How_to_Start_a_Catering_Company

This article is part of our Event Planning Business Startup Guide—a curated list of articles to help you plan, start, and grow your event planning business!

Do you find the process of shopping and chopping, sautéing and flambéing for large groups of people rewarding and fulfilling? Would you rather die than serve a salad that is topped with anything other your homemade vinaigrette dressing? Are people constantly asking you to cook for their next gathering?

If any of this sounds familiar, you’ve probably at least toyed with the idea of starting a catering business. But like young, hungry athletes and musicians, those thoughts were likely met with that one question everyone must face at one time or another—can I really make it as a professional?

While only you can answer that for yourself, there is some encouraging news. The catering business is a thriving industry which can be scaled and tailored to whatever best suits your skills and situation. This article is intended to serve as a step-by-step guide to show you how to start a catering business.

To supplement this guide, I interviewed two seasoned veterans of the catering business:

Jean-Marc Fontaine is a French-trained chef, event planner, and sommelier who now serves as the Catering Sales and Events Consultant for Urban Source Creative Catering in the heart of downtown Toronto, Canada. Warren Dietel is the Owner and President of Puff ‘N Stuff, a full service wedding, corporate, and holiday event caterer and planner serving the greater Orlando area and all of Central Florida.

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The state of the catering industry in the United States

In the United States alone, the catering industry is a $12 billion juggernaut and growing every year. Despite a struggling economy, the industry saw a spike of 1.8 percent annually, from 2010 through 2015, making it one of the few nearly recession-proof businesses. No matter how bad the economy is, people will still have baby showers, weddings, funerals, and high school graduations—although not likely in that order.

A market report shows that in 2012, the average costs for the food service at a wedding reception in the United States amounted to $3,579 U.S. Not surprisingly, the largest market segment that supports the catering business is households earning at least six figures. In 2015, of households with a combined income of 100,000 U.S. dollars or more, 5.4 percent spent $500 to $999 U.S. on catered events outside the home.

There is another aspect of the catering industry that makes it very appealing for entrepreneurs: Unlike most other sectors, the industry is highly fragmented, meaning there is no one corporate entity dominating the market share. The top 50 U.S. companies account for less than 15 percent of industry revenue.

This means there’s room for everyone who has some skill and hustle. Large companies can leverage their ability to scale to any event and cover multiple events at the same time; smaller outfits can push their personal touch for a competitive edge.

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Are you ready to start a catering business?

There’s no shortcut to determining if you are just a “weekend warrior” dazzling your friends and colleagues in your own home or someone who is a great candidate to branch out and start their own catering business. Jean-Marc Fontaine says to find success, people need to spark that burning desire from within.

“I really have a passion for food and entertaining and the reason I’m still doing this job today is because I am passionate about the food industry,” he says. “It’s a very special area, it’s not like an office job, it’s more like art—you have to really love it.”

Jean-Marc believes this passion is necessary because almost everyone who enters the food service industry greatly underestimates the amount of time, effort, and expense it requires to be successful. This is a lesson he has learned personally.

“Many years ago when I was in France, my brother (also a chef) and I opened a small restaurant together—30 seats so not a big operation. It was just his wife serving and we had someone helping in the kitchen. We knew it would be a lot of work; we didn’t know we’d be working literally 18 hours a day, seven days a week. So many things to think about, not just food prep but cleaning and overhead, you need equipment, you need a vehicle which means expenses for gas and parking. If you don’t anticipate all the expenses and overhead charges, it can be overwhelming,” he says.

Warren Dietel also cautions anyone thinking of entering the business against getting swept up in the glamorous portrayal they may have seen on television, as the reality of the industry is altogether different.

“Catering is not for the faint of heart, this is a hard business,” he explains. “You can’t get into this thinking this is what you see on the Food Network. I think the cooking networks have done a fabulous job of showcasing the glamorous side of what the food service and special event industry is, but at the end of the day, it takes hard work, grit, and determination to be successful.”

