open an all-occasion-catering storefront, there are some fundamental rules to follow. In this installment of the black enterprise dream business series, we’ll look at how to start, run, and grow a successful catering business.
Caterers are hired to provide food, beverages, and service for functions ranging from intimate dinner parties to galas for hundreds, even thousands, of people. But you don’t need formal culinary training to start a catering business.
“Catering is not a food business, it is manufacturing,” says Roman. “Having good food is a given, but you really have to know how to price, market, hand-hold (clients), and close the sale.”
And he should know. Roman, who has more than 15 years’ experience managing his family’s catering business in Chicago, has also taught catering at the Culinary Institute of America.
For example, “When someone goes to a restaurant they can’t say ‘Your price is kind of high, can you knock it down a little bit for this entrée?’ But in catering people will say, ‘I will give you the party but you have to take a couple bucks off.’ New caterers often don’t know how to handle that. This is a competitive business,” Roman says.
And as with any competitive business, proper planning and forethought are a must to keep the doors open. Industry experts offer the following advice:
Go to work for another caterer. General survey and research data shows that nearly 85% of food-service businesses will fail within the first year. Additionally, 95% of startup problems stem from mismanagement and lack of experience, which ultimately lead to bad decision-making. Roman recommends working for another catering company before starting your own. This gives you time to shore up the reserve capital you’ll need to start and carry your business through the first year or two, he adds. Partner with or hire someone who has expertise in the areas you don’t, whether that is cooking, business, or event planning.
Figure out startup costs. The type and size of your business will determine the amount of capital you’ll need. Will you be doing box lunches, buffets, formal dinners, cocktail parties, corporate events? While opening a restaurant requires a greater cash outlay, with a catering business you can start small and expand later. In Frazer’s case, she had catered on a freelance basis and was looking to operate an off-premise business, so she required _minimal startup capital-less than $10,000 from her personal savings. She was able to build on pre-existing clientele and started networking with event planners to draw new business.
However, for those who start from scratch, “You’re not going to be able to start a catering business and sustain it through the startup time with $10,000 or $20, 000,” says Bruce Mattel, associate dean at the Culinary Institute of America and author of Catering: A Guide to Managing a Successful Business Operation (Wiley, $45). He suggests having at least $100,000 so you have bankroll to fall back on during lean times if you’re not getting enough bookings and sales. For that kind of capital