Are you confused about how to open your catering business? If YES, here is a detailed comparison between buying a catering franchise vs starting from scratch.
Once you have decided to go into catering as a business, there is one major decision that you would need to take; on which all other decisions would be built upon and that is the decision of whether to buy a catering franchise or start your own catering business from the scratch.
Like every other thing in life, both business models have advantages and disadvantages and when making a decision, you would have to consider a number of things such as your personal vision for the business, your long term goals and the capital available to you.
Let me make a simple example to demonstrate both business models. We all love food right? Especially when it is delicious and served in a tantalizing way. But there are two ways to get food. It’s either you get into the kitchen and prepare one yourself or get already prepared food from other sources which may include buying or eating at restaurants or parties or maybe hiring a chef to cook for you that great meal.
But whether you are eating out, hiring a chef or cooking the meals yourself, you are taking a great risk and a very huge one at that. How do you know that you won’t develop stomach infection or get food poisoning after eating at that restaurant?
What if one of the ingredients used in preparing the dish was contaminated and mistakenly used or what if something that you are allergic to was used as an ingredient in preparing the meal and you’re totally unaware of it?
Now i am not trying to scare you, I am only trying to explain the risks involved in eating meals prepared by other people. Buying a franchise is like buying a meal prepared by someone else. And even if the meal was prepared by you, you are still taking a risk because you probably didn’t manufacture all the ingredients you will be using to prepare the meals by yourself. What if the meat had some hidden bacteria infestation. Lol. Enough of the food poisoning talk; let’s get back to the basics.
So buying a catering franchise versus starting your own, which is best? Well, you should be able to decide for yourself after reading this article. I will do my best to reiterate all the pros and cons of both options to guide you in making a perfect decision.
Starting a Catering Business Vs Buying a Franchise : Which is the Best?
Table of Content
5 Advantages of Buying a Catering Franchise
1. Existing customers
Trust me; getting customers to patronize a new business ain’t cheap. You would have had to do a lot of advertising, cajoling, conversing and when you eventually get the customers, your job is just half-way done because you will have to struggle to keep them.
This is one thing that buying a catering franchise offers to you on a platter of Gold. The business would most likely have existing customers who would continue to patronize you even when the business is transferred to you, so that your job of searching for customers is not totally eliminated but reduced.
2. Positive brand awareness
Note that I said POSITIVE brand awareness. If the business is already known by people and has a positive reputation, then you won’t have a problem because the goodwill is automatically transferred to your business when you purchase the franchise. However, the onus rests on you to continue to maintain and build upon that reputation.
3. Cash flow-: When you are buying a catering franchise, cash flow would not be a challenge in the initial phase of your business as you would have ready-made customers who would start patronizing you immediately, so that cash flow is not a problem.
4. Staff Training-: Most restaurant businesses who offer franchising opportunities already have staff training programs in place that you could benefit from. This means that you won’t have to crack your pretty brain thinking about how to train your staff because the franchisor would do that for you.
5. Advertising and Marketing-: You are in luck here too because just like staff training, most franchisors offer promotional materials and advertisements to help promote the brand and make the business more successful.
There are tons of other advantages of buying a catering franchise but let’s stop here for now. I need you to know that the grass not always green on the other side too. There are also disadvantages of buying a catering franchise, some of which include;
4 Disadvantages of Buying a Catering Franchise
Yes, capital. Capital is the numero uno challenge for people who want to buy an existing catering franchise because this means that you would need more money than when you are starting from the scratch in most cases. Some franchisors would insist that you must have at least 50% of the required capital and it must come from non-borrowed sources. If you were starting your business, you might as well start on 100% borrowed funds, who’s gonna ask you why?
b. Bad business reputation-: If the catering business you are buying already has reputation challenges, then your business is dead on arrival because such negative reputation would most likely affect your own business too.
c. Limited Control-: When you buy into an existing business, you have limited control over how your business is run and managed. There are times you would have some excellent ideas that you cannot use because the ‘management won’t approve’.
d. Hidden problems-: If the management has some business threatening issues that they are not telling you about, it might eventually affect your business.
Let’s move on to the pros and cons of starting your own catering business from the scratch:
5 Pros of Starting your Own Catering Business from Scratch
- Ability to use your own concept and ideas-: When you start your own catering business from the scratch, you are able to incorporate all your ideas into the business. Your business is totally yours and you are fully in charge of the decision making process.
- Chance to build your own reputation-: When you start your own business also, you are not walking in any ones shadows. You have the chance to build your own business reputation and you won’t have to suffer for what did or did not do.
- Flexibility-: It also offers you flexibility and the ability to make changes and improvements whenever it suits you.
- Menu control-: You also get the chance to plan your own menu and use your own recipes when you start your own catering business from the scratch.
- Capital-: How much you want to invest in your business and the sources of your capital is totally up to you. No one is going to insist that you get some amount of unborrowed funds before you can start your business.
5 Cons of Starting a Catering Business from Scratch
There are also some risks involved in starting your catering business from the scratch. Some of which include-:
- Licensing-: The onus of getting a license for your new catering business rests singularly on you and this may take some time and efforts not forgetting money.
- Getting Customers-: You would also have to struggle with getting customers to patronize your business. This would set you back a few dollars for advertising, marketing and promotion-related expenses.
- Staffing-: When you decide to start a catering business from the scratch, you would have to employ new staff and train them yourself compared to having it done for you when you purchase a franchise.
- Poor Sales-: You also risk losing your invested funds due to poor sales.
- Unprecedented Expenses-: Despite the fact that you already had your business plan written and you have all start-up costs analyzed, there might still be some unprecedented expenses which you are totally unaware of and this may affect your business and even discourage you in the beginning phase of your business.
In conclusion, i want you to know that catering business is a risky business just like any other business and it is not uncommon to face challenges and obstacles but the most important thing is to carefully analyze the pros and cons of each model and discover what works for your person before making a decision.