Do you have a passion for cooking and dream of owning a restaurant?
Many people aspire to have a startup, but opening a restaurant requires a lot of money.
Alternatively, you should consider catering.
Catering is one of the businesses with low startup costs.
Learning how to start a catering business from home is simple, and you can do it by following a few steps.
In this article, you’ll learn everything about starting a catering business from home.
- How Profitable Is Owning a Catering Business From Home?
- What You Will Need To Start a Catering Business From Home [& Associated Costs]
- Why You Should Consider Starting a Catering Business From Home as a Side Hustle
- How To Start a Catering Business From Home in Eight Simple Steps
- Things To Consider When Building a Catering Business From Home
- INSPIRATION: Catering Business From Home Ideas
- Frequently Asked Questions
- Similar Businesses To Consider Starting
- Wrapping Up
How Profitable Is Owning a Catering Business From Home?
The profit you can make from a catering business varies depending on many factors, such as the number of jobs, the type of event, the number of guests, etc. For most catering businesses, weddings make the largest source of revenue.
As an overall idea, and according to ZipRecruiter, a catering business owner earns over $46,000 annually.
Catering is a thriving business, and over 90% of catering companies made more money in 2022 than the year before.
As a starting home-based catering business owner, you can expect to earn around $30,000 in the first year.
More established and professional catering businesses can earn up to $80,000 annually.
What You Will Need To Start a Catering Business From Home [& Associated Costs]
The cost to start a catering business from home depends on where you’re running it and what type of food you’re serving, among other factors.
On average, you can expect to spend anywhere from $10,000 to $50,000, aside from the cost of a vehicle. However, if you’re taking it slow by working on small events, it may cost much less than that.
Whether you’re catering off-site or on-site, there are common costs associated with every catering business, which include:
- Registering Your Business: Business registration fees vary from city to city. In most cases, you’ll pay around $100 to get a DBA registration and Employer Identification Number (EIN).
- Issuing Licenses and Permits: The types of licenses and permits you need also vary depending on your location. Special permits and licenses can cost anywhere from $300 to $3000.
- Getting a Work Space: If you live in one of the many states prohibiting catering out of your home, you’ll need to lease or rent a commercial kitchen. Renting such a place costs $15–$45 per hour.
- Buying the Needed Equipment: The advantage of renting a kitchen is having most of the equipment available. However, you’ll need to buy other special tools and packaging materials.
- Purchasing Ingredients: According to Bizfluent, you should expect to spend 27%–29% of your business’s gross sales on food.
- Buying a Transportation Vehicle: You need a van to transport your food and other equipment. A decent-sized used van costs no less than $20,000.
- Advertising Your Business: For building a website and launching an advertising campaign, you need to spend $3,000–$9,000.
Do I Need a License or Certificates To Start a Catering Business From Home?
Aside from the general business and DBA licenses, starting a catering business from home requires the following (Make sure to check your state’s regulations for additional information):
- Home occupation permit
- Caterer permit
- Building health permit
- Food handler permit
- Restaurant food service license
Why You Should Consider Starting a Catering Business From Home as a Side Hustle
Food is the kind of service that people will never stop needing, especially during their special events.
There are a few reasons you should consider catering from home, including:
- Sharpening Your Culinary Skills: Having your catering business allows you to train and gain experience constantly.
- Having a Flexible Schedule: Your work day as a caterer doesn’t have specific hours. You get to manage your schedule however you like and become your boss.
- Being Able To Start Small: You have the option to start small serving groups of 10 or 20 persons maximum. Whether working part-time or full-time, you always have room to grow.
- Gaining Connections: You’re constantly making new connections and meeting new people every day. Whether a client, staff member, vendor, or competitor, adding more people to your network is a huge plus.
How To Start a Catering Business From Home in Eight Simple Steps
Now that you have a bigger picture of what you need and what the average cost of each item is, it’s time to look a bit closer into this matter.
To start a catering business from home, follow these nine simple steps.
Step #1: Know Your Area’s Laws
Before starting to spend money on this idea, you should know what you can and can’t do in your area. Most states don’t allow catering out of your home.
That’s why you need to have a kitchen meeting standards. Make sure to check the requirements of your state’s department of health before proceeding with the business.
Step #2: Create the Business Entity
Your business entity determines its whole existence and it’s essential to give it the needed effort.
- Start by choosing a unique and catchy name for your business.
- Make sure the name you chose isn’t already taken by checking the Secretary of State’s website.
- Decide the business structure that best suits your business.
- Register your business with the IRS to get your EIN.
- Set up a bank account for your business separate from your personal account.
