How To Start a Catering Business: Your Step-By-Step Guide
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Do you consider yourself a wiz in the kitchen and the go-to entertainer for all your friends? Are you the one hosting game day gatherings and going above and beyond when it comes to the snacks? Can you stay calm and collected in the face of a little chaos? Then you might want to consider a side hustle in catering.
With a $12 billion market size providing an average income of $30,000 to $80,000 annually, the catering industry has long been a lucrative area in the events space. And though there’s the obvious and unfortunate fact that it’s taking a hit during the coronavirus pandemic, it’s not entirely impossible to launch a catering biz right now. With more intimate and perhaps at-home gatherings on the horizon, it just might be the perfect time to enter the market. Don’t know where to start? We’ve got your step-by-step guide.
1. Do Your Research
As is true when launching any type of business, your necessary first step is to research every aspect of what’s involved, from general costs to market competition. According to Tyler Drown, co-founder of New York-based Worthwhile LLC Event Services and industry vet with 10 years of experience in the catering and events space, “You need to think about your target market, you need to think about your bottom line, prime costs, and how much business [you] need in order to make this business viable to do it full-time. There are various industry benchmarks about food costs, costs of renting equipment, costs for leasing kitchen space, et cetera. Learn them and work backwards.”
2. Find Your Niche
In the midst of your research, you should be taking note of what other catering companies in your area offer and where there might be a gap you could fill. Lots of wedding caterers around? Consider specializing in corporate events. Know your stuff when it comes to vegan food? Make that your selling point! Think about what services you can offer that will set your business apart while giving you the marketing advantage of filling a void. If you’re starting small, it’s important to find a niche you can focus on to find your footing and develop a reputation before expanding.
3. Get All The Legal Stuff Out Of The Way
From registering your company name to determining what type of entity it’ll be (some options include sole proprietorship or limited liability company, known as an LLC) starting a small business comes with quite a bit of paperwork you’ll need to get sorted before you really get started. Check with your state about what licenses and clearances you need for food preparation and serving alcohol, if that’s something you plan to do.
4. Get Insurance
You’ll also need to look into liability insurance. “Many residential and office buildings and event venues require all vendors, including caterers, to have a certain amount of general liability insurance and will require a custom Certificate of Insurance to be issued naming them as additionally insured or having things like waivers of subrogation,” explains Tyler. “They also may have additional requirements to use their loading dock. If your event staff is serving alcohol, you should have liquor liability insurance as well. Also, don't count on your client knowing these things. Politely and delicately make sure they ask the building management. The last thing you want is to show up with a van full of equipment and catering only to be turned away by the building management because of something entirely avoidable.”
5. Scope Out Local Vendors & Kitchens
Next, of course, you need to figure out where you’ll be cooking and preparing your food. If your state allows you to cook and cater from home and you prefer that option, be prepared to purchase commercial grade and/or regulation-approved kitchen supplies. The other option is scoping out a professional kitchen that is already available. “There are many shared-use or temporary rental commercial kitchens that you can use as a commissary kitchen, some of them style themselves as restaurant or food ‘incubators.’ Although it may be unpleasant to consider, there are going to be many commercial kitchens coming online for lease shortly,” Tyler says. “If you are outfitting a kitchen, one rule of thumb I've heard often is that it's better to lease than buy your dishwasher and your icemaker because they require more service than almost any other piece of equipment.”
6. Hire Your Staff
Kitchen help, cater-waiters, bartenders - oh my! This may be your venture, but chances are you’re going to need some staff to ensure a smooth experience not only for your customers but also for yourself. This is definitely not the kind of undertaking you want to go at completely solo. So how do you go about hiring? Tyler says, “There are two routes, hiring staff directly and using an event staffing firm. If you already know many people willing to work for you that are trained in your style of service, hire direct. If not, it may make sense in the short run to use temporary event staffing agencies to grow your business. You will pay a premium, but many people underestimate the cost of recruiting and training staff.”
7. Expand Your Customer Base
When it comes to catering, the best kind of marketing you can hope for is word-of-mouth. Fortunately, this specific business type allows you to easily promote and reach new customers during your time working for another client. “Grow your business by making concentric circles around your client base, expanding your reach and your base,” says Tyler.
It’s a strategy echoed by Giovanna Mansi of Tastings NYC, a catering biz with hubs in both New York and South Florida. “When Tastings first started in New York 20 years ago, the clients were mainly residents of the Upper East Side, with whom we developed a solid relationship. They often owned a house in Palm Beach or traveled there for the winter months,” she explains. “On several occasions, we were asked to assist them in South Florida with their family and friends gatherings. As we were getting busier in the South Florida area, the decision to open a permanent office there came as a natural choice.”
Bottom line? If you want to expand, market around your client base, and provide excellent service during an event, their friends and people in attendance can see firsthand how great you are. They’ll remember you, and they’ll tell their friends and boom. Be sure to give out your card or have promotional materials available during each event you cater to.
8. Prepare For The Unexpected
Whether it’s a last-minute issue with your food supplier or, you know, a global pandemic that has a disproportionate effect on your industry, in particular, you’ve got to be prepared for any challenges your business may face. However, when it comes to the coronavirus, catering companies have had to get creative and learn to adapt. Tastings, for one, launched Tastings 2.0, their virtual catering service, which provides simultaneous meals to guests attending video events from home. “Tastings Virtual Catering and Events was officially launched in April, and it was an immediate success,” says Giovanna. “People were already used to Zoom happy hours and celebrations. But they were only sharing a screen and a drink. We brought a meal to their houses that can be shared with all the attendees, whether in NY, the Hamptons, or Miami (thanks to our South Florida office). Sharing a meal together brought a sense of normalcy that we were all looking forward to.”
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