Virginia

H OME - BASED &

Cooperative

Extension

M ICRO - BUSINESSES

REVISED 1999

PUBLICATION 354-305

Starting a Successful

CATERING BUSINESS

Ann Lastovica, Tim Roberts & Denise Brochetti*

INTRODUCTION

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 opportuni-

ties are excellent. Each catered event is a new experi-

ence 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

pressure.

GETTING A LICENSE

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 Depart-

ment. Before a license is issued, the Health Department

will inspect your business

to see that it meets food sanita-

tion 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 person-

nel, inadequate cooking, and improper cooling and

storage of food.

LOCATION OF A CATERING

BUSINESS

In Virginia, the law requires that the food

operation area be separate from the kitchen facil-

ity 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;

VIRGINIA POLYTECHNIC INSTITUTE

Lorenza W. Lyons, Administrator, 1890 Extension Program, Virginia State, Petersburg.

AND STATE UNIVERSITY

VT/013/0399/2500/993276/354305

VIRGINIA STATE UNIVERSITY

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 prod-

ucts must be made of food grade sources,

as recognized by the Food and Drug

Administration and the United States De-

partment of Agriculture.

DETERMINING

YOUR PRODUCT

AND MARKET

The development of a business plan

will aid you in planning a successful busi-

ness. Prior to starting a catering business, you need to

inspect the area that you intend to use for

determine your type of business—i.e., cakes, recep-

food operation before they will issue a li-

tions, seated dinners, box lunches, picnics, hors

cense. Plans and specifications for construc-

d’oeuvres, or dessert course—and the type of food you

tion or remodeling of an area must be submitted

will serve (primarily convenience or “from scratch”).

to the Health Department for review. Complete

Analyze your market. Ask yourself the following

partitioning and solid, self-closing doors must separate

questions to see if your business venture will satisfy at

the food operation area from your home kitchen. There

least one of the following fundamental elements of

must be separate sinks for food, utensil washing and

success. If not, you probably do not have a viable

cleaning. There also must be a separate sink to be used

business idea.

only for hand washing. Water and sewage supplies and

The questions are:

plumbing systems must be approved. Equipment and

• Will the business serve a presently unserved need?

food-contact surfaces must meet regulations of the

• Will the business serve an existing market in which

Virginia Board of Health.

demand exceeds supply?

• Can the business effectively compete with existing

LOCATION OF A

businesses because of some “competitive advantage?”

HOME-BASED BAKERY

The Virginia Department of Agriculture and Con-

sumer Services (VDACS) has the authority to see that

clean and wholesome bakery products, such as cakes,

breads and cookies, are prepared under proper condi-

tions. Although a license is not required for a home-

based 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 formula-

tions (recipes) of the products that you

intend to prepare as well as flow pro-

cesses 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 adul-

terated with bacteria that cause

foodborne illness.

Decide whom you will target as customers. Who is

Develop a quality standard for each item. Use “high-

your competition? What are their strengths and weak-

tech” equipment designed to produce a consistent prod-

nesses? Where will you get supplies? Decide how you

uct. After considering skills and equipment, compare

will promote your business. Will you need to employ

the cost of caterer-prepared items with purchase costs.

staff to help with production, service, and cleanup?

Evaluate for cost savings and quality consistency. Do

What other skills do you need to make your business

this for each item offered before determining a pricing

successful? For additional information on Developing

structure.

a Business Plan , see VCE Publication 354-302, avail-

Develop an information packet that includes sample

able from your local Family and Consumer Sciences

menus and prices, other services you provide, and past

Extension Agent.

events you have catered. Develop a portfolio of pic-

tures that shows how food was presented at these

events.

START-UP COSTS

Every caterer needs to develop a contract to operate

You may choose to start your catering business by

in a professional, business manner. Write the contract

renting items to keep initial costs to a minimum. You

in simple language that both parties can understand and

may rent the use of kitchen facilities, utensils, tables,

state the terms of the agreement. Have an attorney

tablecloths, serving equipment and other items. This

review the contract form. Include the following items

will allow you to: 1) Build a reputation; 2) develop

in the contract, as applicable. These are:

some capital for investment and expansion and

• Names, addresses and telephone numbers of parties

evaluate how much time and money you want to invest

involved (buyer and seller);

and the impact that this business will have on your

• Date of the agreement and date of the event;

family.

• Time of event;

• Location of event;

DEVELOPING A CREATIVE

• Room set-up, decorations, tablecloths, etc., to be used;

MENU FOR SPECIAL EVENTS

• Type of menu;

Factors affecting menu planning include the type of

• Estimated and guaranteed attendance;

event, time of event, number of people to be served,

• Service arrangements;

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,

including:

• 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. Bal-

ance 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.

