Do you want to start a meal prep business? If YES, here is a detailed guide on how to start a profitable meal prep business with no money and no experience.
There are a lot of people in modern America who do not have time to shop and prepare dinner each night. These individuals have to rely on meal prep businesses to enjoy good and affordable meals. So if you enjoy food and working with others, starting a meal prep business can actually be the right choice for you.
A meal prep business provides the ingredients, recipes and work space, and customers stop by to quickly prepare a meal to take home. Some meal prep businesses also prepare entire meals that need only reheating in the oven.
What Does It Take to Start a Meal Prep Business?
The very first thing to do when planning to start this business is to put together a business plan that outlines each stage of the business development. In your business plan, you have to state the types of meal prep services you will provide. Services typically include creating recipes; cleaning, chopping and measuring ingredients so customers can assemble meals in your store; or providing fully assembled meals for customers to purchase.
You will also have to list all startup costs. These may include rent, utilities, food supplies and materials, computer software and equipment, business insurance and labor. Do not also forget to explain ways to market your meal prep business. Also, list all roles and responsibilities of management and employees.
Take your time to research and understand the legal requirements of your meal prep business. Contact the local county clerk’s office to apply for a business license. Apply for an Employer Identification Number (EIN) to use on all business tax forms. Contact the Internal Revenue Service (IRS) for more information about EINs.
Remember to contact your local health department to know the types of permits required to handle and sell food to the public. Although it depends on the state you are doing business in, you may or may not need a food handling certification.
It’s also advisable that you acquire business insurance from a licensed insurance provider, such as general liability, property and worker’s compensation to protect your business assets. Find a commercial real estate agent to lease commercial kitchen space from.
Note that this space should be able to accommodate several work stations where customers can assemble their meals. Kitchen space should be large enough to allow preparation of ingredients in advance and storage of food, kitchen and cleaning supplies.
Buy kitchen supplies and equipment from restaurant supply stores or online. You may also need a computer and bookkeeping and invoicing software. Have it in mind that you will need to create daily menus with at least two meal options for customers. Menus may include an appetizer, entree, sides and dessert.
Don’t forget to create easy-to-follow recipes that include an ingredients list, measurements and cooking instructions. Meals should serve between four and six people. You will also need to hire employees to prepare ingredients, supervise customers during meal prep and clean the kitchen and work stations after customers leave. Depending on the number of customers served each day, you may need two or three employees.
Starting a Meal Prep Business – A Complete Guide
- Industry Overview
According to industry reports, the Global Ready Meals Market was valued at $72,257 million in 2016, and experts believe it will reach $146,247 million by 2023, with a CAGR of 10.6% from 2017 to 2023. These meals are considered a cost-effective alternative meal and their preparation requires less time, as they are precooked.
Note that these meals are also available throughout the year and are safe to consume. Though processed food cause loss of nutrition, various methods utilized to prepare ready meals ensure that the loss of nutrients is minimal in most cases.
Report has it that the growth of the ready meals market is propelled by the increase in convenience provided in terms of time saving and little efforts required for the preparation of these meals. But preference for these meals by the working population and students has increased, due to the fact that it needs only heating before consumption, which reduces the overall effort.
Also, these meals serve as low-cost alternatives to junk food, which is expected to boost their demand in the near future. Meanwhile, increase in health awareness and negative perceptions pertaining to health effects of these products among the consumers restrain the market growth.
On the basis of type, the market is divided into canned/preserved ready meals, chilled pizza, chilled ready meals, dried ready meals, frozen pizza, frozen ready meals, and prepared salads. By distribution channel, it is classified into store-based retailing, meals to go, meal prep and online retailing.
The store-based retailing segment is broadly classified into supermarkets/hypermarkets, discounters, convenience stores, and others. According to industry data, frozen pizza and prepared salads segments accounted for one-third share of the global ready meals market in 2016.
The frozen pizza segment is the top investment pocket, as they are considered as most popular junk food. In addition, improvements in nutritional value of frozen pizza, interesting ingredient profiles, and ease with which it can be cooked fuel its demand among young population.
