This is How Much Money You Can Make From a Catering Business
There’s a lot to consider when deciding whether or not to start a catering business. One of the biggest considerations? The question of how much money can you make as a caterer. You didn’t expect us to provide an exact number, did you? Of course it’s not that simple, and as the saying goes, “your mileage will vary!” Here, we’ll take a look at the average yearly salary of a full-time and part-time caterer. We’ll also look at several factors that can affect your profit margin, and how much money most caterers need in order to get started and how much should be re-invested each year.
Average Catering Salaries
According to the website Sokanu.com, the average salary for caterers in the US is $48,000. You may be pleased to learn that caterers enjoy a salary that’s in the top 25% of all careers in the food industry. As a starting caterer, you can expect to earn about $30,000, while top caterers at high-end or established businesses often pull in upwards of $80,000.
Costs of Starting a Catering Company
This may seem like great news, but remember that there are also plenty of costs associated with starting a catering company, especially your own private company. These sunk costs have to be factored into the equation of how much money can you make as a caterer. We’ve listed a few below.
Permits/Licenses
Before you do anything else, you’ll need to obtain the proper permits and licenses required by your state. Costs vary, but this should be one of your first expenses.
Space
Unfortunately, there’s little chance that you’ll be able to eliminate this expense by cooking from your own kitchen; most states prohibit this practice. If yours is one of them, you’ll need to look into renting or leasing space in which to prepare all food for your catering business. But don’t sweat — there’s no need to purchase space. Consider looking into a commissary kitchen; a shared kitchen space that provides space to cook along with equipment to use (and sometimes even parking for your food truck!). Or, find a restaurant, school, or church that has a kitchen they don’t use all day every day, and ask them if you can sub-lease their space for several hours each day.
Equipment
How much you spend on equipment is up to you and can be a highly variable expense. If you sink tons of money into stocking your kitchen space with a bevy of state-of-the-art equipment, you’ll likely spend the majority of your first year in business just making up the cost of equipment. But, to cut costs, you can always rent or borrow equipment, share it with another caterer or independent chef, or make use of a commissary kitchen.
Food
Here’s another highly variable expense. If you’ll be providing only top-quality dishes with pricey ingredients like truffle and caviar, then obviously a much larger portion of your yearly income will go toward your food inventory. According to bizfluent.com though, “The food costs for a typical catering business should total between 27 and 29 percent of gross sales.”
Staff
Planning to go it alone? You won’t have to set aside funds to pay other employees. But if your catering business is a side gig, or you have a lot of other stuff going on in life, it may pay off to have some help.
Truck/Transportation
Don’t forget that you’ll need a way to transport your food to events. This can be a used food truck, or even just a van, but it will likely be an unavoidable sunk cost during the first year of your catering company.
Advertising
Last, but certainly not least is advertising. How can you find any clients to cook for if no one knows about your business? Of course, you can use your food truck or van to advertise your business, but it helps to try other ways of getting the word out there too. With the prolific advertising opportunities on social media these days, your advertising budget doesn’t need to be very large. Just enough to spread the word and start building your business.
Do you want to start a food business? At Pilotworks, we create content that helps you learn the ins and outs of starting and scaling a food business. Our membership features kitchen facilities, co-working space, access to mentorship from some of the top food makers out there, as well as access to all our food events. Click here to see how you can get involved or become a Pilotworks member.