• Duration of activity;

incurred to acquire these materials.

• Entertainment;

Overhead costs are the variable and fixed expenses

• Pricing arrangements and potential price increases;

that must be covered to stay in business. Variable costs

• Deposit required (25, 30, or 50 percent of cost when

are those expenses that fluctuate including vehicle

the contract is signed);

expenses, rental expenses, utility bills and supplies.

• Discount (if any) for full payment at the time contract

Fixed costs include the purchase of equipment, service

is signed;

ware, marketing and advertising, and insurance. After

• Cancellation provisions specifying cases of cancella-

overhead costs are determined, the total overhead costs

tion because of illness, broken engagement or death.

are divided among the total number of catering jobs

The contract needs to specify how much of the deposit

expected.

will be retained due to cancellation.

Labor costs include the costs of food preparation

• Applicable taxes;

and service. Also included are Social Security taxes

• Include space for signatures at the bottom of the

(FICA), vacation time, retirement and other benefits

contract form.

such as health or life insurance. To determine labor

Carefully consider contract terms, write them in

costs per hour, keep a time log. When placing a value

simple language, and print them in a size that is easy-to-

on your time, consider the following: 1) Your skill and

read. This is to insure that everyone understands the

reputation;

2) wages paid by employers for similar

terms of the contract.

skills and 3) where you live. Other pricing factors

include image, inflation, supply and demand, and com-

petition.

INSURANCE

Profit is a desired percentage added to your total

Insurance is a necessary expense. This includes

costs. You will need to determine the percentage of

product and personal liability, as well as coverage on

profit added to

the space used for the

each menu item or

business, equipment,

type of event.

vehicle used for the

Determining a

business,

and

price is not easy. It

worker’s compensa-

is as much an “art”

tion for any employ-

as it is a “science.”

ees. Insurance pro-

There is no one ex-

tects

you

from

act price.

Base

the unexpected. For

your price on the

more information on

type of event being

insurance

issues,

catered,

special

please contact your

services

offered

Family and Consumer

and your competi-

Sciences Extension

tion. When con-

Agent to borrow the

sidering your com-

video, Insurance Is-

petition, your three

sues for the Home-

pricing choices are

Based Business .

to:

1) Charge the

same as your competition; 2) charge more than your

PRICING FOR PROFIT

competition or 3) charge less than your competition. It

To operate a profitable catering business, you need

is important to cover all your costs if you want to stay in

to decide on a price that is appropriate for the services

business. There are computer programs available to

rendered. Determining the costs of catering an event is

help you price foods and keep financial data for deci-

the most important part of covering your expenses and

sion-making.

earning profits. Caterers price their services using

different methods. The pricing formula that covers your

BUSINESS RECORD KEEPING

costs and provides a profit is as follows:

Record keeping is not difficult, but it is important

and can be time-consuming. You need to develop a

Materials + Overhead + Labor + Profit = Price

system that helps you keep track of income, expenses,

and profit or loss to determine business growth and for

Materials include the costs of the food or beverage

tax purposes. Contact a local accountant for assistance

items. Also, include any shipping and handling costs

in setting up your record keeping system to save time

and money later. Additional information on record

food in clean, sanitized shallow containers and place

keeping and taxes is available from your local library,

in the refrigerator immediately. Make sure the food is

bookstore, the Internal Revenue Service (IRS), local

covered, dated, and reaches a temperature less than

Small Business Administration (SBA) Office, Small

41ºF within a 4-hour period. Also, food may be

Business Development Center

(SBDC) or Virginia

cooled rapidly by placing on a bed of ice and stirring

Cooperative Extension Office.

the food every 15 minutes.

• Hot food for distribution and holding should be held at

a minimum temperature of 140ºF. Make sure the

FOOD SAFETY

hot-holding equipment is set to maintain the tem-

To be successful in the catering business, one must

perature of the food above 140ºF . If the temperature

produce delicious food that is safe and wholesome. The

of the food should drop in the danger zone (41 to

production of safe foods is your responsibility. Time

140ºF) for 2 or more hours, discard. Placing cold food

and temperature abuse of foods contaminated with

dishes on beds of ice should hold the food below 41ºF.

foodborne pathogens, such as

Salmonella,

Campylobacter and Escherichia coli O157:H7, will

REMEMBER: Keep hot foods “HOT” and cold

certainly lead to a foodborne outbreak that would likely

foods “COLD.”

destroy your reputation and business. Foodborne ill-

ness can be avoided if you and your employees follow

Reheat all potentially hazardous foods including

safe food handling practices.

leftovers to 165ºF. Gravy should be heated to a boil

• Purchase high-quality foods from a reliable vendor.

