Duncan Ferris
Hannah Nemeth
Starting a catering company can be a dream business venture for budding chefs who can cook up a storm. Whether you want to prepare imaginative buffets for simple events from your home kitchen or cater for hundreds of guests at sparkling, swanky parties, catering is an exciting industry that gives you the chance to put your culinary creativity on display.
Read on to get the lowdown on research, budgeting, registration, licences and everything else you need to know about as you start your catering journey.
Why start a catering business?
- Work for yourself: Starting your own business means being your own boss, choosing who to work with, when to work and how the work gets done. It’s a lot of responsibility, but it can be immensely rewarding and allows you to live life on your own terms.
- Follow your passion: Working with food appeals so much to people because of the opportunity to do something they love and share their skills.
- Be part of something special: Helping people to run great events can be very gratifying, as you may get to play a role in weddings, birthdays, retirements and other important celebrations.
Start a catering business in 5 steps
1. Research and choose your market
The first step in starting any new business is to take a step back and do some research. You will need to find out about your future customers and what they want, as well as potential competitors and what they offer.
You can do this online, over the phone or in person, depending on your preference.
Talk to friends, family and acquaintances who have used catering services in the past and find out what they wanted from the experience. Reach out to people who regularly book caterers, such as those working in events organisation, and find out what they look for when organising food. Check out rival businesses in your area to see what kind of events they cater and the types of food and drink they serve.
Keep thinking about:
- whether there is demand for your catering services
- what you can do differently or better than the competition
- who is your target market
After putting the legwork in with your research, you should have a good idea of the answers to these questions. Additionally, you might have an idea of the type of catering business you are building. Some questions to consider include:
- What events will you cater? Caterers can be hired for weddings, parties, graduation ceremonies, corporate events and more.
- How many people can you feed? Events can vary considerably in scale, but it’s probably best to start by catering small events so that you don’t find yourself out of your depth and scrambling to feed hundreds of hungry people.
- What type of food will you serve? Some caterers might specialise in a particular cuisine, or aim to meet dietary requirements, such as vegetarianism or veganism. You might have a small menu or provide clients with the opportunity to request custom dishes.
- What kind of service will you provide? You might choose to offer buffet-style catering, office delivery, food stations or plated meals. These different types of service will each have different challenges and requirements in terms of manpower, skillset and equipment.
2. Create a budget for your catering business
How much money does it take to start and run a catering business? We can’t tell you that, because every catering business is different. However, we can help you build your own budget, which will give you the most realistic idea of the upfront and regular costs your business will face.
Remember to include the following:
- Kitchen: Some sort of kitchen space will likely be necessary if you are going to prepare food at scale. For a small catering business, you might be able to start in your kitchen at home, but larger businesses will likely need a permanent commercial location or rented commercial kitchen space.
- Equipment: If you’re going to cook up a storm, You’ll need the right tools to do so. Think about everything you need, from ovens and food processors to knives and whisks.
- Transportation: You will likely need at least one large car or van to travel to and from events. Make sure you can fit everything you need inside, from ingredients to portable ovens.
- Ingredients: This cost will depend on the types of food you intend to make. Remember to factor these expenses into the cost of any contracts you win, as you will be buying different ingredients for different jobs.
- Employees: If you plan to cater events that include a significant number of people, you may not be able to do all the work yourself. Consider the cost of hiring other chefs, waiters and drivers.
- Energy and utilities: Without power and water, you won’t be able to produce enough food for a party or event.
- Insurance: A catering business will need several different types of insurance to operate, particularly if you have employees. Find more information about insurance for catering businesses further down this article.
For a detailed guide on putting your budget together, explore our five-step guide to creating a small business budget.
As well as a budget, it’s also a good idea to write a business plan. This will help you to establish goals and understand how viable your business idea is. Furthermore, business plans are normally a mandatory part of applying for a business loan.
For a detailed guide, read our article on how to write a business plan.
3. Register your catering business
Every business needs to choose a structure and go through registration. These are the business structures you can choose from:
- Sole trader: If you are a sole trader, that means you are the exclusive owner of your business and you keep hold of any post-tax profits. There will not be any legal distinction between your business and yourself, which means you are also responsible for any losses. You will need to register for self-assessment with HM Revenue and Customs (HMRC).
- Partnership: When a business is being run by two or more people who share the responsibilities, this is known as a partnership. There are different types of partnerships, with the main three being business partnerships, limited partnerships and limited liability partnerships. You will need to nominate a partner who is responsible for filing the partnership tax return and will need to register with HMRC. In addition, all partners will need to submit their tax returns as individuals as well.
- Limited company: Incorporating as a limited company creates a legal distinction between you and your business. Limited companies have shares and shareholders, and the company keeps post-tax profits. Register as a limited company at Gov.uk.
» MORE: Should I register as a sole trader or limited company?
As well as registering your business by choosing a business structure, you will also need to acquire certain licences and permissions.
Any business that will sell, cook, store, handle, prepare or distribute food must register with its local authority. It is mandatory to do so a minimum of 28 days before you commence trading. Registering is free and cannot be declined by your local authority.
