Maybe people you have cooked for before might have suggested to you to start a catering company, some may have even predicted how fast you will become a household name. Well, whether you are a very good cook or you just like the feel of the culinary world, starting a catering business in south africa is a very lucrative venture to get into.
People love to eat good food, and even if some can prepare it themselves, there is this excitement in eating out. In South Africa, the food servicing industry is currently seeing a major growth sprout and this could be attributed slightly to an increase in the tourism and hospitality sector.
Although cooking for a large number of people might be a thing of joy for you, you must understand that there are certain threats and challenges to expect when going into such a venture. One of them is finding the right kind of people to work for you. Good help is hard to find because this work is a skill based business.
Another major challenge to expect is getting accepted by the public as other brands have most likely already established their own presence in the market space. You will have to fight, push and pull your way into your preferred niche.
17 Steps to Starting a Catering Business in South Africa
Table of Content
- 1. Understand the Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide Which Niche to Concentrate On
- 4. Know Your Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Choose the Most Suitable Legal Entity
- 8. Choose a Catchy Business Name
- 9. Discuss with an Agent to Know the Best Insurance Policies for You
- 10. Protect your Intellectual Property With Trademark, Copyrights, Patents
- 11. Get the Necessary Professional Certification
- 12. Get the Necessary Legal Documents You Need to Operate
- 13. Raise the Needed Startup Capital
- 14. Choose a Suitable Location for your Business
- 15. Hire Employees for your Technical and Manpower Needs
- 16. Write a Marketing Plan Packed with ideas & Strategies
- 17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
1. Understand the Industry
The industry of food service in South Africa has a mixture of commercial and institutional sectors. Hotels, Restaurants, fast food independents, clubs, fast food chains and the likes make up the commercial sector and due to a rapid growth of people choosing to eat out, the franchise aspect of this commercial sector continues to grow.
The Institutional sector includes public and private hospitals, educational institutions, prisons, transport services and the likes. It is quite common to put together the food servicing trade with the hospitality and tourism sector of the South African economy as food services goes hand in hand with this sector.
It will be safe to say that although hospitality and tourism accounts for 8.3 percent to the country’s Gross Domestic Product (GDP), Tourism in South Africa has increased since the end of the apartheid in 1994. According to recent tourism figures, the number of international tourists to South Africa has increased.
There were 1.24 million foreign visitors to South Africa in April 2016 and the numbers continue to increase. Food and beverage as a result saw an increase by 1.4 percent in January 2016. Certain contributors in various sectors also saw an increase of up to 4.4 percent in restaurants and coffee shops. Catering services saw a 2.4 percent growth.
Despite the impact of the global recession on the South African economy, the country still remains the largest food service market in Sub-Saharan Africa, which is strongly assisted by the hospitality industry. With food and hospitality going hand in hand, it is no wonder that hospitality and tourism have added greatly to the South African economy.
So with all these positive patterns in the industry of foodservice, it would not be a bad idea to go into the catering business in a bubbling place like South Africa. Statistics constantly show an increase of the market, which is positive for any aspiring business person in this sector, so it is a wise decision if you have a flare for the culinary arts, to venture into such.
South Africa boasts of a large stream of commercial and institutional fast food chains, KFC, Deboniors Steer, McDonalds, Nando’s, just to mention a few, these and lots more pose a great competition to those who are intending to get into the food servicing business.
Except of course your approach to the business is not that of establishing your own restaurant, but even at that, there are a great number of vendors offering similar services as yours, so competition is a strong factor when it comes to the food servicing or catering business in a great country like South Africa.
Government has not developed any strange policies to govern or manage those who are key players in this industry; however there are certain basic laws to consider when setting up a catering business like licenses and certificates. Certain other things to consider like noise pollution, building control, environmental health and the likes would come to play as you start your business.\
Because you would be handling food and meals that people will eat, you have to make sure that your environment is clean. The government and law do not take cleanliness lightly to ensure the safety of the public.