Have it in mind that the consumption of ready meals in Asia-Pacific is expected to rise due to the massive growth in population, development in the food & beverage industry, and stable economic growth. Ready meals are widely accepted by Australian customers, as they are relatively cheaper and convenient option than junk food.
Changes in standard of living, increase in number of working women, and rise in number of single-person households are primary factors that drive the growth of the ready meals market in Japan.
Starting a Meal Prep Business – Market Feasibility and Research
- Demographics and Psychographics
To successfully start and run this business, you should really like to cook. You should like to explore the ingredients that go into making a great meal and especially enjoy serving such a meal to others. Have it in mind that the model in this business is not based on the fast food model.
Instead, in order to be more profitable, it is based on a quality food model that is prepared in advance and is delicious and nutritious. Successful meal prep business owners always take time to hand-select the best ingredients. These entrepreneurs get up early to go to the wholesale markets and pick out the very best things they can find.
Note that one of the biggest threats in this business is to buy enough materials to make the food that is ordered and at the same time control waste. Since many items are perishable, the balancing act is to get enough supplies and sell out the food without having to throw much of it away.
As a meal prep business owner, another key part of your day is to always ensure there is sufficient staff and owners must make sure that employees show up on time. Food preparation is very time dependent and being late is not acceptable. Indeed there is a tremendous rush to prepare orders at certain times of the day and being short-staffed during those periods of heavy activity can cause a disaster.
Meanwhile, you preferred customers will be individuals with disposable income who like good food and do not have the time required to prepare it for their families. These individuals do not want to go to the trouble of visiting a restaurant and they find fast-food less than satisfying. They are willing to pay more for the quality of food that is made using better types of ingredients.
List of Niche Ideas in the Meal Prep Business
In a meal preparation business, it’s very necessary that you find a niche that attracts a customer base. Have it in mind that your customers can become very loyal, which could mean recurring sales in the future.
Establishing an enrollment program for meals can be a game changer in this industry, and it can help you retain customers when they receive food on a daily, weekly, or monthly basis. It’s advisable you consider and analyse the competition extensively before settling for a niche.
You will need to stand out from other companies offering similar services, which is why it’s so critical to spend some time understanding what competitors are currently offering to their customers. Some of the popular niche options in this business include:
- Diabetic diet
- Senior citizen diet
- Paleo diet
- Gluten-free diet
- Dairy-free diet
- High protein diet
The Level of Competition in the Meal Prep Business
Although ready-meal sales are expected to become more dependent on developed markets than other packaged food categories, the unmet market potential is high in key emerging markets, notably China. Have it in mind that meeting the market potential would involve more varied products and wider distribution.
Among developed markets, the US has the world’s highest unmet market potential for ready meals, which may be achieved mostly through encroaching on adjacent categories, but also by growing the assortment at convenience stores.
Note that reaching the unmet market potential in ready meals, particularly for pizza, involves tapping into food service demand, notably by competing against takeaways. Experts believe that this will encourage manufacturers to develop more premium ranges, mirror ethnic food trends, and seek collaborations with food service chains or celebrity chefs. This also feeds demand for more “authentic” and regional recipes, and for greater ingredient traceability.
Responding to the increasing overlap between snacking occasions and meals in eating habits, especially among young adults, manufacturers are looking to adapt their offering with ready meals suitable for on-the-go consumption, and are responding to the growth in demand for more nutritious and healthier snacks.
Note that some US organic brands are making inroads following their acquisition by major global food companies, giving them the opportunity to reach wider distribution, while retailers focus on organic private label ranges. Have it in mind that the emergence of new ranges targeting vegetarians is being driven in part by the rise in the number of so-called “flexitarians”, who actively reduce meat consumption.
