How to Start a Food Catering Business in California - howtostartabusinesscalifornia.com

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What Is a Food Catering Business?

When most people think of a food-based business, they might think of a restaurant, delivery service, or food truck. While those are common ideas, food catering is a combination of some of them.

A catering business can be one of two things: You can have your staff show up to an event and serve people food, or you can provide people with food for an event. Both business models are similar, so it’s essentially a way to provide people with food at events.

People typically use catering services for events like weddings, graduation parties, holiday parties, and office outings. That said, you can get creative and use catering for many events that require some type of food. Plus, most of the licensing requirements are the same regardless of the food that you plan on providing for people.

Overall, a catering business is a type of business that prepares food and serves people at a specified location.

What Are the 2 Types of Catering?

We mentioned that there are two business models for a catering business and briefly covered how they work. However, there is more to both business models than that.

The first catering method is called on-premise catering. This business model requires the catering company to prepare the food at a specific location and serve the guests the food.

The other type of catering is commonly referred to as off-premise catering. This business model relies on food being prepared at a different location and sent to the venue where the food will be eaten.

While these are the two most popular types of catering, there are also some other more niche catering businesses that include:

Concession Catering: Used for large events like sports, concerts, and other mass events.
Food Truck Catering: Some food trucks can be considered mobile catering companies in California.
Mobile Catering: This type of catering company offers food to people on transportation like trains, airplanes, and buses.
Industrial Catering: This business model only includes the sale of pre-packaged goods.

There is also a private club catering business model you can choose, but it’s more or less just on-premise catering for private events. When you want to start a catering business in California, you have to choose one of these options.

An Analysis of the Catering Industry in California

There are more than 140,000 catering businesses in the United States, and the market is still nowhere near saturated. With the right recipes, some clever marketing, and the right people, starting a catering business is possible and profitable in California.

Depending on the type of catering business you plan on starting, the overhead costs can also be low, even if you purchase an old food truck for your catering business.

The catering industry is also expected to grow through the 2020s and well beyond this decade. This is because the demand for food catering continues to rise, especially with new markets like meal delivery services that ship homemade meals to customers to replace grocery shopping.

Therefore, there are plenty of emerging markets that you can enter and make an immediate impact. In California, private chef companies are also profitable due to the demographic of people in cities like Los Angeles and Hollywood.

How Profitable Is a Catering Business?

Yes, catering businesses are profitable ventures. According to several sources, catering services can improve the amount of money a restaurant makes, and even without restaurant support, catering companies alone have a profit margin of up to 7%. In fact, many catering companies make an average of $80,000 in their first year of operation.

While the industry is profitable and many caterers have success, you have to follow the appropriate steps to start a catering business and come up with a solid plan to turn a profit. That said, catering companies have less overhead than restaurants, so it’s worth it to take the plunge if you have some killer recipes and a keen business sense.

How Much Does It Cost to Start a Catering Business in California?

The cost to start a catering business in California can range from $400 to more than $100,000. Ultimately, the price varies based on the type of catering business you want to start.

If you plan on starting a small home-based operation, you’re looking at around $400 to $1,000 if you just need permits and some food to get started. Plus, you’ll already have most of the kitchen supplies that you need.

That said, if you’re starting a commercial catering company, you need to invest more capital. For example, you have to pay staff members to serve and transport the food. Plus, you’ll need vehicles to transport food, industrial equipment, and a lot more food.

For this reason, it’s important to consider the type of catering business you want to start before you even consider the cost.

How to Start a Catering Business in California

Starting a business in California doesn’t have to be hard, but you need to follow the appropriate steps, or you can make the process much more difficult. The good news is that we make it easy to start a catering business in California by providing you with a handful of steps you can follow to get the job done right.

Step 1: Choose the Type of Catering Business You Want to Start

There are many types of catering companies that you can start, so the first step is to choose your niche. While you can always branch out later, it’s always a good idea to make a name for yourself by being good at one thing first.

In addition, you need to decide if you want to focus on on-premise or off-premise catering. In fact, you can also specialize in industrial catering, food truck catering, and concession catering if you want to branch out.

While you can choose any niche for your catering business, we recommend starting with industrial catering, off-premise catering, or on-premise catering to get started. Entering these markets gives you the most opportunity to market your business and make a name for yourself.

Don’t worry about being stuck with just one model, though. As you expand your business, then you can branch out into some of the other catering business models.

