How to Start a Catering Company

Market Research & Planning

As almost any business owner will tell you, conducting extensive market research is crucial to your success. It’s important to understand your competitors, what’s happening in your field and to identify where there might be a gap in the market.

Start by checking what other caterers are doing – this is generally as simple as visiting their website. What style of menu are they offering? What type of events are they catering for? What's their price point? You may even consider obtaining work experience with another catering company to get a real feel for how they operate – just make sure you get answers for the following questions:

• Who are my potential customers?
• Do they live near my business?
• What do people who live near my business want?
• What are their buying habits?
• Are they likely to buy from me?
• Who are my competitors?
• How much do they charge?
• Are they struggling or successful?
• How saturated is the market I am looking to enter?

The next step is to prepare a formal business plan. This document will become your reference point as you begin to establish and grow your business and should be referred to and updated regularly. A business plan includes details of what type of business you are, how and where you'll operate, anticipated expenditure and profits and projected timelines for future plans. You’ll need to have a comprehensive business plan if you're applying for a business loan – the bank will definitely ask to see one as part of your application.

Take a look at the New Zealand government's website to find more information on:

• Guidelines for starting a business
• How to write a business plan

Find Your Niche

There are so many options when it comes to providing catering services, so you need to decide where your business will fit. Ask yourself, what will make my catering services unique? Do you want to specialise, or cover all bases? When you’re first starting out it’s a good idea to focus on your existing skills and try not to be everything to everyone. Generally speaking, caterers are required for:

• Social events and family functions
• Corporate client events
• Cultural and community events

Social events and family functions will include occasions such as weddings, birthday parties, anniversaries, graduations – even funerals. The corporate sector tends to require catering for board meetings, award ceremonies, client functions and employee celebrations, such as Christmas parties. Cultural or community events may include things like the opera, festivals, opening ceremonies, cocktail parties and sporting events.

As you gain experience, you’ll find these groups will overlap, so while you might start out working with corporate clients, the expansion to include larger social events could happen organically over time.

Of course, there's always more than one way to specialise. You might be an excellent vegan or gluten-free cook and decide to promote your business as such. You might want to focus only on desserts, canapés, or children’s parties. The key to finding your niche is to identify your strengths and play to them.

Create a Menu

After conducting research and discovering your niche in the market, the fun can really begin. Planning a menu is one of the most enjoyable parts of running a catering business and probably one of the main reasons you’ve decided to go into business, so pop on your chef’s hat and start getting creative in the kitchen.

Make sure you develop a menu with your customers in mind and that you're offering something different from what your competitors are doing. People looking for catering services are somewhat spoiled for choice, so you need a menu that sets you apart from the rest. You should also bear in mind that your menu needs to appeal to a wide range of people. So, for example, if your specialty is spicy Mexican food, make sure you include a couple of non-spicy options for any guests with an intolerance or dislike to chilli.

TIP: Don’t forget to stay on top of trends. Your menu can fast become one of your best marketing tools, so it’s important to keep it fresh and relevant in order to attract and source new business opportunities. While dessert customers might love cupcakes one minute, they might prefer doughnuts the next. Do your best to be flexible and adapt to changing food trends, without losing sight of your overall vision.

And lastly, it goes without saying that your menu needs to be cost effective. You’ll soon find yourself out of business if you spend big on elaborate and expensive dishes that cost more to produce than what you’re being paid. When quoting for your jobs, be sure to include all costs associated with food preparation, including:

• A list of your menu items and cost per person or per platter for each food item
• The total cost for each food item
• The total costs for the whole menu
• Price of the added costs incurred for the food items, such as cost of disposable utensils and dinnerware, chafing dish rental, cake cutting costs etc

When preparing your quote, be sure to explain each food-related fee or it could come across that you're overcharging, putting you at risk of losing your client to another company.

Test your dishes

Once you’re happy with your menu, it’s time to test it out. Gather a focus group and host an event of your choosing. Invite them to a free tasting session and ask them to provide honest feedback on your dishes, as well as the service you provide. Remember, practice makes perfect. After you receive feedback, tweak your dishes until you’re sure they’ll appeal to lots of people and that your presentation and timing is spot on.

Determine your price point

As with all services, catering businesses can range from being very affordable to very expensive. Where do you see your business on the price point spectrum? If you want to cater for high-end corporate clients and large-scale weddings, your menu should reflect a more expensive taste and be priced accordingly. Alternatively, if you plan on catering for children’s birthday parties, you’ll want to be at the lower end of the pricing scale.

