Jacqueline Frazer developed a passion for cooking at just 9 years old when she made her first cake for Mother’s Day. Her love for the culinary arts continued to grow during her early teens as she worked in the family business-her father owned restaurants in New York and St. Thomas, Virgin Islands. By the time she turned 18, Frazer wanted a taste of something else. “I was tired of smelling like food and getting burned. I wanted a real cute job like other girls,” recalls Frazer, who eventually took up bookkeeping and accounting.
Still, she couldn’t hide her culinary prowess and was asked to cater most office parties. She obliged until a layoff sent her back into the classroom, where she embraced her talents and mastered the art of cooking at the Culinary Institute of America in New York.
“When I was working in my father’s restaurants, learning from my mother and grandmother, it was basically about cooking really good food,” she says. When I was considering the best cooking schools, I realized I needed technical training and basic culinary education in international food preparation and handling if I wanted to become truly professional.”
Frazer gained extensive experience in the hospitality industry after landing positions with hotels and signature restaurants in Washington, D.C., and New York City, where she became the first female executive sous chef of the Sheraton St. Regis. She went on to serve as personal chef for hoteliers Harry and Leona Helmsley and publishing magnate Randolph A. Hearst and also catered private and VIP events for major corporations, charitable organizations, and prominent individuals. In 1997, she decided to stir up the pot again and launched a full-service catering business, Chef du Jour.
Today, Frazer, 54, is chef and owner of Command Performance in New York City, which serves up dishes ranging from down-home barbecue to French cuisine. On average, the business works with 50-plus clients a year and generates annual revenues of approximately $350,000. “I always tell people I am a chef first and caterer second,” says Frazer.
Frazer is not alone in her passion for cooking. In the past 20 years there has been a surge in the ranks of african american chefs and caterers. And according to catersource, a chicago-based resource of business and culinary information, catering has been one of the fastest-growing sectors of the food service industry since the 1990s. Catersource reports there are 53,000 caterers listed in the yellow pages, and that those businesses generate an estimated $6 billion to $8 billion in annual revenues.
“There is always room in this country for a good caterer,” says Mike Roman, founder and president of Catersource. “It’s like Las Vegas, when people say there is no more room for another hotel, but they keep building them and people keep coming.”
As long as there are weddings, corporate events, and birthdays to celebrate, caterers will be needed. But improper planning can be a recipe for disaster. Whether you’re looking to start a small, home-based operation; offer a full-service, wide-menu selection; or 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.
PROPER INGREDIENTS
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 you will need a business plan to secure financing. Entrepreneurs might also consider borrowing the money from family and friends or seeking out micro-lending organizations such as ACCION USA, (www.accionusa.org).Get proper licenses and certifications. Whether you run a catering business from your home, a mobile street van, or a banquet facility, if you’re preparing food you need to be licensed with the local Department of Health. Beyond having good hygiene, regulators want to make sure food for distribution and sale is safely prepared, handled, protected, and preserved. Before a license is issued, someone from the Health Department will inspect your kitchen to make sure it complies with food sanitation rules.
Get up to code. Your kitchen must also be in compliance with standards of the Occupational Safety & Health Administration, to cover employees, and the local fire department depending on the size of your premises. If you are the owner and the main cook, you should attend culinary school or take food handling courses, advises Christine Emerson, executive director of the International Caterers Association in New York. As a caterer, you need to understand the proper way to transport, store, and serve food.
Create various menus. Catering businesses, unlike restaurants, don’t tend to have a single average for food cost. Caterers sell volume, so Roman says it is very important to develop several “levels” of food. “Let’s call them A, B, and C. All of them are great, it’s just that one may offer shrimp and the others do not.” Often, caterers will sell the same menu at a lower or higher price depending on the type of event, total number of guests, an
d amount of money the client is spending.
Set your prices for profit. Develop a pricing structure that will make you money. Take into account the costs of materials, overhead, and labor. “The trick is that a caterer can never sell his A menu for B prices,” cautions Roman. “You have to change the menu to meet the client’s price and not the other way around.” Call other catering companies or check their Websites to see their price lists. Then figure out the cost of ingredients, labor, and company overhead and add in your desired profit-anywhere from 15% to 40%.
Purchase equipment and supplies. Starting out, you can rent items to keep initial costs down. These include the use of kitchen facilities, utensils, tables, tablecloths, serving equipment, and other items. When it comes to storage, the Health Department and OSHA have refrigeration standards. Also, your storage _facility will depend on your market. “If you’re only catering for about 100 people, you don’t need a 200-square-foot walk-in [refrigerator],” says Matthew Raiford, an alumnus of the Culinary Institute of America and owner of Satin and Savory in Atlanta. If you are transporting food off premises, you need a small delivery van or vehicle that can pass health inspections.
A good way to save money is to look for a restaurant that is _closing and buy its equipment. That’s how Nikki Shaw, chef and owner of Flavor Caterer in Los Angeles, was able to stock up. “I started out working out of the home and acquiring equipment, bits and pieces here and there as I needed them,” she says. “I remember I got so excited about buying chaffing dishes for the first time.”
Flavor Caterer now caters small buffet-style gatherings-never beyond 200 guests and primarily during the summer months, averaging between $5,000 to $7,000 per event. “I would buy a couple of platters and then tablecloths,” says Shaw, 39. “I was fortunate to meet a lady whose restaurant caught on fire. Her garage was filled with equipment (plates, glasses, silverware). She told me I could come and get whatever I wanted for free.” All told, Shaw received about $2,000 in free equipment and spent $2,500 over the years on assorted platters, pitchers, baskets, vases, and various sized sets of formal and causal chaffing dishes.
Shaw, who graduated from the Southeastern Culinary Academy, was a household name among her celebrity clients well before she became a finalist on the third season of The Next Food Network Star reality show. Since then, requests to cater jobs have included her as part of the entertainment. “Clients call me out from the kitchen to give a speech and talk to their guests (about the food),” says Shaw, who now does television segments and cooking demonstrations when she’s not catering.
It takes time to set up relationships with food suppliers, which includes getting lines of credit. You also have to build enough volume to warrant wholesalers. Until then, caterers like Shaw rely on shopping clubs such as Costco, Sam’s Club, or BJ’s to buy products in bulk. Another alternative is to contact a restaurant and talk to the owner or executive chef. Ask that person to submit an extra food order and then invoice you.
COOKING FOR SUCCESS
The size and number of events you expect to cater will help you determine a location. “You can rent a facility that already exists or you can build one out,” says Cliff Rome, chef, co-owner, and president of the Parkway Ballroom and Rome’s Joy Inc. in Chicago. “Overhead is a big expense. One way around it is to rent out space from culinary schools.” Also consider signing an agreement with a local church, nightclub, or YMCA-some place that has a licensed kitchen you can use on a part-time basis for a nominal fee. It may in turn hire you to cater one of its events, adds Rome, 36, who has worked with Wolfgang Puck and other chefs.
Initially, Rome used his personal savings, with startup costs of about $40,000 to $50,000, to purchase supplies and storage space. When his catering company took over the management aspect of the Parkway Ballroom, “we built-out a $150,000 kitchen,” says Rome, who again tapped personal financial resources. Today, his business generates approximately $1 million in _revenues, most of that from weddings and holiday events.
Another thing to keep in mind when launching a catering business is that product and personal liability insurance are a must. “Also essential is proper staffing. You can always save a buck or two hiring Aunt Mary or your college roommate to serve food and drinks at an event, but it pays to hire people who have some training in food hygiene and preparation and familiarity with the industry. This goes for the chef, kitchen personnel, service staff, and sales team. Agencies are a good source to find help as well as party rental dealers, culinary schools, and word of mouth.
Longevity in the catering business demands stamina. Not just the ability to work for long hours on your feet and to labor over a hot stove, says Roman. You will work nights, weekends, and holidays, when caterers are in greatest demand. “You have to be willing to make sacrifices,” he adds. -additional reporting by Tamara Holmes
Starting a prosperous catering business shouldn’t be an impulse decision. It takes a good year’s worth of work _up front in planning and learning. Catersource’s Mike Roman offers this 10-item recipe for success:
- Caterers must be selective about to what and whom they sell-all sales are not wise. Refuse an event that is not profitable.
- Aggressive marketing is a must. Lack of business is the primary cause of failure among caterers.
- Proper pricing needs to guide all selling decisions. Never offer your B menu at C menu prices.
- Deposit, refund, and cancellation policies will determine future success or failure. You need to get paid, and on time.
- Prospective clients are looking for fair prices and a positive experience, not just great food. If the service is bad, clients may never give you another shot.
- The amount of full-time office and kitchen staff must reflect the amount of business booked. Don’t under- or over-hire help.
- Caterers are not bankers. Payment must be made on the event day or in advance. Never start a job without getting a deposit.
- Caterers have a right to have a personal life away from the business. Make time for yourself to avoid burnout.
- A catering kitchen is not a kingdom unto itself. It’s a place to produce quality products and a profitable bottom line.
- Owners and highly placed managers must provide leadership and maintain the professional and financial integrity of their companies.