There are thousands of catering businesses in the US, partly because it is so easy to start one. Starting a catering business requires from $5,000 to $40,000; one-tenth of the cost of opening a restaurant. Catering businesses have much better profit margins than restaurants—as high as 25%. There has never been a better time to start a catering business.
Key takeaways:
- Catering businesses have unique niches, providing food for weddings, corporate events, conferences, and social events.
- Startup costs range from $5,000 to $40,000 for small, independent catering businesses.
- The profit margin for a catering business is high—from 10% to 25%—because of its lower overhead.
If you love to cook and interact with new people, and have strong organizational skills, a catering business could be a great fit for you. Here’s how to start a catering business:
1. Learn About the Catering Industry
Catering is a complex industry, ranging from small, independent caterers working from a home kitchen to enormous corporate and resort catering operations with truck fleets and dozens of staff. Catering clients are just as varied, from weddings to funerals to corporate events and conferences, and more. You’ll frequently find yourself collaborating with event planners and coordinators rather than clients.
Here are some great places to learn about the catering industry:
- The International Caterers Association (ICA): This nonprofit organization focuses on educating caterers and prospective caterers. They organize skills classes, and educational trips, and provide scholarships to advance professional caterers’ knowledge.
- National Association for Catering and Events (NACE): This industry organization has a slate of online classes in accounting, catering services, sales, and event management. You can learn at your own pace and only pay for the classes you want. Prices range from $149 ( for members) to $199 (non-members) per class.
If you want a crash course in catering basics, work a few events as an on-call catering server or cook. Caterers are always looking for temporary staff to work on one-off events like weddings, and this is a quick way to learn everything from setting up buffet tables to handling rental equipment.
2. Research Your Market
Catering businesses can be successful virtually anywhere. It’s all about knowing your market, knowing what other catering companies will be your competition, and what sort of customers are most likely looking for your catering services. This research will come in handy later when you write your business plan in step 5, so keep detailed notes.
A great place to start researching your market is Data Axle Reference Solutions. This government-owned database includes information about current and historical businesses throughout the US. Most public libraries have subscriptions to Data Axle Reference Solutions, so if you have a library card, you can look up caterers in your ZIP code or metro area completely for free. This database shows you a business’s contact information, location, sales volume, and projected expenses.
Knowing what caterers are operating in your area, along with their projected sales and costs, will help you with the next steps.
3. Determine Your Niche
Most catering companies find a niche to fill in their local market. Whether that is wedding catering, catering for corporate events and office operations, or being the go-to caterer for outdoor events or conferences. Any gathering that has a lot of people to feed can use catering services.
The main markets for catering services are weddings and corporate events. In fact, in a recent poll, independent caterers said that 35% of their 2022 sales came from weddings, and 52% of caterers say that most of their revenue regularly comes from weddings.
If you don’t want to focus on weddings, you could concentrate on corporate clients that frequently need food for meetings, training sessions, conferences, and events. Catering for other commercial businesses like concessions or coffee shops, bakeries, and restaurants that buy baked goods, desserts, or ready-to-eat meals. You could also focus on non-wedding social events like funerals, bar and bat mitzvahs, and reunions. Choose your niche and design a menu to target the customer types you want to attract.
4. Choose a Kitchen Location
The next major decision you need to make is where you will cook. To operate legitimately, caterers need to prepare their food in a kitchen that is licensed by the local health department. In most places, that leaves you with three choices:
- Independent commercial kitchen space
- Shared commercial kitchen
- Home kitchen
Though some states do not license home kitchens for catering businesses; you’ll need to check with your local health department to find out what options are permitted in your area.
With commercial kitchens, you have two major options: to lease an independent commercial location or lease space in a shared commercial kitchen. Leasing a shared commercial kitchen is typically less expensive, but you’ll have to work around the schedule of other businesses that use the space. If you’re starting with just a few event bookings, a shared kitchen is the best option. If you plan an extensive menu with lots of business right out of the gate, you’ll want an independent location for yourself.
States that license home kitchens for catering businesses will likely do a physical inspection of your kitchen before granting your permit. Many states that allow home catering businesses have restrictions about pets in the home, so check with your health department before proceeding with a home kitchen.