If you are driven by that burning desire to start a catering business and are prepared for the work and accompanying expenses, the catering industry will offer some distinct advantages over starting a traditional sit-down restaurant.

Advantages of starting a catering business

Food production costs:

Caterers know exactly how many people they are expected to serve. That means you can buy only what is absolutely necessary and reduce the expense of food waste. A traditional restaurant may be prepared to serve 150 people on any given night, even if only 30 walk through the door.

Equipment costs:

Since most small catering operations only need their equipment for a few days each week, it makes more sense to rent it for only the times they will be in use. This expense is factored into the overall job quote. That means, unlike the new restaurateur, the caterer does not have to deal with a staggering amount of overhead right out of the gate.

Serving staff:

Most catered events are buffet style, which means the catering company can get by with two or three servers for a party of over one hundred guests, whereas that same guest list in a restaurant would require at least eight to ten paid serving staff.

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What to do before starting a catering business

You’ve seen the advantages, you know what’s in store, and you’ve decided you will forge ahead and start a catering business.

Before you lease space and start advertising, there are some “test drives” you should do first. These are things that can give you a better sense of the professional landscape and either confirm or challenge your commitment to moving ahead.

Work for a local caterer:

As obvious as it may seem, there is no better way to prepare yourself for the realities of making it on your own. You will get a master class in everything that goes into running a successful (or not so successful) catering business. It will also show if you have the one trait Jean-Marc believes any caterer must have to make it in the business.

“I know it sounds a little cliché, but you always have to keep a positive approach because there are so many factors that can be stressful,” he says. “A lot of things can go wrong from the get-go. It could be accidental food poisoning or the delivery van could have an accident on the way to an event. No matter what happens, you always have to have a positive approach.”

Volunteer as an event planner:

For any prospective caterer, the ability to multi-task is just as important as the ability to prepare mouth-watering dishes.

The most delicious food in the world will not save an event that is an organizational train wreck. The experience you gain from helping to plan fundraising events for your favorite charities or church functions could reap huge benefits further down the line.

Work as a personal chef:

This is a very common training ground for many eventual caterers.

By working as a personal chef, you not only hone your skills in the kitchen, but you can also develop a client base and begin networking, which will be very beneficial when you transition to catering.

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How to start a catering business: A step-by-step guide

Step I: Identify your niche

When you’re finally ready to make a go of it and launch your catering business, the first thing you have to do is determine what makes your business unique.

What do you offer that will attract clients in the marketplace? When you’re first starting out, you will likely be a very small operation and that makes it especially important to establish your niche in the marketplace. Large corporate events like Jean-Marc’s Urban Source Creative Catering has the ability to scale up or down depending on the order. They can be a large one size fits all operation that can be, in many ways, everything to everyone.

“A couple of weeks ago I was planning a corporate lunch for executives for one day and the next day, it was a birthday party for a five-year-old girl,” he says. “We’re flexible enough to adapt the menu to the needs and preferences of the client.”

It’s very unlikely you will have the same capability. So here are some things you can do to narrow the focus of what your catering business is all about.

Identify your concept

This is essentially determining what the DNA of your catering business will be.

What’s your most identifiable and unique business trait? Are you a target-based caterer, meaning you specialize in certain events like weddings, corporate lunches, or social fundraising events? Or are you a cuisine-based company that specializes in vegan and vegetarian dishes, Southeast Asian cuisine, or catering for some of the more common food allergies and restrictions?

Conduct market research

Maybe you decided that you are going to be the premier vegan and vegetarian caterer in your city. You’re going to want to find out how many other businesses out there are trying to service that same market.

You may be in trouble before you begin if your chosen niche is already oversaturated in the market. Also, find out who has been successful locally and why. What are people saying about them? Why do they get repeat business? The answers to these questions will help you guide and shape you’re growing catering business.