List of Well Known Meal Preps Brands
- Purple Carrot
- Home Chef
- Terra’s kitchen
- Blue apron
- Peach Dish
- Every Plate
It’s important to state that the quality and safety of meals are the two major factors influencing the production of ready meals. Businesses following the global ready meal competition landscape are picking up advanced food making and packaging solutions to cater to the effective distribution of ready meals.
Experts have also addressed factors such as infrastructure irregularities, lack of proper standardization, and health concerns as the major impediments for the growth of the global frozen ready meals market.
Note that the general demand for ready meals is envisaged to witness moderate gains in the foreseeable future. Inaccessibility to utilities for thawing these meals is driving consumers away, while companies are striving to control the impact of refrigeration on food quality. Also note that regulatory bodies have employed different standards and following them is becoming a challenge for market players.
The rising awareness concerning risks of frozen ready meals have been curbing the overall sales, while logistics complexities are also downgrading the expected expansion of the global frozen ready meals market. According to industry data, several impediments will constrain the global ready meals market from expanding vigorously.
But, the demand for ready chicken meals will continue to gain traction and translate into robust revenue growth. Note that by the end of 2026, over one-third of global ready meals market value will be attained by the sale of chicken meals.
Experts also believe that food chain services will be the leading end-users of ready meals. In 2017, nearly US$ 12 Bn worth of ready meals were used by food chain services across the globe. The demand for frozen ready meals among modern trade outlets is also poised to gain traction.
Starting a Meal Prep from Scratch vs Buying a Franchise
There are benefits and setbacks of both starting from the scratch and franchising. A franchise Meal Prep will provide you with instant brand recognition and a committed customer base. While on the flip side, your dreams of entrepreneurship and creativity may be affected.
You may not be able to offer all the items you’ve dreamed of serving if your franchise won’t allow substitutions. But you will gain a dedicated fan base but it comes with set expectations. If you don’t have the ability to live up to those standards, you could be worse off than if you started with an original brand. In this line of business, it is preferable to buy a franchise than to start from the scratch.
Note that franchising tend to be more expensive when starting up, but the revenue generated from an established brand may outweigh those costs in the long run.
Also, going the franchise route gives you the opportunity to capitalize on the brand’s name, and royalties help cover the franchisor’s costs associated with advertising and the like. These fees will also most likely cover training, site selection, and outfitting, and help with the initial launch of your business.
Possible Challenges and Threats You Will Face When Starting a Meal Prep Business
Have it in mind that starting a successful Meal Prep won’t be a simple stroll in the park. You will have to make a thousand and one crucial decisions, and the few barriers you might face may include;
- Choosing a suitable niche
- Gaining experience
- Menu development
- Applying for permits
- Purchasing inventory
- Writing a business plan
- Industry competition
Starting a Meal Prep Business – Legal Aspect
- Best legal entity for a Meal Prep
There are a lot of factors to be considered when choosing the best legal entity for your Meal Prep. Note that the type of legal entity you choose can have an impact on multiple aspects of your business, including taxes, liability, and your exit strategy.
So when starting your Meal Prep, it’s advisable you consider the LLC structure. Unlike both types of corporations, this legal structure doesn’t need a board of directors, shareholder meetings and other managerial formalities.
You can simply divide up the profits any way you choose, as opposed to shareholders in corporations who have to carve them up in proportion to their percentage ownership in the company. You can also entice talented employees with a share of the profits, even if those employees didn’t pony up their own equity in the beginning. The LLC structure also gives tax-treatment flexibility.
Note that an LLC’s profits can be taxed as a corporate entity (a C corporation) or as a “pass through” entity (an S corporation), meaning that the company avoids paying tax on both corporate profits and the owners’ personal income. Most LLCs choose the pass-through option. But, in some cases, LLCs can choose a C corporation tax structure and save money by funnelling profits back into the business tax-free.
