Starting a catering business can be a fulfilling way to turn your cooking talents into a thriving business. While it can be rewarding to follow your passion though, starting a catering business involves a lot more than opening your recipe book and spreading the word.
Consider these five points before you hang a shingle.
Upfront costs
Having cash on hand allows you to invest in food and other supplies before accepting your first job.
While you should request a deposit from customers, you'll probably have to pay some costs upfront, says Jim Pendergast, senior vice president of AltLINE Sobanco, a small-business financing firm.
"Some people pay the caterer after everything is prepared and delivered," he says, adding that there are options if you don't have the necessary funds. "Either set up invoice factoring, which is selling your invoice to a third party to get money instantly, or have a backer to get the money you need."
What kind of kitchen do you need?
You should know that, as a professional caterer, you may need a professional kitchen.
"Laws regarding catering services will vary state by state," says Andrew Winters, attorney, and co-founder of the law firm Cohen & Winters, in Concord, N.H. "Some states will allow a caterer to prepare food in their home kitchen, but they will have to meet a set of rules and regulations. In cases such as these, a health inspector will visit the home to ensure that all requirements are met."
If your state prohibits residential kitchens from being used for commercial food production, you'll need to rent a commercial kitchen. Some community colleges and local bars and restaurants will rent their kitchens during their off-hours.
What licenses and permits will be required
Food safety is an important issue, and you'll need to comply with local regulations by obtaining permits and licenses from both your county and city. While requirements vary, you may need health permits, food-handling licenses, and a liquor license. Call your area's business licensing department to find out what's required.
You'll also want to have insurance to cover your risks, such as an employee slipping and falling while serving food to guests, transportation accidents, and people getting ill from eating the food you or your employees have prepared.
And use a written catering contract with every client to cover potential issues, such as the closure of a venue or an unexpected occurrence. "Be sure to cover all your legal bases," says Winters. "You want to ensure that you and your customers are in full agreement on expectations and services."
Define your specialty
Another issue to address is defining your specialty. Instead of trying to be everything to everyone, it's best to create signature dishes that you can become known for. Use your expertise and the ingredients that are readily available to you to shape your menu.
You could become known for a certain regional cuisine, such as Italian or Vietnamese. Or you could focus on a type of meal, like brunch or picnic fare.
You could also specialize in a type of customer. "It helps to choose a niche," says Liz Maxwell, co-owner of Mike Maxwell & Company LLC, a catering business based in Los Angeles and Nashville. "When you first start out, you may take every job that comes your way. Eventually, [though,] you may decide to focus on a particular style of catering, like weddings or corporate luncheons. We cater to the entertainment industry."
Marketing your business
Having an online presence is important for long-term success because customers will undoubtedly search for businesses online. Start by creating a simple website and social media accounts with sample menus. You'll also want great photos of your food.
"People eat with their eyes," says Maxwell. "Make sure you take and share great photographs."
And while being on social media is important, when it comes to food, word of mouth is your best form of marketing. Ask for feedback and testimonials from happy customers and share them on your website. You can also offer a discount to anyone who refers a new customer.
"We market in a variety of ways," says Ian Duke, a Southampton, N.Y., restaurant owner who also offers catering. "When we opened The Coop, the catering menu for that was stapled on the delivery bags for people who ordered dinner from Union Burger Bar and Union Sushi and Steak."
Duke also donates food directly to charities and charity events. This way, he contributes to his community while boosting name recognition. "At charity events, guests can sample food," he says. "This method, in particular, has been a great method for us; as much as 80% of our catering comes from referrals."
