Do you want to start a catering business and you want to know the cost? If YES, here is an estimated cost breakdown to open a catering business from home. Starting a business on a small scale is a good thing. You do not have to want to start big to make it big.

As a matter of fact you may choose to start on a small scale, and before long with consistency and hard work, your business can scale into being a medium sized business. There are some things that should be considered they include the following;

Estimated Cost Breakdown to Open a Catering Business in 2021

  • The Total Fee for Registering the Business in America: $750.
  • The budget for Liability insurance, permits and license: $5,000
  • The Amount needed to acquire a suitable Facility with storage space for 6 months in Chicago, Illinois (Re – Construction of the facility inclusive): $70,000 but could be higher when looking to run a medium to large scale catering business.
  • The Cost for the purchase of furniture and gadgets (fridges, TVs, Sound System, tables and chairs et al): $15,000. This could definitely be more if you decided to run a medium to large scale catering business.
  • The Cost for Catering Equipment (Standard commercial oven, Industrial Gas Cooker, Baking Sheets and Racks, Mixers, Work Tables, Sinks, Slicers, Scales, Cake decorating Tools, Ingredient Bins and kitchen utensils et al) : $15,000. Could be more with a medium or large scale business in view.
  • The Cost of Launching a Website: $600
  • The cost for our opening party: $5,000
  • Additional Expenditure (Business cards, Signage, Adverts and Promotions et al): $5,000

Going by the report from our research and feasibility studies, it is estimated that a catering business would cost about $10,000 – $44,000 to start (based on research). However, I want you to know that you can start with much less than the figure stated above; if only you are willing to start from home, invest more sweat equity and rent, rather than buy your catering equipment.

10 Factors That Determine the Cost of Starting a Catering Business

1. Location: $3,000 – $6,000

You would need a place that would serve as a kitchen where preparation and packaging of your food would be done. Most countries require that the location you select for your catering business be approved by the environmental health authority in your country, so it is smarter for you to visit their local office for a checklist of guidelines before you select and pay for a place.

Apart from the rent you would have to pay, you would also need to incur some related expenses like utility bills, maintenance, repairs and security. For this, you should make a budget of about $3,000 – $6,000.

2. Business Licenses and permits: $1,000 – $3,000

You cannot just become a caterer overnight. You would need to obtain permits and licenses that would enable you operate your catering business freely. For this, you should budget between $1,000 and $3,000 depending on your business location.

3. Employees and hired helps: $1,000 – $4,000

You would also need to incur some costs on the people that would assist you in running your business. You can decide to pay them on a commission bases or based on each job you get but you should ensure that you set aside between $1,000 and $4,000 to cover all employee related costs including taxes and employee insurance.

4. Advertisement – $2,000

This is an aspect that sadly, a lot of caterers neglect. Advertising your business is very important and it can make things a lot easier for you in terms of increasing business patronage. You should print hand bills and hand them out at every event you cater for and consider using radio or television as a means of increasing awareness for your business. A budget of about $2,000 dollars should go a long way.

5. Insurance – $1,000

Another business expense you would have to incur is insurance. You may think that you would not need insurance but you just might need it someday and its better you are prepared for it; if you ever need it than otherwise. It is important that you obtain liability insurance as well as a personal insurance to be on a very safe side of your business. Insurance should cost you about $1,000 to start with.

6. Equipment – $25,000

This is the most important and the most expensive of them all. You would need a lot of equipment to run a catering business and this might cost you up to $25,000 dollars. You can decide to purchase used equipment if you cannot afford new ones

Some of the equipment you will need includes industrial gas cookers, cookware, bake wares, pots, kitchen utensils, coolers and several catering equipment. You would also need a means of transporting cooked food around as it is a bit unhygienic to transport food through public transport. This means that you would need to invest in a food truck which you can also convert into a mobile food truck at times when you are not catering.

7. Food and beverages: $1,000 – $1,500

You should also set aside some amount for food and beverages. About $1,000 to $1,500 should be enough to cover that. Some of these items include spices and herbs, cooking oils, preservatives and sometimes alcohol. If you would be buying alcohol, you may also need to obtain license for the alcohol.