Catchy Business Name ideas for a Meal Prep Business
- American Foods
- Maynard Spot
- Big Knuckle’s Food
- Mountain prep
- King size
- Tasty foods
- Star Cooking
- Uncle Sam cooking
- Food World
- Steamy sauce
- Hot zone
- Heavenly Eateries
- Ring of Fire
You need to understand that adequate insurance is a must-have especially for this kind of business. Even with every safety measure possible in place, there is always the chance of sickness or theft, either of which could leave your business in tatters if your insurance doesn’t cover the menace.
For instance, general business liability insurance protects you from the cost of any litigation that may come up against your business due to sickness or if an accident or injury occurs on your property.
Then business crime insurance is also crucial for your Meal Prep. Note that this type of insurance also covers employee theft. It is strongly advised that you speak with an experienced insurance agent to make sure you get all the coverage you need to financially protect your shop from troubles.
Intellectual Property Protection
In this modern computer age, the creation, exploitation and protection of intellectual property (IP) rights are very crucial to the success of most retailers. In the Meal Prep industry, intellectual property protection and Trademark are needed to serve as
- Brand and image rights
- Protection and registration of designs
- Enforcement and dispute resolution
- Anti-counterfeiting and piracy
- Patents laws
- Trade mark filing and opposition
- Brand audits and watching services
- Securing trademarks and passing off
- Domain name strategies and disputes
- Data and database rights
- Competition law
- Protection of technology and innovation
- Advertising and marketing issues
Is Professional Certification Needed to Start a Meal Prep Business?
When starting your Meal Prep, gaining food and safety certifications will go a long way to show how experienced you are in the business. You may need retailing certifications, and other certifications that can come in handy may include;
- ServSafe Food Protection Manager certification
- Advanced Customer Service and Sales Certification (ACSSC)
- certified food protection manager (CFPM)
- Retail Business Credential (RBC)
Legal Documents You Need for a Meal Prep Business
When starting this business, you will need to find out where the health department will allow your meals to be prepared. For instance, you will usually not be allowed to sell food that has been prepared in your home. To be able to open your meal prep business, you will need to find a test kitchen. Note that your test kitchen can be in a restaurant that’s closed to the public, a church, or a community center.
If you use a commercial kitchen, you can negotiate an hourly rate that’s included in the cost of your food. But you can find affordable rates for a commercial kitchen as long as you are using it during off-peak hours. This will usually mean that whoever is using the kitchen will be cooking late at night or on days where the kitchen is typically closed.
Also, have it in mind that certain cities and states have laws known as Cottage Food Laws. If you want to start a meal prep business in an area with Cottage Food Laws, you should be able to prepare food in your home kitchen that will later be sold to customers. California, for example, has a number of Cottage Food Laws. Documents you will be needing will include;
- Building Permits
You will need a building permit if you plan to do any renovating. Note that these permits generally need your contractor to submit the plans for approval. Immediately your building is ready for business, you will need to get a building inspection and certificate of occupancy, which usually come from the fire commissioner.
- Food Handling Permits
You also have to obtain a food handling permit, you will generally need to take a course in safe food handling practices. A lot of states also offer government-sponsored courses, and some require an on-site inspection in addition to taking a class.
- Business License
Note that you have to register your business with several levels of government, including local, state, and federal. A business license registers you locally and in some cases goes together with the state’s retail sales license, which allows you to charge sales tax.
Then the federal government will issue you an Employer Identification Number (EIN) or Tax ID number to allow the IRS to start records on your business. We strongly advice that you consider registering your business name, as it both makes sure that the name is not already taken and prevents any other local businesses from using that name.
- Sign Permits
Note that many local governments have restrictions on where you can put signs and how tall they can be. This is why you may need to submit plans for your signs to be approved before you can begin construction or installation.
