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The catering industry attracts a wide range of entrepreneurs. Maybe you’re an excellent cook, maybe you love to throw parties, or you’re interested in event planning and want to get the ball rolling with catering.
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Or maybe you’re like Danella Barnett of Gainesville, Georgia, who founded her catering business in 2009, and your reason is simple and sweet:
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“I thought if I could cook for other people and put food on their plates, I could put food on my family’s plate,” Barnett said of her decision to start Oakwood Auctions.
But as Barnett knew in the early stages of starting a catering business and expanding into event planning, the business is much more than putting food on a plate. It’s about thinking your way through stressful situations, planning for the unexpected, and most importantly, running a business like you do.
In this guide, we’re going to take you step-by-step through everything you need to know about how to start a catering business. With a little help, you’ll delight guests at parties, events and festivals.
Before you get to the following steps to start a catering business, remember that you should decide on the type of catering business you want to start before learning how to start a catering business.
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Some caterers only do cocktail reception drinks and finger foods, others do buffet-style catering, and some do sit-down catering that you might see at a banquet or wedding. Once you know what type of catering you want, you can move on to the next step.
Once you have in mind the type of catering business you want to start, you can choose a name for your business and also define the entity for it. You’ll want to choose a name and make sure it’s available in the state where you’re opening your catering business. In most states, you can check business name availability online with the Secretary of State.
You also need to choose the business entity as which you want to operate your business. Here you have many options depending on a few things, including whether you want to go it alone.
If you decide to act as a sole proprietor, your business will be unincorporated and owned by you alone (or you and your spouse). If you want to have one partner for your business, or want to avoid taking on all personal liability for your company, you can register your business as a general partnership, a limited partnership, a limited liability partnership, a limited liability company, or another business entity. being Each offers different protections for partners and businesses.
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Once your business name and entity are chosen, the next step on the “how to start a catering business” checklist involves writing a business plan. It will take some work, but it will pay off in the long run because you will have a plan to fall back on and it can help you know what to expect when running your business.
You can use a business plan template or make one yourself. When you make the plan, it should include a lot of research. You’ll want to include an overview of your company, a market analysis, your business organization, the specific products and services you’ll provide, and your marketing and financial plans. If that seems like a lot, don’t worry—you can always add to your plan as you learn more about the world of catering.
Importantly, though, you should research your competition and identify potential customers. Is there a specific type of catering need in your area that is currently underserved? For example, if you live in an area with many golf courses, you may find that they always need caterers for weekend events. Your market research on the needs of your area can go a long way in helping you sustain your business.
Part of your business plan for how to start a catering business should include the vendors and suppliers you plan to use. For some events look into sourcing all the supplies you need, including linens, crockery, china, even tables and chairs, and of course food. When it comes to non-food items, Barnett recommends renting first before buying things outright.
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“In the beginning, you can rent whatever you want or need,” she says. “And renting is great: you know what the cost will be and you don’t have the upfront cost of buying anything.”
“But at some point, though, you want to buy these things yourself because you can still charge for them and basically you’re paying to own them. And they eventually pay for themselves.”
When it comes time to buy, equipment financing can provide you with the funds you need to cover the cost of supplies.
Depending on the business entity you choose, your business name may default to your name. If you want to change this, you may need a DBA or “Doing Business Age” designation. You will want to register your business and its name with the state in which you plan to operate.
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For a catering business, because you are handling food, it may require some other registration depending on your state’s regulations. For example, the health department may need to inspect the area where you cook and prepare the food you serve.
You’ll also want to apply for an employer identification number called an EIN. You can apply for one online from the IRS in minutes and enjoy one stay for years to come. It can serve as a business tax ID number and help you do other business tasks like applying for credit cards and paying your employees.
As with most industries involving food preparation, you can’t just do it. You will need to obtain a business license from the state, as well as a food handling license. You’ll also need to pass a county or state health inspection—a residential kitchen probably won’t cut it, so consider looking for a commercial kitchen that’s already approved.
Some other requirements you need to consider include workers’ compensation insurance and a permit or license to operate from a specific location – the monthly or annual costs of which can cut into profit margins.
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If you are not sure what is required, contact your local Chamber of Commerce, Small Business Development Center, or Small Business Administration to learn more.
It’s not a bad idea to consult a lawyer in your area who specializes in the food or service industry to get everything filed and all registrations put away before you start cooking.
Pricing your work depends on where your business is located and what type of catering you do. Many businesses create price tiers that offer a certain level of service and amenities for different amounts. Barnett never went that route.
“I started doing custom proposals for people, and I’ve been with them for nine years,” she says. “It takes a lot longer, but a lot of my proposals are accepted, rather than a package deal where it may or may not fit what someone is looking for. If they don’t need something, if it’s not related to their event, it’s within their price. Not going. If they need more, they pay more; if they need less, they pay less.”
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To get an idea of what it costs, Barnett said his prices vary from $7-$8 per person, for cocktail hour for light appetizers, to $80 for filet and lobster.
“It varies because we do buffets, plated dinners, simple appetizers, or [events] where we just put out food and they serve it themselves—very high-end menus with unique ingredients,” she explains.
It’s unlikely that you can fill an event by yourself, so staff is a necessity. Hiring and training staff is something that came organically for Barnett, but it may not be the case for you, so here are recommendations for what works best for your business.
“In the first location, we brought in staff members one by one as our people needed. There was no real formal training from the beginning,” she says.
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You may find employees through word of mouth or by combing your own network. But you may need to reach out to food service-based job-search sites or see how competitors have found their workers. Just remember that what works for you when you’re starting a catering business may not be what worked for you once.