(212ºF). Discard leftovers stored in the refrigerator

The food should be in good condition with the

beyond 3 days (Gravy 2 days). Leftovers stored in the

packaging intact, fresh (not beyond expiration date),

freezer should be consumed within 4 months.

and at the proper temperature.

• Practice good personal hygiene when preparing and

• Store potentially hazardous foods, such as meat,

handling food. Wash hands before food preparation,

poultry, eggs, milk and fish, immediately in the

after handling raw foods, after using the restroom or at

refrigerator (33 to 40ºF) or in the freezer (-10 to 0ºF).

any time the hands become soiled. Gloves may be

Dry staples should be stored at 50 to 70ºF. Practice

worn when handling and preparing food. However,

First-in-First-Out (FIFO) to insure safety and quality

gloves can become soiled as easily as hands and

of your menu items.

should be changed often.

• Ideally, frozen foods should be thawed in the refrigera-

• Take measures to prevent cross-contamination of food.

tor 18 to 24 hours prior to preparation. However,

• Clean and sanitize food contact surfaces such as

thawing under cold running water (<70ºF), in the

counter tops, cutting boards, equipment and uten-

microwave, or extending the cooking time are all

sils. One tablespoon of bleach per gallon of water is

acceptable methods for thawing food. If the cook

an effective sanitizing agent.

time is extended, be sure that the recommended

• Wash fresh fruit and vegetables thoroughly under

internal cook temperature for the food is reached.

cold running water. In refrigerator storage, make

• Cook food thoroughly to the recommended internal

sure fresh fruits and vegetables are wrapped or

temperature for the appropriate amount of time. Meats

stored in containers separately from raw meats.

(including ground beef), fish, shell eggs, and pork

• Wear clean clothes and aprons when preparing food.

should be cooked to 155ºF for a minimum of 15

• Do not use the same towel to wipe food contact

seconds. Poultry should be cooked to 165ºF for at

surfaces that you use for wiping hands.

least 15 seconds. Cooking times and temperatures for

• Clean storage and kitchen areas regularly.

beef roasts will depend upon roast weight and oven

• Practice good housekeeping.

type. Use a meat thermometer to measure internal

• Implement a pest control program for eliminating

cook temperatures.

the spread of disease.

• In the catering business, large quantities of food are

Provide safe food for your clients by following and

generally prepared in a central kitchen and distributed

practicing food safety guidelines. Make sure that you

to clients. Proper cooling and hot-holding are critical

and your employees are current with state and local

for preventing the growth of possible foodborne

regulatory requirements for food service establish-

pathogens. Hot food may be prepared and distributed

ments. This way you can rest assured that the food you

in temperature-holding equipment to the client or the

provide to your clients is safe and wholesome.

food may need to be cooled below 41ºF, distributed

cold, and reheated. To cool food properly, portion the

REFERENCES:

Longree, K. and Armbruster, G. (1996). Quantity food sanitation (5th ed.). New

York: John Wiley & Sons.

FDA. (1997). Food Code: 1997 recommendations of the United States Public

Health Service, Food and Drug Administration. Springfield, VA: National

Technical Information Service.

USDA. (1998). Safe handling of complete meals to go. Washington, D.C.: U.S.

Department of Agriculture Food Safety and Inspection Service.

Mayo, C. R. & Murphy, M. L. (1991). Catering innovations: A managerial

approach. Richmond, VA: M & M Publishing Company.

ADDITIONAL RESOURCES

Gisslen, W. (1993). Professional baking (2nd ed.). New York: John Wiley &

Sons.

Hall, S. (1996). From kitchen to market: Selling your gourmet food specialty.

Chicago, IL: Upstart Publishing Division of Dearborn Publishing.

Ketterer, M. (1997). How to manage a successful catering business (2nd ed.).

New York: John Wiley & Sons.

Molt, M., et.al. (1996). Food for fifty (10th ed.), Englewood Cliffs, NJ:

Prentice Hall Press.

Pegler, M. M. (1991). Food presentation and display. Kingwood, TX: Culinary

and Hospitality Industry Publications Services (C.H.I.P.S.).

Schat, Zachary Y. (1998). The baker’s trade: A recipe for creating the success-

ful small bakery. Ukiah, CA: Acton Circle Publishing.

Splaver, B. (1997). Successful catering (3rd ed.). New York: John Wiley &

Sons.

Stachowiak, Y. (1990). Creative art of garnishing. Westminster, MD: Value

Publishing, Inc.

Wemischner, R. & Karp, K. (1997). Gourmet to go: A guide to opening and

operating a specialty food store. New York: John Wiley & Sons.