How to Start a Catering Business

Your culinary talents make you and your family happy, so why not spread that joy to the rest of the world?

Take your cooking skills to the next level and embark on a new career in the wonderful world of catering. If you enjoy parties and specialized food preparation for events of all kinds, then let your entrepreneurial spirit guide you into starting your own catering business.

Starting a business takes planning and hard work, but if you follow this simple, step-by-step guide, you’ll be able to build your own catering business from scratch.

Step 1: Decide if the Business Is Right for You

Pros and cons

Every business has its advantages and disadvantages, including running a catering business. Weigh each pro and con to find out if catering can work for you.

Catering industry trends

In the last decade, the catering business has grown faster than the rest of the US economy, benefitting from a larger urban population and more corporate events. 

Industry size and growth

• Industry size and past growth – Market researcher IBISWorld values the US catering industry at $16 billion. The market has recovered from the pandemic slump, which brought the average annual growth rate to 1.4% over the past five years.((https://www.ibisworld.com/industry-statistics/market-size/caterers-united-states/))  
• Growth forecast – Market research firm Technavio expects the global catering industry to grow 4.5% annually through 2025.((https://www.prnewswire.com/news-releases/catering-services-market-2021-2025-industry-analysis-market-trends-growth-opportunities-and-forecasttechnavio-301349349.html)) 
• Number of businesses – There are around 145,000 caterers in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/caterers-united-states/))
• Number of people employed – The industry employs nearly 300,000 people.((https://www.ibisworld.com/industry-statistics/employment/caterers-united-states/))

Trends and challenges

Trends in the catering industry

Tech design and education firm Harbinger Learning((https://harbingerlearning.com/blog/catering-industry-growing-by-leaps-and-bounds-and-sustaining-beyond/)) attributes the industry’s strong growth to four main factors:

• Technological reach – Apps and websites put catering at event planners’ fingertips
• Healthy consumer spending – The average catering order has increased in recent years due to larger corporate profits and a surge in consumer spending
• Rise in catering avenues – Boxed lunches, catering out of a vehicle, interior decorating, and other non-traditional services have expanded industry offerings
• Better packaging – New packaging that controls temperature and maintains food freshness has enabled caterers to be more mobile and flexible

Challenges in the catering industry include:

• High level of competition
• Food waste
• High employee turnover

What kind of people work in catering?

• Gender – 57% of caterers in the US are female, while 43% are male.((https://www.zippia.com/caterer-jobs/demographics/#gender-statistics))
• Average level of education – 47% of caterers hold a bachelor’s degree and 28% hold a high school diploma.((https://www.zippia.com/caterer-jobs/education/))
• Average age – The average age of a caterer is 36 years old.

How much does it cost to start a catering business?

Entrepreneur magazine estimates the startup cost for a catering business at $10,000 to $50,000, with an average of $30,000. The most significant costs include cooking equipment (~$15k) and potential furniture fixtures such as tables, chairs, and refrigerators (~$15k). And these costs are likely to increase as your business grows.

The right equipment is crucial for the successful launch of a catering business. You might consider specialty equipment for your particular menu needs. Here’s a list of some of the major items you may need to get started:

• Kitchen equipment: ovens, stoves, grills, fryers, plates, bowls, trays, utensils
• Holding cabinets (for easily transporting trays of food)
• Chafing dishes (steel, lidded containers to keep food warm)
• Food pan carriers
• Hot food tables
• Catering carts
• Catering service trays
• Ice beverage bins
• Insulated beverage carriers
• Punch bowls
• Tabletop and buffet displays
• Food and drink fountains
• Ice sculpture molds
• Buffet serving utensils
• Concession equipment

Here is an overview of some of the likely startup cost estimates for a catering business in 2021, as compiled by Step by Step Research:

Start-up Costs	Ballpark Range	Average
Kitchen/Location	$3,000 - $6,000	$4,500
Licenses and permits	$1,000 - $3,000	$2,000
Staff	$1,000 - $4,000	$2,500
Advertisements	$1,500 - $2,500	$2,000
Insurance	$500 - $1,500	$1,000
Equipment	$15,000 - $35,000	$25,000
Food and beverages	$1,000 - $1,500	$1,250
Training and courses	$500 - $1,500	$1,000
Networking/marketing	$250 - $750	$500
Total	$23,750 - $55,750	$39,750

How much can you earn from a catering business?

