You are perhaps the go-to person when family and friends need help with cooking for events such as parties, anniversaries and weddings.
You know as much, and that’s why you’ve recently started charging a small fee for the service — you now get paid whenever your excellent culinary skills are hired.
So, have you thought about starting your own food catering business?
After all, it’s virtually impossible that people will stop eating at get-togethers, events and corporate functions.
And, this is one of those businesses where talent really counts.
Nothing quite lingers in the memory like the taste of a delicious meal; all it takes is one opportunity to delight attendees’ taste buds. Do this well and everyone, from the kids to the adults, will make comments about your delicious food part of their conversations for a long time.
The National Association of Catering Executives estimates that this industry generates an estimated $7.1 billion annually. Events — including corporate functions, weddings, holiday parties and funerals are responsible for most of this revenue.
The country has an estimated 10000 catering businesses, each hiring an average of 11 persons. Given that the industry is highly fragmented i.e. most of these are small local businesses which don’t control large portions of the market share, being unique can really work to your advantage.
You want to be based in a densely populated location, e.g. a large city, where demand is typically higher.
1. Catering service prerequisites
Your core operation as the owner of a catering small business will be to provide food service at events.
You will typically prepare this food at your premises and then deliver it to the event location. In addition to the food you may also be required to provide drinks, cutlery, crockery, glassware, decorations and staff.
You will need to decide what sector of the business you will engage in; will your service target social event clients (mostly consisting of social occasions e.g. parties, weddings and funerals) or corporate events? There are some caterers who cover both.
The ability to prepare an extensive range of dishes or multiple types of food service is a crucial prerequisite considering the scope of people who may wish to hire your service. While some may have conventional preferences, others may have more sophisticated requirements.
Versatility and creativity with regards to your offerings will therefore enable you to appropriately cater to a varied description of clients.
Being successful as a caterer will require you to combine your passion for food with some business acumen.
Running a profitable venture will need you to be knowledgeable about effective pricing strategies, controlling costs, sourcing and business marketing. Having organizational and event management skills will also be crucial for the success of your operations.
Last but not least, you will need to be a self-motivated entrepreneurial individual, and especially good at inspiring teamwork in your employees. Remember, you’ll be working when everyone else is having a good time.
2. Deciding on an appropriate business structure
In choosing an appropriate business structure for your food catering business there are basically two considerations:
- Taxation of business income, and
Industry experts agree on the need to prioritize liability, and consequently advise business owners to opt for incorporation.
Corporations and liability companies insulate business owners from business liabilities, unlike sole proprietorships and partnerships. Simply, a corporate structure will provide limited liability for your business.
This certainly makes a lot of sense seeing as the catering business is quite risk-prone. There are quite a number of things that can go wrong; employees can suffer injury, people may fall ill after eating your food, etc. In case you are sued, the incorporated structure will ensure that your personal assets won’t be attached to the lawsuit.
You should at this juncture also find a reputable accountant who’ll demystify the tax implications of running your catering business.
3. Selecting the best form of insurance coverage
Get in touch with insurance brokers who are well reputed amongst commercial food production business owners; they should be able to advice you on the best coverage.
You can also consult with other food catering business owners to find out what coverage they have. Going for a general $1 million liability policy is quite advisable.
4. You must have the required licenses
5. You will need an appropriate kitchen
Building such a kitchen is typically quite expensive though.
Some of the options you may therefore resort to include:
- renting a local commercial kitchen that has subleasing arrangements for freelance caterers
- renting out a bar’s commercial kitchen, and
- retrofitting your home kitchen to commercial standards
6. Some of the equipment you will require
Depending on the type of your operation you are most probable going to need the following equipment:
- Basic kitchen supplies
- Steam table pans
- Disposable catering supplies
- Food carriers
- Convection oven
- Chafing dishes
- Catering display
- Event tents
When setting up it is advisable to adhere to the Golden Triangle of kitchen design.
7. Commercial kitchen health and building codes
Seasoned caterers therefore recommend that startups hire consultants who’ll advise them about:
- the appropriate premises and equipment,
- employee training, and
- structuring code-compliant business operations
8. Basic requirements for your commercial kitchen and premises
The following requirements must be adhered to at your catering business’ premises:
- Hand-washing facilities and toilets — An adequate number of washbasins must be available for hand-washing, complete with hot and cold running water, cleaning accessories, and hygienic drying facilities. (Food and utensils should be washed in separate sinks). The number of toilets should also be adequate and they must not directly lead into food preparation areas.