Step 2: Create a Business Plan for Your Catering Business

Regardless of the type of business you want to start in California, you need to create a business plan. These are detailed plans that outline how your company will operate, what your target market looks like, and how much profit you anticipate in the first year or two.

That said, you can include whatever you like in a business plan as long as it helps you remain organized and focused.

When it comes to creating a business plan for a catering business in California, we do have some recommendations. Try to include the following information:

Executive Summary
Owners and workers
The name of the company
Target market
The type of catering business
The structure of your business

Step 3: Register Your Catering Business

Registering your business is one of the most important parts of the process. You need to choose a name for your business and then register that name with the Secretary of State.

Once you have the name registered, you should also secure any online domains associated with that name. This will prevent people from stealing the domain and then charging you for it.

After you have the name for your business, you have to choose the type of catering business you want to start. The type of catering business you want to start varies based on your needs, but we always recommend starting an LLC.

An LLC, or limited liability company, is perfect for a catering company because it shields you from any liabilities. We’re not saying this will happen, but God forbid someone gets sick from your food; the person can only sue the company and not you. Whenever you’re dealing with food, we always recommend an LLC for the best protection.

That said, you also have other options. If you’re not ready for an LLC yet and plan on having a solo operation, a sole proprietorship might be right for you. Additionally, if you’re starting your catering business with a partner, a general partnership or limited partnership might be right for you.

These are some of the most common types of catering businesses that you can start, so keep this in mind and choose the structure that works best for you.

The next thing to focus on is getting an EIN. This is a number that’s assigned to your company for tax purposes. Any LLC will need an EIN that’s separate from their Social Security Number, but if you go the sole proprietorship or partnership route, you can use your Social Security Number.

Step 4: Choose a Registered Agent in California

If you’ve decided to set up your business as an LLC or corporation in California, the next important step is to designate a registered agent. This is a required step when creating your Articles of Organization, the document necessary to officially register your LLC or corporation with the California Secretary of State.

So, what does a registered agent do? A registered agent is an individual or business entity appointed to receive essential documents on behalf of your business, including tax forms, legal notices, lawsuits, and official government correspondence. Essentially, your registered agent acts as the main point of contact between your business and the state.

Who can serve as a registered agent? The registered agent must be a California resident or a corporation authorized to conduct business in the state, such as a registered agent service. If you want to serve as your own registered agent, you’ll need to appoint an individual within your company, as California law does not allow business entities to act as their own registered agents.

For more detailed information on the requirements for registered agents in California, refer to the California Corporations Code.

Don’t forget that to run a business, you need to: register a business entity (LLC is the most suitable option, more details here), obtain an EIN (you can apply online here), open a business bank account (more details here), understand accounting and taxes (more details here), and register a domain and create a website (this is optional, you can do it here).

Alternatively, you can delegate all of this to a registered agent starting from $0 + State Fees and get everything done in 1 day. This can save you time and ensure everything is done correctly, leaving you to focus on growing your business.

Apply Online

Step 5: Get the Appropriate Licenses for Your Catering Business

Once you’ve started building your business, you may be wondering, “What licenses do I need to start a catering business?” Licensure is incredibly important, especially when it comes to careers in hospitality, but we’ve demystified the specifics for you.

In California, you need a caterer’s permit in order to start a catering business. Without a license, you can face penalties and other legal charges.

To get a California catering license, you need to fill out the application, send it to the state government, and wait for approval. When you apply for the license, the state will review the menu and your cooking process and determine if the company is appropriate.

Once you’re approved for a catering license, you may also have to pass several inspections. Each city in California has a different inspection process, but it’s safe to assume that someone will inspect your kitchen to ensure that it’s safe. It’s also important to note that all staff members who prepare or handle food must pass a state food safety certification.

If you plan on operating a catering business out of your home, you may need a home occupancy permit for zoning purposes, along with a permit from the health department of the county you want to operate in.

Some other general licenses may also be required depending on the food you sell and the vehicles you operate. For example, you might need a commercial driver’s license if you’re using large trucks to transport your catering supplies to places like a stadium.

Step 6: Insure Your Catering Business

When it comes to food service, you need to have insurance. You’ll want general liability and insurance for any vehicles you use to transport your food to venues or events.

Insurance is essential because it provides an extra level of protection from liabilities. When it comes to food, liability protection is important. This is because some people may have allergies or sometimes food can be left out too long and lead to foodborne illness.