5. Write Business Plan & Raise Funds
With your catering niche and location sorted, it’s time to write your business plan. Your business plan will help you secure business loans and entice investors. It will also force you to focus on the foundational details of your business.
Your business plan should include the following sections:
- Executive summary: Brief summary of the entire business plan that allows for a quick, at-a-glance read
- Business description: Couple of pages that list essential business facts like hours of operation, your proposed location, startup costs, and profiles of you and any managers
- Market Analysis: Overview of what niche your catering business fills in your area, including a list of your main competitors and your strategies for doing business in the same market
- Menu and service offerings: Sample menu and a description of the types of events you will cater
- Operating plan: Details how you will run your catering operation on a day-to-day basis, describing exactly who will perform which tasks (you or an employee)
- Marketing & sales strategy: General sketch of how you plan to market your business
- Financial projections: Projections for the first three years of operation, to show potential investors your planned path to profitability
Present your completed business plan when applying for small business loans or equipment financing or seeking investors. Having a plan written before you begin looking for funds speeds up the fundraising process.
For a small home-based catering business, a business plan might seem unnecessary. However, the market research and financial projections in your business plan will give you the best picture of the road to profitability. Plus, many states request a business plan when you register your business.
6. Secure Permits, Licenses & Insurance
You’ll need basic business licenses to operate a catering business, and in most areas, you’ll need food safety permits issued by your local health department. Food safety permits typically require a health inspector to visit the space where you will prepare food to ensure it meets health and safety standards.
Catering companies typically need the following permits and licenses:
- Basic business permits: This includes registering your business with your Secretary of State’s office, getting an employer identification number from the IRS, and obtaining local sales tax and resellers permits.
- Health and safety: These are permits like food handlers certifications and a food safety license that covers your building. If you operate out of a freestanding commercial kitchen, you’ll also need a certificate of occupancy from your local fire marshal.
- Operational permits: These types of licenses allow you to sell alcohol or hold an event in a public space. Some locations will also require noise permits and temporary structure permits if the event you are catering has music or tents.
- Construction permits: If you are renovating a building for your catering business, you’ll need building permits. The scope of your construction plans determines what type of permits you need; check your local building office for guidelines.
If you can afford one, getting a liquor license that covers off-site events is a good idea. You’ll be able to charge more for your services if you can supply the bars for events. Some states and counties allow you to purchase one-off event-specific liquor licenses; check your local laws for your options.
Getting your permits is also a good time to secure insurance. In addition to general business insurance, you’ll also need food vendor insurance. If you have employees, workers’ compensation insurance is also a must.
Finally, you’ll need to insure any vehicles that you use to transport your products to off-site events. If you have employees who drive their personal vehicles to and from and work at off-site locations, you’ll want to ensure that your general liability insurance covers them as well.
7. Purchase Equipment & Supplies
You’ll need to purchase cooking equipment, refrigeration equipment, and food storage supplies to get started. Though, if you are cooking from a home kitchen or an already-stocked commercial kitchen, your purchases will be much less than if you start with a raw commercial space.
In the beginning, you can get away without purchasing specialized serving equipment like chafing dishes, tables, and dishware. You can rent all of these types of equipment from event rental companies and pass the rental costs onto your catering clients. Since many catering clients prefer to choose stylish serving pieces for their events, renting these items is also easier.
As your business grows, however, you may want to accumulate some standard items like chafing dishes and basic dishware. Then, you can charge customers for their use without paying a rental company.
You may want to open accounts with food suppliers for general supplies like your starting food inventory and paper goods. If your catering business is very small, you may not have enough sales volume to interest a commercial supplier, though. In that case, discount clubs like Costco and Sam’s Club are great fits, as are food-service-focused brands like Restaurant Depot. They all require memberships, but as a registered business selling to the public, you should be able to avoid sales tax on your purchases.
You’ll also want to consider tools to help you invoice clients and accept payments. There have never been more options for catering software that you can operate directly from a smartphone or personal computer. A system like Square Invoices can send estimates, proposals, and final invoices from your device and prompt customers for deposits and final payments on your preferred schedule.
Digital invoices can keep your catering company organized and send email or text reminders to clients with overdue balances.
8. Draft Your Basic Contract & Terms
Before you respond to your first customer inquiries, you should write out your standard service contract. Create related policies like a cancellation policy and refund policy, too. Doing this now ensures you aren’t forced to make these decisions under duress.
