By listening to the name of a catering business many people who are willing to start a small business withdraw their name because they believe that starting a catering business requires too much capital investment.
Well, it’s not true, in this article you will learn how to start a catering business with low investment by executing the perfect step-by-step strategy.
Catering service is a business that contains almost 25% to 30% profit margin excluding the major expenses which is a clear indication of the profitable food business.
If you want to start a catering business, there are certain steps that you should follow to pick a great start and make it sustainable in a very short time.
If you have the belief that the catering business is a seasonal business, then you are wrong, this is the business model which gives you the revenue all 12 months of the year.
Because there are many multinational companies that require food for their employees on a daily basis, and they are always in search of caterers at affordable rates.
How to Start a Catering Business in India
Starting a catering business is not a big deal, and guess what? It can be easily started with low investment as well.
You need to understand the food industry and what the client exactly wants from the caterers. If you study these aspects deeply, you can rule over the catering service world.
Rates, quality, service, offers, consistency, taste, feeling them better than others by giving the different treatments are the aspects that drive more customers and convert the existing customers into loyal customers.
These are the after-effects of starting a catering business, but the major question is how to start a catering business. How much investment do you need, how much staff do you need, and what kind of licenses are required to establish the catering service.
All the questions are mandatory and must be solved in order to initiate a catering service business.
So, moving forward with this article, we are going to explore how to start a catering business covering all these aspects and open a clear way for you.
Now, let’s explore how you can establish the business of catering services and which steps you have to follow.
Work on The Business Plan First – Select The Proper Niche
Talking about India, the catering business is an unorganized industry, and there is not a proper channel to run this business. You can take the benefit of this lack of food industry.
First, you need to write the business plan, study the market, which kind of foods or dishes are being provided at higher rates in spite of them being offered at lower rates.
Second, you need to scan the market of people and what the people – as the consumer, are expecting from caterers.
Finding the loopholes of the industry, and working on them with dedication can make you the king of a particular industry.
After analyzing the business model, you would have a clear conclusion that you want to establish the caterers’ service on a small scale or huge scale.
Once you decide the nature of business, then you need to make the investment plan, how much money you will need, who are your potential customers, which location will be affordable for you, etc.
Before executing the strategy of the catering business, you need to conclude whether you want to start the catering business full-time or part-time.
For The Full Time Catering Business
If you are about to start a full-time catering business, then you need the chefs on a permanent basis, a ready-made kitchen (or you need to set up), and other appliances.
Your marketing strategies must be containing online marketing and offline marketing both to get a high volume of customers.
For The Part Time Catering Business
If you want to start the catering service as a part-timer, there are different strategies to be applied, not too different, but some changes there are.
You don’t need a permanent chef, you can arrange the food from the tiffin service providers because you will not be attending to a lot of customers in the part-time business model of catering.
Moving forward in this article, we are going to explore the guide to start a full-time catering business. The next step is to find the best affordable
Setting Up a Kitchen And Looking For The Affordable Space
The kitchen is the center point of the catering service business, and that’s why you need to focus more on this aspect.
While making the business plan you would have decided whether you want to start the catering service on a small scale or big scale.
So, you need to hire a kitchen for rent according to your requirements. I suggest you start a catering business on a small scale in the beginning.
I mean to say that you should start to provide the service for making food for 25 to 40 people, and you would be taking the orders for this volume of people’s food.
Because the big kitchen will cause more investment, which was not recommended in the beginning, you should rent a small kitchen for rent.
The next thing is a selection of the space, here, keep one thing remember that you are not going to target the walk-in customers, so location doesn’t matter.
Your business is a service-oriented business, and you are going to provide food service from your location to the customer’s location.
So, choose the space which is available at an affordable rent to reduce the recurring expenses.
Building A Team With Chefs And Deliver
A catering service business is built by teamwork, whether you work as a team or you hire the workers, depends upon you.
But you need at least one or more chef(s) and 3-4 deliveries to make and serve the food respectively to the customer’s guests or employees.
If your catering service is particularly niche-oriented, then two chefs are more than enough. In actuality, only one chef is enough, but you should have one more as an alternative to the first one.
But if you are covering the multi items with different recipes, then it is quite recommended that you hire a specialized chef for each category.
Here, you might be thinking that the salary will not be affordable for you to hire more chefs, right?
