Catering – How to start my own catering business

Catering business - Most really good cooks have been told they should start a professional catering business, but few manage to ever get around to it. Becoming a caterer is hard work and requires resources that few people will develop, and they soon realize that the ability to make a few great dishes in their own kitchen or serve 10 guests in their own house is only the start of what it takes to develop a successful catering business. Catering has many similar goals to cooking for your party, yet it is also completely different.

What a caterer does take is the ability to cook for and serve a group of people a meal that is above average, do it in a remote location where you don’t have access to your food preparation tools, and do it with time delay while the food remains fresh tasting.

Professional caterers must combine their talents in meal preparation with a strong sense of customer service, being on a schedule, and general business principles. As with most businesses, the catering business doesn’t mean the customer is always right, but they are always the customer. The caterer must attract business, get referred to other business, and watch their bottom line. Failure to prepare the right amount of food or do a lousy job of it means you can sink your business before you get out of harbor.

To top it off, caterers must be able to adapt. While you will still have your base (where you prepare and start the meal process), a good caterer will be able to anticipate problems and resolve them quickly, as well as serve the customer under unknown and unanticipated conditions. The caterer will often not know how warm or cool the room temperature is, how crowded the location will be, or what others may decide the caterer should be responsible for. The caterer will often find that someone else has dropped the ball on something critical. The bottom line is that you may have to get the food out and make the customer happy, even if someone else has not done their job.

How much money can I make doing catering?

Catering is a tough job. Don’t let anyone fool you that catering is anything like cooking and serving food to your friends and family. That tough work can be very rewarding, even if it isn’t always a consistent income. Consistency will come over time. In the beginning and from time to time, you may be constantly busy and even turn down catering jobs. Yet you will probably also have times that you wonder where the next job will come from.

How much money you make as a caterer will also depend on the particular crowd and products that you serve. A caterer who serves a more sophisticated menu will generally make a higher profit than the caterer who serves barbeque. That said, the barbeque caterer would probably have more functions with more people and be able to make it up in volume.

Maximizing your profits can also be a bit tricky. You obviously want to keep your costs low, but not at the expense of your product or service. A caterer must be a good estimator. Excess profits can be sucked up quickly in extra product that must be tossed or given away. The easiest way to do this is with portion control. If you plan 4 oz of meat for each person and know how many people will be served, you can make a pretty good estimate how much product you must provide as the caterer.

Always factor in a few extra portions, because running out of food is the caterer’s worst nightmare. You must factor in the broken or dropped portions, a few that weren’t done right, and a little extra just to be sure, and then there is always the possibility that there will be a few extra people show up. If the mother of the bride tells you that the Wallace family did make it after all, the caterer needs to be able to adjust.

Many caterers try to factor in 10-12% extra for just these situations. Other caterers factor this in and tell the customer that they must or should purchase those 10-12% extra. If you have a few leftovers, don’t sweat it. Give the rest to the customer who pays or give them the option. The person hosting the event will very often be glad to have a bit extra to serve the company that stays around for a few days. If the customer doesn’t want it, consider it a bonus. Either plan to take the leftovers home to your friends and family or donate it to a worthy charity that needs some extra prepared meals. You may be able to take the tax write off. Either way, it’s money in your pocket.

Then there is corporate catering. There are many issues that must be dealt with in this end of the business, yet these are often the gravy accounts for any catering business. Special occasions such as weddings, family reunions, or other one-time functions can be great business, but picking up a number of monthly board meetings or weekly sales lunches can be the consistency a caterer needs to stay in business.

Corporate catering may also require you to set up a billing cycle, though with corporate credit cards, this is becoming more rare. Some businesses will look upon you more favorably if you are willing to send them a bill and get paid in 15 or 30 days than if you require immediate payment for service. The trick here is to make sure that you document everything and only extend financial services if it is required to get the deal. Most companies that you will do business with know they need to part with payment immediately, but will only do it with plastic. Be sure you are set up to take MasterCard, Visa, and American Express. The latter is particularly valuable if you want to cater events with larger corporations.

Geographical limitations/differences

Catering might not sound like there could vary a lot with geography, but it can if you get into some of the more cultural foods or customs. In the USA some sort of chicken or beef are always good to offer on the menu. But getting many catering contracts may mean you also have to offer such things as barbeque in the south, a larger beef selection or Tex-Mex in the southwest, or seafood on the ocean coasts.

