Depending upon the way it’s structured, a catering company either delivers the requested food or takes part in its presentation, staying throughout the course of an event to ensure quality service. Some caterers forego private events altogether, opting to take part in seasonal, public events such as sporting games and festivals.
Ready to turn your business idea into a reality? We recommend forming an LLC as it is the most affordable way to protect your personal assets. You can do this yourself or with our trusted partner for a small fee.
Northwest ($29 + State Fees)
DIY: How to Start an LLC
We have put together this simple guide to starting your catering business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Exploring your options? Check out other small business ideas.
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
Luckily we have done a lot of this research for you.
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Catering Business Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
It's very important to secure your domain name before someone else does.
The greatest part of your investment will be your kitchen. While many caterers start out working out of their home, those with any success quickly outgrow that space. Since outfitting a commercial kitchen can cost anywhere from $30,000 to $120,000, you’ll want to rent or purchase a space that is already equipped with what you need to get started. Many cities now have another great option for those just starting out - you can rent out workspace in a commercial kitchen on an as-needed basis. Fees are usually paid on an hourly basis, with initial fees averaging $75.
Once you’ve found your workspace, you’ll need to invest in a few additional items. Depending upon the type of catering you do, it might not be necessary to purchase everything on the list. To cut down on up-front costs, many caterers lease some equipment and even rent the items they’ll only need on an occasional basis. Leased equipment averages between $100-$400/month and some companies will offer free leasing for some items, with the agreement you purchase their products.
Table settings - includes flatware, glasses, and linens. If your business only requires these items on an occasional basis, consider renting from a local company. Not only will they deliver the items, they’ll arrange pick-up and clean-up after the event. Rental costs vary, depending upon the number of guests you’ll be serving.
Serving and buffet equipment - you’ll need a wide variety of sizes and shapes to accommodate the varying needs of your clients.
Cambros - to save on time, much of your food will be prepared prior to arriving at the event. Cambros keep the food warm and safe during travel. Each cambro will set you back approximately $200.
Van - catering equipment takes up a lot of space. To ensure everything arrives intact, you’ll need reliable transportation that’s large enough to transport everything for the event. A used van will run you between $7,000 - $15,000, while a brand new one can run as high as $75,000.
Catering software - these programs will assist you with planning, sales, event booking, and marketing. Some even have the capability of generating quotes, letters, and invoices. If you purchase the software outright, cost is $1,200 - $3,500. Hosted software will set you back $70-$135/month.
Your initial investment should also include launching a website, marketing materials, and an insurance policy, recommended by your attorney or agent.
Fortunately, each event is scheduled well in advance, which eliminates any food waste. When the event comes up, you purchase enough to feed everyone and send the rest home with the client.
Your primary ongoing costs will include:
If your business plan limits you to working public events such as football games and festivals, the food you serve will be informal, as will your clientele. If you choose to take the more formal route, you’ll want to appeal to customers who are hosting events for large groups of people. Clients will range from individuals to small and large businesses, all with one thing in common - the desire for you to serve their guests quality food and refreshments.
The needs of your clients will vary from event to event. Your catering business will generate revenue based on the number of meals and other services provided during each event.
Your prices will vary, depending upon the needs of the client. How many people will you be serving? What food is being served? Will you be supplying linens, flatware, dinnerware, etc.? Will servers be required? Will your company be in charge of providing alcoholic beverages? Once you have all the answers, you’ll be able to determine your cost per person, and how much you’ll need to charge to ensure a profit.
While this varies depending upon a number of factors, a majority of catering businesses start out with a profit of $20,000-$40,000 annually. After 2-3 years in the business, most report a minimum of $100,000.
For many, catering is a seasonal business. With the right strategy in place, however, it doesn't have to be. The following are a few strategies other catering entrepreneurs have implemented to ensure a more profitable business:
Want a more guided approach? Access TRUiC's free Small Business Startup Guide - a step-by-step course for turning your business idea into reality. Get started today!
One crucial aspect that cannot be overlooked when starting your catering business is the importance of establishing a solid business foundation. While sole proprietorships and partnerships are the most common entity types for small businesses, they're a far less stable and advantageous option than LLCs.
This is because unincorporated business structures (i.e., sole proprietorships and partnerships) expose you as an owner to personal liability for your business's debts and legal actions, while LLCs protect you by keeping your personal assets separate from your business's liabilities.
In practice, this means that if your catering business were to face a lawsuit or incur any debts, your savings, home, and other personal assets could not be used to cover these costs. On top of this, forming your business as an LLC also helps it to appear more legitimate and trustworthy.
More than 84% of our readers opt to collaborate with a professional LLC formation service to kickstart their venture. We've negotiated a tailored discount for our readers, bringing the total down to just $29.
Note: If you're interested in more information before getting started, we recommend having a look at our state-specific How to Start an LLC guide (DIY) or our in-depth Best LLC Services review (for those opting for a professional service).
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN through the IRS website. If you would like to learn more about EINs, read our article, What is an EIN?
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Besides being a requirement when applying for business loans, opening a business bank account:
Recommended: Read our Best Banks for Small Business review to find the best national bank or credit union.