In the midst of all these competitors, creating a unique niche for yourself will go a long way in attracting and retaining customers. So it may be the unique way you prepare a popular public favorite or something on your menu that no other person in the business is doing.
Whichever way you choose to create your own unique selling point, it will be one of the things that make you a success in this trade. Of course proper feasibility study is needed and for this kind of business, the risks are low and your guarantee for success begins with the quality of food you can provide.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Almost everyone on this earth needs food, we can’t go a day without it, so when we talk about demographics it is safe to say every living human being in South Africa. However, people are different in their various sects and groups. It is important even when venturing into something as natural as food service to focus on targeted sets of people from where you begin to spread if that is the plan.
Of course targeting a certain group of people could also be a determining factor in choosing the exact kind of catering you want to do. If you want to simply cater for weddings and events, then there would be no real need to set up a restaurant.
All you will have to do is operate from a work station whenever you have these kinds of activities to cater for. People who are organizing weddings and events definitely require the services of caterers meaning that event planners and organizers are also part of your demographic.
There are folks, especially in a booming society like South Africa, that do not have time to cook at home because of their very busy schedule. Ordering food from your business can be a very good option, if they trust the quality of your cooking.
Setting up a restaurant by a location with a lot of businesses and companies is also a very good idea. These workers make up another set of people who would need this service as most do not carry cooked meals from the house to work every morning.
So it would be a very convenient thing to simply walk to your restaurant for a very satisfying meal. Another way workers can be targeted could be by setting up a restaurant in the building of the company where workers can easily come to have their meals. Another alternative would be to establish a food delivery service in various companies around or even beyond your location.
3. Decide Which Niche to Concentrate On
With the wide spectrum of catering services to choose from in South Africa, it is very important that one seeking to go into such a business learns to carve out a niche for himself. One cannot just start doing what every other person is doing; this will make their efforts ineffective.
The good thing is that there are many ways one can create that specific niche for himself in this industry. One could focus on Food Delivery Catering, Barbecue Catering, Catering School and Training, Sales of Cakes, Canteen Management, Gourmet Catering, Industrial Catering, Breakfast Catering, Holiday Catering, Wedding Catering, Corporate Catering, Special Events Catering, Hotel/Restaurant Catering, Transport Catering, Welfare Catering, Mobile Catering, Box Lunch Catering, Picnic Catering, Airline Catering, Cocktail Party Catering, Canteen Management, to mention a few.
The Level of Competition in the Industry
Profitability in this sector depends highly on cost effectiveness and marketing. While larger companies seem to be more on the advantageous side as they offer services such as facilities management and entertainment, the smaller companies focus on serving small groups and specialized services.
Depending on the specific niche you want to create for yourself, one would say that there is a lot of competition out there, but in this type of industry it should be quite easier to make your name known, because this industry is about consumer experience. First thing one must do is to make sure the taste and quality of their food is up to standard and the rest is all about marketing.
Like they say, the proof of the pudding is in the eating, it will be easier to scale over competitors if the foundational product is irresistible, word of mouth is your best advertising tool in this trade.
4. Know Your Major Competitors in the Industry
Usually every industry has brands that have made a positive mark on consumers either by their unique approach to service delivery, customer retention or even by simply being in the industry the longest. Some of these attributes resonate positively with consumers and further facilitates committed patronage.
Below are therefore some of the leading catering service businesses or brands in South Africa;
- Food for thought
- South Cape Caterers
- Caterers Johanesbourgh
- Country Fresh Catering
- Exquisite Tastes
- Urban Spoon
Making profit is one of the major reasons why people go into business and for a business like catering, the odds of losing profits because of lack of cost control is very possible. Anyone who is into this kind of business will tell you that no two jobs are ever the same, being organized is key in making sure expenses are not over stretched. Therefore it will be smart to focus on only things that are directly relevant for every service you want to provide.
