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How to Run a Catering Business in the USA

Rise above the competition, carve out a niche, and scale up your catering business

The catering industry is a very competitive one, but you too can thrive in it. It is a rapidly growing market, and statistics show that from 2017-2022, catering companies in the US annualized market size growth of 1.4%. 

However, running a successful catering business is not just about loving to cook and entertaining others. You need to have a thorough business plan, an optimization strategy, and the right technology.

Therefore, if you've recently started your own catering business and you're looking for how to effectively scale up your business, follow some of the pointers in this guide.

How to improve your catering business

Efficiency is key when it comes to effectively running your catering business. As your business grows, manual processes like managing and tracking your catering orders might begin to hold you back.

Business automation is a great way to help you boost your efficiency and consequently improve your catering services. With catering software such as TripleseatDirect and Caterease, you could focus on the following:

  • Generate lead form, keep track of new leads, and improve customer management.
  • Create specialized menus for specific events such as cocktail parties and corporate events.
  • Reduce chances of miscommunication between your team members and also help analyze schedules to prevent conflicts.

Ways to reinvent your catering business

A good way to reinvent your catering business is to reevaluate your value proposition. An effective value proposition tells your prospects what your business is about, what makes you unique, and how they will benefit from you.

For instance, if you've decided that your catering business would cater to the vegan community, you could create personalized video content demonstrating your prowess in creating different vegan-based menus. You could also offer teaching lessons as part of the services you render.

Taking mouth-watering pictures of your cooked meals is also another way of letting your clients know what you're about.

Additionally, you could also diversify by partnering up with local businesses that offer services your prospective clients might require.

Sometimes, you get clients who require things such as flowers, centerpieces, tables, and chairs. So instead of saying no and losing their interest, it would do you good to partner up with florists, furniture rental companies, and event planners. Combine with your partners to come up with pre-priced service lists to make buying easier for your clients.

Inventory management considerations 

When it comes to catering businesses, the importance of inventory management cannot be overemphasized. Without proper inventory management, you could be bleeding financially without even knowing it.

This is one aspect of your catering business that could benefit from automation as well. Incorporating inventory management software into your business ensures that there are little to no errors in the running of your inventory.

Software like Pxier and curate will help you:

  • Give accurate reports of your available inventory at your catering business outlets
  • Make data-driven decisions based on reports concerning inventory consumption.
  • Compare the expected daily consumption of inventory with the leftover inventory.
  • Make tracking of waste, errors, theft, and loss a lot easier

Catering business market analysis 

For a catering business, your competitive analysis should consider both direct and indirect competition.

Indirect competition refers to other options your potential client could consider that aren't direct competitors. This category includes supermarkets, delis, and restaurants.

While your direct competition are other catering services, probably in the same geographic location, you will all compete for clients.

To analyze your competition, you need to handpick the successful ones, then find answers to these questions

  • What type of clients do they offer solutions to?
  • What type of services and products do they offer?
  • What's their pricing system?
  • What are their strong points?
  • What are their weakness?

Finding answers to these questions would help you decide what to emulate, what not to emulate, and most importantly how to capitalize on their weaknesses.

Three interesting industry facts

  • The catering industry market size is stipulated to reach $445.72 billion by 2027. With a compound annual rate growth of 3.6 during 2021-2027.
  • In terms of the accommodation and food services industry, the catering sector is ranked 10th in terms of market size market size.
  • There are more than 10,000 caterers in America with combined labor of about 110,000 people.

Some marketing ideas

Your marketing strategy as a caterer is very important in that it could help in generating leads and clients, and drive sales.

When your food tastes awesome and impressive, you get to enjoy one of the most effective modes of advertisement in the industry – word of mouth. Customers can taste and testify, and this type of marketing is pretty much free.

Another way to expose people to your business is to offer free tastings. Of course, this only works if you're confident about your culinary skills.

Create a functional website and invest in proper search engine optimization. This is important because your website will serve as the repository for most of your digital marketing endeavors. Optimization ensures your site shows up when people search caterers in your specific niche.

When it comes to keeping with your existing clients and interacting with new prospects, social media platforms such as YouTube, Pinterest, Facebook, Instagram, Twitter, and LinkedIn, offer the perfect opportunity for such. With social media, you could reach the vast majority of the population with pictures and reels of your meals.

How to get funding for business browth

To get funding for your business, most lenders would want to get a good understanding of your business plan, credit score, and in some cases your catering licenses.

SBA ( small business administration) loans are non-government loans available for small businesses. You could take advantage of their competitive rates and lower risk to fund your catering business. They're generally long-term, which means they're less expensive to pay back. 

Equipment financing can also be a useful way to get funding. But in this case, the lender releases funds to buy physical assets like food processors, industrial ovens, and other accouterments. This type of loan is great for people with a low credit score, or new business owners.

Another interesting option is the catering cash advance financing. This way you get funds by selling future bank account deposits or future credit card sales.

Reasons to exit your business, and what to expect

Leaving a business can be a result of several reasons such as making a substantial profit, retirement, or running into a loss. But for whatsoever reason you decide to leave your catering business, you most definitely need an exit strategy.

A good exit strategy would allow you to sell or transfer ownership of your business with less liability and as much profit as possible.

Exit strategies should be pragmatic but this proves difficult for most caterers as they are caterers first, before a business strategist. They often shy away from the thought of letting go of the business they've poured so much passion into and this sometimes leads to bigger regrets.

That's why it's advisable to seek a professional that can help with the financial side and tie up loose ends, like liabilities and potential litigations.

Questions to answer before formulating an exit plan are:

  • When do you want to leave and what would it entail?
  • Is it going to be a clean break or will you only be stepping back from daily control?
  • To whom will you be transferring ownership of the business?
  • How much money do you need?


Megan Kelly

About the author

Megan is the Content Manager for Dynamis and researches and writes for BusinessesForSale.com. She is an expert writer and aspiring digital marketer.

@Be_theBoss

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