Starting a Successful CATERING BUSINESS Virginia Cooperative

Starting a Successful
Ann Lastovica, Tim Roberts & Denise Brochetti*
Starting your own catering business can be both
financially rewarding and fun. Whether you cater
events on a full-time or a part-time basis, the opportunities are excellent. Each catered event is a new experience and challenge with a new group of people. With
the rewards and fun come demanding work, for which
you will need stamina and the ability to work under
Virginia law requires that caterers be licensed and
meet other requirements for foodservice establishments.
In Virginia, the Board of Health insures that food for
distribution and sale to the public is safely prepared,
handled, protected and preserved.
To obtain a license, apply to the local Health Department. Before a license is issued, the Health Department
will inspect your business
to see that it meets food sanitation requirements. Once a license is
issued, the Health Department will conduct routine
inspections of your business. These inspections are
needed to help insure compliance with food sanitation
rules developed to protect the public from foodborne
illness. Outbreaks of foodborne illness have been
attributed to factors such as poor hygiene by personnel, inadequate cooking, and improper cooling and
storage of food.
In Virginia, the law requires that the food
operation area be separate from the kitchen facility of your home. The Health Department will
*Extension Specialist, Family Management, Virginia State University; Extension Specialist, Food Safety, Virginia Tech; Extension
Specialist, Human Nutrition, Foods and Exercise, Virginia Tech, respectively
Virginia Cooperative Extension programs and employment are open to all, regardless of race, color, religion, sex, age, veteran status,
national origin, disability, or political affiliation. An equal opportunity/affirmative action employer. Issued in furtherance of
Cooperative Extension work, Virginia Polytechnic Institute and State University, Virginia State University, and the U.S. Department
of Agriculture cooperating. J. David Barrett, Interim Director, Virginia Cooperative Extension, Virginia Tech, Blacksburg;
Lorenza W. Lyons, Administrator, 1890 Extension Program, Virginia State, Petersburg.
If the products will be sold to retail
outlets, they must be labeled. The label
must include: 1) name of the product; 2)
net weight of the product; 3) name and
address of the manufacturer and 4) a list
of the ingredients in descending order by
weight. All packaging used for the products must be made of food grade sources,
as recognized by the Food and Drug
Administration and the United States Department of Agriculture.
inspect the area that you intend to use for
food operation before they will issue a license. Plans and specifications for construction or remodeling of an area must be submitted
to the Health Department for review. Complete
partitioning and solid, self-closing doors must separate
the food operation area from your home kitchen. There
must be separate sinks for food, utensil washing and
cleaning. There also must be a separate sink to be used
only for hand washing. Water and sewage supplies and
plumbing systems must be approved. Equipment and
food-contact surfaces must meet regulations of the
Virginia Board of Health.
The Virginia Department of Agriculture and Consumer Services (VDACS) has the authority to see that
clean and wholesome bakery products, such as cakes,
breads and cookies, are prepared under proper conditions. Although a license is not required for a homebased bakery, VDACS must inspect the facility that
you intend to use. A separate kitchen is not
required, but the products and ingredients
must be kept separate from those used by
your family. VDACS will need formulations (recipes) of the products that you
intend to prepare as well as flow processes for these products. To insure
that good manufacturing practices
(GMP) are used, all products must
undergo basic laboratory testing to
make sure that they are not adulterated with bacteria that cause
foodborne illness.
The development of a business plan
will aid you in planning a successful business. Prior to starting a catering business, you need to
determine your type of business—i.e., cakes, receptions, seated dinners, box lunches, picnics, hors
d’oeuvres, or dessert course—and the type of food you
will serve (primarily convenience or “from scratch”).
Analyze your market. Ask yourself the following
questions to see if your business venture will satisfy at
least one of the following fundamental elements of
success. If not, you probably do not have a viable
business idea.
The questions are:
• Will the business serve a presently unserved need?
• Will the business serve an existing market in which
demand exceeds supply?
• Can the business effectively compete with existing
businesses because of some “competitive advantage?”
Decide whom you will target as customers. Who is
your competition? What are their strengths and weaknesses? Where will you get supplies? Decide how you
will promote your business. Will you need to employ
staff to help with production, service, and cleanup?
What other skills do you need to make your business
successful? For additional information on Developing
a Business Plan, see VCE Publication 354-302, available from your local Family and Consumer Sciences
Extension Agent.
