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The catering industry attracts a wide range of entrepreneurs. Maybe you’re an excellent cook, maybe you love throwing parties, or maybe you’re interested in event planning and want to get the ball rolling with catering.
How To Start A Successful Catering Business
Or maybe you’re like Dannella Burnett of Gainesville, Georgia, who formed her catering business back in 2009, and your reason is simple and sweet:
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“I figured if I could cook for other people and put food on their plates, I could put food on my family’s plate,” Burnett says of her decision to start Oakwood Occasions.
But as Burnett knew even in the beginning stages of starting a catering business and expanding into event planning, the business is about much more than putting food on plates. It’s about thinking through stressful situations, planning for the unexpected and most importantly, running a business like any other.
In this guide, we’ll take you step-by-step through everything you need to know about how to start a catering business. With a little help, you’ll be delighting guests at parties, events and festivals in no time.
Before you get to the following steps to start a catering business, be aware that you should decide what type of catering business you want to start before learning how to start a catering business.
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Some caterers only do cocktail reception drinks and small finger foods, others do buffet-style catering, and some do the sit-down catering that you might see at a banquet or wedding. Once you know what kind of catering you want to do, you can move on to the next steps.
Once you have in mind the type of catering business you want to start, you can move on to choosing a name for your business and also defining the entity for it. You need to choose a name and make sure it is available in the state where you will open your catering business. In most states, you can check the availability of business names online with the Secretary of State.
You must also select the business entity you want your business to operate as. Here you have a lot of options depending on a few things, including whether you want to go alone or not.
If you decide to operate as a sole proprietor, your business will be unregistered and owned by you alone (or you and your spouse). If you want to have a partner for your business, or you want to avoid taking on all personal responsibility for your business, you can choose to register your business as a general partnership, a limited partnership, a limited partnership, a limited partnership, or another business entity . Each offers different protections for the partners and the business.
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Once you’ve chosen your business name and entity, the next step on the “how to start a catering business” checklist involves writing a business plan. This will take some work, but it will pay off in the long run because you have a plan to fall back on and it can help you know what to expect as you run your business.
You can use a business plan template, or you can create a plan on your own. When you make the plan, it should include a lot of research. You will want to include an overview of your business, a market analysis, your business organization, the specific products and services you will provide, and your marketing and financial plan. If that sounds like a lot, don’t worry—you can always add to your plan as you learn more about the catering industry.
Importantly, however, you should also research your competitors and identify potential customers. Is there a need for a particular type of catering in your area that is currently underserved? For example, if you live in an area with many golf courses, you may find that they always need caterers for weekend events. Your market research of the needs in your area can greatly help you sustain your business.
Part of your business plan for how to start a catering business should also include the vendors and suppliers you plan to use. Find out if you can buy all the supplies you need, including linens, utensils, crockery, even tables and chairs for some events, and of course the food. When it comes to non-food items, Burnett suggests renting first before buying things outright.
The Basic Steps To Run A Successful Catering Business
“In the beginning, you can rent anything you might want or need,” she says. “And renting is great: You know what the price will be and you don’t have the upfront costs of buying something.
“But at some point, even if you want to buy those things yourself, because you can still charge for them, and essentially you’re paying for the ownership of them. And they ultimately pay for themselves.”
When it’s time to buy, equipment financing can give you the financing you need to cover the cost of supplies.
Depending on the business entity you selected, your business name may default to your name. If you want to change it, you may need a DBA or “doing business as” name. You must register your business and its name in the state in which you plan to operate.
Catering Supplies & Equipment
For a catering business, because you are handling food, this may also require some other registrations depending on the regulations in your state. The health department may need to check the place where you cook and prepare the food you are going to serve, for example.
You will also want to apply for an employer identification number also called an EIN. You can apply for one online from the IRS in minutes and enjoy the benefits of having one for years to come. It can serve as a business tax identification number and help you perform other business tasks such as applying for a credit card and paying your employees.
As with most industries that involve cooking, you can’t just, well, do it. You must have a business license from the state as well as a food handling license. You’ll also need to pass a county or state health inspection—a residential kitchen likely won’t cut it, so consider looking for a commercial kitchen that’s already been approved.
Some other requirements you may need to consider include workers compensation insurance and permits or licenses to work from certain venues – the monthly or annual costs can cut into profits.
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If you are unsure of what is required, contact your local Chamber of Commerce, Small Business Development Center or Small Business Administration to learn more.
It’s not a bad idea to consult with an attorney in your area who specializes in the food or service industry for help filing everything and getting all the records cleared before you start cooking.
The price for your work largely depends on where your business is located and what kind of catering you do. Many companies create price tiers that provide a certain level of service and amenities for different amounts. Burnett never went that route.
“I started out doing custom proposals for people, and I’ve stayed with them for these nine years,” she says. “It takes a lot more time, but a lot of my suggestions are accepted, rather than a package deal where it may or may not fit what someone is looking for. If they don’t need something, if it doesn’t relate to their event, it goes it doesn’t factor into their pricing. If they need more, they pay for more; if they need less, they pay for less.”
How To Run A Successful Catering Business
To get an idea of what costs what, Burnett says her price per person has ranged from $7-$8, for light appetizers for cocktail hour, up to $80 for filet and lobster.
“It varies because we do buffets, plate dinners, simple appetizers or [events] where we’ve just delivered food and they’ve served it themselves — to very sophisticated menus with unique ingredients,” she explains.
It is unlikely that you can organize an event all by yourself, so staff is a requirement. Hiring and training staff is something that came organically for Burnett, but it may not be the case for you, so doing what’s best for your business is recommended here.
“At the first location, we arrived employees one by one, as we needed people. There was no real formal education from the beginning, she says.
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You may be able to find staff just as easily, either by word of mouth or by combing your own network. But you may also need to contact foodservice-oriented job search sites or look at how competitors found their staff. Just keep in mind that what works for you when starting a catering business may not be what works once your business starts
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