The catering business is one of the most lucrative and profitable home businesses to start these days, if, of course, you enjoy cooking and working with people. The catering business offers a high potential for expansion and growth. It's both financially rewarding and fun. Each catered event - whether birthday parties for children, breakfast in bed and intimate candlelight dinners for two, company dinner parties for 50 and wedding receptions involving a hundred or more guests -- is a new experience and challenge with a new group of people.
Whether you cater events on a full-time or part-time basis, the opportunities are excellent. However, catering is demanding work, requiring stamina, the ability to work under pressure, and excellent interpersonal skills. Your success will greatly depend on your reputation.
To build a good reputation in the business, you should be willing to work hard and have the ability to work under pressure. This kind of entrepreneurial business is definitely growing and becoming more popular with people of all income levels.
The increased demand for catering business is driven by the rising number of higher-income households, number of weddings and increased corporate events with companies, corporations, charities, civic groups, event organizers and individuals calling on caterers to host on- and off-premises events. Businesses of all sizes are using catered lunches, cocktail parties and dinner meetings to build their images and increase company sales.
Present lifestyles have also given way to increased demand for catered food service. Instead of laboring for hours, even days, in the kitchen preparing for parties or events, many homemakers now call on a caterer to provide sumptuous and unforgettable feasts for their guests. An increasing number of working mothers are paying to have catered birthday and graduation parties, as well as wedding receptions handled by caterers.
The reasons are simple: if she is working outside the home, today's mother just doesn't have the time or the energy to do all the planning and staging of a memorable party.
Even the concept of eating out is slowly being changed by the business of catering: instead of going out to a restaurant to partake of a good meal, families can call on a caterer for that same great food.
Income Potentiall
The income potential of a home bases catering service business depends on the size of the events you cater. Like any other business, however, catering requires excellent management and organizational skills for the business to succeed. Your ability to keep your operating costs down while maintaining a high quality service is also essential.
Many claim that profits in the catering business are the best in the food and beverage industry. An in-demand caterer in a large metropolitan area can easily gross upwards of $200,000 per year, while a small part-time caterer in a small town can count on at least $50,000 per year.
To cut down costs, you can employ several strategies to help keep your bottom line richer. You can use your house as your office, hiring employees and renting a kitchen in a nearby restaurant only on days you have catering events. With its seasonal nature, catering usually does not require a large number of year-round employees.
Start-Up Costs
With a home based catering service business, you can start as small or as big as your wallet will allow. The start-up costs for a catering business will depend on what you put in your kitchen and can range from $500 (if you work from your own kitchen) to $80,000 (if you outfit a professional kitchen). Most caterers do the cooking on-site, either using their own facilities or equipment provided by the clients. However, you would still need to do some prep-work in your own kitchen facilities (e.g. pre-cutting vegetables, etc.)
Most individuals, who are considering starting their own home based catering service business already have much of the equipment they'll require in order to fulfill their clients orders. This is one of the advantages of starting this type of business.
Also, to help keep your initial costs down, you can opt to start your catering business by renting items. You may rent the use of kitchen facilities, china, utensils, tables, tablecloths and linens, serving equipment and other staples. Plenty of vendors are available to help you pull together the perfect event — decorators, designers, event planners, florists, bakers, and rental companies for portable toilets, cooking equipment, tents, chairs, linens, tableware, glassware, and silverware. You can start buying your own equipment only when you have steady revenues. By renting equipment, facilities and supplies, you can use your first few months to build your reputation, develop some capital for investment and expansion and evaluate how much time and money you want to invest.
There is also the question of staffing, as it is nearly impossible to start a catering business solo. Check the costs and viability of hiring temp workers through the staffing agency vis-a-vis keeping employees on a payroll. Word of caution: when hiring temporary workers from the staffing agency, give ample time prior to the event to meet the people to see what they look like and whether they can complete the tasks you need them to do.
What You Need
The catering business is tough, with the details of preparing food off-premises and on-site for hundreds of people often times mind-boggling. It is not easy to cater to an event of 400 people, much more if you start to do thousands, some 60 miles from your home (what if you forget the sauce?) Successfully running a small catering business takes much more than a passion for cooking and a knack for preparing tasty dishes.
You have to be a superb planner and manager as well. You need to be extremely organized, yet flexible enough to be able to deal with last minute changes. You also need a strong affinity for people and a kind of intuition as to what people enjoy in different environmental settings.
As the culinary sophistication and desire to be entertained of many people have grown, customers today are looking for the catered experience to be more restaurant-like. Many caterers are now offering signature dishes and house specialties as customers broaden their culinary experience. Others are offering family-style menu, especially for large informal functions and even corporate meetings.
Caterers today have to be adept not only in satisfying the taste buds but also excel in food preparation. With the goal of wowing the socks off the clients, many caterers give ample focus on plate presentations, venue selection, and table decoration, among others. Some even hire artists to improve the presentation of the food, while some go to such lengths as indoor pyrotechnics, confetti guns and laser-light shows. Others employ in-house artists to customize each catered event from passing platters to plate presentations. Given the intense competition, caterers nowadays are prepared to do anything to keep the customer happy (and coming back for more).
You do not need special education or training to become a successful caterer. Although taking some courses at culinary institutes or vocational schools can help. Some start out by working for one or more catering businesses to get an inside look at how the business goes.
As with any business, your success will be directly related to the soundness of planning and the working of that plan. Start small and keep it simple. Understand exactly what your client wants, and give him what he wants in the way of service that reflects upon the client in a complimentary manner.
The Legal Requirements
It doesn’t matter whether you’re serving the business community or individuals. Although many people operate small home-based catering businesses, health regulations usually require better facilities than most home kitchens can provide. Considerations may be the number of sinks available, dishwashing facilities and refrigeration. So you may not legally be allowed to operate from home, unless you construct a whole separate kitchen for your business. You should also check with your municipality to be sure the zoning bylaws in your area allow home businesses.
Another thing to consider is income tax. Depending upon the tax laws where you live, you will probably be allowed to deduct the costs related to the use of space in your home by your business. However, in many cases, the space must be only used for your business. So you would be forfeiting the business-use-of-home deduction if your business were to use the same kitchen in which your family meals are prepared.
From a marketing perspective, you should consider the effect - if any - your location will have on your business image. Some clients may feel that your business is too new or too small to properly serve their needs because it’s located in your home. For others, it may be a quality issue. And some clients won’t care one way or the other. That question should be part of your market research. The best answer to the marketing aspect of this question will come from asking your prospective clients.
Additional Resources
Catering Market Research Reports
Best of luck,
'Til Tomorrow,
Terry