When you sit down to write your contract terms and related policies, ask yourself the following questions:
- How far in advance will you accept bookings?
- What percentage of the balance will you require as a deposit?
- Will you allow cancellations? And if so, how soon after booking are cancellations permitted?
- Are any tastings included in the lead-up to the event (as is typical for weddings)?
- How will you handle menu change requests?
Create a contract template in a word processing app like Google Docs so you can easily update it when you book a new client. Leave room for basic information like customer name, contact information, date and time of the event, event type, and a minimum and maximum number of guests. Then include sections for all of your contract terms, requesting your customers’ initials to confirm they have read the details.
Leave room in your contract for a copy of the menu, and any rental equipment the event will need (or that the customer requested). Include itemized pricing for the food, rentals, staff, and other charges. Then, finish the contract with a designated place for you and the customer to sign.
Signatures and initial blocks throughout a catering contract could be the difference between winning and losing a chargeback dispute. Over the years, I have seen many caterers win a multi-thousand-dollar chargeback because they could provide a signed and initialed contract.
9. Hire Staff
Catering typically requires some employees. Most catering companies have fewer than 50 employees; 30% of caterers have 10 or fewer full-time employees and between one and 30 part-time staff. The employee types you need will depend on your service style and what types of events you book.
Typical catering employees include:
- Dishwasher: Dishwashers tend to be paid minimum wage or a little higher. If you are spending all day cooking, you’ll be relieved to have someone cleaning as you go.
- Cooks: The more cooks you have, the more clients you can book. Cooks tend to earn between $14 to $20+ per hour, depending on their skill level and your market.
- Servers: If you do a lot of seated dinners or events with tray-passed food, you’ll likely have some servers on your team. Catering servers can be paid minimum wage plus tips, or a flat hourly rate (typically from $20 to $35).
- Bussers: Bussers are typically reserved for larger catering operations or events. Smaller caterers tend to rely on servers to perform double duty as servers and bussers. Bussers are paid a flat hourly rate (typically $15 to $20) or minimum wage plus tips.
- Bartenders: If your event has cocktail service, you’ll need bartenders. Bartenders tend to prefer to earn a flat hourly rate plus tips. Because offering bar service increases what you can charge clients, catering bartenders are usually the highest-paid hourly employees. And if you ban tip jars on your bars, you’ll need to pay them well—from $35 to $50 per hour is not unusual.
- Delivery drivers: If your business is mostly ready-to-eat meals that are dropped off, with no staff attendants (typical of corporate catering), you’ll likely have more delivery drivers than waitstaff. Catering delivery drivers tend to earn a flat hourly wage plus tips.
Post your available jobs on job posting sites like Indeed and ask friends to share the listing on their social media channels. Caterers in major markets like Chicago and New York may prefer to hire on-demand employees from an event staffing agency.
You pay a flat fee per hour and the staffing agency handles all the administrative work from filing employment forms to processing paychecks. This tends to be pretty expensive—up to $60 or more per person per hour—but if your work is highly seasonal, it could be worth the expense.
Since most catering jobs are part time, you could tell some of the servers and bartenders at your favorite restaurants that you are hiring. But tread lightly as it is considered rude to “poach” staff from another business, and if employees quit their existing jobs to work for you, it could affect your relationships with local business owners.
10. Market Your Catering Business
Once your business is established, you need to tell clients how to find you. Marketing is how you do that. Successful marketing for a catering business blends several channels, from an ecommerce-optimized website to an active social media presence and a strategy for collecting and displaying customer testimonials.
The most important part of a catering business marketing plan is a high-functioning website. Your website should have a few key elements:
- Menus with mouthwatering images of your food
- A gallery of images that shows eye-catching images of past events you have catered
- A contact form where customers can send catering inquiries.
Depending on your catering niche, you may also want a full online ordering page so customers can place orders in advance with little assistance.
In addition to digital tools, caterers also need traditional paper advertising materials like trifold paper menus and business cards. You can design these yourself using a tool like Canva, or hire a freelance designer from sites like Fiverr or Upwork. These are valuable for obtaining new business from off-site events. You can also include them with complimentary food samples that you drop off to potential clients (which should also be part of your marketing strategy).
