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How to Start a Food Catering Business

A food catering business offers the flexibility to bring your restaurant’s culinary vision to a larger audience. And the profits can be quite lucrative, with pre-tax profit margins of 15% or more versus the standard 3-4% for most restaurants source: Galley. That’s why established chains like Panera Bread and Wing Stop have made such a big push towards catering.

The catering menu should reflect your expertise, but also consider the needs of potential clients. Having menu items that appeal to a variety of dietary restrictions or preferences can help boost your catering sales. In addition, incorporating foods that are easy to prepare and can be prepared in bulk can reduce costs and labor.

Caterers often provide a menu and cost estimate for clients to give them an idea of what to expect. This allows the client to compare and contrast catering services and their prices. It’s important to be transparent about the costs associated with each menu item, including beverage service. Billed by consumption bars, cash bar options, and BYOB events all carry different costs and require different planning considerations.

Developing a solid concept and menu can make your catering business stand out from the competition. Then, it’s a matter of establishing relationships with vendors and optimizing the back-of-house operation to take advantage of the 15% profit margins that caterers can offer.

For example, using a food management software system like Galley can streamline the ordering process and provide you with accurate inventory data to maximize your margins. This is an easy way to increase your profitability and ensure you’re always serving the freshest, highest-quality food possible.

Establish a clear goal for your catering business and develop an action plan to achieve it. This will help you focus on the right marketing channels, hire the best staff, and streamline your operations. It’s important to set goals and stick with them, as well as to measure your progress along the way.

A catering business requires a license and insurance coverage. Check with your local food health department or Small Business Administration to see what the requirements are in your area. You may also need to update your homeowner’s insurance to add a rider if you run the business out of your home.

As with any food business, there’s a risk of foodborne illness. Fortunately, the food industry is regulated to minimize that risk. In fact, many states require catering businesses to be inspected and licensed before operating. It’s also recommended to have a food liability insurance policy, which can cover the cost of cleanup and damages if someone gets sick from your cooking.