The Ultimate Checklist For Starting A Catering Business
For many entrepreneurs who want to dip their feet into “foodpreneurism,” going all out with a full dine-in restaurant may seem daunting. However, a private catering business is the perfect intermediary step to test the waters, work out your menu, and build your reputation in the local food world.
Catering has become an umbrella term for many food hustles, including private events, regular pop-ups, or even a weekly stand at the Farmer’s Market. Catering is the perfect entry point into a food business for those with entrepreneurial dreams but without the hefty initial investment or desire to swing full-time kitchen life.
Benjamin Franklin once said, “If you fail to plan, you plan to fail.” From that wisdom, we have created the Ultimate Checklist For Starting a Catering Business.
Why Start A Self Catering Business
After COVID shook the food world to its foundation, many people gravitated towards a food business model less susceptible to unforeseen changes. As a result, catering businesses saw a 5.5% surge in 2022, which amounted to over 30 000 individual catering operations in the United States.
Running your private kitchen or catering service can have a lot of benefits over other types of food business models.
- They have versatility. Menus, hours, and offerings can change as the business evolves.
- You can make your own hours. Anyone in the restaurant industry will tell you there are no weekends and few holidays in a brick-and-mortar business.
- Lower liability. While catering liability insurance is a good idea, you won’t have to worry about the regular maintenance of a standing restaurant.
- Low overhead costs. Depending on where you operate, you might have little to no rent. Ditto for utilities and
- Low initial investment. The money needed to start a catering business is relatively minimal at the beginning, and if you reinvest your profits wisely can be built as you grow.
- Can be extremely lucrative. Due to the minimal overhead, low staffing needs, and fewer middlemen, catering can have big profit margins.
- Opportunity for creativity. Catering offers a great way to stay creative with custom or seasonal menus that can change as you learn and grow. By comparison, a restaurant menu needs to stay more or less the same to reduce logistical hassle and to maintain tight margins.
Finally, catering or running a private kitchen can be a much more intimate experience than running other types of food businesses. You have the opportunity to work closely with people to create bespoke menus and be part of setting the ambiance for special events. It allows you more personal access to the community and a genuine opportunity to create connections.
So what do you need to know before you jump into self-employment and start your catering business dream? We’ve created the ultimate checklist to consult before your first gig.
The Eight-Step Checklist To Start Your Catering Business
1. Do Your Market Research
The first and most important step to founding your self-catering business is complete due diligence on the market’s potential. This means studying the competition, examining gaps in the market, and comparing pricing. Of course, you don’t want to enter the market blindly, against obvious competition, or by outpricing yourself. You don’t want to walk into an oversaturated plan unless you are looking to disrupt the market.
Before you move on to the next step of opening your catering business be sure to know:
Targeted customer base
What food niches or services are underserved
2. Draft A Business Plan
Unfortunately, just being known for your food quality and reputation are not enough to create a sustainable business. Drafting a plan from the start is imperative to understand what is ahead and to create a long-term strategy. Failing to plan can land you in difficult situations without the tools to recover.
Part of your business plan will be the market research you have already done. In addition to having proof of concept, an idea of your audience, and an understanding of your competition, you’ll need to develop a roadmap. This should include the following:
A mission and vision statement.
Your unique value proposition.
A twelve-month budget of expenses and projected income.
A plan to reinvest profits into growth.
Menu with cost-out projections.
A marketing strategy.
A note on setting your business budget and projected costs. Entrepreneur Magazine estimates that self-catering business start-up costs can run anywhere from $10,000 – $50,000, depending on the scale of your project.
Don’t let this discourage you if you are cash-strapped. There is a great ability to make a good profit margin with a catering business and you can invest in your equipment inventory as you go. In addition, you won’t necessarily need a commercial space to rent. However, you may also be able to finance a self-catering business for much less than $10,000. If you are bootstrapping and light on start-up cash, consider applying for a small business loan or looking for investors – in which case a complete business plan will be a necessity.
3. Draft a Menu and Set Pricing
Start with a rough draft menu of signature items that you have a proof of concept for – and had good feedback from. Then, build on those items with dishes that meet an unfulfilled niche or can compete with what is already in the market.
