A catering firm, depending on how it is constituted, either delivers the ordered food or participates in its presentation, remaining throughout the duration of an event to assure exceptional service. Some caterers avoid private parties entirely, preferring to participate in seasonal public events such as sports events and festivals.
Table of Contents
Follow these ten steps to start a catering business:
Plan your Catering Company
Create a legal entity for your catering business.
Register your catering company for taxes.
Create a Business Bank Account and a Credit Card
Create Accounting for Your Catering Company
Get the Permits and Licenses You Need for Your Catering Business
Purchase Catering Business Insurance
Define your catering company’s brand.
Make a website for your catering business.
Configure your Business Phone System
Starting a company entails more than just registering it with the state. This basic guide to beginning a catering company has been put together by us. These stages will guarantee that your new company is well-planned, correctly registered, and legally compliant.
STEP 1: Make a business plan.
A well-thought-out strategy is vital for entrepreneur success. It will assist you in mapping out the intricacies of your organisation and uncovering some unknowns. Consider the following crucial topics:
What are the initial and continuing expenses?
Who is your intended audience?
How much money may you charge your customers?
Fortunately, we have done a lot of the legwork for you.
What are the expenses of starting a catering business?
Your kitchen will be the most expensive aspect of your purchase. While many caterers begin by operating from home, those that are successful rapidly outgrow that area. Because installing a commercial kitchen may cost anywhere from $30,000 to $120,000, you’ll want to rent or buy a place that comes fully equipped. Another wonderful alternative for individuals just starting out is to rent out workspace in a commercial kitchen on an as-needed basis. Fees are typically paid hourly, with introductory fees costing $75.
After you’ve determined your workplace, you’ll need to purchase a few other goods. Depending on the sort of catering you do, you may not need to buy everything on the list. Many caterers lease certain equipment and even hire things they will only require on an infrequent basis to save upfront expenditures. Leased equipment costs between $100 to $400 a month, and some firms will give free leasing for certain devices in exchange for purchasing their products.
Flatware, glasses, and linens are included in table settings. If your organisation only needs these products on occasion, try renting them from a local provider. They will not only supply the materials, but they will also arrange for pick-up and cleanup after the event. The rental rate varies according on the quantity of visitors you’ll be serving.
Serving and buffet equipment – you’ll need a broad range of sizes and shapes to meet the diverse demands of your customers.
Cambros – in order to save time, most of your meals will be cooked ahead of time. Cambros keep food warm and secure during transportation. Each cambro will cost you back about $200.
Catering equipment takes up a lot of room in a van. To guarantee that everything arrives in one piece, you’ll need dependable transportation that can convey everything for the event. A secondhand van will cost between $7,000 and $15,000, whereas a brand new one will cost up to $75,000.
Catering software may help you with planning, sales, event booking, and marketing. Some are even capable of producing quotations, letters, and invoices. The programme costs between $1,200 and $3,500 if purchased outright. The cost of hosted software is $70-$135 per month.
Your first investment should also include the creation of a website, marketing materials, and the purchase of an insurance policy, as advised by your attorney or agent.
What are the continuing costs of running a catering business?
Fortunately, each function is planned in advance, so there is no food waste. When the occasion occurs, you buy enough food to serve everyone and send the remainder home with the customer.
Your major continuing expenses will be:
Staffing and payroll taxes – On average, servers make $125 each event, plus tips. Chefs are paid on an hourly or salaried basis.
Rent/lease – for your building as well as any rented equipment
Costs of energy
Insurance for your company as well as your transportation
Marketing
Who is the intended audience?
If your business strategy restricts you to working public events such as football games and festivals, the food you offer and your customers will be casual. If you go the more formal approach, you’ll want to target clients who are planning large-group gatherings. Clients will vary from individuals to small and big enterprises, all having one thing in common: they want you to deliver great food and drinks to their visitors.
How does a catering company earn money?