A catering business can expect to make $30,000 to $50,000 in annual profits, with leading jobs site ZipRecruiter putting the national average at just over $42,000. A typical catering firm maintains a 10-12% profit margin, which may be low but is a sizable improvement on restaurants’ 3-6% margin.

A catering solopreneur could thus expect to take in $350,000 to $420,000 in annual revenue, and $35,000 to $50,000 in net profit. A catering business’s main source of revenue is the per-event fee, which varies based on the number of people being served and the extent of service.

Event catering can cost clients anywhere from $500 to $3,000 and above, depending on the number of people and the market niche of the caterer. To make $40,000 in annual profit, a catering firm would have to host around 200 events and charge an average of $1,800.

In your first year or two, you could work from home and do 15 events per month for $1,800 per event, bringing in $325,000 in annual revenue. This would mean about $39,000 in profit, assuming that 12% margin. As your brand gains recognition, sales could climb to 25 events per month and you could charge higher at $2,500 per event. At this stage, you’d rent a commercial space and hire staff, reducing your profit margin to 10%. With annual revenue of $750,000, you’d make a tidy profit of $75,000.

What barriers to entry are there?

The primary barriers to entry for starting a catering business include:

• Startup capital – A catering business requires a kitchen, cooking equipment and possibly furniture, each of which requires significant monetary investments. Licenses, permits, and insurance are other initial costs.
• Competition – The catering industry is growing fast and that means competition. Many restaurants perform catering services as well.
• Logistics – Cooking a mass meal is one thing, but effectively packaging, transporting, and delivering it to an event is another. The logistics of catering can be a problem if you do not have the experience or equipment to effectively do it and maintain your food’s freshness and quality.
• Difficult to scale – Due to the time-intensive work required, scaling your business enough to serve multiple events simultaneously is difficult.

Step 2: Hone Your Idea

Now that you know what’s involved in starting a catering business, it’s a good idea to hone your concept in preparation to enter a competitive market. 

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

To begin as a prospective caterer, you should research your local market to identify what kinds of businesses are catering events, what kind of events those are, and what kind of equipment, fixtures, and logistics such events require. 

Consider the most common avenues of wedding catering and corporate catering. Other special events, such as graduations or birthdays, are also likely to use catering. Alternative niches in the realm of catering might include flowers, tables, or other non-culinary decorations and interior design.

What? Determine your food menu and offerings scope

Compare your local market’s needs to the food and beverage menus you’re capable of providing. Do you want to provide full-service, multiple-course meals, or just pastries, cookies, and desserts? Will you serve alcohol? These decisions could necessitate additional planning.

Determine your offerings by researching the most popular food and beverage products at the events you plan to serve. Examples of catering niches include:

• Corporate lunches
• Holiday parties
• Weddings
• Rehearsal dinners
• Anniversaries
• Conferences
• Award ceremonies
• Bar mitzvahs
• Box lunch events
• Baby showers
• Concessions
• Dessert delivery

Maybe you provide the best brunch, vegan meals, or mobile dining. Traditional or cultural dishes could be popular in your market.

Consider how you’d like your dishes served — on plates, by servers, or in boxes. There are many options for your choice of food and its delivery. It is best to consider your market relative to your capabilities, both in terms of skill and equipment.

How much should you charge for your catering services?

Generally, catering services charge based on the size of the event. You should structure your pricing plan based on your expected expenses. Whether you are preparing mass meals or just delivering treats, you need to weigh labor and ingredient costs against your desired profit margin (avg. 10-12%).

