Earn More MoneySeptember 28, 2020October 26, 2020

How Much Money Can A Catering Company Make?

If there is one thing I love, it’s food. However, I’m not the only one in this world who loves food, many people do. Therefore, it’s only natural that we’d create an article that outlines this particular industry, catering. If you’ve ever been to a function that contains a lot of people, chances are that it was a catered event. Catering is essential to parties and functions. At times it can cost a lot. However, it’ll save you valuable time. Furthermore, if you can’t cook, it’ll deem even more advantageous.

Consider this, if you’re the owner of a restaurant, small or large, offering catering is a great way to earn extra money. However, there are companies that specifically cater to events. They don’t have a physical location where customers can sit down and eat. Aside from catering events, you can monetize your business in a few ways, expanding if you will. However, we will discuss other options later on in the article. Therefore, let’s get into the main content of the article.

What Is A Catering Company?

If it isn’t clear, a catering company is a sector within the hospitality industry that provides food and drinks to social events. These events are usually professional. However, there are many times when catering companies provide for less professional events. For example, a birthday, graduation, or going-away party. There are many possibilities to go about catering events.

As a catering company, you will usually have employees, assistants, managers, cooks, etc. However, you have the option to outsource various tasks is available. For the sake of this article, let’s say you and one other person are creating a catering company. Both of you will oversee cooking, prep, inventory, costs, profits, and everything else that is associated with operating a business. As a catering company, you need to provide your clients with a variety of foods and beverages. Therefore, you need a menu.

As the owner of a catering company, you need to possess stellar customer service skills. I mention it a lot in the articles I write. However, the sentiment holds true in any service-based industry. Having amazing customer service skills not only reflects well on your brand but will prove to be the best form of marketing. Word-of-mouth.

Word-Of-Mouth & Trust

One thing companies thrive on is trust. Therefore, if someone is hosting a birthday party that they need catered and heard from a friend that your company provides good service, they’re more likely to trust you. This was true when I was running my car detailing company. Most of my clients came from friends or family referrals. Therefore, marking through good customer service will bring you the highest return-on-investment, at least, in the early stages of your business.

If you need proof of this, think about how many times you’ve either used or heard of a company through someone else. Real estate agents, car washes, restaurants, you could probably name a few. This is proof that word-of-mouth marketing is power. A personal example is a restaurant named Tremendous. It’s a restaurant that is open late at night and offers a wide variety of Asian cuisine. I have not once seen an ad for that company. However, it’s always packed. I imagine that for most people, they heard about the restaurant from someone else and now frequent it.

How Do You Own & Operate A Catering Company?

Some may think that owning a catering company is simple. However, this is far from the truth. Catering events will most likely be the most work you’ve ever done if this is your first business. Therefore, it is important to know that if you want this business to work, you truly need to give it maximum effort. As an entity that both creates and sells foods, there are a few regulations that you have to follow. Furthermore, you must acquire various licenses. For example, if you’re selling and serving alcohol, you’ll need to obtain a specific license. Becoming regulated and follow standards is extremely important. Serving high-quality food that meets health and safety standards only benefits you. Doing this ensures that you will mitigate any problems you have in the future. Not following these guidelines can have serious consequences.

Above is a list of regulations companies will have to follow when dealing with food. However, I implemented this picture because it has the number to CFIA. If you’re looking to start a restaurant or catering company, you can give them a call.

Steps You Should Follow

Now, we will speak on certain steps you need to take in order to operate your business. First, like any business, before you invest any sort of money, you will need a plan. However, this plan needs to be extremely detailed. Owning an operating a catering company can cost a lot. Before you make a menu, you should create a name for your company, ideally something catchy. Next, incorporating the business so that you can legally run your business. Next, creating a menu and establishing a budget. If you’re making all of your food at home, you can cut costs. However, as a catering company, you need to create a menu. Having a wide variety is always good. However, make sure the food you make tastes good and is cost-effective.

With every item on your menu, you should have a rough estimation of how much creating it costs. Of course, this number can vary depending on the portion size. However, say you’re making fried rice for 50 people, you should know approximately how much that costs. It should go without saying that you need to keep a record of everything you’re spending. For example, supplies, equipment, etc. This will help you keep a budget and stay on track.

Next, you will need reliable transportation. Namely, a large vehicle where you can place all the food and transport it. All you need to do now is set the prices, communicate with clientele, market, and deliver the products.

How Much Money Can Be Earned Through Catering?

Now, onto how much money you can earn from catering. Unfortunately, answering this question is more difficult than one would think. This is due to the fact that multiple factors affect how much money you’ll earn. For example, a large catering company with employees, kitchens, and hundreds of clients will earn exponentially more than two people just starting.

The picture above is from the official Canadian website. It outlines the net profit/loss for catering companies in 4 distinct quartiles. In the bottom percentile, it shows that caterers operate at a loss. However, this is common for many businesses. Especially during the beginning due to operating and startup costs. However, once you reach the top percentile, you can earn quite a considerable amount of money.

If you’re creating a dish and it costs you $1 per portion, this means it’ll be around $25 for 25 portions. In this instance, you may want to charge $50 for that whole order. This ensures that your costs are covered and you make a profit. However, you have to go through your records and price your portions according to what you think it’s valued at. Aside from catering, you can earn additional money by offering a delivery service. This would be done with smaller portions. However, many companies outsource this service through platforms such as Skip The Dishes and Uber Eats.

To Conclude

Owning and operating a catering company can be extremely profitable. However, it’ll take time, dedication, a plan, capital, and a tremendous amount of effort. However, if you truly love what you’re doing, you’ll be able to earn a full-time living and find fulfillment.

Shameed Chris Khan

Shameed is just a man on a mission to help those around him gain financial success. Obsessed with writing about all things finance, this GTA native is constantly learning and sharing his experiences with others.