How to start your food catering business in 7 steps
Are you looking to make extra money on a full or part-time basis? Starting a food catering service from home can be a very profitable business idea. It is one of the most booming areas since the COVID-19 pandemic. In this article, learn how to establish and run one from scratch. It covers the best business models and offers you bonus tips for making extra income in the area.
As a catering business, you are responsible for, purchasing raw goods, preparing food, packaging it and serving the meals and beverages to your customers. Its history dates back from 4th Century BC in China, Egypt and ancient Greeks. To date, the industry has transformed given the modern improvements on transportation, technical innovations and population increase. Other factors in your favor are the rapid rise in global trade, travel and tourism. But how do you establish one?
How to start a food catering service business
You do not have to be a foodie to run a successful catering business. If you can follow this simplified process, you can run one in a weeks’ time. The 7 seven steps that are a must are
- Decide on the best type of food business
- Business planning
- Business Registration
- Invest in business equipment & supplies.
- Business branding
Would you rather start a home-based food business, an outside catering company or a food truck? To decide on this and other factors like location, prices and menus, commission market research in your city. This fact-finding exercise will inform you on the existing demand. By talking to and with other existing food businesses, you will freshen your business idea to minimize your chances of failure.
Which areas should your market research focus on? Ideally, you should contract a specialized food consulting firm like Agcenture for the exercise. Or you can do a simplified one that investigates the 5ps of a business, price, place, promotion, products, and people. The diagram below is a summary of the details you market research must cover.
Decide on the best type of food business
Use your facts above to choose the most profitable food to sell and the appropriate kind of a business.
Which is the best business legal structure for your food business?
There are several types of business you can start. You can do it as an individual or a group of investors. The best types in your area are a sole proprietorship, a partnership, cooperative or a company (private or public.)
Which is the best food business you can start?
The best food businesses ideas in 2021 you can establish with a low investment are;
- A mobile food truck you target commuters, office workers or event attendants.
- A home-based kitchen or catering service.
- A street food kiosk serving groceries and cooked foods
- A coffee shop serving various hot beverages.
- A bakery serving baked products, cereals and other starch like roasted potatoes
- A fast-food outlet selling chocolates, soft drinks, candies etc.
The best idea you can make is to establish a specialized food service. Focus on an area like healthy organic foods or market home-grown food products to further your local economy.
Which is the most profitable food to sell?
People will always eat, and any food can make you rich. All that you must do is ensure it is quality, hygienic and sold at an affordable price. When considering the best food types for your food shop, ensure it is easy to source, prepare and can be sold profitably. The list below has the most popular foods for investors in food trucks and fast-food outlets.
- Baked products like bread, cup cakes, cookies, pizza, burgers tacos etc.
- Coffee shop selling tea, smoothies and other healthy drinks
- Exotic food joint that promotes Ethiopian Cuisine, Mediterranean, Indian street food, Thai, Chinese or an indigenous menu like Swahili dishes from Kenya.
- A Grill joint selling grilled cheese, barbecue, grilled chicken or “nyama choma”
- Wines and spirits shop
Other profitable venture includes a grocery, a cereal or grains shop a restaurant or a an outside catering company selling food to corporate offices and events like a wedding or a graduation.
Invest in a line of products with a high demand in your region. Besides, target a huge number of customers in a busy route to enjoy the highest returns on investment.
You will need a living business plan to guide your start up to a thriving venture. The document needs constant reviews and revisions to reflect the current business situation. You will benefit from the written plan to attract investors and guide your growth strategy.
The following illustration shows the details that must be covered by a complete business plan. You can categorize them into an executive summary, your business description and the food market analysis in your region. Others are your business organization or management, a description of your products and services and a marketing and sales strategy. Moreover, include a detailed plan of your financial projections of income, costs, budgets and the funding plan from donors or creditors. Finally, include an appendix of any other relevant information that may convey important information to your lenders and investors like photos, business profile and business certificates.
If you want to run a sustainable catering service, make it a legit business. Apply and register for all relevant licenses, certificates and permits from national and local authorities.
Apart from giving you limited liability from your business actions and credit, registration will help you to operate with minimal regulatory prohibitions and assist you to cover larger geographical areas.
Though the permits vary from one state to another, the following are the most common for food sellers.
- Business registration and incorporation certificate
- A food safety or health certificate.
- A trading license or seller’s permit
- Fire inspection certificate
- Tax certificate (IRS)
- Statutory employee registration (EIN) for national health and social security funds.
- A business bank account
Invest in business equipment and supplies
Having completed the preparation and planning work, it’s time to actualize your vision. You need to establish and maintain business relationships with food suppliers and other business service providers. You need them to access food ingredients, cutlery and utensils. Others like transporters and event organizers will offer complimentary services to you. Besides, you will need qualified staff to assist your family, friends or partners.
To increase your profits, consider leasing a modern kitchen space from a local restaurant at night instead of buying one at an expensive price.
You will only make money from your business if you can draw -up attention and consumers. To achieve it, implement your marketing and sales or promotion strategy of your business plan.
You can use both the digital and print marketing platforms such as social media, a website and paid advertisements. You can edge competition by use of catchy food images and encourage user generated content from your followers.
The key information you must give to your existing and target consumers are menus, food prices and an operating schedule like opening and closing hours or a planned route of your food truck.
Grow & Expand
Use your food business success and failure learnings to guide your business growth. It is time to dissolve non-performing assets and menus while you focus on the profitable food menus. With time, continue to invest in more efficient solutions like Point of sale (POS) food delivery apps and kitchen ware.
Finally, keep an open mind and be flexible. Update your operations menus and communication to remain successful.