If you run your catering business well, this is unlikely to happen. However, mistakes are made. Therefore, it’s worth it to have protection in place to avoid any potential problems. When you’re running a catering business in California, peace of mind is a great thing to have and gives you one less thing to worry about as you’re getting started.

Step 7: Open Business Accounts for Your Catering Business

Every catering company should have separate business accounts from the owner of the company. This makes it easier to keep track of your income, expenses, and tax requirements.

Plus, you don’t have to worry about mixing your funds and creating clerical errors that can cost you fees or even your business. For this reason, it’s important to open business accounts with a bank that you can trust.

Most banks will offer checking accounts and savings accounts that are suitable for businesses, and the benefits of the accounts can vary based on how much cash is flowing through the company.

Building a relationship with a bank is also a great idea because it can help you get credit cards or secure a business loan. While banks are helpful, you can also secure funding and open accounts with investment firms and venture capitalists.

Step 8: Get the Equipment You Need to Start Your Catering Business

A catering business requires equipment to operate properly. You need to secure catering supplies if you plan on getting your operation off the ground.

Catering equipment ranges from something as simple as pots and pans to as complex as a food truck that’s fitted with stoves, ovens, and fryers. Ultimately, the type of equipment that you need varies based on the type of catering services you need to offer.

Some common equipment to consider purchasing includes:

Tablecloths
Carts for serving and moving food
Tables
Holding cabinets
Beverage dispensers
Refrigeration units
Chafing dishes
Grills
Fryers
Griddles

Depending on the type of catering business you plan on staying, you may need some or all of this equipment.

Step 9: Start Catering in California

Once you’re ready to go the last thing to do is get started. If you run a solo operation you can start booking events using your marketing plan, which should be created during the planning phase.

You should at least have a functional website, business cards, and some testimonials about your cooking skills. We also recommend creating pamphlets and running advertising campaigns that can boost your exposure because California is a competitive state for business.

If you plan on staying at a larger company you’ll need to hire people to drive vehicles and transport food, people to cook the food, and people to assemble and clean up equipment. In some cases, you’ll have to have a building that you can use to cook food if you make everything off-premise.

How to Start a Catering Business in California FAQ

Have questions about how to start a catering business in California? We have plenty of answers to some of the most commonly asked questions below.

Can You Start a Catering Business from Home With No Money?

Yes, you can start a catering business from home with little to no money. As long as you have your catering permit and a home occupancy permit (or similar permit), you can start a small catering business from your home.

You may also have to have someone inspect your kitchen, depending on the county you’re located in.

Unfortunately, you’ll have to spend some amount of money on these licenses and permits, so it’s almost impossible to start a catering business from home with zero money spent. The only money you’ll need is money for the food you want to prepare, along with any money required for transportation.

However, there might be some grants or organizations in your area that can help you start a California catering business with no money.

How Much Does a Catering License Cost in California?

The cost of a catering license varies based on where you’re located. For example, it costs about $440 to get a catering permit in San Francisco County.

Other counties might have different rules for how much a license will cost based on how much you’re projected to make. On the other hand, some counties might have a flat fee. Therefore, the cost will vary based on your location, so make sure you visit the website of the city you plan on operating in to estimate the costs.

What Type of Catering Is Most Profitable?

Any catering business can be highly profitable and most catering companies have profit margins of at least 6%. That said, some catering businesses are more profitable than others.

The most profitable type of catering business is a specialty cuisine catering company. If you offer unique food that you can’t find anywhere else, people will end up paying you top dollar for it. However, there are also some other notable profitable catering business options. These include:

Event-specific catering
Personal chef services
Business events and weddings
Meal delivery services on a massive scale
Party platters
Food truck catering

Any catering business can be profitable. So, take some time to find a niche that works for you and don’t focus too much on profitability as you start out.

Start a Food Catering Business Today!

Food catering businesses make it easy to bring the joy of a meal to any venue, event, or location. In fact, you can even prepare your food off-premise and have it ready for someone’s home; this works great for holiday parties.

That said, starting a catering business in California is not as simple as making food and selling it to someone for some extra money. When you want to start one of these businesses, you’ll need to file the proper paperwork, apply for a catering license, and make sure you maintain food health safety standards.

The good news is that if you follow the steps for how to start a food catering business in California that we covered in this article, you’ll have no problem starting a food catering business. So, what are you waiting for? Start a catering business in California today!