Starting your own catering business is an attractive prospect for a lot of new entrepreneurs.
The catering industry is big – it was worth around $15 billion in the US in 2021 – and many people are interested in setting up a new catering business for that reason alone.
However, there are several other reasons why you should consider starting your own catering business:
- A catering business requires little specialist training
- Catering benefits from a simple business plan and business structure
- Potential clients are easy to find and there are lots of examples of successful business starters in this sector
And these are just a few examples of why starting a catering company is such an attractive prospect to many business owners.
This article will cover:
- Exactly how to begin catering from start to finish
- What catering equipment you will need to start serving food
- The legal considerations required to get a business license
- How to increase your profit margin
- How to create business plans and market your catering business
So let’s dive right in.
Things to consider when you start your own catering business
As with any business, there are a few things that an aspiring catering business owner should know before starting to construct a business plan and applying for a catering license.
First of all, running a commercial kitchen is the type of business that needs to be very carefully thought through as it is not for the faint of heart.
Food businesses are logistically demanding and full of small details you need to consider or your local health department will do it for you in the form of a large fine.
But let’s get started with the benefits of owning and operating a catering business:
- It’s a great for people who love working in hospitality and want to start their own business
- It can be built on non-technical skills such as event organizing and creating a nice atmosphere
- The demand for food preparation businesses is always there
Still, it’s important to know that catering services can be difficult to set up. You need to know about food safety, food handling, and food health code regulations before you start to prepare food professionally.
It also requires a sizable amount of personal assets or backing to acquire everything that you’ll need before starting a catering business.
That said, it is absolutely doable, and here’s how to do it.
How to start a catering business in 7 steps
An effective business plan should consider startup costs, potential customers, insurance coverage, and more.
It might sound like a headache but opening a catering business needs proper planning. And to do it successfully, you’ll need to follow these steps:
1. Define your niche
Your niche won’t just decide whether you’re going to serve vegetarian and vegan options on your menu (though it’s a good idea to think about it) – it’s also going to inform your whole business structure.
There are many event types that food businesses tend to cater to and these are just a few of the examples out there:
- Wedding caterers and funeral receptions
- Corporate events and business luncheons
- Festivals and gigs
- Dinner parties
- Adults parties (bachelor, graduation)
- Children’s parties (birthdays)
- School functions
After that, you need to think about what kind of food you’ll be serving when you’re starting a catering business.
For example, what type of service will you offer? Hot food only, cold appetizers, cakes, alcoholic beverages, or everything together.
Depending on which services you offer, your business will require different health permits from your local health department, a different marketing strategy, and insurance.
Then there is the target group – are you catering to a homey vibe or something a little bit more elegant.
Event planning is difficult but the business structures involved in understanding how to start an event planning business is similar to that of a catering business.
Still, the most important thing for many food businesses is finding a business structure that can create viable profit margins.
2. Set pricing strategy
Food pricing needs to consider the cost of the raw ingredients, wastage and waste disposal, the cost of labor, the cost of equipment and overheads at a minimum.
But that’s before you can start to think about being competitive and matching the general vibe of your neighborhood.
A classic food pricing marketing strategy is called the rule of three. You offer three variations of the same dish, each with a higher final markup:
- Basic option. This might be a simple pasta and sauce, it’s the cheapest option but mostly it is a way to make people opt for the standard option more often.
- Standard option. This might be pasta, sauce, and vegetables. It’s a cheap addition in terms of ingredients and represents a high markup at the final cost.
- Deluxe version. This might be pasta, sauce, vegetables, tofu or meat. This is the “best” and highest priced version.
Offering complimentary pricing on items such as add-ons or side dishes is a classic way to improve the profitability of your basic dishes and it is a technique that residential kitchens can employ just as easily as a catering business.
After that, you’re going to need to make an idea of your maximum and minimum guest count in order to set your pricing.
Cocktail parties with 150 guests require different cooking techniques and expectations to private dinner parties and the number of ingredients that you can buy in bulk will affect the price of your food.
3. Think of what employees you need to hire
When getting started, it might be enough to ask a family member or friend to help you out on a small-scale catering operation.
But, different catering businesses offer services that require staff with different qualifications and skillsets.
Many businesses will need to hire the following at least:
- Event Planner or supervisor
As your business grows and you find that your business has more customers, it’s not going to be enough to have staff that enjoy cooking.
You should consider hiring chefs with specific experience serving high volumes of food and designing great-tasting menus with a large profit margin.
4. Find a good source for your products
Now that you know exactly what staff you’re going to hire, it’s time to think about finding a high-quality, cost-effective supplier.
Many professional chefs can source produce from inside their own network of industry suppliers.
Think where you will purchase the ingredients from – will it be from local farmers or a wholesale club?
These concerns need to be addressed in your original business plan and they should be a part of your core messaging as well as the kind of customers you are looking to target.