- Changing facilities must be provided for the staff
For the food preparation area the following requirements must be complied with:
- The floors and walls must be smooth and hard-wearing, well maintained, and easy to clean and disinfect
- Ceilings should be in good condition, smooth, easy to clean, with no flaking paint or plaster
- Windows and doors should open to the outside, and be easy to clean and disinfect. Where necessary the windows should be fitted with insect-proof screens that can easily be removed to allow for cleaning
- All surfaces, especially those that are touched by food, must be easy to clean and disinfect
- Facilities for cleaning, disinfecting and storing utensils and equipment must be provided, and these facilities should have an adequate supply of hot and cold water
- Facilities for washing food must be available, and must have an adequate supply of hot and/or cold drinking-quality water. The facilities must always be kept clean and should be disinfected whenever necessary
- Waste (including food waste and other rubbish) must be promptly disposed of
- Employee health and safety, and fire safety precautions must be adhered to
9. Food production and food safety regulations
There are various food preparation, food safety, product packaging and labeling regulations that you’ll need to comply with. To know about these you’ll need to consult with your local Public Health Department.
In case you’ll be producing a food product that will be shipped across state boundaries then you’ll be well advised to find out what the Department of Agriculture and FDA compliance guidelines require.
10. Marketing the business and finding clients
Some of the promotional activities you can invest in include:
- Creating a social media presence. Note that online marketing needs to adhere to several legal requirements which you can learn about here.
- Printing business cards and promotional brochures
- Joining the NFIB, your local chamber of commerce, and other relevant organizations
- Charging discounted rates for several of your initial gigs can also be helpful
- Making the most of your home-based profile — marketing your business as one that delivers “homemade” food can really work. Some of the slogans you can use are “good ole’ home cooking” and “homemade food — just like mom used to make”. Indeed some new clients may be won over by your homey appeal rather than the conventionality of a corporate caterer.
- Offering tastings — Taking food samples to potential clients is an even more practical. After describing your offerings over the phone or via email, you can take samples of the food to them and cater to them just as you would have done for an actual event. If your hot and delicious food impresses them you just may land a contract.
11. Drafting a customer’s contract
A written contract won’t be necessary if you’ll be providing your catering service within a year from the date of your agreement with the client. Nevertheless, it’s prudent to draft a catering contract with each customer of your service.
Draft each contract carefully, ensuring that all potential legal issues that may arise in the event that something goes wrong are covered.
Your contracts should feature the following:
- Details of the services to be offered
- How payment for the services will be made, and when this will be done
- Actual figures — explicitly mention the exact amount the customer will be required to pay
- A description of the venue. Indicate who will be contracting the venue (your business or the customer) and who’ll be responsible for any damages. Also, find out any rules about the venue that the customer has consented to and which may affect your business
- It is also prudent to confirm whether the state laws allow food catering business customers additional damages
12. Staffing issues
You are most likely going to need extra hands — mostly servers and preparers. An administrative assistant may also be required.
Industry experts advise business owners to hire independent contractors.
To determine your labor cost you should consider a specific event’s requirements (i.e. the amount of food, type of food, transportation costs, number of guests, etc). This cost must then be factored into the customer’s price.
Given that staffing will be one of your most significant expenses, it is (wherever possible) advisable to start as a family business or husband-and-wife team.
13. Qualities of a good caterer
- Your cooking skills — The food must taste good. You must also display lots of cooking versatility and awareness with regards to recipe substitutions, menu planning, and the logistics of preparing, transporting and reheating food.
- Attention to detail — As concerns every aspect of an event including table arrangements, décor, food presentation, serving, and clearing the venue
- Adherence to food safety rules and regulations
- Exemplary customer service — Including good communication and people skills, courtesy, tact, diplomacy, all which help to achieve customer satisfaction
- Flexibility and creativity — You must show imagination and adaptability, say if recipes need to be altered to suit various religious, health and personal preferences
- Leadership — This applies to how well you manage your team
- Self-motivation, enthusiasm, positivity and stamina
- Business management acumen — How well you handle various crucial aspects of your business including pricing, employee management, accounting, taxes, sourcing and ordering food, budgeting, scheduling, etc
- Marketing skills — How well you promote your business, and how well connected you are e.g. with venue organizers, event planners, florists, etc.