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Starting a Catering Business

How to Start a Catering Business


How to Start a Catering Business

If you're looking to start a catering business, you've come to the right place since we're going to show you exactly how to do it.

We'll start with key catering industry fundamentals like how big the market is, what the key segments are, and how revenues and profits are generated.

Then we'll discuss keys to not only starting a cateringbusiness, but succeeding in it!

How big is the catering industry?

There are 111,909 catering businesses in the U.S. that generated $11.6 billion in revenue last year. This represents an annual growth rate of 1.8% over the past five years.

What are the key segments of the catering industry?

The main segments of the catering industry are Food served at events on customer's premises (37.3%) and Food served at events on caterer's premises (31.4%). Other food services and alcoholic beverages account for the remaining portions of the industry's revenue.

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What external factors affect the catering industry?

A number of factors affect the performance of the catering industry. These drivers include:

  • Consumer spending: As consumer spending increase, they also tend to spend more money in catering services.

  • Corporate profit: Companies are the top customers of catering businesses. When companie's income increases, their budget for corporate events which includes catering costs also increases. Last year, corporate profit increased.

  • External competition for the Catering industry: This comprises of restaurants and hotels that offer function rooms for corporate events, and packed meals available in the market. The increase of external competition threatens the catering industry because they are more time and cost-efficient.

  • Demand from trade show and conference planning: Trade shows and conferences highly need catering services. Therefore an increase in events positively affects the catering industry.

  • Households earning more than $100,000: A huge percentage of revenue that catering businesses generate come from household incomes, so when households earn more than $100,000, they tend to spend more on food and catering services.

What are the key customer segments in the catering industry?

At almost 58%, households are the largest customer segment for the catering industry. Businesses then account for 38% and government entities for the remaining 4%.

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What are the key financial metrics and costs in the catering industry?

The key financial metrics in the catering industry are as follows:

Profit - The average catering business owner earned a profit of 7.8% last year, which is higher by 0.8% as compared to profit five years ago.

Purchases - Last year, 39.5% of the catering business revenue is allocated to purchases.

Wages - Due to the labor intensive nature of the industry, wages account for 23% of costs.

Other - Other costs in catering businesses will remain constant over the years. This also includes 9.1% of the industry revenue which is expected to be spent on rent and utilities.

What are the keys to launching a new catering business?

1. Create a menu

Determine what type of food you want to serve. This will help you identify the equipmentand space you need for the business. Make sure that you have variety in your menu so that you will be able to provide for a range of clientele. You should also consider the ingredients that you will need for the food that you will be serving, make sure that it is easy to source and preserve.

2. Test your Recipes

Prepare sample meals for your family and friends to taste and ask for their honest reviews. You can also test your target market and remake your recipe based on their feedback to make sure that you get the taste that your prospective customers are looking for.

3. Find your own kitchen space

If you do not have enough space in your home, you must invest in a place where you can prepare your dishes. Your kitchen space should be spacious enough to house all your equipment, machines, utensils, and cookware. It must be clean, well ventilated, and located away from polluted and hazardous areas.

4. Purchase equipment

Make sure that you have both kitchen and on-site equipment before you accept orders. Kitchen equipment is what you need to cook your dishes and store your supplies. On-site equipment, on the other hand, refers to the things you need to serve your dishes to your customers. This includes plates, silverware, glassware, platters, utensils, napkins, linens, and centerpieces. Invest in equipment that looks good and will last.

5. Invest in your own catering vehicle

Have a vehicle that you can use to transport your food to your client's premises or event locations. Make sure that this vehicle is spacious enough to store your food and on-site equipment and supplies.

6. Hire reliable employees

Look for people that have previous experience in the food or catering industry. This will save you more time in training them the basics in food service. You can either use an agency or hire employees individually, whichever is more convenient for you.

7. Secure necessary licenses and permits

Know the regulations in your area for catering businesses and comply with their requirementsto avoid hassle and conflicts in your operation. It would be better if you work on these requirements on your own to save money.

What are the typical startup costs for a new catering business?

The typical start-up costs for a catering business include:

Business permits
Employee salaries

$1,000 to $5,000
$3,000 to $6,000
$1,000 to $3,000
$1,000 to $4,000

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How much do catering operators make?

The annual salary of catering managers ranges between $37,976-$53,111.

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Download Our Business Plan Template!

If you want to create your own business plan quickly and easily, we now offer a business plan template that allows you to develop a professional business plan in hours or days, not weeks or months. Visit this link to learn more: products/bpt/pre-vsl/misc

OR, We Can Develop Your Plan For You

Our professional business plan writers can create your entire business plan for you. We will make sure your business plan is sound and ready for investors so you can continue to focus on running your business. Over the past decade, we have created business plans for hundreds of hotels and related travel & hospitality businesses.

To speak with a Growthink business plan consultant, call 800-506-5728 or complete the form below.


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Founder & CEO
Great Expectations

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