Financing your Meal Prep Business
You’re ready to go if you already have the amount needed to start and run your Meal Prep. But if you need additional funds before you start your Meal Prep, then we believe you will need to approach an investor, the government, a bank, or some other loan-giving establishment. At this point your business plan will have to become even more instrumental. Ways of getting funds for your Meal Prep business may include…
- Getting initial capital from family and friends
- Getting Capital from Angel Investors
- Funds from Venture capitalists
- Taking your company public through IPO
- Getting small business loans
- Getting funds through Crowdfunding
- Raise Funds through Mergers and Acquisitions
- Finance your Business Expansion with Equipment Leasing
Choosing a Suitable Location for your Meal Prep Business
Choosing a good location for your meal prep business will have a huge say in the success of your business. When you start searching for location, have a basic idea of the size you need for both the dining room and the kitchen. Note that a too large space may have you paying more rent than you can afford, but not enough space may restrict your ability to grow your business.
You have to make sure your kitchen holds enough equipment to cook for your customers in a timely manner and the dining room can comfortably accommodate the number of tables you need for your business. Also, do not forget to consider extensively the activities happening outside the building, this is because is as important as what’s inside.
It’s advisable you visit the location at different times of the day on weekends and weekdays to get a feel of traffic patterns for the days and times you plan to be open. Also take your time to check and ascertain if the location is visible to a large number of people.
Experts also suggest you ask yourself, Is it near a large residential area or business park that might bring business? Is the traffic more vehicular than pedestrian, do you have adequate parking? If the location was not a shop previously, does the city’s zoning allow you to open one there?
Are there any other food joints nearby that you will be competing with? Try as much as possible not to exceed your budget and be careful to not overreach, but don’t be afraid to look at places a little out of your price range, as most property owners are open to some negotiation.
Starting a Meal Prep Business – Technical and Manpower Requirements
It’s important to note that the most critical skill you need to succeed in this business is the ability to make food that is very tasty and to keep materials and labor costs under control. Indeed well tasting food that is prepared in such a way that it is expensive and can drive your business to failure.
Being an excellent chef, understanding cost controls, and knowing how to strategically market your business are the key things that will make you successful in this endeavor. Have it in mind that it is very much possible to start this business from home as long as you can get the health department to approve the kitchen for operations. But, a lot of businesses in this sector start as a commercial operation.
Note that this requires leasing an appropriate space and having the equipment necessary to cook the food. You will also need delivery vehicles if you offer home delivery services. Also have it in mind that as your business grows, you may find yourself in need of extra hand and help. In a meal prep establishment, you might need employees to supervise customers during meal preparation, prepare the ingredients, and clean the workstations and kitchen area after the demonstration is complete.
Although it all depends on the needs of the business and the number of customers, you may need a couple of employees or quite a few. When looking to hire extra help, make sure to choose delivery drivers with good customer service skills and who are trustworthy, as well as chefs that create high-quality food products. Your employees can make or break the business.
The Service Delivery Process of a Meal Prep Business
As the owner of a meal prep marketplace business, you can choose different business service models that suits you and your customers. If you own a suitable website, your job will be to list experienced chefs. The customer visits your website to select the meals he/she wants, selects his/her chef, and the suitable time for delivery/pick-up.
Note that the customer will have the freedom of specifying a menu of their choice beforehand, their preferred ingredients, as well as the recipe.
For convenience, you should mention the time during which orders will be accepted. Meanwhile, Chefs will make storable and reheatable food, strictly adhering to the specifications of the customers. You will earn your basic revenue via commission from each sale.
You will also gain extra from featured chef listing, banner ads, and affiliates of your business on your website. You can also have subscription model for regular customers. Similar to previous revenue model, you will earn your profit via commission from each sell, featured lists, banner ads, and affiliates on the site.
Have it in mind that you can also use the online meal-kit delivery business model, which appeals to people who like to experiment according to their own convenience and specifications, but, cannot afford the time for the arrangement which goes before the actual meal.
Note that in this model, you will deliver meal-kit with measured ingredients, including the recipe, right at the customer’s doorstep. Here equally, chefs decide the menu, mentioning the nutritional value and ingredients, which the admin can update as well. Customer makes a choice and select meals along with the number of members he/she wants to cook for.
You will deliver pre-measured fresh ingredients and recipes for such preparation at his/her choice date and time. You can expand this model by providing equipment on rent or on sale, depending on your resources and the customers’ interest.