Determine your price point

Like most other goods or services, catering businesses range from the very affordable to the quite expensive. You’ll need to determine where in that spectrum your business is situated.

If you are going for high-end clients like corporate lunches or expensive wedding parties, you will need to price your meals and services accordingly. Or perhaps you’ve decided to make catering affordable to those who would normally not consider it, and so you’re going to offer delicious catered meals to the middle class.

In either case, how successful you are in your targeted market is going to depend in large part on determining the right price point.

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Step 2: Choose your menu

A caterer does many things and must wear many hats, all at the same time. But, nothing is more central to the core identity of the business than the menu.

Your service and presentation must be impeccable, but it is the food that will keep customers coming back and offering referrals to their friends and associates. For many, it is the single defining aspect of a catering business.

Here are some things to consider when putting together your catering menu.

Have an area of expertise

The larger corporate catering firms which often target large and expensive executive lunches can scale their operation up or down to meet any food request presented to them. Starting out, your focus will have to be more narrow, partly because for budgetary reasons and partly because that will help you create an identity.

By targeting your menu to what you do best, you put yourself in a better position to deliver a top quality product to your client. This is something Warren Dietel believes is crucially important for new caterers.

“Know your limitations and always try to undersell and over-deliver,” he advises. “You don’t want to promise something that you can’t deliver upon.”

Stay on top of current food trends

Food is no different from fashion, architecture, or technology in that it is nearly impossible to stay on top of all the current trends.

The advent of food and cooking television networks over the past 10 years has given rise to numerous self-proclaimed “foodies” who are very specific about what they consume, and this is the biggest change Jean-Marc has seen in the industry in the last five years.

“We are seeing a big demand for gluten-free items these days, but it’s always changing,” he says. “Up to a couple of years ago, it was all about cupcakes, everybody had to have cupcakes. You would see cupcake shops spring up all over the place, but now that’s fading away and now we’re in the macaroon phase. Everyone now wants macaroons for their parties.”

It would seem keeping current has never been more important in the foodservice industry.

Make sure your menu is cost efficient

This may seem self-explanatory, but there is no faster way to put yourself out of business than by delivering amazing dishes that cost more to produce than what you are receiving from the client. Be sure to factor in all food preparation costs when deciding what you will put on your menu.

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Step 3: Working on location and logistics

Before you can place that first order and take that first piping hot tray out of the oven, you will have to clear some logistical hurdles to get your business operational. To work through this next step, you will have to wear the hat of a shrewd CEO and CFO.

Choose a business location

Perhaps the biggest difference between the catering and restaurant industries is that the restaurant mantra “location, location, location” does not really apply as much when it comes to starting a catering business.

Jean-Marc believes what is most important in choosing a location is what amenities are available rather than what part of the city you are situated in.

“I don’t think it really matters where you are located,” he says. “What is important is to have plenty of preparation and storage space. We have office space plus a basement for storage with walk-in fridges and walk-in freezers.”

Decide on transportation

Setting up business anywhere you’d like is a positive, but having reliable and sizable transportation is an absolute necessity. You will have to determine if it makes sense to buy a company van or simply rent one on as as-needed basis.

Of course, there’s more to transporting food than simply loading it into the back of a van. You will need special units to keep the food properly preserved from your location to the function.

This involves the use of:

  • Food carriers
  • Beverage carriers
  • Insulated food carts
  • Banquet carts
  • Thermal insulators
  • Cold packs

Make sure you have insurance

Anyone entering the food service industry absolutely must protect themselves with adequate business instance coverage.

Even with the most careful attention to detail, accidental food poisoning or other mishaps can happen and you must be prepared for all eventualities. Your serving staff will also require Workers’ Compensation insurance.

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Step 4: Developing your marketing strategy

You’re already the culinary master, you’ve taken on the role of CEO and CFO and now it’s time to put on yet another hat—marketing specialist.