8. Training – $1,000

Training is also essential in starting a catering business and you should not forget this vital cost when planning to start your catering business. You can register for short courses on catering. These courses are usually offered by renowned successful caterers or community colleges. You can also enroll for a food and nutrition related course in the university.

Whichever option you choose, you must ensure that it is one that leaves enough room for practical training. Registering for catering courses on the internet would not help you because to really learn anything tangible, you have to be there to see how it is done and also gain some hands-on experience that would help you in running the business. You should set aside at least $1,000 to cover initial training expenses.

9. Networking costs – $500

You should also not forget what it would cost you to get more clients through other people. You would probably have referral programs that would set you back a few dollars in terms of commission and payments. You should set aside at least 500 dollars for this.

10. Time

Lastly, it would cost you a lot of time and energy to start a successful catering business and who says time is not money? Be prudent with your time and use it in the wisest way possible so that at the end of the day, all of your efforts would pay off.

Financing your Catering Business

Since you are really determined to start a catering business, then part of what you must have figured out is the fact that you already have a reliable source for financing your business. There are different ways through which you can finance your business. They include;

  • Family and Friends

This option is very much a great way to raise funds to start a business. This means that y6ou may have family and friends who buy into your business and are willing to support your course financially.

  • Loans

These days more than ever before, there are banks who are all out to grant loans to those who wants to start a trade. Care must however be taken in seeing to it that you have all that the bank requires before you are granted a loan.

  • Grants

There are foundations and organizations through which you can be granted a startup. You have got to be well positioned and aware of this act before you can be a beneficiary.

  • Angel investors

There are investors who when moved or captured by the exactness and reality of a business plan invests greatly in it. This is why it is vital to have a compelling business plan.

Frequently Asked Questions

  1. What Licenses Do You Need To Start A Catering Business?

You will need state-level licenses, a business license and local county or city-based licenses and permits. In addition to licenses and permits specifically related to serving food, such as health permits and food-handling licenses, you may also need to obtain a liquor license.

  1. How Do You Start A Successful Catering Business?
  • Get the required training and experience
  • Choose a name and register the business (Preferably DBA)
  • Draft a detailed Business Plan and market strategy
  • Secure the needed licenses and permits
  • Apply for an EIN (Employer Identification Number)/Federal Tax ID Number.
  • Open a corporate bank account
  • Acquire your catering wares and accessories
  • Hire employees
  • Promote and Market your business
  1. What Are The Keys To Launching A New Catering Business?
  • Conduct feasibility studies and market survey
  • Choose a good location to launch the business
  • Organize an open party
  • Come up with unique recipes
  • Network with event planners
  • Be deliberate in branding, promoting and marketing your services
  1. What Is The Growth Potential For A Catering Business?

The growth potential for a catering business is positive because the global contract catering market is expected to grow at a compound annual growth rate (CAGR) of 4% from 2016-2021, according to recent industry analysis conducted by Azoth Analytics.

  1. What Are The Costs Involved In Opening A Catering Business?
  • Registering the business
  • Acquiring the required licenses and permits
  • Purchasing cooking wares, serving wares and other catering accessories
  • Renting and equipping a commercia kitchen
  • Purchase of a van or truck
  • Settling utility bills and handling other logistics
  • Payment of salaries
  • Payment of insurance and tax
  1. Do You Need A License To Start A Catering Business?

Yes, you will need a license to start a catering business.

  1. How Much Can You Potentially Make Owning A Catering Business?

As a starting caterer, you can expect to earn about $30,000, while top caterers at high-end or established businesses often pull in upwards of $80,000.

  1. How Do You Start A Catering Business From Home?
  • Get the needed clearance and permits
  • Purchasing cooking wares, serving wares and other catering accessories
  • Source for contracts/Promote and Market your business
  1. How Much Does It Cost To Start A Catering Business?

On the average, you can expect to invest $10,000 to $50,000 to start a standard catering business. But if you start with small events, you should be able to open your business for less.

  1. What Makes A Good Catering Company?
  • Good meals
  • Timely delivery
  • Excellent workforce
  • Neatness
  • Excellent food presentations and serving skills
  • Reasonable charges et al
  1. What Are The Ongoing Expenses Of A Catering Business?
  • Phone calls and internet fees
  • Purchase of food ingredients
  • Purchase of cooking gas
  • Logistics and utility bills et al
  1. How Do You Make A Catering Menu?
  • Step 1: Match the Catering Menu with Your Restaurant
  • Step 2: Know Your Numbers
  • Step 3: Price the Catering Menu
  • Step 4: Set Up Your Schedule
  1. What Are The Four Major Segments Of Market In Developing A Catering Business?

