What Is A Catering Business and How Does It Work?


I’ve worked as a Caterer on-and-off for over fifteen years. But, I’ve not chosen catering as my primary source of income. Before you decide about starting a catering business, let’s make sure you understand what a catering business is and if it will work for you.

So what is a Catering Business? A Catering Business is a food business that specializes in food delivery for groups of people. In addition to food, many caterers also offer supplies and services. The style of food varies as does the cost, but all caterers specialize in feeding groups of people away from the caterer’s kitchen.

Now let’s dig into the details about what it’s like to start and run a Catering Business.

Types of Catering Businesses

The term caterer originated in the 1600’s with the word ‘cater’ which meant “provide food for” in English. That term came from a 1400’s word ‘catour’ which meant “buyer of provisions”

So at its core, a catering business is simply a food provider business. However, in modern times it’s meaning has become more specific.

A modern catering service provides food, dining supplies, and food service to groups of people primarily at remote locations.

It is worth noting that there is another type of catering referred to as ‘On-Premise Catering”. This is primarily offered by event venues such as hotels and event centers that require those that rent their space to also use their on-premise catering if food is involved in the event.

Catering Businesses can specialize in countless styles and types of food, so the following list is just to demonstrate the breadth and depth of types of caterers.

  • Sandwich Caterer
  • Ice Cream Caterer
  • Pizza Caterer
  • BBQ Caterer
  • Wedding Caterer
  • Birthday Party Caterer
  • Alcohol Caterer
  • 5 Star Caterer
  • Table Side Service Caterer
  • Buffet Caterer
  • Food Truck Caterer
  • Cupcake Caterer
  • Kids Party Caterer

As you can see, there are lots of different kinds of Catering Businesses.

How A Catering Business Works

When you operate a Catering Business, potential clients will contact you with details of their planned events. Those details will include:

  • Date & Time of Event
  • Location of Event
  • Type Of Food Desired
  • Number of Guests To Be Served Food
  • Details Of Any Supplies & Services Desired

Armed with that information, a Caterer can then quote the potential customer a price-per-guest, or perhaps a price-per-guest plus a set fee for additional services.

When the catering company and the customer come to an agreement on food, supplies, and services for a certain price, a contract is signed and the catering client is usually asked to pay 25 to 50% of the total prior to the event. The remainder will be due on the day of the event.

Armed with a contract and the funds to purchase the required ingredients, the caterer plans the food preparation in advance of the scheduled event.

They will then do the grocery shopping and food preparation.

On the scheduled day of the event, the caterer will arrive with the contracted food, supplies, and services.

At the end of the event, the remainder of the agreed-upon price will be paid to the caterer.

With that, the catering job is done and it’s on to the next catering job!

Alternate Names For A Catering Service

  • Wedding Catering
  • Corporate Catering
  • Event Caterer
  • Social Event Catering
  • Dessert Caterer
  • Food Truck Catering
  • Concession Catering
  • Restaurant Catering
  • Casual Catering
  • Party Food Catering

Pros of Starting A Catering Business

  • Controlled Cost of Goods Sold – Purchasing ingredients after the order is placed is one of the greatest advantages of this type of food business, as you can cut your waste (or risk of running out of food) tremendously over a restaurant business model.
  • Flexible Work Schedule – Since all catering jobs are scheduled ahead if you want to keep a certain time period work-free, you can do so.
  • Lower Pressure Cooking – Since the food is prepared ahead of time, a caterer has the option to remake something if things go awry.

Cons of Starting A Catering Business

  • High-Pressure Customers – Caterers often provide food and service to high-pressure events such as weddings. This means that they often face stressed-out clients with very high standards.
  • Food Safety Challenges – Preparing food under food safety guidelines isn’t all that difficult in a proper commercial kitchen. However, transporting and serving that cooked food within the same food safety guidelines is much more challenging.
Cost To Startup (Scale: $ to $$$$$)$$$$
Full Income or Side HustleFull Time
Income Potential (Scale: $ to $$$$$)$$$$$
Profit Margin (Scale: 📈 to 📈📈📈📈📈)📈📈📈📈📈
Time To Build (Scale: ⏰ to ⏰⏰⏰⏰⏰)⏰⏰⏰
Time To Run (Scale: ⏰ to ⏰⏰⏰⏰⏰)⏰⏰⏰⏰
Complexity to Run (Scale: 🤹 to 🤹🤹🤹🤹🤹)🤹🤹🤹🤹
Employees RequiredYes
Personal Catering Business Model Characteristics

Cost of Starting A Catering Business

This is not an inexpensive home-based food business to start. Honestly, depending upon the regulations in your area, it might not even be possible to run a catering business from home.

Starting a catering business is significantly less expensive than opening a restaurant, but more expensive than starting a home-based food prep and delivery business.

Is Catering A Full-Time Income Business or A Side-Gig?

I have personally known caterers who did this as a side-gig, and others who support their whole family with their catering business.

Honestly, because of the cost to start a catering business I’d encourage you to assume that you’re growing towards a full-time income that can support your family after paying off the startup cost.

Unless your state is one that allows you to run a catering business entirely from your home, the cost of starting one is just too much for a side-gig, unless you’re looking for this to be a labor for love, not a labor for income.

