There are costs to running any business, but in surveys, many caterers report that keeping their margins under control has a significant impact on their long-term success. When writing your business plan, carefully consider how these costs will impact your business. This quick overview will give you an idea of what to expect, though much will depend upon the size and type of catering company you want to start or grow.
Conservative estimates put the cost of starting a catering business between $. These assume that you immediately rent a space for your business and food preparation, some caterers get their start preparing food in their home kitchen. If you want to get your feet wet by catering small events with baked goods, pastries, and appetizers, this will work, but to grow, you will eventually need a larger space.
The cost to rent an office space, which also has room for food preparation, could be between $3,000 to $6,000 a month. You will need equipment such as ovens, cooking trays and racks, and refrigerators. If you plan on also providing china, silverware, and glassware, you might have to build storage shelves for them. Some items, such as burners and warming pans, can be rented on an as-needed basis.
Plan on investing in ingredients, herbs, and spices before you have made any money. Part of your marketing plan could be to offer taste samples to potential clients. However, you should avoid investing significantly in meats or produce until you have booked any jobs and received a partial upfront payment. Controlling food waste costs is a skill that you will need to develop early for your business to succeed.
Business licenses and permits, including a license to sell alcohol if you plan on including it in your services, can run several thousand dollars. State licensure requirements could consist of taking food safety courses, undergoing a health inspection, or paying for your employees to take courses. You will also need insurance, both to cover your business from the liability of a lawsuit but also injury protection for kitchen staff or other forms of liability insurance.
Most catering companies employ a mix of part-time and full-time employees. While you may want a full-time chef, you can often hire serving staff as needed. Payroll costs can eat into your margins, and you will need to monitor how many servers you need per event carefully.
Then, you must get all the prepared food to the event location. In the beginning, you can rent delivery vehicles such as trucks and vans, but part of a professional appearance is consistent branding and presentation. At some point, you may want to invest in delivery vehicles painted with your logo, which will also serve to advertise your business.
Word-of-mouth can significantly help build your business, but you will need to advertise and market your new catering company. Devote a portion of your start-up costs to your marketing plan and utilize free options such as social media whenever possible.
Start-up costs can be small if you start small, but to build a viable business, you will also need to plan for growth.