It is said to be fairly cheaper to operate from one’s own facility, but the cost of maintenance should also be considered in such a decision.
It is no use especially if you are an events caterer to have permanent staff on your payroll as events may not come on a daily basis. One of the ways to maintain a balanced economic ecosystem is to hire temporary staff. But as the business continues to grow, it will become more expedient to buy equipment of your own and keep your staff close to home.
5. Decide Whether to Buy a Franchise or Start from Scratch
Whichever one you choose, either starting your catering business from the scratch or buying a franchise, success in any of these will depend on the elements that are specific to the choice. For example when you choose to buy a franchise, it may seem that this is a better option because the brand is already accepted by consumers.
The consumers already have their favorite meals, deals and delicacies. Most legal documents and operational policies have already been checked off and have passed, and now it’s just for you to sit back and enjoy the ride to more success, seeing that there is no real need to build again.
But if you are a culinary professional, with recipes and menus of your own, this may not be the best option because a franchise may not accept the vast expression of your culinary prowess. You will not be able to implement your own menus hence clamping back on your true dreams of affecting consumers positively by your food servicing skills
The major challenge with starting your catering business from scratch is acceptance. It may be difficult to have consumers accept you as a viable brand; this acceptance is good because it breeds loyal customers.
Another major thing to take into account when starting from scratch is workers. An already established franchise comes with all these, the positive side of this is that some of these workers may have been working there before you bought the business and they already know how everything works. So the issue of not having the right kind of people can be scaled over. However starting your catering business from scratch will mean you training your workers to meet your standard.
All and all, whichever you choose will depend on your person and your vision. If you like the process of growing, and being able to present your menus as you see fit, trying out new approaches to already known meals, then starting from scratch is your ticket. If on the other hand you simply want to ride on the success of another person’s labor, then buying a franchise is your go to option.
6. Know the Possible Threats and Challenges You Will Face
Going into catering business brings its own challenges and threats some of which centers around other established brands. You will be forced to face brands that already have a large client base and already established presence. These brands have already been accepted by consumers and they do not mind spending millions in advertising and promotional campaigns.
Again getting hard working and competent employees is a threatening factor in setting up your own catering service. Cooking is a skill based activity and requires excellence in its preparation; the truth is not everyone comes on the scene with these skills. You will have to train them to cook your meals exactly the way you do it. This will take time, plus other staff members that may not be placed in the kitchen may equally be difficult to manage.
This is a very tasking job as you will always, either be out there looking for more catering jobs or in the kitchen making sure your cooks are doing things right, especially if you do not have an experienced hand to assist you. Once again you are dealing with a skill based work so execution is very sensitive.
You would have to be a perfectionist because clients are very petty with how they like their meals. Some are very particular about how their meals are prepared, so if there is any trade were perfectionism comes as a top priority it’s this one. You do not want the word to go out that you did not prepare a meal to the standard that is generally accepted.
Quality control and maintenance is also a key threat to this kind of business. Can you imagine ordering food from a catering service and on one occasion it tastes okay, and the other it tastes different. Now I am not saying it tastes bad, just different.
The moment this happens, clients begin to wonder at the state of consistency in quality they would find with that brand. You will have the challenge of making sure that all your meals in their various categories taste the same all the time, else it could be thought that the changing taste is as a result of negative conditions and many will stop patronizing your service.
Other challenges and threats that may affect this kind of business are;
- Constant change in the price of food ingredients
- Event logistics
- Clients complaints and possible lawsuits
- Ensuring safety of food
- Clients ever changing demands
- Clients indecisiveness
- Getting Licenses and permits
- Taxes and Levies
7. Choose the Most Suitable Legal Entity
There are some factors to consider before choosing a legal entity for your catering business and they are, limitation of personal liability, ease of transferability, investor’s expectations etc. Starting this business as a sole proprietorship is one of the best options to begin with, because it will most likely be a business that comes out of your personal passion or skills.