Step #3: Get Licenses and Permits
Check with the Small Business Association (SBA) to know your local area’s rules and regulations.
Each state, county, and city has its requirements for permits and licenses.
Make sure to be extra careful and precise with this step, as any error may lead to serious trouble in the future.
Step #4: Get Insurance
Insurance protects you and your business in case of any accidents happening.
Research your options and take a look at specialty insurance providers too.
Step #5: Create Your Menu
This is where the fun begins.
Although setting a specific niche for your business reduces your possible clients, it makes you stand out for customers looking for this kind of specialty.
Work on creating lists of dishes for customers to choose from. Try to also have various tiers with different costs per person.
Step #6: Purchase Needed Equipment
Assess what equipment you have and what you need to purchase. Then, order them by priority according to your specialty.
Make sure that you have large storage space for extra ingredients and all the other items you’re not using daily.
Step #7: Look for the Right Vendors
As a caterer, you have access to buy ingredients in bulk for better prices.
Communicate with local vendors to assess their qualities and get information about their prices and delivery methods.
Step #8: Market Your Business
Utilize all marketing methods to get the most exposure. Printed brochures and local publications help you reach older customers.
As for the younger generations, online marketing is always the answer.
Things To Consider When Building a Catering Business From Home
Having great cooking skills isn’t enough to build a successful catering business from home. Your business can face many obstacles.
It’s important not to let these issues discourage you from pursuing your dream.
Here’s what to consider when building a catering business.
Can You Run a Catering Business From Home by Yourself?
Yes, you can do that. Offering catering services isn’t as simple as it looks.
You need to know that running such a business requires a lot of planning and great organizational skills.
Dealing with people is also not easy, as some clients may have unreasonable requirements or be difficult to deal with.
Do You Have Access to a Commercial Kitchen?
Many states don’t allow preparing food in your home.
Altering a space in your house to fit the department of health’s guidelines will cost you a lot of money.
Your kitchen needs to be well ventilated, fitted with non-permeable as well as a three-compartment sink.
The cost of doing that can easily exceed $100,000.
Are You Aware of the Food Safety Requirements?
Cooking and preparing food can be a critical process.
That’s why it involves many regulations. You and your staff should know how to store and handle food properly.
Knowledge about cross-contamination and how to prevent it is also essential.
Any issue related to mishandling food can result in liability issues.
INSPIRATION: Catering Business From Home Ideas
If you think a catering business isn’t the small-scale industry you anticipated, you can consider other business ideas.
Check out the following options for home base catering businesses.
- Meal Kits Business: This business is growing in popularity by the minute, and you don’t even need to cook the food. The whole idea is to sell ready-to-cook pre-packaged ingredients along with their recipe.
- Baby Food Business: Parents are constantly looking to provide healthier food products for their children. That’s why selling organic pureed baby food is a good idea.
- Baked Goods Business: Nothing beats the smell of freshly home-baked goods. Whether you choose to specialize in one item or sell a range of products, this business always attracts customers.
- Organic and Healthy Food Business: Many people want to eat healthier but are too busy to cook. This is when such a business idea comes in handy. You can also provide certain diet options, like vegan, keto, low-carb, etc.
Frequently Asked Questions
What are the three types of catering?
There are many types of catering but the three major categories are:
- Corporate Catering, ranging from on-site limited office gatherings to off-site corporate dinners.
- Social Events Catering, including grand openings, birthday parties, bridal/baby shower parties, retirement celebrations, etc.
- Wedding Catering, involves serving dinner, preparing food stations, and hosting cocktail receptions.
What are the latest trends in catering businesses?
People are always drawn to experience the hottest trends. When you offer something new, your business is going to be the talk of the town.
The latest trends in catering businesses include:
- Food walls
- DIY catering kits
- Neo-nordic cuisine
- Sustainably-sourced ingredients
- Vegan options
- Open-fire cooking
Similar Businesses To Consider Starting
Consider the following alternative business ideas if you think home-based catering isn’t for you.
- How To Start a Food Truck Business: Having a food truck is an efficient low-cost business, allowing you to go to people instead of them coming to you.
- How To Start a Food Business: Many people aren’t able to cook everyday meals. That’s what makes any food business a wise choice, as long as you serve delicious dishes.
- How To Start a Food Business From Home: Starting a food business from home is an excellent idea for those who don’t have much money to rent a facility.
As overwhelming as learning how to start a catering business seems, keep in mind that not everyone gets to do what they love.
Pursuing your dreams of having a catering business is something worthwhile.
All you need to do is prepare a suitable facility and make sure you have the right licenses. If you give it your all, this business can be quite profitable.
Comment your opinion below, and share this article with your food enthusiast friends.