No matter where you see yourself, the success of your business depends heavily on choosing the right price point for your target market, so take the time to research before making any final decisions. You can always revise your pricing as your business gets going.

Obtain permits and licenses

When starting a food business, there are a number of licenses and permits needed for you to operate legally and safely. These include everything from zoning and public event permits, to liquor licenses. Depending on where you're based across New Zealand the requirements will vary, so make sure you check you have all the relevant information before you apply for anything.

You can find all the information you need regarding permits and licenses on your local council’s website, along with a range of helpful information about starting your business on the right foot.

Additionally, in order to produce and serve food to the public you need to have first completed some basic training and be in compliance with the relevant food safety legislation. The formal regulation that governs the industry for New Zealand is known as the Food Standards Code, which you'll need to become familiar with. You can download a free copy to become acquainted with the requirements that affect you.

Insurances & Registration

When entering the food service industry, it’s an absolute must to protect yourself with the right level of business insurance. Accidents happen and the last thing you want is to find yourself not covered in the event of food poisoning, staff accidents, vehicle theft and any other unforeseen occurrences. The types of insurance you should look into include cover:

• Public Liability (e.g. injuries from slips and falls etc.)
• Product Liability (e.g. food poisoning, unwanted objects found in food etc.)
• Worker’s Compensation (e.g. staff injury or illness)
• Business & General Property (e.g. damage to property or vehicle due to vandalism)
• Fire (e.g. grease fires, electrical malfunctions etc.)
• Business Interruption (e.g. if you are forced to close for a period of time)
• Equipment Breakdown (e.g. refrigerator breaking down resulting in loss of product)

Speak to a professional insurance company to determine which insurances are relevant to your business and obtain quotes from at least three companies prior to making your final decision on who to sign up with.

Should You Set Up as a Sole Trader, Partnership or Limited Company?

Using the Government's online guides, it's easy to reserve a business name and incorporate your own company in a few hours. But there are three business structures to choose from, so what do you go for?

Sole Trader

• Bring a sole trader means you'll operate the business on your own
• You can employ staff, but the control and management of the company lies with you
• You're liable for business taxes

Partnership

• Partnerships are a great way to share business operation costs
• The partnership won't pay tax, instead you split the income between the partners and the partners pay tax on their share

Limited Liability

• Limited companies are New Zealand's most successful business structure
• The company is a formal and legal entity in its own right with the shareholders only liable for losses relative to their share of the ownership of the company
• You can register a company online through the Companies Office for a small NZ$150 fee

To find out more about these business structures take a look at the New Zealand Government's website here.

Setting Up Your Kitchen

With your menu tried and tested and the appropriate permits and insurances in place, it’s nearly time to launch your business. And for that you’ll need a kitchen. When starting out, many caterers choose to rent an established premises with kitchen facilities (such as a cafeteria) on an as-needed basis to reduce set-up costs. Since you'll probably only need the space for a few days a week, this can be a cost-effective option until you feel ready to find your own place.

But if you’re feeling confident of your success and have the budget, you can lease or buy your own premises straight away and get to work setting up your kitchen from scratch.

It’s important to note the equipment needed for a commercial kitchen is quite different to the equipment you'll use at home. Commercial equipment is designed for constant use and won't let you down in high-output situations. The below lists are intended as a guide, as the equipment and supplies you need depends on the type of catering services you’re offering and how many guests you’ll be catering for.

Firstly, you need to make sure you have plenty of preparation space and food storage equipment. This may include:

• Modular kitchen equipment (prep benches, shelving, storage racks etc.)
• Commercial fridge
• Commercial freezer
• Gas ovens and ranges
• Sous vide
• Commercial dishwasher
• Coffee machines
• Deep fryers
• Commercial microwave

You’ll then need to stock your kitchen with all the necessary supplies, including things like:

• Chefs knives
• Utensils
• Cookware
• Bakeware
• Dish Towels and Cloths
• Rubbish bins
• Food storage containers

Many catering businesses also provide supplies for off-site events, which can include:

• Glassware
• Crockery
• Cutlery
• Disposable napkins
• Service trays
• Chafing dish sets and fuel
• Tabletop supplies
• Hot water urn

Remember, food hygiene law is extensive and well-regulated, so when setting up your catering business you need to make sure your preparation space and equipment meets all the necessary requirements.

Transport & Logistics

When catering for off-site events, you need to create a plan for transporting prepared food between your kitchen and the venue. This generally involves purchasing or renting a reliable vehicle (generally a van) with plenty of storage space.

