Catering company – StartupSmart
The catering business is considered one of the most lucrative and profitable home-based business ventures, with a high potential for expansion and growth.
While most of us simply enjoy the culinary delights dished up by catering companies, those with a flair for food and an entrepreneurial spirit will be keen to know what business opportunities lie beneath the silver serving trays.
What is it and who is it suited to?
Catering is the business of providing food service at events. The catering company usually prepares the food at its premises and delivers it to the event when needed. It may also provide drinks, crockery, cutlery, glassware, decorations and service staff.
As an independent, there are two main sectors you can target: private and corporate events. The former category will consist of family occasions such as weddings, parties and funerals.
Operating within the latter category means you are more likely to provide food for board meetings, functions and award ceremonies. Some caterers specialise in one or the other while others cover both.
Obviously, an extensive knowledge of food is a key prerequisite. Not only are customers’ tastes becoming more sophisticated, your offerings may need to be both imaginative and appropriate for the event you are catering for.
It is also important to ensure the food you serve is fresh and of good quality.
A background in food should be combined with some degree of business acumen; it’s not enough to be passionate about food but have no concept of controlling costs.
Catering is a competitive market and business is predominantly driven by word-of-mouth recommendations. How you price your food and service will therefore have a huge impact on the success of the business.
Because you are dealing with a perishable product in a high-pressure environment, you need to be highly organised. There are plenty of courses in event management to ensure your skills are up to scratch.
Finally, it is important to remember that catering is not a nine-to-five job; you will be working when everyone else is partying. It is important to bear this in mind when deciding if catering is right for you.
Rules and regulations
The fact that you’re dealing with food and potentially employing a high number of staff not only means that you will have to deal with an array of rules and regulations, outlined by the Restaurant & Catering Association.
The business premises should be clean and in good repair, with adequate drinking water, pest control, lighting, ventilation, restroom, hand washing and drainage facilities.
The room in which food is prepared should have surfaces that are easy to clean and disinfect, with adequate facilities for washing food and equipment, storing food and removing waste.
Food handlers should wear clean clothes and observe good personal hygiene. They should not smoke when preparing food and should be trained in all areas of food hygiene.
Equipment, containers and vehicles used to transport food should be designed to be easy to clean and kept in a good state of hygiene. Vans will often need to be refrigerated if transporting cooked food.
Food and food waste should be immediately cleared from surfaces and stored in a closed-lid container. Temperature controls apply to dairy products, cooked products and prepared ready-to-eat uncooked food, which means many caterers have to use refrigerated vehicles.
Food hygiene law is rigorous and anyone setting up a catering business will have to think very carefully about where they set up and what equipment they buy.
Remember that environmental health officers make regular inspections of food businesses and have the power of closure if they think you are not up to scratch.
The other area of red tape that will affect your catering businesses comes from the fact that you may employ a large number of staff, especially if you serve the food as well as simply deliver it.
This means becoming familiar with the raft of employment regulations covering the recruitment process, pay, leave, discipline and dismissal as well as administrating payments.
Research and competition
The key to finding a successful formula for any business is good research, but this is especially important in the fiercely competitive world of catering. You will need to focus closely on who your customers are, what they want, and what you can offer that no one else can – your unique selling point.
As stated above, your possible client base will be corporate or private, although you may target both. Serving the business sector will predominantly involve lunches for business meetings and training courses but may extend to business breakfasts and evening receptions, which may involve providing drinks and servers as well.
The major advantage with corporate clients is the opportunity for repeat business. Businesses like having a regular supplier, so if you provide a good service at a good price and you’re reliable, you’ll become invaluable to them.
They will remember you and call you whenever they need some catering. Arguably, organisational skills are more valuable than culinary skill in this regard.
Alternatively, you could aim your catering service at the private sector, which typically involves catering for large family occasions such as weddings, funerals and birthday parties.
To run this type of business will require good culinary skills since the quality and range of your menu will be a major selling point, and you will have to be flexible enough to cater for any special requests from clients for their big day.
Think about offering extra services in order to stand out in the highly competitive private market. For example, if you provide crockery, cutlery, servers, decorations and marquee hire, you’ll attract business much more quickly.
If you don’t want to focus on weddings, you can find a niche through specialising in a certain type of cuisine, offering theme events such as Mexican nights or gourmet cuisine for dinner parties.
Costings and earnings
According to Jennie Blake, director of Blakes Feast Catering, you’re looking at around $100,000 to start up in the industry.
“To start off with, you will need a shop front with a commercial kitchen, complete with a cool room and freezers, in addition to cooking and packaging materials,” she says.
In order to cut down on costs, Blake advises start-ups to lease vehicles rather than purchase them, and complete office work from home.
With regard to earnings, she says you should be aiming to make a profit of at least $500,000 in your first year, but you will earn considerably less if you don’t put in the work.
According to Blake, your biggest expense will be staff, so a family business or a husband-and-wife team is the perfect candidate in this regard.
An average day
In the beginning, Blake says your days will be filled with office tasks such as choosing an accounts program, marketing, and hiring staff if and when necessary.
Blake says depending on your size, you could be catering for up to 10 clients on a busy day, but that is preceded by weeks of preparation.
“If you’ve got a wedding for 120 people, you could be constantly on the phone to the bride and/or groom and sourcing the best prices, which means contacts in the industry are very valuable,” she says.
Useful contacts
Restaurant & Catering
1300 722 878
Australian Liquor, Hospitality and Miscellaneous Workers’ Union
02 8204 3000
www.lhmu.org.au
Australian Government Small Business Support Line
1800 777 275