If you’re hoping to start a catering business either now or in the future, you are in the right place.
There are a lot of things to know and factors to consider when starting any business, especially one in the catering industry.
In this post, we will cover the following topics:
- What is involved in a catering business?
- What are the costs it entails?
- What information should you know before entering the catering industry?
- How to start your catering business.
- What are the income streams in the catering business?
- Tips to avoid losing money in the catering business.
By the end of this post, you should have a concrete idea of how to get started with your catering business from home or from scratch.
What Is a Catering Business?
A catering business involves providing food and drinks and waiting services for individuals, businesses and events. You would be required to prepare, cook, deliver, and sometimes serve food and snacks for an occasion for a specified price.
Restaurant catering may also involve having a beautifully decorated physical location for people to come in and order food to enjoy within the restaurant or take home with them.
Caterers may be hired to provide food for events like weddings and parties. Some organizations that provide lunch benefits for workers also need the services of caterers to handle the provision of food and drinks on a daily basis for employees.
Costs Involved in a Catering Business
Assuming that you are planning to build this business from scratch and not hoping to cater from your house kitchen, the costs of this business could be much higher.
There are many costs involved in the catering business. They include;
- Ingredient costs
- Transportation costs
- Cost of paying the delivery company
- Equipment costs
- Cooking gas costs
- Rent costs (if having a physical store)
- Cost of electricity, water and other major utilities.
- Cost of building a functioning and appealing website.
- Advertising costs
Things To Know Before Starting a Catering Business
1. Know your location and the behavioural or spending patterns there
You need to know the spending pattern or behaviour of the people in your location. For example, if you live in a small area where people aren’t used to spending thousands on fine dining or expensive cuisine, it would be unrealistic to expect that you will have the same results as a catering business in a big city.
It is important to choose a location for your catering business that makes sense for the type of food or drink you plan to serve. You also need to be aware of any competition in your area, leading us to the next point.
2. Know your competitors
You need to know the biggest names in the catering industry and where they are situated. If you are in a small town, there may not be room for more than one catering business. If this is the case, you will need to differentiate your business by providing a unique selling proposition that sets you apart from the competition.
3. Know your niche and your target customers
Although everyone eats food, each person has a preference. So if you want to cater to any niche, you need to know if there is a market for it in your area.
For example, if you want to focus on vegetarian or healthy eating, you need to know if there are enough people in your area who are interested in this type of food. The same goes for if you want to focus on a specific cuisine like Italian, Mexican, or Chinese food.
You also need to have an idea of the type of customers you want to cater to. This could be businesses, families, students, or a specific age group.
4. Know your suppliers
What are you going to need for your business? If you need specific ingredients, you need to have a supplier who can provide these items to you at a reasonable cost.
You also need to be aware of how often you will need to restock your supplies. This information will help you budget for your business and ensure that you always have the ingredients or products you need to meet customer demands.
It is also a good idea to have more than one supplier so that you can compare prices and get the best deals for your business.
How To Start a Catering Business
1. Find out what you have
Many people think that they cannot enter the catering industry unless they have a lot of money.
This is not the case. You can start small and gradually grow your business as you get more clients and generate more revenue.
The most important thing is to find out what you have. For example, do you have a kitchen that can be used for catering? Do you have any cooking supplies or equipment? Do you have a vehicle that can be used for transportation?
You also have to know how to cook or hire someone who does. Your food is the heart of your business, so you need to ensure that the food is great and keep the customers talking and coming back with friends and family.
You may not have everything you need to start your business, but whatever you have can be used to get started.
2. Choose a name for your business
You need to create a name that gives people an idea of what you do. Your name should be creative, easy to remember and reflect what you do.
Your name is how people will identify your business, so it is important to choose a name that you are happy with.
3. Choose a niche for your business
Decide on the type of catering business you want to run and create a menu accordingly. You may want to focus on a specific type of cuisine, like Italian or Chinese food.
You could also focus on a specific type of event, like weddings or business lunches.
You need to be clear about the type of catering you offer so that people can identify your business when they need your services.
4. Write a business plan
A business plan is a document that outlines your business goals, strategies, and how you plan to achieve them. Your business plan should also include a marketing plan and financial projections.
Creating a business plan is important because it forces you to think about your business in a structured and logical way. It also helps you to identify any potential problems and how to solve them.
Your business plan should include:
– Your business goals and how you plan to achieve them
– Your target market and how you plan to reach them
– Your unique selling proposition
– Your marketing strategy
– Your financial projections
5. Draw up a budget
Create a checklist of the equipment you will need and draw up a budget. As you are starting up, include only the basics you can’t do without, like a cooker, pots, pans, freezers etc.
As you grow and start making money, you can expand your menu and purchase more equipment. Research the prices of these equipment and draw up a tentative budget to help visualize your costs.
6. Find a location for your catering business operations.
This may be your home kitchen, your friend’s kitchen or a brand new physical store. The bottom line is that you need to find where you want your base of operations to be based on your budget and your business type.
Delivery is also a key factor in a catering business because these days, as everyone is prioritizing comfort.
According to QSR magazine, 67% of people who order food online utilize takeout or delivery services. So if you are not partnering with an efficient delivery service company as a catering business, you need to do that soon.
7. Take your business online
Create an online presence, and this can be a website, a Facebook page or an Instagram page. You need a form of digital advertising to help people hear about your business. Word of mouth is the most important form of advertising, but in this day and age, it is not enough.
Your website does not have to be anything fancy, but it should list your menu, your prices and how to contact you. You can also use social media platforms like Facebook or Instagram to post pictures of your food and tag your location.
You can also design a digital menu that people can view on your online platforms. The look of your menu is also a key factor, especially in your branding as a restaurant, because if your menu is sub-par and your prices are high, it could send a conflicting message to the customers.
How To Make Money with a Catering Business
There are many ways to make money in the catering business. Although you may not be able to earn from all methods, combining a few can give you sustainable income in the long run. These streams include;
- Catering for events and birthdays.
- Catering for institutions.
- In-house services like restaurant services
- Deliveries and takeout orders
- Sale of cookbooks or guides.
- Social media content creation, e.g. cooking tutorial videos
Tips to Avoid Losing Money in the Catering Business.
In order to not just make money but stay profitable in this industry, here are a few tips for you:
- Make partnerships with suppliers: This will help you get discounts on the raw materials you need for your business.
- Do not overstuff your kitchen: This is a common mistake many restaurants and catering businesses make. Only staff according to the number of orders you have.
- Do not overprice your menu: Take time to research how much your competitors are selling their dishes for and how much it costs you to make the dish. This will help you come up with a fair price.
- Reinvest profits but not 100% of profits. Keep a certain percentage aside for precautionary purposes.
- Be very particular about customer service: Customer service can make or break a business, your food may be great, but if word gets around that you don’t treat customers right, it could ruin your business.
- Every business, especially catering businesses, needs an online presence. Even if you are a solely physical store, you need to have an informative and appealing website or Instagram page where customers can find you, and your content needs to inform people about prices and any other important information they may want to know.
With all that we’ve covered in this post, I hope that you have been motivated to start that catering business and not just to start but to start it properly in order to make money in the long run.
Our emails are always open if you have any questions that need to be answered. See you in the next post!