Your customers’ requirements will differ from one event to the next. Your catering company will earn money depending on the amount of meals and other services offered at each event.
How much money may you charge your customers?
Your rates will vary based on the client’s requirements. How many people are you going to serve? What kind of cuisine is served? Will you provide linens, flatware, tableware, and so on? Will servers be necessary? Will you be in charge of supplying alcoholic beverages? Once you have all of the answers, you can calculate your cost per person and how much you need to charge to make a profit.
How much money can a catering company make?
While this fluctuates based on a variety of circumstances, the majority of catering firms begin with an annual profit of $20,000-$40,000. Most companies report a minimum of $100,000 after 2-3 years in existence.
How can you increase the profitability of your company?
Catering is a seasonal industry for many people. It doesn’t have to be that way with the correct approach in place. Other catering entrepreneurs have used the following tactics to guarantee a more lucrative business:
Pay attention to major occurrences.
Hire someone who specialises in cake baking.
Manage a food truck
Share your understanding of food and nutrition on a blog to educate others while also promoting your company.
Organize culinary lessons both online and in person.
Allow your consumers constant access to your cuisine by establishing a bodega where they can stop by and pick up some of their favourite products.
Include bar service as one of your offerings.
STEP 2: Establish a legal entity
Sole proprietorship, partnership, limited liability company (LLC), and corporation are the most frequent business structure forms.
If your catering company is sued, becoming a formal business organisation, such as an LLC or corporation, prevents you from being held personally accountable.
STEP 3: File your taxes
Before you can begin for business, you must register for a number of state and federal taxes.
To register for taxes, you will need to get an EIN. It’s really simple and completely free!
Taxes on Small Businesses
Depending on the business form you choose, you may have multiple choices for how your company is taxed. Some LLCs, for example, may benefit from being taxed as a S company (S corp).
These guides will teach you more about small company taxes:
Taxes on LLCs
LLC vs. sole proprietorship
Corporation vs. LLC
S Corp vs. LLC
How to Form a S Corporation
S Corporation vs. C Corporation
There may be state taxes that apply to your company. In our state sales tax guides, you may learn more about state sales taxes and franchise taxes.
STEP 4: Establish a company bank account and credit card
Personal asset protection requires the use of distinct business banking and credit accounts.
When you combine your personal and business accounts, your personal assets (your house, vehicle, and other possessions) are at danger if your company is sued. This is known as penetrating your company veil in business law.
Furthermore, understanding how to develop corporate credit may help you get credit cards and other financing in your company’s name (rather than your own), lower interest rates, larger lines of credit, and other benefits.
Establish a business bank account.
Opening a business bank account is not only required when asking for business financing, but it also:
Separates your personal assets from the assets of your firm, which is required for personal asset protection.
It simplifies bookkeeping and tax reporting.
Create a net 30 account.
Net 30 accounts are used to develop and grow company credit while also increasing cash flow. Businesses use a net 30 account to purchase items and refund the whole debt within a 30-day period.
Many net 30 credit suppliers submit information to the main business credit agencies (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how firms establish business credit in order to get approved for credit cards and other lines of credit.
Apply for a business credit card.
Obtaining a business credit card benefits you in the following ways:
Put all of your company’s costs in one location to separate personal and business spending.
Build your company’s credit history, which will be important for raising funds in the future.
STEP 5: Establish business accounting
Recording your numerous costs and sources of revenue is crucial to assessing your company’s financial status. Keeping precise and thorough accounting also makes yearly tax filing much easier.
STEP 6: Obtain all required permissions and licences
Failure to get appropriate permissions and licences may result in significant penalties or possibly the closure of your firm.
Requirements for State and Local Business Licensing
Catering companies must get a Food Service Establishment licence. These permits are available from the local health department. All food-serving enterprises must pass a health inspection. Here are some pointers for passing a health inspection.
If your catering service plans to sell alcohol, you will need a liquor licence to do it legally. The states adhere to a set of laws.