Your primary source of revenue if you choose to leverage this model will be the price for each meal-kit delivered, which can be per-meal or on a subscription basis. You can also earn by placing an advertisement on your website as well as affiliates of the website wishing to promote their business. For positive outcome, evaluate potential meal prep business profit beforehand.
Starting a Meal Prep Business – The Marketing Plan
- Marketing Strategies for a Meal Prep Business
Note that one of the most crucial steps in starting a meal prep business is getting the word out about the company. Have it in mind that without customers, your business won’t succeed. It actually takes some time to create a solid marketing strategy.
But, you don’t have to spend a lot of capital as some of the best marketing methods are free. If you have more money to spend on marketing, you can also look into marketing avenues that are a bit more expensive. As you develop your marketing plan, make sure to track the costs of marketing versus the profits returned on each initiative.
Don’t get too wrapped up in spending money on marketing, inventory, or other business needs that you overlook the financials of the business. Ways to market your meal prep business may include;
- Provide cooking demonstrations at community and senior centres
- Creating a business website
- Passing out business cards and flyers
- Creating social media pages and sharing announcements, product information, promotions, etc.
- Advertising in the local newspaper
- Catering community meetings and events
- Television or radio ads
- Using Google AdWords to post advertisements
Strategies for Winning Competitors in the Meal Prep Business
You should consider advertising on Internet directories such as Yelp. Note that getting good placement on Google’s localization tracking is also important. A lot of people choose the food prep services for convenience, so you want to make sure they can easily find you.
Also, consider using flyers and sponsoring the catering of food for local business organizations when they hold a charity event. Ask your customers to recommend your business to their friends. Other ways to leap ahead of your competition include;
- School fundraisers with your local elementary school
- Coupon mailers
- Daily deal websites
- Create a flavor contest
- Loyalty programs
- Group contest
- Street marketing
- Sponsor or advertise at local races
- Social marketing
- Cross market with local businesses
- Online marketing
Increasing Customer Retention in your Meal Prep Business
In this business, the best way to get and keep customers is to serve really great food. Indeed this is the most powerful way to get new customers and keep them coming back. Consider offering an enrollment program for customers who wish to receive meals regularly.
Also try to focus your time and energy on these individuals as against always trying to find new customers. Ways to increase customer retention in your business may include;
- Friendly employees
- Satisfy your customers
- Patronage discount and coupons
- Loyalty and reward programs
- Be lenient
- Help desks and support systems
- Customer feedback survey
- Light personalization
Strategies for Boosting Brand Awareness and Creating a Corporate identity
Building your brand’s image early on is very crucial as it helps you to maintain consistency throughout the life of your business. Always strive to be creative and remember that you can’t develop a logo then change it later. It will make your costumers confused. Ways to boost your brand may include;
- Create an attractive Logo
Have it in mind that your business logo has to represent the spirit and personality of your business. If you are not an expert or experienced in graphic designing, hire someone who is to design your logo and other graphics to ensure a professional, clean look. Research and make your decisions early on so you won’t have to make changes once the product is already on the shelves, to avoid killing your business vibe.
- Unique product designs
Most businesses in the industry are recognized by their flavors and designs. Always keep an open mind when designing your menu because it could become part of your signature in the industry. You should try something extraordinary and choose a design to attract more attention to your product.
- Social media and Business website
Even if you don’t plan to sell your services online, having a presence online is crucial in this millennium. Consider creating a standard website which is professionally designed and easy to navigate. Ensure you inculcate your logo, products, company history, and contact information. Also do the same for your social media pages and have a strategy in place to make sure these pages get updated frequently and are used for marketing and positive interaction with your target market.
- Supplement Your services
A proven way to generate additional profits and keep your customers happy is to add other options to your meal prep business. When having a meal, a drink is an important follow-up. You can easily add canned or bottled soft drinks or water just by getting some coolers. You can also opt for fountain drinks with drink dispensers and portable ice makers.