Once you have registered, your business can be subject to food hygiene inspections at any time without advance notice. Failing these inspections, which will assess the safety and hygiene of your preparation areas and processes, can result in a notice that would ban your business from performing certain procedures.
Food safety training and a good understanding of UK food safety regulations can help your business avoid falling afoul of these inspections.
If you plan on serving alcohol as part of your catering offering, you are also likely to require an alcohol licence. These licences are necessary unless there is no cost to the consumer.
4. Fund your catering business
Most businesses are not free to start, and catering is no different. Once you are armed with your plan and budget, you can turn your attention to getting hold of the money you need to turn your ideas into reality. Carefully consider your options from the below list:
- Personal savings: It can be simplest to use your savings to start a business, as it will ensure you retain full ownership and you won’t have to worry about paying back creditors. Depending on costs, this may not be possible and you should always be careful not to risk your financial health.
- Friends and family: Some small business owners will receive loans or financial gifts from friends and family. For those fortunate enough to be in this position, make sure you draw up a written agreement so that all parties understand the terms.
- Small business grants: New business owners can sometimes access non-repayable and partially repayable start-up business grants. There are also many specific regional grants in Scotland, Wales and Northern Ireland.
- Government business loans: There are government business loans that may be of use to any new small business in the UK.
- Business loans: A business loan can help new business owners access different amounts of capital, with different lenders offering a variety of borrowing options.
- Angel investors: In rare cases, new business owners might be able to receive funding from angel investors. These are usually wealthy individuals who might fully or partially bankroll a business in exchange for equity or convertible debt.
- Crowdfunding: You can also secure funding from many small investments or donations. This process, which may see strangers invest in your business in exchange for equity or privileged access to products, is called crowdfunding.
Opening a business bank account will give you a place to put your funding, while it can also be helpful for budgeting and tax. Sole traders can choose to use their personal account for their business, but a limited company or partnership must have a business bank account. Additionally, sole traders often find it more convenient to have a business bank account as it allows them to easily separate business and personal funds and transactions.
5. Find your first catering customers
The final key step of starting any business is finding some paying customers. Here are some ideas for getting catering clients knocking on your door, ringing your phone or filling up your email inbox:
- Get people talking: Get the word out about your new catering business. Tell everyone you know, from family and friends to acquaintances you hardly know. Before long, this is likely to lead to some kind of work.
- Business cards and flyers: Print off some professional-looking leaflets and business cards before pinning them up on noticeboards, sharing them with contacts and posting them through letterboxes.
- Get an online presence: Start a website and/or social media page that you can direct interested customers to.
- Local businesses: Find out about local businesses or organisations in your area and whether they hold events. Ask if they hold conferences, socials, Christmas parties, awards shows or other significant gatherings where catering might be required.
- Event planners: Caterers will often be booked by event organisers, such as professional wedding or party planners. Find some of these professionals operating in your local area and make it known that you are a new and exciting option for the events they work on.
- Trade fairs: If you plan on catering for events like weddings, you might find that trade fairs are a good way to find customers. Fairs like the National Wedding Show feature many different caterers, so you will need to stand out.
- Positive reviews: Encourage any customers who have a good experience to leave a review on sites such as Google Reviews.
Remember that many customers will want an opportunity to sample your food before choosing you to cater for their event. Plan menu-tasting sessions that allow them to sample a variety of your dishes, either for free or for a basic fee.
How much do catering businesses charge?
The amount charged by catering companies varies greatly depending on the type of food offered and how it is served. Skills and services marketplace Bark gives a broad estimate of £10 to £150 per person, but this figure alone does not tell the full story.
A cold buffet carries the lowest cost per head at £10, but an all-day event that consists of multiple courses is much more expensive at as much as £225 per person.
This wide range gives caterers significant flexibility when choosing what to charge. When picking your prices, remember to factor in the costs of ingredients, travel, bills and labour so that you can offer a competitive price that will also make some money for your business.
What insurance do catering businesses need?
A key consideration for all businesses is what insurance policies to take out, as these can save you huge amounts of money and stress if things go wrong. In some circumstances, they may even be legal requirements.
Taking out public liability insurance will cover your business in the case of claims from members of the public, who may have suffered accidents, injuries or damage to property because of your business.
You will need to take out professional liability insurance in case a product you provide causes a guest to become ill. For example, your food could make someone unwell or a customer could receive a burn from a hot drink.
If you cater for events, there is a good chance you will need to hire employees. Any business with employees is legally required to take out employer’s liability insurance, which covers injuries and accidents suffered by employees in the workplace. This includes self-employed and temporary staff you might hire for an event. Businesses can receive a fine for not having this kind of insurance.
If you own or rent a location in which to work, it is a good idea to take out contents insurance. This will ensure that your expensive property and equipment are protected in the case of damage and theft, helping you to avoid shelling out for costly replacements. You will also need buildings insurance if you own premises
With all the equipment and ingredients involved in running a catering business, it is almost a certainty that you will need a car or van. As such, business vehicle insurance is a must-have. You may want to use a personal vehicle to transport food and equipment, but remember that you should inform your insurer before using your vehicle in a professional capacity.
» MORE: How to start a vending machine business
Image source: Getty Images
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