The catering business is one of the most lucrative and profitable home businesses with a high potential for expansion and growth. It is financially rewarding. Each catered event – whether birthday parties for children, breakfast in bed and intimate candlelight dinners for two, company dinner parties and wedding receptions involving a hundred or more guests is a new experience and challenge with a new group of people.
Whether you cater events on a full-time or part-time basis, the opportunities are excellent. However, catering is a demanding work, requiring stamina, ability to work under pressure, and excellent interpersonal skills. Your success will greatly depend on your reputation. To build a good reputation in the business, you should be willing to work hard and the ability to work under pressure. This kind of entrepreneurial business is definitely growing and becoming more popular with people of all income levels.
The demand for catering business is always on the rise. The increased demand for catering business is driven by the rising number of higher-income households, number of weddings and increased corporate events with companies, corporations, charities, civic groups, event organizers and individuals calling on caterers to host on- and off-premises events. Businesses of all sizes are using catered lunches, cocktail parties and dinner meetings to build their images and increase company sales. It is a matter of keeping up with the competition in promoting a company and/or product
InPakistanwhenever there is a wedding or a dinner party, hosts are seeking quality food because it is not only food for them, it actually projects their image. Most people consider it as status symbol. Middle class people usually require caterers only in weddings or funerals but the higher class have lavish weddings, dinners, meetings and parties through out the year.
IBEX team has found that the catering business is a profitable business with huge margins starting with a low initial investment.
The word “Organized” is the best word to describe this business. If the caterers are not well organized, their business can sink in minutes and if they are; then the business can also be a huge success in minutes. Whatever the occasion is, whether it’s a wedding, funeral, dinner, party, or a business meeting, the real job of the caterer is only for a few minutes starting from the time when dinner or lunch starts and ending at the time when food ends which is not more than 20 minutes. In those 20 minutes, a caterer might get more future projects or there are chances that he might be out of the business if the service is not proper.
Starting the Business
To start the catering business, first you have to decide that what will be your target audience, whether you will be targeting the higher class or the middle class. Once you have decided the audience than you will have to think on the maximum guests limit that you could be able to serve. Like there are some caterers who can only serve small parties with guests of not more than 100 and there are caterers who can serve more than 2000 guests. If you want to serves a large number of guests, you will require more initial investment for the crockery and other essentials.
You must have an office or any location from where you can work and where the kitchen exists with best cooks. Initially you will have to find some good events to get established in the market. This depends on your contacts otherwise you will have to market your business. Once you cater a few projects than your service will become famous by marketing through word of mouth.
Initial Requirements
The major requirements of this business are the crockery stock with tables, chairs, tents and other decoration materials. You need employees which include waiters, cooks and laborers for the installation of tents and initial setting of the area. To give you an idea about the employees, let’s take an example that you want to start the business to serve on an average 100 guests. For 100 guests, you require at least 8 to 10 waiters, around 4 laborers and 1 or 2 cooks at the backend. This classification is used for providing a high quality catering service. If you want to serve more number of guests for example 200, then number of cooks and laborers will remain same only the number of waiters will increase but it will not be doubled. For 200 guests, around 13 to 15 waiters will be required. Similarly if you have increased the number of guests with the passage of time, it will be less costly in terms of waiters and other employees.
Initial Investment
There are plenty of vendors available to help you pull together the perfect event — decorators, designers, event planners, florists, bakers, and rental companies for portable toilets, cooking equipment, tents, chairs, linens, tableware, glassware, and silverware. You can start buying your own equipment only when you have steady revenues. By renting equipment, facilities and supplies, you can use your first few months to build your reputation, develop some capital for investment and expansion and evaluate how much time and money you want to invest.
The initial investment can be calculated with the number of guests you want to cater. If you have a location for the kitchen, there are only two other areas for the initial investment: 1) Crockery and 2) Investment on the employees
Crockery includes plates, spoons, forks, glasses, napkins etc with the tables, chairs, table clothes etc. We can calculate the cost of crockery on per head basis. For one guest a high quality crockery set costs around Rs. 500 and another Rs. 500 is needed per guest for table, chairs and other decoration stuff. It means to cater one guest Rs. 1000 is the initial investment needed. To start with a business to cater 100 guests, you will need initial investment of Rs. 100,000 including the tents.
For the investment on the employees, you have several options. You can outsource the waiters, you can pay them on project basis or you can have fix employees. We will talk about fix employees which is the case of an organized business. Like explained above, to cater 100 guests, you need 4 laborers , 10 waiters and a cook; on average each person’s pay starts with Rs. 3000 to Rs. 4000 a month and goes up to Rs. 6000. Usually these waiters rely more on tips which sometimes is more than their fixed monthly income.
To have 15 employees on fixed pays, you will have to pay around Rs. 50,000 to Rs. 70,000 a month. The actual initial investment is only those Rs. 100,000 which you have spent on purchasing the crockery and decoration stuff. Employees work is part of the monthly expenditure.
Profit Margins
The profit margins are high in this business. For example, you are charging Rs. 300 per head for an event with 100 guests. It will give you Rs. 30,000 for a few hours. After all expenses, you can get minimum profit of 30% that is Rs. 9000 and even sometimes more depending upon your efficiency. Similarly if you are able to cater more number of guests, the profit margins can also be increased.
Major Problems
The catering business is tough, with the details of preparing food off-premises and on-site for hundreds of people often times mind-boggling. It is not easy to cater to an event of 400 people, much more if you start to do thousands, some 60 miles from your Kitchen.
Another major problem of the catering business is to manage your employees properly. It is up to the number of events you get that leads you to a decision weather you want the employees on fixed salaries, on commission or you want to outsource this job. Another challenging task is that your waiters should be well experienced and well organized; even a small mistake can put you in a serious problem. If an event is not well organized, then your clients can sometimes even penalize you and you can face a number of problems. If an event goes well, then you can get more such events in future. You have to be very careful about the selection of waiters and make sure they complete the job in an organized way.
