketing, and building your reputation so that eventually, you’ll have the freedom to do whatever you want with your catering businesses.
If you’re looking for a little more help through the process, Crazy Egg has a few more guides that can help you reach success faster: