How to Start a Catering Business in 2021

Food & Beverage
Rea Regan December 10, 2020 9 min read
How to Start a Catering Business in 2021

Quick Guide

    Are you a foodie? Good news! If you’ve been itching to start your own catering business, whether as a “Plan B” or a full-time gig, the time has never been more perfect. Especially given the current stay-at-home situation.

    No, really. Market trends show that the catering industry is projected to increase by 1.4% in 2020 alone and will grow to 6% by 2024. In fact, not even COVID-19 has slowed the industry down, it’s continued to drive the market so the time to start your own catering business has never made more sense.

    If you’re now asking yourself how to start a catering business? Then read the tips outlined below because that’s exactly what we answer. 

    1. Do The Research

    You need to know exactly what kind of catering business you want to open. Most caterers will specialize in a single type of food, like cakes and pastries, whereas the other half offers many services, such as floral arrangements, a champagne fountain, and more. 

    So whether you choose to focus on a single catering type or multiple, make sure you’ve done your homework so you know what you can take on and offer to potential clients.

    • Lunch or brunch foods like sandwiches and salads which are great during business luncheons, school functions, etc.
    • Wedding reception
    • Special event meals like a graduation or Sweet 16
    • Desserts like cookies, cakes, etc. 
    • Appetizers and cocktails

    The above really fall into three main categories: business clients, social events, and cultural events. 

    Now that you know which category you will focus your culinary experts on, take a look at your competition. Scope out what they do that works well for them, and what doesn’t so you don’t make the same mistakes. What is their pricing structure and costs? Getting your research out of the way clears the path for success.

    2. Obtain Licences & Permits

    Once step one of how to start a catering business is nailed down, you have to know if you are operating as a home-based or commercial caterer. As most states will only license one or the other. 

    Most places require a business license and possibly a catering license or permit so that you can prepare and sell food. This does mean that you will have a health inspector pop in to ensure you’re meeting all of the state and local requirements for commercial food preparation. Additionally, if you’re selling alcohol then you need a separate alcohol permit.

    It can be helpful to contact your Small Business Development Center so they can fully explain how you get a catering license in your area. In addition, they will be able to provide you with pricing costs. 

    If you want to take your catering business to a whole other level then consider culinary school training – sure, it isn’t required, but it can give you a leg up over the competition. Or you can gain a certificate from the National Association for Catering and Events

    3. Choose a Business Structure 

    Your next step when sorting out how to open a catering business is to choose a business structure. This is key as it will affect how much you’re taxed and if you can get sued by a dissatisfied customer.

    There are three options available:

    • A sole proprietorship is easy to create. You just need to use your own name and social security number. All business expenses are deducted through your personal tax return. 
    • A LLC (Limited Liability Company) can have two or more owners. An LLC also protects the owners from personal lawsuits. 
    • An S Corporation is a form of incorporation that is similar to an LLC, but offers some tax advantages and extra paperwork.

    It is wise to consult your legal team to make the best choice for your catering business.

    4. Locate a Suitable Cooking Space

    Whether you’re thinking about using your home or renting or even buying your own place, research has to be done before a decision is made. In fact, this decision should be at the top of your mind when looking at how to open a catering business

    If you’re worried about costs and think your own home is a suitable place, there are a few things to consider. For starters, your home will need to pass an inspection so being up to date with all health and safety standards is a must. In addition, do you have space to store multiple ingredients and prepare food for 100+ people? Really consider the space you have and go from there.

    Most commercial kitchens and commissaries are commercial kitchens so they are already licensed as a place to prepare and store food. If your home doesn’t have a fully-loaded chef’s kitchen then look at renting a commercial kitchen to get started.

    Lastly, sometimes restaurants in your local area are open to renting out their kitchen space after business hours so be sure to call a few and see what’s possible.

    5. Get All Equipment

    Just like with the location of your cooking space, you need to consider whether you’re going to rent or buy all your own equipment. You are going to need utensils, silverware, plates, bowls, cups, and so on. And don’t forget warming trays, big pots, and sternos. Sites like Amazon and eBay can work wonders when needing to buy small items in bulk.

    Also, you need an account for storage for all your catering equipment. Especially if your catering business is in your home. If you don’t have room, or just don’t want to clutter your own garage, then look at renting a small storage unit.

    We recommended that you weigh up costs when it comes to renting and buying all your own equipment. Consider that you might go through dozens of pots and pans every year. Renting such equipment for each gig can add up.

    There is no right or wrong answer here, make the best choice for yourself and your business.

    6. Use The Right Tools

    It is vital that you streamline daily processes to ensure customer satisfaction and efficiency when it comes to your catering business. This is why many catering professionals turn to catering business software.

    What is catering business software? Catering business software is designed to help your catering business run smoother so that you can avoid organization problems and challenges most commonly associated with your industry. Such as inefficient training, poor management, high turnover, scheduling discrepancies, and so on. 

    As such, many catering companies turn to Connecteam catering business software to manage their day-to-day operations. From robust features to affordable pricing plans, Connecteam is a no-brainer. The most popular features include:

    • Quick and easy scheduling, from planning to distribution, for all the different employee roles and events. Each shift includes all key information such as time, address, and special instructions, allow employees to accept and reject shifts, and more.
    • Track work hours with GPS empowered records, send automatic reminders to make sure caterers are clocking in and out on time, process vacation and sick day requests, view timesheets, and more.
    • Easily onboard new hires by ensuring all policies and operational processes are available on their smartphone. 
    • Train your team for different event types with easy access to a knowledge base with your catering dishes, or how tables and food should be organized, and so on.
    • Keep everyone on the same page by creating event-specific communication with chat groups and send updates for company announcements and employee motivation. Share GIFs, videos, and pictures, start a live poll, and create surveys.
    • Create checklists for event preparation, collect information about the event (broken dishes, food ratings, event pictures, etc.) and more.
    • Easily manage preparation for events with built-in reminders for your team to execute tasks, where you receive automatic updates in real-time on task completion. Create event tags and delegate tasks for each responsible party.

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    7. Create a Menu

    One of the most fun steps when considering how to start a catering business is creating your menu and then testing your own dishes!

    When creating your menu, follow these steps to ensure variety:

    • Offer a variety of options to suit different tastes like spicy and non-spicy options. Even if you only specialize in a specific cuisine, ensure that your menu will appeal to multiple tastebuds. 
    • Offer vegetarian and vegan options.
    • Ensure your menu has manageable sizes, especially with food that you’re skilled in cooking as it’s made with ingredients you can easily obtain.

    Test your dishes. 

    Now that you have a menu, host a party with friends and family to test the menu! Just make sure they’re brutally honest about the food. Based on their feedback, make changes to the menu and dishes to ensure it appeals to potential customers. 

    Plus, practice really does make a difference. So work on smoothing out your cooking techniques, cooking times, and even presentation. 

    8. Hire Your Team

    Unless you’re catering a party of fewer than 10 people or you have superhuman powers, the chances of catering an event all by yourself are slim. You may need to hire and train a catering team. However, this might not make any sense for you but is something to consider if it comes up.

    Review job sites specifically made for food services, research how your competitors landed their staff, and go by word of mouth by looking at your own network. 

    Ensure that you’re asking the right questions during the hiring process, after all, your catering business is only as good as your menu and the people who work for you.

    Wrapping Up How to Start a Catering Business

    By following the tips we outlined above on how to start a catering business, you can avoid common mistakes when starting your own catering business. It is so important to do your research before you hit the ground running. 

    Always ensure you’re following the latest marketing trends as well, this allows you to stay ahead of the competition. 

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