Why Set Up a Catering Business?On March 11, 2018 by NACE
If you love food, people, and freedom from a 9 to 5 job, then the catering business is for you. With a catering business, you don’t have to allocate a large amount of start-up capital, like you would when putting up a restaurant. You don’t have to stress yourself either, with the unpredictable quantity of inventory to stock up on—a problem with most food trucks.
But like any other businesses, a catering business has its pros and cons. Here are the advantages and disadvantages of running a catering business:
• You get to network with different kinds of people where every encounter is a possibility for personal and professional growth. You turn into a “Type A” person: aggressive, jolly, and passionate.
• There will always be celebrations all year round, so expect good business all the time. If you’re able to strike a deal for food delivery to homes or offices, then you’ll be busy every day of the year.
• Catering services gives you an outlet for your creativity. It’s an opportunity for you to showcase your signature dish.
• You own your time. You can accept engagements according to your schedule. Your hours are flexible and you work at your own pace.
• You’ll get to visit new places and experience new challenges, boosting your confidence and leadership skills.
• You’ll have to be prepared to do dirty work: loading the truck, setting up scullery, scraping and washing the dishes, even running to the nearest grocery for a spatula before the bride cuts the cake. And then there’s cleaning up and hauling trash after the event.
• For sure, you’ll hear criticisms about the food. This is part of being a new player in the catering business. Don’t despair. At least you’ll know what to improve on the next time.
• You need to be quick but careful about hiring additional help for bigger engagements. You have to make sure you’re able to meet deadlines, while you manage cost implications.
Start Up Capital
Here are your cost considerations when starting up a catering business:
• Location. You’ll need a kitchen for food preparation and packaging. There will also be utilities, maintenance and repairs, and security to pay.
Allocation: $3,000 – $6,000
• Permits and Licenses. You start by obtaining permits and licenses from your State Licensing Office. Here are the required documents:
- Business License. The Business Licensing Office will check if there are no laws that prevent you from starting a catering business in your prospective location. If you’re to start as home-based, they will check that you do not violate zoning laws.
- Health Department Permit. You’ll be issued this permit after an inspection visit to check if you comply with sanitary food handling practices.
- Fire Department Permit. Running a catering business involves fire, fuel, and other flammable materials, thus the permit.
- Air and Water Pollution Permit. The State Environmental Protection requires this permit to ensure that you’ll comply with regulations on dirty smoke, dirty water, and wastes.
- Signage Permit. Before having your ads designed and installed, pay a visit to you local Advertisement Regulation Office first for rules on approved sizes, locations where you can place your signs, and proper lighting.
- Liquor License. If you plan to serve alcohol for certain events, then you’ll need a permit for your wines and spirits.
- Sales Tax License. You’ll be running a taxable business so you need to secure a Tax Identification Number for filing your taxes.
Make copies of your permits and licenses and display them prominently in your business location, not only for government inspectors, but for your customers and their peace of mind.
Allocation: $1,000 – $3,000
• Employees. For the people who will provide you assistance, you may decide to pay them on a commission basis, or on an on-call, per engagement basis.
Allocation: $1,000 – $4,000
• Advertisement. You can never undermine the importance of advertising for your catering business. You may print handbills that you can distribute during your events. If you like, you can place plugs on radio or TV.
• Insurance. Inquire about obtaining liability insurance and personal insurance.
• Equipment. You need to purchase industrial-size cookers, pots and cookware, utensils, coolers, and a delivery vehicle.
• Food and beverages. You need to stock up on herbs and spices, preservatives, condiments, cooking oils, and sometimes alcohol.
Allocation: $1,000 – $2,000
• Training. We’re not talking here about catering training courses on the net. A good course should provide you hands-on experience in how things are actually done in the kitchen, and the event venue. Enroll in a workshop conducted by a successful caterer, and a food and nutrition seminar offered by a university near you.
To summarize, you need anywhere from $10,000-$50,000 to get your catering business started. If you’re working on limited budget, consider starting from home, or renting catering equipment from party equipment rental companies. You should also establish relationships with providers of events-oriented goods and services: florists, photographers, musicians, videographers, event organizers, bridal shops, bakeries, and hotels and country clubs.