If you aren’t familiar with these local variances, spend some time learning. Include some options and be willing to take from or add to your catering menu based on customer preferences and what you learn on the job. Some menu items just won’t be worth the bother on a caterers’ menu. Just don’t invest in very specific preparation or catering equipment until you are sure it will add to your ability to produce, get contracts, and otherwise improve your income.

Competitors in the Catering Business

Your competitors aren’t just other caterers. In fact these are often the smallest percent of your competition. Catering companies must compete with any other company that provides food, and there are more of those than you might think.

Restaurants will have special rooms set up for people to come in large groups and be served by wait staff. These rarely work for groups more than 30-50 people and they generally don’t offer the ability to use the place for much longer than the meal. Many restaurants don’t like to have these groups on busier days either since they always tie up tables for longer than it takes to serve and eat the meal.

Hotels and country clubs are probably the biggest competitor out there. These businesses build their business on catering and have the benefit of offering the space for free or reduced prices.

Many churches and clubs will have their own kitchens. These can either be your allies or your competitor. They will be the caterers’ ally when they can be used as staging centers for the caterer to use to serve the meal. They can be your competitor when they are used by membership to do their own function.

Differentiating your catering business

Like any business, catering can be very competitive. As such, you have the potential to differentiate your catering business by doing something different or special. Add special menu items or develop a trademark cool thing that nobody else has and price it low. People often develop ideas who to hire from other functions they go to. Every time you do an event, you are advertising yourself to future potential clients. Do something to make them want your catering business

Advertising your catering business

While every catering event is a potential contact with future potential clients, this is not a place for the caterer to flagrantly market the catering service. The client is paying for the event and will likely take offense if you spend time doing this. There are however, more subtle ways to make your name known at each event.

Start by putting your catering company name on jackets, shirts, headgear, or other things that potential catering clients might see. It should be subtle to be seen when someone is looking for it, but not obnoxiously in everyone’s face. It doesn’t need to be. Potential clients will actively seek this information.

Some clients won’t mind if you put a stack of business cards on the table. But be sure to ask first.

For less formal events, consider making preprinted napkins part of the service set. This allows you to print your company name on them without looking like a opportunistic schlock.

Getting started as a caterer can take a bit of work. If your name is not out there and you don’t have any events under your belt, it may take a bit of work to talk people into giving you a chance. Given that, people do it every day. Talk about events that you have been in charge of or other relevant personal history. You may also find that some people don’t bother to ask so long as you present yourself in a confident manner.

Catering Business License Requirements

Few locations have specific license requirements for caterers. However, many communities have specific requirements for cooking and food service. You should check with your local city and county governments to determine if and what requirements might have to be met for you to go into the catering business.

Catering Business Product Supplies

You will need to have suppliers in two major categories. The first major one for any caterer is the institutional food source. Your catering food supplier should have all the major ingredients for your menu since dealing with more than one supplier can get to be rather tedious.

Most medium to large cities have one or more institutional food supplier, though size and pricing will vary. You will have to acquire your business license before they are willing to talk to you since they don’t deal with the public at all.

The other big requirement is the service set. This includes the caterers serving units and sometimes, tableware, glass, and silver. Not to panic through. Many of these items can be rented from party rental stores. Large box stores such as Costco, Sam’s Club, and BJ’s are also known to carry some of these items.

Closely related, the average catering business is going to need a kitchen to use as a staging center. This will require cool storage and cooking ability that exceeds the average home kitchen. Smaller catering events might pull this off from a well-equipped home kitchen, but beyond that, you will need to find a place to rent a kitchen. These are few and far between, but contact local churches, civic clubs, country clubs, and owners of closed down restaurants. You might be able to strike a few bargains there.

Lastly, the big requirement you need to run a successful catering business is service help. Since you won’t be paying them regularly, keeping help might require that you pay them well when they do work.

Financial Requirements

To start a catering business isn’t nearly as expensive as starting many other businesses. Your equipment can be rented from local party and equipment rental centers, and your food doesn’t have to be bought until after you have received up front money for the event.

What you will have to afford are the normal costs of starting up a business, doing the advertising, and doing some test meals.

What to do next

After doing the basic business startup procedures, you will need to find your suppliers and equipment rental centers. Produce your caterers list of equipment and supplies and uniforms so you know what you will need to find or buy. Doing this after you have your first contract will be a huge distraction and mean you will probably forget something.

Develop your menu offerings and make sure that these can be done in large batches and remain fresh between your kitchen and the time you start serving.

Consider how you want to start getting your name out there. Alternatives include standard advertising, doing a low-cost meal for someone as an incentive and to be seen.

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