The four major interest segments that a market survey must investigate are the customer, the competition, the community and the labor pool.

  1. What Types Of Catering Equipment Should I Invest In?

Dinnerware, chairs, linens, and banquet tables, either purchased or rented. Food pan or banquet holding cabinets. Portable catering and cooking equipment, such as commercial induction ranges, hand sinks, and cold food tables. Buffet serving materials, including serving trays, beverage dispensers, and chafing dishes.

  1. How Does A Catering Business Make Money?
  • Catering events
  • Equipment rental
  • Outsourcing
  • Use a temporary agency to find your wait staff
  • Specialize in a list of items to create a niche for your catering business
  • Partner with a local meeting or business venue to set up an onsite shop
  1. How Do You Get Clients For Catering?
  • Reach Out to New Venues
  • Set up Google Alerts
  • Contact Real Estate Developers
  • Use Social Media to Listen
  • Filter Your eRFPs
  • Don’t Underestimate Word of Mouth
  • Email Your Past Clients and Prospects
  1. What Is The Average Profit Margin For A Catering Business?

A typical catering company earns a profit of 10 to 12 percent, as opposed to the four to seven percent profit typical of restaurants.

  1. How Do You Decide Prices In Your Catering Business?

You should first of all consider the industry average, but know that you can always use your discretion.

  1. What Happens During A Typical Day At A Catering Business?

A typical day at a catering business involves planning food menus together with cooks/chefs. Training, supervising and managing staff. Creating staff schedules. Ordering supplies for day-to-day operations and special events.

  1. Can You Use Your Home Kitchen For Your Catering Business?

It depends on your state regulations.

  1. What Are The Main Challenges Of A Catering Entrepreneur?
  • Sourcing for some food ingredients
  • Down times
  • Dealing with people
  1. How Can You Get Rich In Catering?

You can get rich in catering by deliberately growing your catering business to serve more people, that is expanding your market base. You can also go into franchising if you have been able to build a brand name for the business. You can as well offer other complimentary services such as party rentals, catering trainings and consulting et al.

  1. What Are Some Insider Tips For Jump Starting A Catering Business?
  • Be thorough with your feasibility studies and market survey
  • Come up with unique marketing strategies
  • Come up with unique menu list
  • Network with the right people
  1. How Much Does It Cost To Feed 100 Wedding Guests?

It depends on the cost per plate, but most receptions for 100 people cost around $5,000 to $10,000, with average cost being around $7,000.

  1. How Much Should I Charge For Catering?

It depends on where you are catering, but this should serve as a guide;

  • Formal dinner – $145 per person
  • Informal food stations – $25 – $45 per person
  • Buffet – $23 per person
  • Corporate event – $70 per person
  1. How Much Does It Cost To Start A Small Catering Business?

Going by the report from our research and feasibility studies, it is estimated that a catering business would cost about $10,000 – $44,000 to start.

  1. What Are Some Skills And Experiences That Will Help You Build A Successful Catering Business?
  • Ability to work under pressure
  • Excellent communication and interpersonal skills
  • Strong organizational and time management skills
  • Decision making skills
  • Ability to manage in a diverse environment with a focus on client and customer services
  • Good business and commercial acumen
  1. What External Factors Affect The Catering Industry?

The economy, politics, competitors, customers, and even the weather are all uncontrollable factors that can influence the catering industry. This is in comparison to internal factors such as staff, company culture, processes, and finances, which all seem within your grasp.

  1. What Are The Key Costs In The Catering Industry?

The key costs in the catering industry are the purchase of cooking ingredients –more than 1/3 of the catering business revenue is allocated to purchases. Wages – Due to the labor-intensive nature of the industry, wages account for almost a quarter of costs. Other – Other costs include rent, utilities, marketing and other miscellaneous.

  1. What Are The Typical Startup Costs For A New Catering Business?

According to the studies, you should be prepared to budget $10,000 to $50,000 in startup costs for your catering company. Naturally, startup costs vary business to business. You’ll need to take into account your equipment, transportation, and marketing needs.