Search site Thumbtack provides a handy guide on catering costs on a per-person basis. Their rates for weddings and other common events include the prices customers should expect to pay. On average, for the most common food station or buffet-style catering, they calculate that the customer will pay around $30 per head:

# of People	Total Cost	Cost Per Person
0-20 people	$540	$27
21-30 people	$960	$32
31-40 people	$1,240	$31
41-50 people	$1,520	$30
51-60 people	$1,800	$30
61-70 people	$2,090	$30
71-80 people	$2,370	$30
81-90 people	$2,650	$29
91-100 people	$2,930	$29

For high-end food and services, the prices will of course be higher. Formal plated meals with multiple courses, for instance, require more preparation time and more expensive ingredients. Here are some more example prices from Thumbtack:

Catering service	Cost per person
Formal dinner	$145 per person
Informal food stations	$25 - $45 per person
Buffet	$23 per person
Corporate event	$70 per person

Depending on your target market and specific catering offerings, this should get you started in brainstorming your own pricing plan.

Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market – whether it’s corporations, weddings, or another niche – will have different demands. You should adjust your menu and your services accordingly.

For example, weddings and rehearsal dinners are more likely to make specific requests and ask for certain dishes. Corporate events may be more informal, with generic food requests or adherence to your menu offerings.

If you are ready to customize your menu and include a capacity for your cooks to accommodate unique wishlists for meals, then perhaps you should seek out weddings, bar mitzvahs, and other personalized celebrations. If you intend for your meals to be more standardized, boxed, and templated, then corporate events and conferences may be a better fit. If you want to make extravagant meals fit for fine dining, then you should pursue the higher-end clientele looking for that type of service.

You should understand going in, no matter what type of cook you are, your menu will largely be determined by the desires of your target market.

Where? Choose your business premises

In the early stage of business development, you may want to operate your business from your home, assuming your kitchen is big enough. This will help you keep expenses in check.

But as your business grows, you’ll likely need to hire workers for various roles and may need to rent out a physical storefront. You can find commercial space to rent in your area on sites such as Craigslist, Crexi, and Instant Offices.

When choosing a commercial space, you may want to follow these rules of thumb:

• Central location accessible via public transport
• Ventilated and spacious, with good natural light
• Flexible lease that can be extended as your business grows
• Ready-to-use space with no major renovations or repairs needed

Step 3: Brainstorm a Catering Business Name

Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for name suggestions
• Including keywords in the name, such as “catering” or “foods”, boosts SEO
• Choose a name that allows for expansion; “Tasty Temptations Catering” rather than “Wedding Bells Catering” or “Vegan Ventures Catering”
• Avoid location-based names, as they may hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Catering Business Plan

Every business needs a plan, a rough outline that helps guide a startup through the launch process while maintaining focus on key goals. A business plan is also crucial for helping potential partners and investors understand your company and vision:

• Executive Summary: A brief summary outlining the key points of the catering business plan, including its mission, objectives, and anticipated success.
• Business Overview: A comprehensive introduction to the catering business, encompassing its mission, vision, location, and legal structure.
• Product and Services: Details on the specific catering services offered, including menus, pricing, and any unique features that set the business apart.
• Market Analysis: A thorough examination of the target market, customer demographics, and trends to justify the demand for catering services in the chosen area.
• Competitive Analysis: An assessment of competitors in the catering industry, highlighting strengths, weaknesses, opportunities, and threats to inform the business strategy.
• Sales and Marketing: Strategies for promoting the catering business, including advertising, promotions, and sales tactics to attract and retain customers.
• Management Team: Profiles of key personnel in the catering business, outlining their roles, expertise, and contributions to the company’s success.
• Operations Plan: Detailed information on the day-to-day operations of the catering business, covering logistics, suppliers, staffing, and facilities.
• Financial Plan: Projections for the financial performance of the catering business, including revenue forecasts, expense estimates, and break-even analysis.
• Appendix: Additional supporting documents and information, such as resumes of key team members, detailed financial spreadsheets, and any other relevant supplementary materials.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to catering. 

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state. 

Choose your business structure

Businesses come in several varieties, each with its pros and cons. The legal structure you choose for your catering business shapes your taxes, personal liability, and business registration requirements, so it’s important to choose wisely. 

