Start & Run a Catering Business. George Erdosh

creativity with food presentation.

      Social catering (i.e., catering for private clients) calls for every type of food service imaginable. Most of these events are receptions, breakfasts, luncheons, and dinners. There are relatively few guests for full meals, and social receptions are not as large as corporate receptions. The difference is in the budget. Most corporations can be lavish with their budgets. However, large private parties, such as weddings and bar mitzvahs, may also have substantial budgets and a large number of guests.

      There is another catering niche that is less easy to classify: institutional catering. It includes off-premise catering for any institution or government agency, including schools, hospitals, various other public institutions, and government offices. Many of these catering jobs are routinely done in-house, but if the requirement is for better quality catering or if the in-house staff cannot accommodate catering needs, an outside contractor is called in.

      The main difference between institutional and corporate catering is the budget. The budget for institutional catering is usually lower, sometimes far lower, than for corporate catering. It is a catering niche in the low-end or medium-quality sector.

      Nearly all caterers do both corporate and social catering, but how much of each varies widely from business to business. On average, surveys indicate that caterers do about 60 percent corporate and 40 percent social catering.

      Even if a caterer attempts to work in corporate catering entirely, never marketing to social clients, he or she will find that guests attending corporate events may call to request catering for social events. This kind of solicitation is hard to refuse. The same applies if you try to restrict your business to private parties. However, the two types of groups make a pleasant blend. Each requires a different approach and different types of service, and each poses different problems. They complement each other on your calendar, too. Corporate events are generally scheduled on weekdays, social events on weekends.

      What separates caterers most from each other, however, is what class of catering they choose to do. The field varies from low-end to high-end (or low-budget to high-budget) with a complete spectrum in between. Decide where you want to be, but never attempt to span the complete spectrum. That is simply not good business philosophy. Large caterers may have a low-budget division along with their medium-budget business. Small caterers, however, should specialize in a narrow band of the spectrum.

      In low-budget catering, expect much higher volume, more competition, more production-line food preparation, and little leeway for creativity. Your business will be more in demand (though this also depends on the state of the economy), and you can expect lower profit margins, higher volume, better overall profits, and longer working hours.

      In high-budget catering, you will have more fun, less competition, possibly less work, more exacting demands, and more tension. Your clients will be much more particular and expect more from you, but they will pay to have those demands met. Your business will be vulnerable to economic downturns because high-end catering is slashed quickly from both corporate and social budgets. Events are less frequent, but if you price them right and watch your costs, they can still be very profitable.

      In addition to the broad catering areas outlined above, here are niches that are possible for a small caterer:

      • Bar and bat mitzvah catering; children’s parties

      • Barbecues

      • Breakfasts and brunches

      • Catering for small groups only

      • Coffee breaks, meeting breaks

      • Corporate gifts

      • Food styling

      • Fundraising

      • Kosher and halal catering

      • Last-minute catering

      • Organic ingredients catering; providing meals considered healthy

      • Picnics

      • Producing private-label food items

      • Selling to retail outlets

      • Subcontracting to hotels, banquet halls

      • Subcontracting to large caterers

      • Vegetarian and vegan catering

      Producing private-label food is not strictly catering, but if you find the right food item, it can be very profitable. Thousands of new food items hit the market every year, but only a small number make it to long-term profits. The other niches are fairly obvious and can be profitable. Food styling is not exactly catering but is an artistic niche you may consider. Some caterers hire food stylists on a consulting basis to present their food displays for particularly fancy events.

      Two areas are in great demand: catering for small groups, and last-minute catering. Few caterers want to do either. Small groups are simply not profitable unless this is your niche and you are set up specifically to do such events. Caterers get many calls for small events, such as lunch or dinner for five to ten guests, but many are reluctant to take them unless they are for good, steady clients.

      Similarly, there are many last-minute calls, mainly from corporations, when unexpected events call for a meal in the boardroom. Many caterers take such contracts reluctantly or refuse them. If you decide to market yourself as a last-minute caterer, you may find another niche here. Advertising in the Yellow Pages and letting other caterers know your niche will help in getting small and last-minute events.

      3. What to Expect in Catering

      More than ever before, today’s buyers expect excellent service. Diverse industry surveys have consistently found that buyers prefer businesses that offer good service even over those that offer good quality and low price. Catering is a pure service industry; with excellence in service, a catering business has a good chance of success.

      What’s more, catering is one of the rare businesses in today’s world of superstores and mega-warehouses where small means personal and yet can be competitive. While small drugstores, grocery stores, and hardware stores are absorbed by impersonal big-box stores with no staff in sight to ask questions of, catering businesses can still remain small and yet be competitive by focusing on service.

      The industry is characterized by small- and medium-sized businesses, with very few large ones. Large caterers mainly offer mass-produced, airline-type food; the quality suffers due to the huge volume produced. There are exceptions, but in general, large caterers are unable to provide high-quality food. Have you ever had high-quality catered food from hotel and banquet establishments?

      Your small operation can compete successfully with any large caterer in your area. You can offer competitive prices and far better quality than they can.

      What can you expect in catering? Briefly, long hours and little profit, at least in the beginning. As you establish your business, the profits will slowly creep up and the number of working hours hopefully will slide down. Yet a survey by the Department of Food and Beverage Management at Cornell University School of Hotel Administration, responded to by 340 US caterers, showed the following frightening answer: The average work week for caterers is 58.7 hours, but it ranges up to 100 hours.

      Don’t expect catering to be a get-rich-fast business. However, if you find just the right niche for yourself and you are good at what you do, there is no reason not to expect a very handsome profit.

      Be warned that the burnout rate in the food business is very high, in both restaurants and catering. If you put all your energy into the business for several years, you are likely to feel the symptoms. In the beginning the business will demand all your energy and enthusiasm, but eventually you have to channel your life in other directions as well or burnout will come even sooner. Mike Roman, president of Catersource, a respectable Chicago-based catering education institution, states in one of his ten catering rules: “Caterers have the right to a personal life away from business … make time for yourself, burnout is worse than bankruptcy.”

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