  1. What Are The Legal Requirements For A Catering Business?

Starting a catering business has its own set of legal considerations. These include choosing the proper business entity, obtaining licenses and permits, dealing with health and safety, creating policy statements and contracts, getting adequate insurance, and dealing with employees.

  1. What Certificates Do I Need For Catering?

You need a Level 2 food safety certificate, which you can get by doing a one-day course with an organization such as the Chartered Institute of Environmental Health or the Nationwide Careers Association (NCASS).

  1. How Much Money Can You Make As A Caterer?

You may be pleased to learn that caterers enjoy a salary that’s in the top 25% of all careers in the food industry. As a starting caterer, you can expect to earn about $30,000, while top caterers at high-end or established businesses often pull in upwards of $80,000.

  1. What Education Is Needed To Become A Caterer?

In general, no formal education is required for a career in the food service industry, and much of the knowledge and skill required of Catering professionals is gained on the job. It’s recommended that aspiring Caterers have a minimum of a high school diploma.

  1. Who Is The Target Market Of A Catering Business?
  • Wedding planners
  • Event planers
  • About to wed couples
  • Party planners
  • Cooperate Organizations
  • Schools
  1. How Can You Make Your Business More Profitable?

Here are surefire tips For Making Your Company More Profitable

  • Hire the Right People.
  • Focus on Finding and Retaining New Customers Daily
  • Advertise Your Brand Wisely.
  • Use Resources Well and Cut Costs.
  • Motivate and Empower Your Employees.
  • Analyze Your Competition and Be Creative.
  • Provide Great Customer Service and Be consistent
  • Be strategic with branding and marketing.
  1. What Do Food Inspectors Look For?
  • A completed, signed and dated food safety management system.
  • Adequate facilities for washing and drying hands.
  • A food preparation sink.
  • A suitably equipped first aid kit.
  • A probe thermometer.
  • Fire protective equipment.
  • Proof of registration with the environmental health department.
  1. How Do You Keep Your Catering Business Costs Down?

You can keep your catering business costs down, by purchasing your food ingredients directly from farm markets, cut operational costs to barest minimum and contract some of your services.

  1. Is Catering A Hard Job?

One of the most common jobs in the hospitality business is working in catering. Whether you are an event planner, a chef, a bartender, a waiter or a busboy, a busy catering service will offer no shortage of work opportunities. But it is also a difficult job, with some serious stress involved.

  1. What Do You Learn At Le Cordon Bleu?

Considered the guardian of French cuisine, Le Cordon Bleu students learn the art of French cooking and the culinary techniques, which have been the cornerstone of French gastronomy for over 500 years.

  1. Can I Cook At Home And Sell?

All states except New Jersey and Hawaii have cottage food laws which allow producers to cook low-risk foods like pie, bread and jam at home and sell to individual consumers.

  1. Why is Catering A Good Business?

A catering business can be wildly successful, enjoyable and fulfilling. In this business, you are able to please clients while indulging your love of food and people. If you love food and love making sure that clients get exactly what they asked for, then choose to start a catering business.

  1. Is Catering A Profession?

Catering can represent a very exciting profession. Centered around excellent levels of customer service, you can expect to enjoy a constant change in terms of where you work and communicating with clients will build long-standing relationships that can last for decades.

  1. How Can I Improve My Catering Sales?
  • Get creative with your marketing.
  • Host tasting events.
  • Build trust with your clientele.
  • Don’t lose out on walk-in customers.
  • Reward customers who refer others to your business.
  • This one menu item can make a difference.
  • Make it easier for yourself with software.
  1. What Is The Job Description Of A Caterer?

Catering is the industry responsible for providing beverages, food, and other services to different clients for special events. Caterers are some of the professionals working in this area and their duties are related to organizing catering operations.

  1. Why Do People Study Catering?

To meet a need in the society.

  1. How Big Is The Catering Industry?

The market size of the catering sector in the United States reached 11.35 billion U.S. dollars in 2020, reflecting a decline over the previous year’s size of 12.97 billion U.S dollars. The sector was forecast to reach approximately 12 billion U.S. dollars in 2021.

Ajaero Tony Martins