Catering Business Income Potential

You can make a lot of money as a caterer. Some high-end caterers make millions of dollars a year, but to be fair they have huge operations with hundreds of employees and fleets of trucks to serve the biggest and best parties in the world.

To be fair, most of us don’t aspire to run a business that large. I know I don’t. I’ve had over one hundred employees at one time in my past, and I was miserable (but that’s a story for another day).

With a small staff, as a caterer, you can make a revenue comparable to that of an average restaurant in your area but with a much higher profit margin.

A Catering Business can make a very comfortable living for a smart and hard-working business owner. The trick is to control expenses while providing food, supplies, and service that can command a premium price.

If you want to be the first to hear more about how to grow the profitability of a Catering Company, be sure to signup for my email list and consider leaving me a comment below encouraging me to write that article sooner than later.

Profit Margin For A Catering Business

The profit margin for a Catering Business can be very good because you are taking orders before you purchase the goods required to produce the ordered food.

That’s a formula for an insanely good Cost Of Goods Sold (COG).

As an added bonus, as a caterer you are primarily providing food, supplies, and services for someone’s special event. The more special you can make that event, the more you can charge for your catering service.

As we all know, great food alone will not make for a special event.

A truly special event includes style (quality supplies), and outstanding service. If you can nail theses parts of your Catering Service, then the price you can command will only rise.

If you are a good cook with an eye for style and a heart for service, your Catering Business Profit Margin can be embarrassingly great and every one of your clients will gladly pay for your special treatment.

How Long Does It Take To Start A Catering Business?

Since you are building towards a full-time income business, it’s not going to happen overnight.

You could probably get to ‘scale’ faster if you dumped a ton of money into marketing, but unless you are a very experienced & successful marketer, I’d discourage that plan.

And please, don’t put all your trust in some advertising salesperson who promises you success. Almost all of them are lying to you because they are just trying to feed their family after their own business failed.

If you want to end a conversation with an ad salesperson, ask them why they’ve never paid for an ad to sell their own ad selling service.

Instead, you need to get a few jobs, even if they are just break-even kind of jobs. And from those jobs, you want to be paid in testimonials.

At the very least, you want to be able to send potential clients to them for a reference. Better yet, they’ll write you a testimonial with pictures for your website, page on Facebook, and more.

Even better, they’ll do a quick video telling the world how you made their special event even better than they dreamed it could be. That’s marketing gold for a fraction of the cost of radio ads.

I say all this, to just say this: You need some small wins to lead to bigger wins.

Since your new Catering Business is going to serve a local market, you don’t need to get well known all over the world, just in your area. That makes the growth time longer, but not insanely long.

This is going to take some time, but you are building a business to support your family for years, decades, or more.

How Much Time Does It Take To Run A Catering Business?

Running a Catering Business at a scale that it’s a full-time income is going to make it a full-job.

You’ll spend your time marketing your business, completing contracts with customers, procuring ingredients, preparing food, and serving that food.

On top of that, you’ll have the paperwork associated with any business.

This is at least a full-time job, but with that, you have some flexibility in your work hours and ability to make more by working not only harder, but smarter.

How Hard Is It To Run A Catering Business

Running a Catering Business is complex, but not nearly as complex as running a restaurant.

As I talked about above, there’s a lot of moving parts in running a catering business. It’s way more than just cooking meals.

Consider that running a Catering Service is going to take all of the following tasks and more.

  • Recipe Testing
  • Recipe Pricing
  • Marketing
  • Catering Contracts
  • Ingredient Shopping
  • Food Prep
  • Food Transportation
  • Food Service
  • Cleanup
  • Employee Management
  • Financial Records

I’m listing all of those tasks not to scare you away from starting a Catering Business, but to make sure that you do so with a full picture of the job ahead.

Keep in mind that you can hire experts for some of the tasks of running a business that aren’t areas where you have skill or in areas that you really don’t enjoy doing.

You might have a marketing person who helps you out. You’ll likely have an accountant. You might even have a full time cooking staff, and you spend your time as the face of the company.

There is no one right way, but every way is going to take a lot of time and learned expertise.

Do All Catering Companies Have Employees?

I have known a few caters who were solotrepreneurs { Definition >>> }, but even they had friends or family who helped them on larger catering days.

You should plan on having employees as a Caterer. You might be able to get by with a handful of part-time employees, but you are going to need help.

By having regular employees, instead of just friends who you talk into helping some weekends, you’ll end up providing better food and service. With that you’ll end up being able to charge more for your service and making more money.

So, Should You Start A Catering Business?

If you don’t have food service experience, I’d strongly suggest you go get some before trying to start a Catering Business.

Because a Catering Business is going to take upfront investment and is somewhat complex to run, ideally you’d have both foodservice and business experience before you started your own Catering Company.

Maybe start with a part-time job working for an existing catering service, while honing your business skills with a home-based food business or even multiple food side-hustles to build your nest egg for your own Catering Business in the future.

But when you are ready, a Catering Business is a great food business with tremendous upside.

~Stacey

Stacey

With over 15 years of experience starting, running, and growing home-based food businesses, Stacey is the #1 home-based food business coach in America. Stacey is the author of the Advantage Meals: By The Numbers Book.

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