But seeing as you can’t just throw everything you need in the back of a van, you’ll also need to purchase or rent equipment and supplies to ensure the food arrives at the destination safely, including:

• Food storage racks
• Insulated food transport
• Plate rings and covers
• Gastronorm pans
• Food labelling

TIP: Want to find out more about Equipment Leasing? Take a look at how Silver Chef can help you try catering equipment before you commit to buying.

Finding Food Suppliers

If you don’t have an existing relationship with food suppliers, you’ll need to quickly establish some. As a caterer you should be able to apply with local wholesale suppliers and expand into a larger supply company as you grow your business. You can also source fresh produce directly from farmers to reduce costs, which ensures you receive quality, seasonal ingredients. Even alcohol suppliers will sometimes offer you a discount if you agree to display their logo at your events.

Play it smart and shop around until you're confident you’ve found the right suppliers for your business and don’t be afraid to negotiate on prices.

Hiring Staff

With all this work to do, you’re going to need reliable staff to help you prepare and serve your food for each event. When you’re just starting out, a temp agency can be a great way to find the help you need as you grow your business on a casual basis, as your company may not yet be big enough to justify hiring additional employees right away.

When you're ready to hire your own team, you’ll need to become familiar with all the regulations that go along with it, such as:

• Recruitment processes
• Pay rates and administration of payments
• Relevant awards
• Paid and unpaid leave
• Discipline and dismissal
• Training requirements

You’ll also need to provide a dress code or uniforms and provide adequate food handling and service training.

Branding & Marketing Your Catering Business

Choosing your brand name, as with deciding on your menu, can be great fun. You can simply go for something that relates directly to your product, or you might want to throw your customers a curveball with something funny or quirky.

When it comes to brand name development, there are typically seven different categories that are used as a starting point. These are:

• Descriptive: describes the product or service (eg: Burger King)
• Evocative: evokes suggestion and metaphor without reference to the product (eg: Virgin)
• Invented: fabricated or completely made up (eg: Esky)
• Acronym: shortened version of the company name (eg: KFC)
• Founder: derived from the name of the company founders (eg: Ben & Jerry’s)
• Geographical: relates to the location of the company (eg: Goulburn Valley Fruit)
• Lexical: often clever, relying on word-play for memorability (eg: Dunkin’ Donuts)

Remember, whatever name you choose will form the core of your overall brand, from which you'll develop your marketing materials including your website and all-important social media profiles. It’s in your best interests to take the time to plan and come up with more than one option before making a final decision. Trial the name with your focus group too, to see how they respond, and also check out the local competition – you don’t want a name that's too similar to another catering business in your area. Make your name unique, memorable, and enticing.

Whatever you choose, just make sure you’re consistent in your approach as customers will definitely notice if your idea is confused. If you’re feeling a little lost, research brands that you admire and other local catering businesses, or even create a ‘mood board’ (Pinterest is a great source of inspiration) to help put your thoughts into perspective and you bring your idea to life.

When it comes to marketing your business, a basic website and social media profiles, plus a set of business cards, is the best place to start. Social media is free to kick off and an excellent means of communicating your location to your customers. Twitter, Facebook and Instagram are all good options. And if you’re tech-savvy, why not have a go at building your own website? There are many low-cost and user-friendly platforms available, such as Wordpress, Wix and Squarespace which allow you set up a basic site with relative ease.

Word of mouth will also play a large part in your marketing plan as you become more established and you may also consider registering with a group such as the Restaurant & Catering Industry Association to help you get noticed. And make sure you’ve always got a business card handy – they’re the easiest way to pass on your details to anyone who might be enquiring about your services.

There are many, many other methods of marketing that you'll probably consider as your business gathers momentum, but initially, try not to blow the budget on fancy flyers or digital marketing campaigns. Instead, get yourself set up with a solid online and social presence, tell all your friends to tell their friends, then reassess any additional marketing needs a little further down the track.

Try It For Yourself

By now you should have a good understanding of what it takes to establish a catering business and as you see there is quite a lot of work involved to get it off the ground. That said, if you’re willing and able to put in the time and effort, the rewards of the job can be endless. You have the freedom to take on the clients you want to work with without being tied to one location as you would in a restaurant, to design and prepare a menu that excites you and your customers – and change it along with food trends – and to work on a variety of projects which keep you feeling motivated and driven to succeed in this fast-growing industry.

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