Right! And if you are thinking this, you are on the right path in the journey of business, and I have a solution for this question.
See, if you are covering multiple categories of food, you don’t have to hire the chefs on a salary basis, you can hire them on the on-call or on-demand phase.
It means, you will not be paying a fixed amount as a salary per month, but you will be paying them when you will get an order, and they will be involved in making food.
Allocation of Food For The Company Customers
If there is a situation in which you face a problem while starting a catering business, then this is that one.
When you get a client as a multinational company, you need to provide the food on a daily basis, and every day you will have to provide the different dishes. (5 or 6 varieties per week with repetition).
Here you can hire 3 regular chefs with the system of on-call or on-demand, so each of them will be working for the 2 days a week, and you will be paying them a payment according to their work.
Companies always ask for a special dish once a week for their employees, and that is also a beneficial key for you, and you can manage it with this strategy as well.
For the delivers, you should hire them on a salary basis because they will have to work all the days of the month.
Arrangement of Equipment
While starting a catering business, you have to keep yourself ready with all required equipment like a refrigerator, oven, serving equipment, beverage station, tin foil, plastic wraps, garbage bins, and disposable containers for storage.
Gas cylinders, gas stoves, steel containers in which you have to fill the food to serve, and other equipment are mandatory before starting a catering service business.
In order to have all equipment, you should have a proper arrangement of investment. That’s why I suggested you do deep research on the market and requirements before establishing a caterers service business.
Dealing With The Vegetables and Spices Suppliers
The caterer’s service business is a full food service-oriented business, and you will need a constant supply of vegetables and spices with other ingredients.
It is quite an irritating and loss-making step to purchase these ingredients from the market on a daily basis.
So, the best way is that you make the deal with the vegetable supplier and spices supplier to deliver at your location on demand.
Not only the vegetables and spices, but for all the required appliances and ingredients like liquids, soaps, and other appliances, you should make the deal for the constant supply.
As the catering business comes under the category of the food industry, the FSSAI license is mandatory for you, and you get it by applying online for FSSAI.
The next one is the Fire NOC because you will be using fire-sensitive equipment like LPG, Oven, and stoves, so you will have to issue the NOC from the fire office department of your area to start a catering service business.
Until your business reaches 12,00,000/- rupees annual revenue, you don’t need GST, but after that, you will need it.
Driving Customers For Catering Business
None of the businesses can survive without customers, and your business is also one of them. After starting a catering business, it is quite mandatory that you drive more and more customers to make it sustainable.
You also have to drive the customers for your catering business from various sources with and without marketing.
In order to get the customers, you should make the deal with the corporate companies that contain many employees, marriage halls, banquet halls, and other occasional resources.
The occasional resource will give you the seasonal business, and the companies, hostels, and hospitals will give you the regular business.
Marketing For The Catering Business
Marketing is one the most important pillars for every business, your one is not excluded from it.
You have to adapt both marketing strategies; online marketing strategy and offline marketing strategy.
For the catering business model, the video content marketing strategy is considered the best online marketing strategy.
And for offline marketing strategy, you should hire a marketing person, only one person is enough who will make the deal with different sources and you will pay him either salary or commission per deal or order.
Investment Required to Start a Catering Business
The required investment is subject to your business plan, generally, if you are going to start a catering business on a small scale, you need 4,00,000/- to 5,00,000 rupees as an investment.
This includes all the one-time and recurring expenses, but remember once again, this amount is for starting a catering business on a smaller level which is enough for 40-50 people’s catering.
Profit Margin in a Catering Service Business
Talking about the profit margin in a catering business, there is between 25% to 30% profit margin in the catering business.
Whether it depends upon your deal, items included in the dish, and other factors. Moreover, in the seasonal orders, you can fetch up to 40% profit margin as well.
Conclusion on How to Start a Catering Business
During the article, you might have come to know how to start a catering business, and one more thing I want to suggest you do deep market research before starting the business of caterers service.
Take the brief about your competitors as well, it is very beneficial to find the loopholes of your competitors and fulfill them for the customers.
Another most important thing that I must suggest to you is that it will take some time to get sustained after starting a catering business, so you should keep some amount as a backup.
The reason is to survive in the market without revenue or with less revenue so that you can enhance your business.
The moral of the story, starting a catering business is not as hard as it seems if you execute it with the proper strategies.