How to Start a Catering Business: Simple Steps to Success
Setting up a catering company is a sure bet because the initial overheads are lower than opening a restaurant. Furthermore, the growth potential for the catering business is practically limitless, allowing you to build your business incrementally without much hurdles and stress.
If you have a flair for entertaining, fine cooking skills, and want to work for yourself, it's time to start your catering business. With catering companies in the US and Canada raking in billions of dollars annually, competition for this lucrative market is quite fierce. Prior preparation and extensive research are key when starting your own catering business.
This simple guide provides everything you need to know about starting your own catering business in Canada. With a little help, you will soon delight guests at festivals, events, and parties. Here are the main steps to help you set up a successful and thriving catering business.
Perform a Research of Your Target Market
To set up a successful small catering business, you must understand the needs of your target market. Extensive research will help you understand what consumers seek in a catering company.
In addition, it will help you understand the competitors within your local area, giving you a competitive edge when entering the market. Furthermore, you will evaluate whether your local area demands another new catering. You will also find new ways of making your business distinct enough to make a huge impact.
Before setting up a catering company, talk to family and friends, use social media platforms, and investigate launching surveys on review websites. This will help you understand the market and your competition before investing in the new business. You can create a spreadsheet or document with the following categories for research:
- Competitor's names
- Company size
- Type of food
Find Your Small Catering Business Speciality
When starting your own catering business, you should find a specific niche that fits your business. With a catering speciality, you will face less competition from large, one-size-fits-all caterers in your region. In addition, it will be easier to build a solid base consisting of repeat customers through word-of-mouth marketing. You can find your catering niche by looking at the following:
- Type of Food to Serve: Determine whether you will serve the needs of every individual at an event or want to go deeper into a niche market by providing gluten-free or vegan cuisine. Your catering products and services should be unique to your speciality, distinctive, and reflect your professional skills and expertise.
- Types of Functions to Serve: When opening a catering business, it is easier and less stressful to start with smaller functions such as wedding showers, staff lunches, kid's parties, and cocktail parties. As your business grows, you may expand your catering services to incorporate larger events and parties.
- Catering Capacity: If you are setting up a catering company that runs full-time, you should be able to serve multiple functions weekly. However, if you are running your business as a side hustle, you should restrict your catering activities to weekends only.
- Labor Needs: When starting your own catering business, you should determine who will do all the work needed to make an event successful. That means you should sketch out your hiring plan and determine who will handle the food preparation, accounting work, sales, serving, and more.
Draft the Menu for Your Small Catering Business
After determining the demographic and catering niche, you should think about your menu. With so many meals and cuisines available today, you must create a menu offer for your clients. Furthermore, your small catering business will feel more tangible and realistic when you have a menu.
When creating your menu, ensure you offer your customers as many food choices as possible. In addition, your menu choices should appeal to your clients from a culinary and financial perspective. You can also provide tiered offerings with varying price plans and offer your customers discounts, especially for bigger orders.
Create Your Small Catering Company's Business Plan
Like starting any business, you must develop a business plan before setting up a catering company. To succeed, you must have clear plans for each part of your business instead of assuming clients will automatically come when you cook great meals.
Your business plan should include extensive research on your competitors and customers, your start-up budget, and financial projections for your business. In addition, the business plan for starting a catering company should also cover other aspects, such as:
- Your menu
- Costs such as ingredients, labor, marketing, transportation, and more
- Projected margins on all food sold
- Characteristics that set you apart from your competitors
- The problems your business is solving for customers and clients
- The inspiration behind your business
- Your mission statement and vision for the future
- All resources that the business depends on
Seek Financing for Your Small Catering Business
Starting a catering company requires lower initial overheads when compared to other food businesses such as a restaurant. Therefore, you can independently save cash for the launch and initial outlay. However, for those who need financing, there are many options that you can choose from. You can get business financing from online lenders, credit unions, or banks. It is best to shop for a financier that suits your needs and incorporates all repayments into your operating costs. Some of the best financing options you can consider include:
- Business Loans: When setting up your catering business, you can get loans from credit unions, online lenders, and banks. Always find a lender that offers the best interest rates and great repayment periods for the loan.
- Grants: Your new business may qualify for small business grand funds from local governments. Ensure you confirm with local authorities to see the grants you are eligible for before starting a catering business.
- Investors or Partners: You may know people keen to invest in your small catering business or want to go into business with you. A business partner should have skills that complement yours to ensure your combined attributes cover everything the company needs, for instance, business acumen, the expertise for generating business through sales and marketing, and a flair for catering.