A cloud-based point of sale can also help you log customer contact information for future email or text message promotions. While some events you cater will be one-time affairs like weddings, others can create repeat business. Segmented customer lists can allow you to send updated menu offerings to local event planners, or reminders for family-style holiday catering packages to individual clients.
Why Start a Catering Business?
There are several reasons to start a catering business. Caterers work for themselves, and no two days are the same. You get to be part of some incredible events and join a close-knit network of small business owners who are passionate about food.
Here are some other reasons you should consider opening a catering business:
- Low overhead: Most small caterers are very small teams, consisting of the owner and maybe a part-time helper or two. If you are able to operate from a licensed home kitchen, you’ll even save on rent.
- High profit margins: The flip side of that low overhead is much higher profit margins than other food-based businesses. Caterers typically see a profit margin of 10%–25%.
- Low startup costs: In many parts of the US, you can start a catering company from your home with less than $10,000 in startup capital. That’s less than 10% of what you would spend to open a restaurant.
In 2023, the catering industry is booming. In a recent survey by the International Caterers Association, half of the surveyed ICA member caterers reported annual revenues between $1 million and $7.5 million, with more than 90% saying their sales increased between 2021 and 2022. While weddings brought in the most revenue overall for 35% of caterers, corporate catering was the largest area of growth.
Challenges of Starting a Catering Business
As with any business, opening a catering business has some challenges. While you will work for yourself and set your hours, those hours can be long (especially during wedding and holiday seasons).
Before you submit your first catering contract, you should consider whether you can handle:
- Fluctuating demand: Catering can be a feast-or-famine business as demand fluctuates throughout the year. You’ll have more inquiries than you can handle for the graduation-wedding-family reunion season in May and June, while you’ll be scrounging for sales in September.
- Challenging clients: You’ll frequently be preparing food for major life events like rehearsal dinners, weddings, and milestone anniversaries. Clients for these events can be incredibly picky, and there are no do-overs; these are once-in-a-lifetime moments. If fielding 47 emails about tray-passed crab puffs makes your skin crawl, catering may not be a fit for you.
- High pressure and tight deadlines: Catering is about events, and events are about having everything ready at a specific time. There is usually no way to get extra time or make up for a mistake later.
Key Tips for Catering Success
Catering businesses have a lot of moving pieces and deal with a ton of information. After several years fielding catering inquiries, writing (and rewriting) catering contracts and working events, these are my top tips for catering success.
Respond Quickly
When you get an event inquiry, respond immediately. Most customers are inquiring with several caterers for their event. Responding quickly makes it more likely they will book with you. If you are unavailable for the date or time of their event, letting them know as soon as possible allows them to move on to another caterer (and stop emailing you).
Network With Other Caterers
When I booked catering and events for a Southern California restaurant, I joined a networking group of other event coordinators and salespeople in the neighborhood. Whenever one of us had an inquiry for an event we didn’t have the time or space for, we reached out to the rest of the network to take the gig.
The customers got their needs met, and we all benefited from the system. It’s easier to tell a client you are already booked when you can pass them off directly to another caterer you trust. Both the customer and the caterer you referred the business to will remember how well you took care of them. It’s more than good karma—it’s good business.
Incentivize Referrals
The most influential advertising is word-of-mouth. Ask your clients to refer your catering business to others, and give them a little reward for their effort. This could be an informal arrangement like delivering a box of baked goods to their office ahead of a busy party booking season, or a formal program where you track each referral and offer the referring customer a perk like a gift card to a local coffee shop or a discount on their next event order. Check out our guide to using referrals to generate quality leads for more tips.
Use Software to Save Time
Caterers need to keep track of a ton of information, from event inquiries, event proposals, contracts, banquet event order sheets, menus, rental agreements, invoices, and more. Luckily, there are tons of options for catering management software nowadays. Most of it is cloud-based, so you access all your paperwork from a smartphone if you are at an off-site event. As a former catering and event manager, I promise you these tools will save you time and prevent embarrassing mistakes like double bookings, lost rental agreements, or missing menu information.
Last Bite
Starting a catering business is a low-cost way to start a food service business. If you like to cook and have good organization and people skills, you’ll easily make a lucrative profit as a caterer. A successful catering startup needs a detailed business plan, a craveable menu, and a detailed catering contract to be prepared to convert customer inquiries into lucrative events.
