Starting a contract catering firm

29 April 2005
Starting a contract catering firm

It is hard work, especially as you'll start off small, probably with one or two business partners. That means selling your company to prospective clients and managing the contracts or events you win.

The big picture

Location, location, location The usual scenario is that contract caterers locate themselves near to either the venues they intend to work at or the clients they hope to win. If you're going for contracts that don't require you to have a kitchen, you may be able to operate out of an office from home. But if you're intending to offer event catering, you'll need an industrial kitchen space to prepare food.

Take specialist property advice, as you may be better off with a leasehold building with lower overheads than a freehold. Equally there could be an advantage subletting from someone else.

Try to rent space that allows for some growth in the business, but doesn't stretch you financially to start with.

The big idea In contract catering sometimes it is enough just to be a small operator pitching against the mega-companies - as long as you can offer quality, consistency and the right price to the client! Some clients want individuality, while others want a smooth operation that isn't likely to cause them any hassle.

Pitching for an events catering job could be more difficult - most organisers want someone with a proven track record, especially when large numbers of people are involved. Be sure to sell the abilities of you and your partners well.

Whatever you decide your unique selling point will be, draw up a clear plan of how you will deliver it and which partner is responsible for each aspect - there could be a clear division of labour if one of you is particularly strong on winning accounts, while the other has the hands on experience of running a contract catering business.

Financing the dream

Write a decent business plan for a start - it will help convince potential investors you are serious and have thought through potential pitfalls.

Channel Four's site offers a good step by step on how to write a business plan - it's even got templates to download to help you get started.

Many of the high street banks have useful guides on their sites - NatWest is just one of many.

Who's going to pay for it?

Ask the experts how to start a business and many of them will say, "With someone else's money if possible". The premise is that if you are under considerable financial stress it will add to the stress of getting the business up and running.

However there are pitfalls - banks want collateral, usually your home, before they're prepared to invest in your business. This goes against the principle above of keeping your stress levels down.

Investors generally want to have some operational control in running the business - this is fine, if it's what you want, but be careful who you team up with. Business angels are a great way to get investment with little interference, although naturally, they expect their money back, with interest in the future.

Check out this site for a description of who is likely to loan you money.

And here's a brief guide on what kind of finance you are looking for (link to types of finance).

If you're still struggling for financial assistance there are grants and advice from a variety of bodies. See Grants, Information and Advice.

Down to the Detail So the next question is how to get started. Unlike those starting a business with a premise - eg pub or restaurant - as a contract caterer you need to go to your target audience rather than the other way round. So you need to get yourself out into the marketplace.

Marketing is crucial for contract and event caterers and contacts are everything. The small canapé party you do for a friend as a favour could lead to bookings for weddings or an invite to pitch for someone's staff canteen.

Of course you need to pay attention to legal and financial issues, but marketing you and your abilities is the key. But be sure to know what is expected of you before you sign your contract. See Signing the Contract.

Shout about it

Develop a plan of attack - who are you going to target and how are you going to get them to see you? You may think it wise to hold a series of open days at your new premises, allowing potential customers to taste your food and hear your sales pitch. But you're also going to need to go to them.

You need to hear about potential contracts before your rivals - read the local papers and try to stay abreast of planning applications so you know when new businesses are opening. Keep a diary of what is due to happen and when so you can follow it up at the appropriate time.

Most caterers start up with at least one client already signed up and expand from there. Try to get permission to use details of your first operation to build up other clients - pictures, storyboards of the operation, sample menus - all of this will help show your professionalism and sell you to others.

Probably the best thing you can do is network locally, joining business associations and local chambers of commerce. Not only will you meet lots of contacts, but you may be able to offer services for charitable events that again, could bring you into touch with the right people.

Create your own website to showcase what you offer that other caterers don't.

Hold your 'opening' party and use it as an opportunity to invite anyone who might help generate business as well as those who have helped you set-up - financial supporters, friends, family, local journalists, dignitaries. This may be your only chance to impress someone, so make sure you get it right.

Legal eagle Any potential client will want to be reassured that you know the legislation that pertains to your business and can fully comply with it. So be sure you're up to scratch.

A good solicitor is crucial as you want to make sure any contract you sign is accurate and correctly reflects discussions and negotiations. See how to choose an accountant.

You must be sure you comply with all the food hygiene regulations, whether it is your kitchen or the client's kitchen. You must also ensure staff are correctly trained. Do not assume that the previous caterer complied with the law - make sure you check through everything.

The Food Standards Agency produces a downloadable booklet on things to be considered when opening a new catering business.

Employment law is increasingly more complex and you must understand TUPE (Transfer of Undertakings (Protection of Employment) if you are taking on an existing contract. See TUPE in HR.

Once you have staff, you need to know about employment law, which is constantly evolving - from 2006 it will be illegal to discriminate on the basis of age. Candidates can take you to an industrial tribunal if they feel they've been discriminated against at the recruitment stage, so be aware of your obligations and their rights. And if the employee isn't working out, know the correct way to go about firing them.

For more info on writing job ads, writing a job description, hiring staff, writing job offer letters, setting up employee appraisal schemes and if it all goes wrong, click on HR.

And don't forget there is now the Disability Discrimination Act, which affects the access to all public buildings by the disabled, so be sure that any plans for alterations take these new requirements into account.

Info on the act
Disability Rights Commission

Insurance may be dull it is essential. Make sure your own property and equipment is insured and be sure insurance is covered in the contracts you sign with the clients.

Money matters

An accountant is an absolute must unless you've done a fair amount of bookkeeping yourself. Chances are hiring a professional will save you time and money in the long run. Ask fellow caterers, or other local businesses for recommendations. See choosing an accountant.

If you are hiring staff, or indeed taking salaries out of the business for yourself and partners you need to ensure you set-up a PAYE (pay as you earn) system and ensure National Insurance contributions are being met.

Make it pretty

Some clients will be willing to spend money on making changes to the kitchen/dining areas they have hired you to cater for and will ask for your input. Others will expect you to come in and make use of what's there. Be sure you know what you're getting into before you sign the contract.

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