How to Start Your Own Highly Profitable Catering Business

How to Start Your Own Highly Profitable Catering Business

Learn how to start a catering business, one of the most lucrative and profitable home businesses with a high potential for expansion and growth. It is both financially rewarding and fun.

by Jenny Fulbright

The catering business is one of the most lucrative and profitable home businesses with a high potential for expansion and growth. It is both financially rewarding and fun. Each catered event - whether birthday parties for children, breakfast in bed and intimate candlelight dinners for two, company dinner parties for 50 and wedding receptions involving a hundred or more guests – is a new experience and challenge with a new group of people.

Whether you cater events on a full-time or part-time basis, the opportunities are excellent. However, catering is a demanding work, requiring stamina, ability to work under pressure, and excellent interpersonal skills. Your success will greatly depend on your reputation. To build a good reputation in the business, you should be willing to work hard and the ability to work under pressure. This kind of entrepreneurial business is definitely growing and becoming more popular with people of all income levels.

Demand for Catering

The demand for catering has increased tremendously through the years. According to the National Restaurant Association’s 2000 Restaurant Industry Forecast, social caterers are one of the fastest-growing segments of the restaurant industry, with sales expected to reach $3.6 billion in 2000 - a 5.7 percent increase over its 1999 level. As impressive as the figure may be, there is great likelihood that it still underestimates the industry, as many home-based caterers are not even listed in the phone book.

Driven by the rising number of higher-income households and a strong economy, catering sales is expected to continue to soar as more companies, corporations, charities, civic groups, event organizers and individuals call on caterers to host on- and off-premises events. Businesses of all sizes are using catered lunches, cocktail parties and dinner meetings to build their images and increase company sales. It is a matter of keeping up with the competition in promoting a company and/or product.

Present lifestyles have also given way to increased demand for catered food service. Instead of laboring for hours, even days, in the kitchen preparing for parties or events, many homemakers now call on a caterer to provide sumptuous and unforgettable feasts for their guests. An increasing number of working mothers are paying to have catered birthday and graduation parties, as well as wedding receptions handled by caterers. The reasons are simple: if she is working outside the home, today’s mother just does not have the time or the energy to do all the planning and staging of a memorable party.

Even the concept of eating out is slowly being changed by the business of catering: instead of going out to a restaurant to partake of a good meal, families can call on a caterer for that same great food.

Start-Up Costs

Catering offers an opportunity for starting a food service business with a lower initial investment than opening a traditional restaurant.

In the catering business, you can start as small or as big as your wallet will allow. The start-up costs for a catering business will depend on what you put in your kitchen and can range from $1,000 (if you work from your own kitchen) to $80,000 (if you outfit a professional kitchen). Most caterers do the cooking on-site, either using their own facilities or equipment provided by the clients. However, you would still need to do some prep-work in your own kitchen facilities (e.g. pre-cutting vegetables, etc.)

To keep your initial costs down, you can opt to start your catering business by renting items. You may rent the use of kitchen facilities, china, utensils, tables, tablecloths and linens, serving equipment and other staples. You can start buying your own equipment only when you have steady revenues. By renting equipment, facilities and supplies, you can use your first few months to build your reputation, develop some capital for investment and expansion and evaluate how much time and money you want to invest. You can also take the start-up period as the time to determine the impact that this business will have on your family.

Income Potential

The income potential of catering depends on the size of the events you cater. Like any other business, however, catering requires excellent management and organizational skills for the business to succeed. Your ability to keep your operating costs down while maintaining a high quality service is also essential.

A quick survey of successful caterers across the nation shows that began with zero capital by working out of their homes. The basic starting up investment would appear to be around $500, with some big spenders capitalizing their idea with as much as $15,000 in order to get off to a fast start.

Many claim that profits in the catering business are the best in the food and beverage industry. An in-demand caterer in a large metropolitan area can easily gross upwards of $200,000 per year, while a small part-time caterer in a small town can count on at least $50,000 per year.

To cut down costs, you can employ several strategies to help keep your bottom line richer. You can use your house as your office, hiring employees and renting a kitchen in a nearby restaurant only on days you have catering events. With its seasonal nature, catering usually does not require a large number of year-round employees.

What You Need

Successfully running a small catering business takes much more than a passion for cooking and a knack for preparing tasty dishes. You have to be a superb planner and manager as well. You need to be extremely organized, yet flexible enough to be able to deal with last minute changes. You also need a strong affinity for people and a kind of intuition as to what people enjoy in different environmental settings.

As the culinary sophistication and desire to be entertained of many people have grown, some caterers today have to be adept not only in satisfying the taste buds but also excel in food preparation. With the goal of wowing the socks off the clients, many caterers give ample focus on plate presentations, venue selection, and table decoration, among others. Some even hire artists to improve the presentation of the food, while some go to such lengths as indoor pyrotechnics, confetti guns and laser-light shows. Given the intense competition, caterers nowadays are prepared to do anything to keep the customer happy (and coming back for more).

You do not need special education or training to become a successful caterer. Although taking some courses at culinary institutes or vocational schools can help. Some start out by working for one or more catering businesses to get an inside look at how the business goes.

As with any business, your success will be directly related to the soundness of planning and the working of that plan. Understand exactly what your client wants, and give him what he wants in the way of service that reflects upon the client in a complimentary manner.

Learn everything you need to know to start your own catering business and begin making money in 30 days or less: