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Catering business is one of the easiest businesses to start on a small scale. It is one of the best ways to turn a person’s hobby or interest into a profit making venture. Nowadays there are many ways to learn and improve one’s cooking techniques and increase their knowledge about various cuisines and produce by simply taking online or offline cooking classes or seminars. Moreover, it is not necessary that the entrepreneur has to have a professional background or education to support their culinary skills. There are many success stories of people even from small towns and semi-urban areas creating a huge fan base and a great catering business for themselves by their sheer talent and cooking skills.
Entrepreneurs can use their own savings or credit available with them or find potential investors and lenders to kick start their catering business. However, in either case, one of the basic steps to start a business is to have a clear business plan. It should be with clearly defined goals and objectives and a set path way to ensure smooth operations of the business as well as timely funding as and when needed thereby leading to the success of the business.
About Catering Business Plan
This section is the brief summary of the entire business plan highlighting the key points of each section. Although presented at the very start of the business plan, this section is written last in order to present the correct summary of the entire plan.
This section highlights the objectives and goals of the business that the entrepreneur would strive to achieve through seamless operations. It can also provide a brief background of the entrepreneur (educational or professional background in culinary skills to be highlighted, if any) and the need or vision to start the catering business.
This section will provide details of the type of the catering business that the entrepreneur focuses on or specializes in. Some of the specific types of catering services are,
Usually, the entrepreneur can cater to multiple types of the above events. Caterers providing services to a particular type of event is usually a rare case in the initial stage of business as they want to create a name for themselves and build on their brand. Another point of contention should be to determine whether renting a kitchen space is beneficial or can be business be carried out from the entrepreneurs own home kitchen. This decision will be dependent on the scale of operations and the response received to the business. If the caterer is comfortable taking large orders at the very beginning of the business and has a large team to execute the order, renting a commercial kitchen space is a better option.
Industry research and analysis may seem a tedious task but will provide the entrepreneur an overview of the industry and the expectations thereof. It will also give the potential investor and the lenders the faith that the entrepreneur has done his/her homework to get into this business. The entrepreneur can gain immense knowledge like the current trends in the catering industry or the amount of initial investment required to kick start the business, will help in estimating the industry growth in the next 5 years or 10 years, etc.
Customer analysis will help the entrepreneur to gain an insight into his/her target market. It will also help in modifying or providing customer centric products as per the geographical dynamics of the entrepreneur’s area of operations as well as arriving at the right pricing policy for the business. For example, if the majority of the people in the entrepreneur’s vicinity are non-vegetarians then providing only vegetarian cuisine is not going to benefit the caterer much.
This is the most crucial aspect of the business. A correct analysis of the competition will enable the entrepreneur to highlight the unique selling point of their business as well as determine the right pricing policy that will give the business an edge over its competition. Entrepreneurs can also study their indirect completion (restaurants, hotels, etc.) apart from the direct competition (other catering businesses) in order to gain an overall knowledge of the competition and arrive at suitable measures or plans to succeed.
Marketing and promotion strategies
Marketing and promotion of a new catering business is very crucial to make the customers aware of the business, its wide variety of cuisines or food and specialties that entrepreneurs can provide. Small businesses cannot afford huge advertising and promotional expenses, hence, the entrepreneur can come up with some unique ideas to promote his/her business in their immediate area by many means like providing free samples of their signature dishes or inviting a few people to taste and rate their menu, etc. Entrepreneurs can also reach out to food bloggers or critics to try their food and provide their feedback or get in touch with local supermarkets or shops to keep their food samples or flyers of their business.
The operations plan is the details of execution of the set objectives and goals and the path to achieve them. The entrepreneur can break or divide the operation into short term and long term operations and can execute them at ease. This involves delegation of tasks to the support staff (if any) and making sure that the tasks are executed within the targeted time efficiently.
The financial plan of the catering business is the key to getting potential investments or loans to advance or expand the business. It should not only include the current income statement and cash flow statement and balance sheet but also future projections. Budgeting is another crucial aspect of the financial plan based on the past performances. A detailed financial plan will enable the potential investors and lenders to see the financial viability of the business and the ability to sustain the business in the long run. Some of the key elements to be included in a financial plan are,
This section is dedicated to the information about the management or the owner of the business. Any past professional experience or culinary educational background, online courses or any other similar asset that can highlight the ability of the management or the owner to carry out the business successfully are to be highlighted in this section.
Apart from the above key points, the most crucial aspect for the success of catering business is the quality, taste and the variety of food along with cuisine options and the flexibility in ordering the quantity of food that the entrepreneur can provide to his/her customers.
There are many advantages of starting a catering business as against a full-fledged restaurant. Some of the major advantages of starting a catering business are mentioned below.
Reduction in food production and storage costs
As the caterer has the exact idea of the number of people for whom the food has to be prepared, it results in reduced food procuring costs, production costs as well as storage costs. Whereas in a restaurant, the chef will have to prep for an unknown number of meals but sufficient enough that the customers do not have to wait unnecessarily long.
Cost of Equipments
The scale of food production in a catering business being less than a regular restaurant and also usually not for all days of the week, the cost of purchasing the equipment and maintaining them is much lower. This helps the entrepreneur reduce the overall expenses and overhead cost of the business.
Reduced serving staff
Majority of catered events are buffet style events. This enables the entrepreneur to hire reduced staff to serve food as compared to any restaurant where the staff requirement is considerably huge (waiters, busboys, excess kitchen staff, etc.)
1. What are the most common types of catering?
The most common types of catering undertaken by the caterers is wedding catering, corporate catering, social event catering and mega event catering (also known as concession catering).
2. How can a person plan for a catering event?
The basic steps to cater an event are,
3. How is the menu priced for a catered order?
The caterer can calculate the total cost of the raw materials purchased for the specific order, the time and efforts taken to prepare the meal, transportation charges, cost of hiring the support staff and divide the total by the number of persons for whom the meal is prepared, finally adding the profit percentage to arrive at the price of the catered order. Over time, the entrepreneur can create a standard pricing pattern for various types of cuisines considering the number of persons and easily price the order.
4. Is registration of the catering business required as per law?
Yes. The caterer needs to register the business under necessary laws to avoid any legal hassles that may hamper the smooth functioning of the business.
5. Can a catering business be started from the entrepreneur’s home kitchen?
Yes. The entrepreneur can start the catering business from his/her own home in the initial stage of the business when the scale of production is lower and manageable. Once the scale of production increases and is beyond the capacity of a home kitchen, the entrepreneur can choose between hiring a professional kitchen or purchasing one depending on the financial viability of the option.
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