However if you have the vision of becoming much bigger, you can transition into being a Limited Liability Company. Whether or not you choose to go public depends on the scope of your vision. General Partnership is also a great option for this type of business because it gives room for personal creative direction for the business. Entering into this with people of mutual respect is always a welcomed idea.
Limited Liability Companies are more flexible to work with plus you will need managerial formalities like board of directors and shareholders meetings.
8. Choose a Catchy Business Name
There should be a world of catchy phrases that can be used as interesting names to your catering business because it’s about food. Choosing a catchy name should not be difficult because food has to do with part of our existence as human beings. A catchy business name for your catering business may make the difference between patronage and decline.
When thinking of a catchy business name, you can begin to think from the reason why you want to establish the business. You could also play around the idea of the unique niche you want to create for yourself, or even the exact demographic you desire to focus on.
Either way, the name of your business can go a long way to ensure people patronize you. My usual suggestion when it comes to names is to look for names that can easily be pronounced and remembered. If you are therefore considering what names to use when starting your own catering business, here are some names you should try;
- Merry Meals Catering
- Amazing Grace Events Catering
- I Do Catering
- South African Catering
- Exquisite Catering
- Elegant Cuisine Catering
- Taste Buddies Catering
- Wings and Drinks Barbecue
9. Discuss with an Agent to Know the Best Insurance Policies for You
Insurance policies help us stay secure in whatever venture we choose to go into and security is a game changer in any kind of business. When thinking of entering into the catering world, you may need to get insurance policies that protect you from some of the various threats that may be available out there.
For example, you may need to get insurance for your equipment should they be damaged or lost, insurance for the vehicles that do your deliveries or marketing, so on and so forth. Some of the basic insurance policies that you should therefore consider purchasing if you intend starting your own catering business in South Africa are;
- General Insurance
- Overhead expense Insurance
- Credit Insurance
- Equipment Insurance
- Liability Insurance
- Health Insurance
- Workers Compensation
- Business owner’s policy group insurance
10. Protect your Intellectual Property With Trademark, Copyrights, Patents
The major areas where you may want to get Intellectual Property protection and trademark may be in the specific recipes of your menus. When it comes to this kind of business, the taste is the major thing you are selling apart from nutrition value. These meals have to taste a certain way and in this we find that your “secret ingredient” could be a matter of professional trademark.
Your unique recipe is you own discovery of how to prepare the meal and could be considered you intellectual property. Such elements should be protected by you and it is possible for you to file with the corporate affairs commission as your own culinary intellectual property.
11. Get the Necessary Professional Certification
In as much as one can enter into this business without any professional certification, it should be noted that a professional certification would be an upgrade to the perceived credibility of the person or persons in question. There are culinary schools all across South Africa that an aspiring cook can enroll in to receive formal training in the art.
Chef schools are numerous in the area and would be obliged to develop your skills in the art of food servicing. One may need to register with the Federated Hospitality Association of South Africa and/or the South African Chef’s Association; of course one may need to be a Certified Chef to qualify for entry.
12. Get the Necessary Legal Documents You Need to Operate
Some of the basic legal documents that you should have in place if you intend running your own catering business in South Africa include;
- Certificate of Incorporation
- Operating Agreements
- Business License
- Business Plan
- Insurance Policy
- Employment Agreement
- Health and Safety License
- Liqour License
- The South African Music Rights Organization (SAMRO) License
- The South African Music Performance Rights Association (SAMPRA) License
13. Raise the Needed Startup Capital
Before one can enter into such a business, they must have cooked for certain people who may have recommended that they go into the business fully. These enthusiasts may make up the initial set of people to receive funds from in order to kick off your catering business.
Depending on how you want to go about it, starting a catering business is not financially intensive. Since you can basically start at home, hire equipment and help, it’s pretty easy to start. However if you want to go at it big time, then more money will need to be pumped into the venture. This means that you must have prepared your business plan.