Furthermore, local licencing or regulatory restrictions may apply. For additional information on local licences and permissions, please visit:
Check with the clerk’s office in your town, city, or county.
Contact one of the local organisations mentioned in the US Small Business Associations database of local business resources for help.
Service Contract
Before beginning a new project, catering companies might consider asking customers to sign a service agreement. By defining payment terms and conditions, service level expectations, and intellectual property ownership, this agreement should clarify client expectations and reduce the likelihood of legal problems. Here’s an example of a service contract.
When you join up for Rocket Lawyer’s premium membership, you can easily write a professional service agreement for your catering company. Members have access to hundreds of legal agreements and on-call lawyers for free legal assistance for $39.95 each month.
Labor safety regulations
It is essential to follow all Occupational Safety and Health Administration regulations.
Catering companies must display safety signs, keep the workplace as safe as feasible, and report any work-related accidents.
Occupancy Certificate
A catering company is usually conducted out of a huge storefront. A Certificate of Occupancy is often required for businesses that operate from a physical site (CO). A certificate of occupancy certifies that all building rules, zoning laws, and government requirements have been satisfied.
If you intend to rent a space:
In most cases, it is the landlord’s obligation to get a CO.
Before leasing, ensure that your landlord has or can acquire a valid CO for a restaurant.
A new CO is often required after a big remodelling. If your location will be refurbished before opening, incorporate wording in your leasing agreement saying that lease payments would not begin until a valid CO is given.
If you intend to buy or create a location:
It is your responsibility to secure a valid CO from a local government entity.
Examine all building laws and zoning standards for your restaurant’s location to verify compliance and the ability to receive a CO.
STEP 7: Obtain commercial insurance.
Insurance, like licences and permits, is required for your company to operate safely and legally. In the case of a covered loss, business insurance protects your company’s financial well-being.
There are several sorts of insurance plans designed for various types of companies with varying risks. If you are unaware about the hazards that your company may encounter, start with General Liability Insurance. This is the most popular coverage required by small companies, so it’s a good place to start for yours.
Workers’ Compensation Insurance is another important insurance product that many companies need. If your company will have workers, your state may require you to purchase Workers’ Compensation insurance.
STEP 8: Establish your brand
Your company’s brand is what it stands for, as well as how the public perceives it. A strong brand will help your company stand out from the crowd.
How to Promote and Market a Catering Company
Today, few successful firms do not have a website. While it does not have to be complicated, invest in a website that provides important information such as contact information, menu samples, and images from previous events. Share this content on social media to increase your internet visibility. Who Caters is another excellent website for caterers all around the globe.
Consider joining your local chamber of business and participating in local events to acquire further exposure. If you reside in a bigger city, look into fundraising activities like Jacksonville’s FOODFIGHT. You’ll be surrounded by the finest in the industry, earn media exposure for your company, and contribute to a worthwhile cause.
How to Keep Customers Returning
You will gain a devoted following if you continuously provide high-quality cuisine. Each event that you cater exposes you to tens to hundreds of prospective consumers. If your employees are professional, courteous, and informed, news will spread like wildfire.
STEP 9: Create your company’s website.
After you’ve defined your brand and designed your logo, the next step is to build a website for your company.
While developing a website is an important step, some may be concerned that it is out of their grasp due to a lack of website-building skills. While this was a fair concern in 2015, online technology has made significant advances in recent years, making the lives of small company owners considerably easier.
The following are the primary reasons why you should not put off developing your website:
Every genuine company has a website, period. When it comes to bringing your company online, it doesn’t matter what size or sector it is.
Social media accounts, such as Facebook pages or LinkedIn company profiles, are not a substitute for your own business website.
STEP 10: Install your company phone system.
Getting a phone for your company is one of the finest methods to keep your personal and professional lives distinct and private. That isn’t the only advantage; it also helps you automate your company, provides it legitimacy, and makes it simpler for prospective clients to identify and contact you.