You may choose to start your catering business by
renting items to keep initial costs to a minimum. You
may rent the use of kitchen facilities, utensils, tables,
tablecloths, serving equipment and other items. This
will allow you to: 1) Build a reputation; 2) develop
some capital for investment and expansion and 3)
evaluate how much time and money you want to invest
and the impact that this business will have on your
Factors affecting menu planning include the type of
event, time of event, number of people to be served,
available equipment, number of food preparers and
servers and the amount of money to be spent.
The menu needs to include a variety of foods that are
acceptable to the customer and the occasion. Be able to
suggest menus that show a balance in color, texture,
shape, sizes, flavor, cooking methods and cost. Plan to
include nutritious foods from each of the food groups,
• Meat, poultry, fish, dried beans, eggs and nuts;
• Bread, cereal, rice and pasta;
• Vegetables;
• Fruits;
• Milk, yogurt and cheese.
Plan for eye appeal by using at least
four colorful foods on each menu or
food tray. Plan for contrast in texture
and flavor. Contrast crisp foods with
soft, creamy foods. Use strong and
mild flavored foods together. Balance light and heavy foods. Use
foods that complement each other.
As a caterer, you will need to
decide whether you will make all
foods “from scratch,” or purchase some
convenience foods. If you make all
foods, consider your skills, equipment and
time as you plan menus. Also, it is important to
prepare a quality product of standard consistency.
Develop a quality standard for each item. Use “hightech” equipment designed to produce a consistent product. After considering skills and equipment, compare
the cost of caterer-prepared items with purchase costs.
Evaluate for cost savings and quality consistency. Do
this for each item offered before determining a pricing
Develop an information packet that includes sample
menus and prices, other services you provide, and past
events you have catered. Develop a portfolio of pictures that shows how food was presented at these
Every caterer needs to develop a contract to operate
in a professional, business manner. Write the contract
in simple language that both parties can understand and
state the terms of the agreement. Have an attorney
review the contract form. Include the following items
in the contract, as applicable. These are:
• Names, addresses and telephone numbers of parties
involved (buyer and seller);
• Date of the agreement and date of the event;
• Time of event;
• Location of event;
• Room set-up, decorations, tablecloths, etc., to be used;
• Type of menu;
• Estimated and guaranteed attendance;
• Service arrangements;
• Duration of activity;
• Entertainment;
• Pricing arrangements and potential price increases;
• Deposit required (25, 30, or 50 percent of cost when
the contract is signed);
• Discount (if any) for full payment at the time contract
is signed;
• Cancellation provisions specifying cases of cancellation because of illness, broken engagement or death.
The contract needs to specify how much of the deposit
will be retained due to cancellation.
• Applicable taxes;
• Include space for signatures at the bottom of the
contract form.
Carefully consider contract terms, write them in
simple language, and print them in a size that is easy-toread. This is to insure that everyone understands the
terms of the contract.
Insurance is a necessary expense. This includes
product and personal liability, as well as coverage on
the space used for the
business, equipment,
vehicle used for the
worker’s compensation for any employees. Insurance protects
the unexpected. For
more information on
please contact your
Family and Consumer
Sciences Extension
Agent to borrow the
video, Insurance Issues for the HomeBased Business.
To operate a profitable catering business, you need
to decide on a price that is appropriate for the services
rendered. Determining the costs of catering an event is
the most important part of covering your expenses and
earning profits. Caterers price their services using
different methods. The pricing formula that covers your
costs and provides a profit is as follows:
Materials + Overhead + Labor + Profit = Price
Materials include the costs of the food or beverage
items. Also, include any shipping and handling costs
incurred to acquire these materials.
Overhead costs are the variable and fixed expenses
that must be covered to stay in business. Variable costs
are those expenses that fluctuate including vehicle
expenses, rental expenses, utility bills and supplies.
Fixed costs include the purchase of equipment, service
ware, marketing and advertising, and insurance. After
overhead costs are determined, the total overhead costs
are divided among the total number of catering jobs
Labor costs include the costs of food preparation
and service. Also included are Social Security taxes
(FICA), vacation time, retirement and other benefits
such as health or life insurance. To determine labor
costs per hour, keep a time log. When placing a value
on your time, consider the following: 1) Your skill and
reputation; 2) wages paid by employers for similar
skills and 3) where you live. Other pricing factors
include image, inflation, supply and demand, and competition.
Profit is a desired percentage added to your total
costs. You will need to determine the percentage of
profit added to
each menu item or
type of event.
Determining a
price is not easy. It
is as much an “art”
as it is a “science.”
There is no one exact price.
your price on the
type of event being
offered ,
and your competition. When considering your competition, your three
pricing choices are
to: 1) Charge the
same as your competition; 2) charge more than your
competition or 3) charge less than your competition. It
is important to cover all your costs if you want to stay in
business. There are computer programs available to
help you price foods and keep financial data for decision-making.