Recommended: Apply for an easy approval business credit card from BILL and build your business credit quickly.
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
Make LLC accounting easy with our LLC Expenses Cheat Sheet.
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
Catering businesses must be licensed as Food Service Establishments. These licenses can be obtained from the local health department. All establishments serving food are required to pass a health inspection. Tips for faring well on a health inspection can be found here.
If your catering business intends to sell alcohol, you will need a liquor license in order to lawfully sell alcohol. The states follows a list of laws.
Most businesses are required to collect sales tax on the goods or services they provide. To learn more about how sales tax will affect your business, read our article, Sales Tax for Small Businesses.
Catering businesses should consider requiring clients to sign a service agreement before starting a new project. This agreement should clarify client expectations and minimize risk of legal disputes by setting out payment terms and conditions, service level expectations, and intellectual property ownership. Here is an example service agreement.
Recommended: Rocket Lawyer makes it easy to create a professional service agreement for your catering business when you sign up for their premium membership. For $39.95 per month, members receive access to hundreds of legal agreements and on call attorneys to get complimentary legal advice.
Catering businesses need to post safety signage, make the work environment as safe as possible, and report any work-related injuries.
A catering business is generally run out of a large storefront. Businesses operating out of a physical location typically require a Certificate of Occupancy (CO). A CO confirms that all building codes, zoning laws and government regulations have been met.
If you plan to lease a location:
If you plan to purchase or build a location:
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
FInd out what types of insurance your Catering Business needs and how much it will cost you by reading our guide Business Insurance for Catering Business.
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
Recommended: Get a logo using Truic's free logo Generator no email or sign up required, or use a Premium Logo Maker.
If you already have a logo, you can also add it to a QR code with our Free QR Code Generator. Choose from 13 QR code types to create a code for your business cards and publications, or to help spread awareness for your new website.
Few successful businesses today lack a website. While it doesn’t have to be complex, invest in a website and be sure it includes pertinent information such as: contact information, menu examples, and photos of past events. Share this information on social media to build a greater online presence. Who Caters is also a great resource for caterers worldwide.
Additionally, consider joining your local chamber of commerce and participate in local events to gain more exposure. If you live in a larger city, see if they hold a fundraising events like Jacksonville’s FOODFIGHT. You’ll be surrounded by the best in the business, gain media exposure for your business, and help raise money for a worthy cause.
If you consistently offer quality food, you’ll develop a loyal following. Every event you cater exposes you to tens to hundreds of potential customers. Make sure your staff is professional, friendly, and knowledgeable and word will spread like wildfire.
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
Recommended: Get started today using our recommended website builder or check out our review of the Best Website Builders.
Other popular website builders are: WordPress, WIX, Weebly, Squarespace, and Shopify.
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use. Check out our review of the Best Business Phone Systems 2023 to find the best phone service for your small business.
Recommended Business Phone Service: Phone.com
Phone.com is our top choice for small business phone numbers because of all the features it offers for small businesses and it's fair pricing.
If you’re a self-starter who is passionate about cooking and entertaining, owning your own catering business might be the ideal career for you. Due to the nature of the industry, you’ll need to live, eat, and breathe catering for the first few years, but the rewards far outweigh the risks.
Take our Entrepreneurship Quiz to find out!
You’re probably envisioning yourself in the kitchen all day, every day. But there’s so much that goes into running a catering business.
Most days will include the following activities:
One of the many advantages to running a catering business, is that no two days are alike. Aside from the standard administrative tasks that come with running a business, your tasks will vary as much as the customers who hire you.
On the surface, running a successful catering business sounds fairly simple - you cook food and deliver it to your client. Things are never as simple as they sound. Food brings people together and your client is counting on you to help make that happen on their special day. Thus, it’s imperative that you are detail-oriented and on time. In many cases, you’ll be preparing meals in an unfamiliar kitchen, so organization and adaptability is critical to your success. No matter how organized and prepared you are, mistakes happen. The test is how quickly you respond to these snafus and what you learn from each mistake.
In the catering business, you’ll also be required to interact with people. From your staff, to the clients and their guests, you’ll need to maintain an air of professionalism at all times. When meeting with a potential customer, it’s important that you read between the lines, really gaining an understanding of what their needs are and how you will deliver. If something they require isn’t doable or won’t reflect well on your business, be upfront. Both the business and the client will suffer, otherwise.
Working in the service industry is not for everyone. If you have culinary knowledge, but have never worked in the industry, consider spending a year or two gaining some hands-on experience. You’ll gain a deeper understanding of how to run a kitchen, learn tricks and shortcuts, and get used to working long hours on your feet. Additionally, The International Caterers Association and National Association for Catering & Events offer members a number of resources that will assist you in getting started in building a successful business from the ground up.
Over the last 5 years, the catering industry has realized massive growth, bringing in over $32 billion in 2015 alone. More than half of that income was drawn from restaurants who realize the needs of their customers expand beyond the four walls of their restaurant. Depending upon your long-term goals and the strength of your service, your catering business has the potential to expand to include multiple locations, a restaurant/storefront, and/or a franchising opportunity for others.
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe to view later.