Some of the financing options you can explore when seeking for start-up capital for your catering business include;
- Raising money from your personal savings and sale of stock
- Market your ideas for business grants and seed funding from angel investors and donor organizations
- Getting soft loan from your family members and friends
- Sale of personal properties if one has them
- Applying for loan from the bank
- Getting the required capital from private investors and business partners
14. Choose a Suitable Location for your Business
Finding a good location for your catering business depends on your type of catering business. For example, if all you do is provide catering services for weddings and events, then you can operate from home as your work station, seeing that you would not be entertaining customers like a restaurant or canteen. Home can be the place where you prepare the meals before transporting them to the event in question. People could contact you through your website or social media accounts.
If you want to run an office catering service, then it will be more advantageous to secure a space in the office complex where you can run you catering business from, workers can come to your restaurant to eat breakfast, lunch and even dinner.
You can even use that as a leverage point to offer catering services for the various luncheons, seminars and events the company may have from time to time. But if you want to have a restaurant standing alone from any corporate complex, then the tides will definitely change drastically.
The rules are now different, and more market research and feasibility studies would have to be taken into account. These are some of the key factors that you should consider before choosing a location for your Catering business;
- The local laws and regulations in the community/state
- Hall that serves as the Restaurant
- Office for your team
- The demography of the location
- The number of catering businesses in the location
- The demand for the services of catering businesses
- The purchasing power and business activities in the location
- Accessibility and road network of the location
- Traffic, Parking and Security
15. Hire Employees for your Technical and Manpower Needs
Although there are no hard and fast rules as to the type of equipment to acquire, below are a few you may need to consider;
- Baking Sheets
- Industrial Gas Cooker
- Standard commercial Oven
- Work Tables
- Kitchen Utensils
- Ingredient Bins
- Cake Decorating Tools
- Work Tables
It is good to know that most of these items can be hired. Over the course of time, and as demand continues to increase for your services, you may choose to purchase them. Even if demand isn’t too high, simply having some of the necessary items on the list will prove to make your service delivery more efficient.
When it comes to man power, below are a few offices and people you may want to employ in your catering business;
- Chief Executive Officer
- Admin and Personnel Manager
- Sales and Marketing Officer
- Front Desk Officer
- Chief Cook
- Cooking Assistant
- Cleaners and Dish Washers
The Service Delivery Process of the Business
Usually the service delivery process of a catering business is payment first, whether the client needs catering services for a wedding or event. Payment must be made first to the company so that they can begin to purchase the items to be prepared for the event.
But if it’s a restaurant or food delivery service, then the food is already made and payment could be made after it has been served. There is no hard and fast rules about service delivery in this business, one can apply the approach that best fits their work.
16. Write a Marketing Plan Packed with ideas & Strategies
Below are some platforms you can use to market your catering business.
- Advertise your business in relevant financial magazines, radio and TV stations
- Introduce your business by sending introductory letters alongside your brochure to all the corporate organizations, households and businesses
- List your business in the local directories
- List your business in the yellow pages.
- Engage the services of marketing executives and business developers to carry out direct marketing
- Utilize the internet to promote your business
- Create different packages for different categories of clients in order to be more specific in meeting their needs.
17. Develop Strategies to Boost Brand Awareness and Create a Corporate Identity
Social media is one of the cheapest ways to bring your catering business to the notice of the public. Online they can see videos of your meals in preparation, see recipes, pictures and the likes. Below are other platforms you can leverage on to boost your brand and advertise your business.
- Ensure that you position your banners and billboards in strategic positions in your city
- Advertise on TV and Radio by Sponsoring programs
- Ensure that all your staff members and management wear your branded items at regular intervals
- Advertise your business on your website; develop strategies that will pull traffic your way.
- Use the direct approach by calling households, start-ups, small and medium scale businesses and the likes of them, informing them of what you do.
- Share Fliers and handbills around the target areas where you have deduced that your business will do well.
- Encourage the use of word of mouth among your loyal consumers.