Ensure that the menu has ingredients that can be regularly sourced and can meet your price point. For example, avocados as a year-round ingredient can be difficult to source and have a fluctuating price point.
For catering, consider a customizable menu with multiple options and price points for different packages. Set pricing that is within the range of market competition that also meets the needs of your profit margin. Pricing is a science and something that can be difficult to change after creating a loyal customer base.
Lastly, you’ll need to address a minimum order quantity and lead time. This should reflect the speed at which you can procure your ingredients from suppliers and the minimum order quantities they require. You’ll also need to make sure that the total order value is enough to cover your costs. This can include staff, set up, breakdown, and other variables.
4. Get Legal; Licensing, Insurance, and Permits
You will need to check your local requirements. However, most states require any food business to obtain a business license, insurance, and potentially permits.
Licensing will come with the formal incorporation of your business. In addition, you may need liquor licenses, health and safety, and food handlers permits. Venues you service may cover part of these requirements.
Business insurance is imperative in protecting your catering company in the case of the unexpected. It is not only wise to protect your assets and shield you from being sued, but it may be mandatory.
Furthermore, there are several kinds of small business insurance, the most common being general liability coverage. Other types of coverage you might consider are commercial property insurance, business interruption insurance, employee insurance, and personal liability.
Before you launch your self-catering business, investigate the licenses, insurance, and permits you’ll need with the United States Small Business Admistatrative services.
5. Make An Equipment List & Budget
You won’t have to start with much to launch a self-catering business. The great thing about having flexibility is that you can start small with the equipment and materials you have and scale as you grow. It is helpful to create a complete list of what you have (your assets), what you will need to start, and what you have on your wishlist as you grow.
No need to worry about buying everything new. Checking resellers like Craigslist for second-hand commercial equipment can be very cost-effective. One of the secrets to any food business start-up is to look for restaurants that are scaling their equipment and want to unload their older kitchen goods or even a business that is closing and clearing out. This can lead to great deals on normally expensive commercial equipment.
6. Plan & Execute A Marketing Strategy
Word of mouth is an invaluable touchpoint of marketing, but it won’t be enough to gain elite status. Fortunately, there are many strategies you can employ as a self-catering business to get the word out.
Decide where and how you want to spend your marketing budget. Set a monthly plan and adjust as you see what is working and what is not. Social media presence is imperative in modern times and if you aren’t savvy, hire someone who understands your goals and brand aesthetics to make regular posts to show that the lights are on and you an active business.
In addition, to considering where and how you want to market, you can do several other things to gain momentum and build traffic to your business.
Invite reviews and engage with your commenters.
Give a real-time look at your business with regular photos and videos of events.
Get personal, invite people into your business to see how things are made, and meet your team.
Engage, engage, engage! Create conversations on your and other local social media sites.
Encourage your friends and happy customers to spread the word and photos of your events and signature dishes. The opinion of others is possibly the most important free marketing you can get.
7. Create A Staff List
Creating your team is imperative. Even if it is just family to start, you should know who is available and when. Catering is usually geared towards weekends and evenings. Strategically speaking, you will need people who are available during these peak times and are alright with part-time hours.
Keep a primary list and backup list of available people. The worst scenario for any catering service is that you have the opportunity but not the staff to execute the event. In addition, consider potentially training staff on evenings when you don’t need their manpower so that they are ready to be called up for future events.
8. Plan Your First Gig, Contact Potential Venues
Your first professional gig when you are launching a catering business is crucial. Many people find it more relaxing to promote your business with an event that will have a friendly audience of people they know. Think about hosting an event with friends to get the word out, get great marketing photos, and spread word of mouth about your services.
Self-catering means that you will often be at venues for the first time. Be sure to check out the facilities well in advance. When doing a site check, take notes on entrances for loading, kitchen amenities if any, on-site equipment and electricity, and available staging items (like tables).
Lastly, if you want to spread your services to launch regular pop-ups, make connections with weekend markets and event promoters. Send them a menu or sample dish to engage them with possible partnership opportunities.