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate on a calendar year (January–December), or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital: Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a catering business. You might also try crowdfunding if you have an innovative concept. 

Step 8: Apply for Catering Business Licenses and Permits

Starting a catering business requires obtaining a number of licenses and permits from local, state, and federal governments.

Federal regulations, licenses, and permits associated with starting a catering business include doing business as (DBA), health license and permit from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.

For a catering business, you will potentially need state-level licenses, a business license, and local county or city-based health and food-handling licenses and permits. If you plan to serve alcohol, you will need to obtain a liquor license as well.

Additional permits may be required by your state, such as a general business permit or license. The license requirements and how to obtain them vary from state to state, so check your state government’s website or contact the appropriate person to inquire about licenses and permits needed to run a catering business. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your catering business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account. 

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked but is vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your life and business.

Here are some of the different types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, a number of excellent software programs and digital tools can help you with many business tasks. 

Several catering-specific websites and online tools can strengthen your business and boost efficiency. Here’s a list of top catering software offerings: 

• CaterZen
• TripleSeat
• Curate
• FoodStorm
• FlexCatering
• Caterease
• Total Party Planner
• BetterCater
• HoneyCar

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you are unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Marketing

Here are some powerful marketing strategies for your future business:

• Website & SEO — Optimize your website with SEO best practices for catering-related search terms and encourage clients to leave positive reviews to boost local visibility.
• Professional Branding — Ensure your branding reflects elegance, quality, and unique flair, from your logo to your presentation style.
• Direct Outreach — Build relationships with event planners, corporate entities, wedding venues, and other professionals who can refer your services.
• Social Media Engagement — Use Instagram, Pinterest, and Facebook to post high-quality images and videos of your dishes, events you’ve catered, and behind-the-scenes content.
• Culinary Blog — Publish posts about menu planning, event-specific catering tips, and the latest trends in event catering to establish thought leadership.
• Customer Success Stories — Share testimonials and case studies from successful events to highlight your impact and service quality.
• Catering Tips and Guides — Develop useful content for event planning, dietary considerations, and selecting the right caterer for different occasions.
• Tasting Events — Host tasting events where potential clients can sample your menu and experience your service style firsthand.
• Participation in Local Events and Expos — Engage in local food expos, wedding fairs, and business networking events to promote your services and network with potential clients.
• Email Marketing — Send newsletters to keep past and potential clients informed about your latest menu items, event ideas, and special promotions.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your catering service meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your catering business could be:

• Gourmet food on the go
• Niche food expert
• Organic and vegan meals
• Traditional or cultural dishes
• Well-planned; consistent and timely delivery
• Cater to customized requests
• Food presentation specialist
• Day-of prep and delivery
• Decorations, interior design
• Cooking instruction; a micro-culinary school
• Offer photography/videography
• Airline / cruise ship catering
• Cocktail catering

Networking

You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a catering business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in a catering company for years and can offer invaluable insight and industry connections. 

The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in catering. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.

Step 12: Build Your Team

You may not need to hire any employees if you are starting with a small catering firm run out of your kitchen. But as your business grows, you will likely need full-time employees to fill various job roles, such as:

• Chef
• Event planner
• Supervisor
• Servers
• Bartenders
• Hostess
• Drivers
• Busboys and dishwashers
• Admin & HR
• Accounting

Your business may at some point need to hire all of these positions, or just one or two of them, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need. 

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent. 

Step 13: Run a Catering Business – Start Making Money!

Higher consumer spending and corporate marketing budgets bode well for a catering business, so be prepared to step up once the opportunity comes knocking. 

To jumpstart word-of-mouth marketing, it’s wise to identify a niche market, such as product launches, meetings and conferences, and other corporate events. But you might also want to keep your options open and cater to a broader client base. Either way, cooking up a diverse and appealing menu is important to keep clients satisfied and inspire their loyalty.

You’re now ready to launch your catering business and start your entrepreneurial journey. Good luck!