No matter how great your food is, your business won’t survive without the clientele. Here are some things to consider when it comes time to start marketing your catering business.

Think twice about brochures and flyers

Not long ago, this was one of the go-to methods for getting exposure for a catering business. Handing them out a wedding or trade shows was considered a no-brainer for any enterprising caterer.

“We used to do brochures and flyers but that doesn’t really work these days,” Jean-Marc says. Instead, they now use a targeted cold-call method when they have on-site office jobs. “Let’s say we have a job in the building at 110 King Street. What we do is take business cards to the neighboring businesses and let them know who we are and what we have to offer. That has worked well for us in the past.”

Establish a website and social media presence

This is by far the most effective marketing tool you will use. Your website is the first place most people will go to see what your business has to offer and determine if it’s a good fit for them.

Having a strong web presence is an absolute must, and Warren believes social media is pretty close to being the entire ballgame for catering businesses. Social media sites such as Facebook and Twitter are key to not only effective image crafting for your business, it is also the most effective means of monitoring and responding to what people are saying about your catering business.

Volunteer your services at a charitable event

This is a tactic that Jean-Marc has found to be very effective during his years in the business.

Find a really great cause you want to support, and offer to cater the event as your contribution in exchange for the organizers using your company name and logo on all promotional materials and at the event itself. You will be incurring a significant expense at the outset but it is a great way to penetrate a target-rich environment.

Partner with event planners and venue owners

Look to develop long-term, mutually beneficial relationships with other organizations that frequently use caterers. Establishing a great working relationship in with the top two or three event planners in your area is a great way to keep your business going strong.

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Resources

Below you’ll find a list of different resources that can help you find out more about what goes into getting your catering business off the ground.

Websites:

  • The Catering Institute: An excellent online resources which offers downloads, essays, videos, and webinars on topics such as leadership, operations, sales and marketing, and delivery. Past webinars include: “Catering Menu Optimization,” “How to Market Your Holiday Catering Program,” and “Building Loyalty and Order Frequency with Rewards and Incentives.”
  • NACE: The National Association of Catering and Events offers online learning opportunities through what they call NACE University. Their courses fall under two umbrella headings: The Business Academy, and Food Safety. They also offer Certified Professional in Catering and Events (CPCE) Designation.
  • Vegetarian Society: An excellent resource to help caterers navigate the often choppy waters of providing excellent meals to a strict vegetarian clientele.
  • TES: An online educational resource hub that is home to the world’s largest online community of teachers, with 7.3 million registered users. It has numerous resources for caterers including information on cooking skills, health and safety, managing an event, customer service, world foods, and preparing food—just to name a few.

Other resources:

One visit to Amazon.com will give you numerous options for published guides on starting a catering business.

Some of the titles you’ll find include:

Taking those first steps:

Both Jean-Marc and Warren stress the importance of patience and determination in those early days. It will be harder and more labor-intensive than you can possibly imagine, but it will also be unbelievably rewarding.

Warren said anyone new to the field must anticipate seasonal ups and downs—there will be natural ebbs and flows and it is important to be both psychologically and financially prepared.

“This is a very seasonal business. It seems we work really, really hard for eight months out of the year and for four months out of the year we get to regroup, recalibrate, reorganize,” he says. “That’s a good thing, but you just have to be sure you prepare for that from a cash flow perspective.”

So, the next time you amaze your social circle with your culinary mastery and someone says “You should really start your own catering company,” ask yourself one question—are you ready to flip the switch?

View our Guide to Starting a Business today!
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Tony Sekulich
Tony Sekulich

Tony is a freelance writer and editor based out of Toronto, Canada. After writing for newspapers and magazines, Tony wrote for film and television where he was recognized with a Leo Award nomination for Best Screenwriting in an Animated Series for his work on the APTN animated series Animism: The Gods Lake. You can follow Tony on Twitter here: @TonySekulich