Conducting market research on the kind of products that your competitors in your catering niche are using is a good way to understand the level of product that you need.
5. Consider the costs
Setting up a business is always going to incur some costs.
There are the standard costs that are obvious like equipment and ingredients, but have you considered the cost of an insurance agent to avoid personal liability or the registration costs of setting up a limited liability company and legal advice?
Here are some of the regular costs that you can expect to have to deal with before starting your catering business:
- Business registration and taxes
- Kitchen space
- Licenses for the business (health, food, alcohol)
- Equipment (large scale cooking equipment, thermal bags, branded uniforms, tablecloths)
- Delivery costs (van, gasoline)
- Labor costs
- Website and marketing costs
- Unexpected costs estimation
If you’re going to be starting a catering business with a sole proprietorship, all of these fees can start to add up pretty quickly.
That’s why when you’re getting your business off the ground it pays to have a simple and affordable way to grow your online business presence.
6. Build your online presence with Zyro
A website is an essential part of your online presence. Every catering business needs a website because while word of mouth can be a very powerful tool, it will only go so far.
Getting started, it’s important to be able to advertise your services, set prices, make appointments, receive honest feedback, and tell the brand story that will set you apart from all the other catering businesses out there.
Zyro is the easiest and most affordable way to build a professional business website.
Powered by AI tools, the simple drag and drop builder can get your website online in under 1 hour.
Start by choosing from 100+ fully customizable designer-made website templates and quickly edit any feature you like to match the style of your business.
Whether you want a slick and modern style or a classic elegant template you can find it all with a simple search of our templates, organized into categories to help you build.
Here is a list of catering website essentials that you’re going to need to cover:
- Menu with pricing
- Contact details (telephone number, e-mail address, social media links)
- Location information
- Minimum notice period
- What the service includes
- Gallery of food (as visual aspects are important in this business)
- Option to order online
Catering industry website examples
BKRY is an example of how to design a restaurant website and cake catering website with a great business name.
You can see how this business used a minimal viable product (MVP) approach to launch their website fast and start making money.
It’s a great example of how to launch with the essentials of an online ordering platform and product details.
Food for your mood is a catering website created with Zyro. It’s a perfect example of how to name a business in a catchy way.
If you need ideas on how to name your business, try our AI-powered business name generator to instantly create dozens of creative options.
It features a stripped-back design without an obvious logo. Knowing how to design a restaurant logo need not require professional help. With Zyro’s AI logo maker you can create a professional logo for your business in seconds.
This is a wedding catering and event planning business website created with Zyro that allows potential clients to read about the brand story, see previous client testimonials, and book ahead.
It’s a simple but effective website and understanding high quality product photography goes a long way to creating the vibe of a special event.
The owner really understands how to combine online marketing best practices and word of mouth to show how to market a restaurant or catering company.
7. Promote your catering business online
One of the most important aspects of building an online presence is the ability to promote your new business everywhere you go.
Understanding how to do social media marketing is a great place to start and it should go without saying that you need to create business pages on Facebook and Instagram and post on a regular basis.
Make sure to also make use of ‘live’ features like stories and reels as they can offer great spaces for customer interaction for small businesses.
Then there is SEO or search engine optimization. SEO for catering works much the same way it does for any other small business. It’s all about knowing how to drive traffic to your website.
Start by focusing on niche keywords, link building, and on-page SEO through design. All Zyro website templates are SEO optimized by default to give your website an advantage straight out of the box.
Extra tips to start a catering business
You should now know the main steps for starting your own business, but those are just the basics.
There are always a few hidden extras to remember when starting a business and if you want to be as successful as possible it always helps to avoid these common mistakes.
Prepare for the unexpected with extra money
Unexpected expenses can strike at any moment.
Whether it is employees slipping and dropping a plate of hors d’oeuvres or something more serious like a broken oven, you need to save a little extra money to weather the storm just in case it hits.
Try to set up a separate account for business expenses like these and save a portion of your income so that you never get caught short.
Building positive long-term relationships is crucial.
In catering, return customers are the lifeblood of success as you continue to grow your list of clients.
Not only can you rely on a steady stream of income when you build customer relationships, but you can also expect to get discounts on your ingredients when you return to the same suppliers over time.
Quality over quantity – don’t expand until you’re ready
When you have many clients, but you are understaffed, it’s easy to run into issues.
Make sure you have the capacity in terms of staff and clients when you want to expand your business.
Create an online calendar so customers can book straight away. Control your schedule and make it easy for your customers to invest in your catering.
With Zyro website builder it is easy to include an online calendar for bookings.
Include reviews and testimonials
Ask your customers for the reviews and feel free to publish them to make you reliable for your future clients.
Social proof is one of the most effective ways to turn traffic into customers.
People place trust in reviews – especially those that are given by industry professionals or clients in their situation.