Record keeping is not difficult, but it is important
and can be time-consuming. You need to develop a
system that helps you keep track of income, expenses,
and profit or loss to determine business growth and for
tax purposes. Contact a local accountant for assistance
in setting up your record keeping system to save time
and money later. Additional information on record
keeping and taxes is available from your local library,
bookstore, the Internal Revenue Service (IRS), local
Small Business Administration (SBA) Office, Small
Business Development Center (SBDC) or Virginia
Cooperative Extension Office.
To be successful in the catering business, one must
produce delicious food that is safe and wholesome. The
production of safe foods is your responsibility. Time
and temperature abuse of foods contaminated with
Campylobacter and Escherichia coli O157:H7, will
certainly lead to a foodborne outbreak that would likely
destroy your reputation and business. Foodborne illness can be avoided if you and your employees follow
safe food handling practices.
• Purchase high-quality foods from a reliable vendor.
The food should be in good condition with the
packaging intact, fresh (not beyond expiration date),
and at the proper temperature.
• Store potentially hazardous foods, such as meat,
poultry, eggs, milk and fish, immediately in the
refrigerator (33 to 40ºF) or in the freezer (-10 to 0ºF).
Dry staples should be stored at 50 to 70ºF. Practice
First-in-First-Out (FIFO) to insure safety and quality
of your menu items.
• Ideally, frozen foods should be thawed in the refrigerator 18 to 24 hours prior to preparation. However,
thawing under cold running water (<70ºF), in the
microwave, or extending the cooking time are all
acceptable methods for thawing food. If the cook
time is extended, be sure that the recommended
internal cook temperature for the food is reached.
• Cook food thoroughly to the recommended internal
temperature for the appropriate amount of time. Meats
(including ground beef), fish, shell eggs, and pork
should be cooked to 155ºF for a minimum of 15
seconds. Poultry should be cooked to 165ºF for at
least 15 seconds. Cooking times and temperatures for
beef roasts will depend upon roast weight and oven
type. Use a meat thermometer to measure internal
cook temperatures.
• In the catering business, large quantities of food are
generally prepared in a central kitchen and distributed
to clients. Proper cooling and hot-holding are critical
for preventing the growth of possible foodborne
pathogens. Hot food may be prepared and distributed
in temperature-holding equipment to the client or the
food may need to be cooled below 41ºF, distributed
cold, and reheated. To cool food properly, portion the
food in clean, sanitized shallow containers and place
in the refrigerator immediately. Make sure the food is
covered, dated, and reaches a temperature less than
41ºF within a 4-hour period. Also, food may be
cooled rapidly by placing on a bed of ice and stirring
the food every 15 minutes.
• Hot food for distribution and holding should be held at
a minimum temperature of 140ºF. Make sure the
hot-holding equipment is set to maintain the temperature of the food above 140ºF. If the temperature
of the food should drop in the danger zone (41 to
140ºF) for 2 or more hours, discard. Placing cold food
dishes on beds of ice should hold the food below 41ºF.
REMEMBER: Keep hot foods “HOT” and cold
foods “COLD.”
Reheat all potentially hazardous foods including
leftovers to 165ºF. Gravy should be heated to a boil
(212ºF). Discard leftovers stored in the refrigerator
beyond 3 days (Gravy 2 days). Leftovers stored in the
freezer should be consumed within 4 months.
• Practice good personal hygiene when preparing and
handling food. Wash hands before food preparation,
after handling raw foods, after using the restroom or at
any time the hands become soiled. Gloves may be
worn when handling and preparing food. However,
gloves can become soiled as easily as hands and
should be changed often.
• Take measures to prevent cross-contamination of food.
• Clean and sanitize food contact surfaces such as
counter tops, cutting boards, equipment and utensils. One tablespoon of bleach per gallon of water is
an effective sanitizing agent.
• Wash fresh fruit and vegetables thoroughly under
cold running water. In refrigerator storage, make
sure fresh fruits and vegetables are wrapped or
stored in containers separately from raw meats.
• Wear clean clothes and aprons when preparing food.
• Do not use the same towel to wipe food contact
surfaces that you use for wiping hands.
• Clean storage and kitchen areas regularly.
• Practice good housekeeping.
• Implement a pest control program for eliminating
the spread of disease.
Provide safe food for your clients by following and
practicing food safety guidelines. Make sure that you
and your employees are current with state and local
regulatory requirements for food service establishments. This way you can rest assured that the food you
provide to your clients is safe and wholesome.
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