Acquire the Necessary Catering Company Licenses and Clearances
To legally run your business, you must obtain catering company licenses and food handling permits from your local or provincial administration. In addition, you must pass a health inspection, which is why you should have an already approved commercial kitchen because your residential kitchen may not be approved. In addition, some provinces in Canada may require liquor licenses or catering company licenses for events that involve alcohol.
When setting up a catering company, you should consider additional requirements such as licenses or permits for working in specific venues and workers' compensation insurance. Although these expenses may initially seem minor, the annual and monthly costs may cut your profit margins.
Ensure that you consult your local health department to learn more about the permits and catering company licenses that pertain to you. You can also work with a local lawyer specializing in the food and service industry to assist you in filing everything and ensure all your registrations are squared away before you begin cooking.
Set Up Your Small Catering Company Kitchen
When the legal compliance of the small catering business is guaranteed, you can set up your new kitchen. An organized and well-equipped kitchen can boost efficiency and enhance the success of your business. You can lease or buy equipment such as storage containers, refrigerators, stoves, and ovens. Your kitchen area should also be properly ventilated, with adequate lighting and plumbing.
When setting up a catering company kitchen, ensure you stock up on essential kitchen supplies such as dishware, cleaning supplies, cooking utensils, and dishware. In addition, all kitchen equipment should be inspected and maintained regularly to guarantee proper function. Ensure you hire and train enough kitchen and catering staff in proper equipment use and food safety practices.
Market Your Small Catering Business
Marketing is important to any business's success; your new catering business is no exception. Always remember that marketing is an ongoing process that needs creativity and consistent effort. When you implement a mix of different strategies, you will increase your company's visibility and attract new clients and customers.
Some of the effective ways of marketing your small catering business include:
- Optimizing your catering business website for search engines and ensuring its mobile-friendly
- Using PPC and SEO to boost online visibility and attract clients
- Creating social media accounts and posting engaging content regularly, such as menu updates, food photos, and customer reviews
- Partnering with local charities or businesses to donate food or sponsor events
- Offering promotions and discounts to referrals and first-time clients
- Joining exhibits, food festivals, and expos to showcase your business and network with potential partners and customers
- Hiring food bloggers to promote your business on social media
- Providing free samples or tasting to potential clients and reviewing their feedback
Frequently Asked Questions (FAQs)
Is it Difficult to Start a Catering Business?
No, catering is one of the easiest food service businesses to start and run because it is easily scalable. However, you will still deal with all the hassles of operating a business. Based on how you want to manage the catering business, you can choose to keep it small or allow it to thrive and grow.
How Profitable Is a New Catering Business?
A thriving catering business is quite profitable in the service and food industry. New companies can expect to bring in about $40,000 yearly, while established businesses can make over $80,000 annually. However, ensure you factor the cost of operating your business into these numbers.
What Types of Catering Services Can My Small Business Offer?
A catering business can offer three main types of catering services. You can specialize in one niche or provide a mix of services. These services include the following:
- Social Event Catering: Social events can be a holiday celebration, graduation party, or birthday party. Catering for social events is a booming niche since the event possibilities are endless.
- Corporate Catering: This catering niche covers events in the corporate world such as company cafeterias, corporate dinner events, corporate breakfasts, seminars, and conferences.
- Wedding catering: Most catering businesses that offer this service will stick to wedding events, for instance, winery wedding events.
Can I Run My Catering Business as a Side Hustle?
Yes, catering can be a great side hustle. The seasonal nature of most events means that you can take up as many jobs as possible and build them around your main hustle. Furthermore, you can scale your business from your side hustle to your primary income source.
The Bottom Line
Starting your own catering business in Canada can be immensely gratifying; however, running a successful business is difficult. Prior planning is important due to the physical and demanding nature of the work involved. Although catering businesses are highly competitive, they are ideal for a first business because they can build and scale over time because of their relatively low overheads. To thrive, you need lots of preparation and execution to ensure things work and maintain your tax and legal compliance.
The information provided on the page is intended to provide general information. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. Accountor Inc. assumes no liability for actions taken in reliance upon the information contained herein. Moreover, the hyperlinks in this article may redirect to external websites not administered by Accountor Inc. The company cannot be held liable for the content of external websites or any damages caused by their use.
Accountor CPA – Accountor Inc., 1000 FINCH AVE W SUITE 401, NORTH YORK, ON M3J 2V5.
Contact number +1 (416) 646-2580 or toll-free +1 (800) 801-9931.
Please click here if you would like to contact us via email or contact form.
Copyright © Accountor Inc.