How to Start Catering Business in India

In India, starting a catering business is profitable as it does not involve higher initial investments, especially for the homemakers. Based on the present industry analysis of the catering business, it is expected that the global catering market will grow at a CAGR of 3.88% between 2017-2022. The catering industry is estimated to yield an average annual growth of 25-30% in India.

Any person can start a small catering business with dinners for ten persons or cater to parties for 25-50 persons. When the business is established, it can expand and cater for a large audience. Every event, including charity events, social events, celebrations or mourning, requires a caterer. Thus, home catering services are in huge demand nowadays.

Scope of Catering Business in India

Catering business deals with providing food services at birthday parties, weddings, anniversaries and corporate events. It also involves offering food services at an entertainment site, office event, hotel, hospital, pub, etc. It has a good scope in India.

In India, festival time provides an excellent opportunity for caterers to earn and grow their business as people organise parties during festivals and invite their friends and relatives. They usually require a caterer to provide suitable food for the occasion or festival.

Indian weddings are another excellent opportunity for a caterer to earn money. Food is an important aspect of a wedding and people invest a lot in the food for weddings. People organise birthday parties and kitty parties at home. They hire caterers to provide food at such events rather than cooking by themselves.

A caterer is required in corporate events where food plays an important role. It is a great option for caterers to earn huge revenue. Likewise, many other events require a caterer, and starting a catering business in India could prove to be a profitable business.

Process to Start Catering Business in India

The process of starting a catering business in India involves the following:

Create a Business Plan

The first thing that a caterer needs to do is find his/her catering niche. Niche is the area of work of the caterer such as private chef services, contract catering for special events, banquet lunch boxes, etc. A caterer should study the market, identify the potential customers and observe competitors before deciding on the niche.

After selecting the niche, the caterer must create a business plan that covers all the investment costs and expenses of the business for the initial few months. A business plan is an overview of the work that helps the caterer operate the business in an organised way. It shows how to grow the business and gives insights into generating better revenue. 

Decide the Budget and Capital

A caterer should decide on the budget required and the source of capital to start the business. A caterer must also create a plan to spend the money efficiently on licenses, on-site equipment, transport, rental costs, and other such expenses. 

In India, the average budget to start a catering business is around Rs.20 lakh, including an initial few months of kitchen rent, expenses, licenses, transport, and other permits. The budget may vary according to the caterers’ preferences.

When a caterer does not have enough money to start a catering business, he/she can approach investors to provide funds for starting the business. The caterer may also approach banks to avail of loans or opt for different government schemes that help small business owners.

Decide on the Location

The caterer should decide on the location and storage requirements. Setting up a kitchen in a hygienic and clean location will help to attract more customers. The rent for setting up a kitchen will differ for each place. Several factors should be considered while choosing a suitable location, such as rent, area and prime locality.

When a caterer is planning to have a full-time business, there is a requirement for a permanent cooking facility and storage space. When a caterer is proposing to start a part-time business or online catering services, he/she may rent kitchen space to suit his/her needs or start from home.

Decide the Menu

The caterer has to decide on a menu to offer to the customers or clients. A menu should be made considering several factors such as the price of raw materials, quantity, competitors’ rates, and costs involved. Standardising recipes helps to reduce food costs by a higher margin as it defines the exact amount of raw material required for every dish.

The caterer has to price each item on the menu in a competitive way. While evaluating pricing, the caterer must think of profit also. Pricing of items depends upon the place, time taken to prepare the dish, cost of ingredients, and the margin of profit.

Procure the Required Equipment 

A caterer must purchase the kitchen equipment based on the menu that has been finalised. Before buying the equipment, the caterer must take stock of all the items that he/she has and the equipment required to be purchased. Apart from cooking equipment, a caterer also requires storage equipment. In the case of a startup, the caterers can buy raw materials from local distributors and shift the orders to a supplier once they expand to a larger scale.

The cooking equipment for a catering business includes deep fryers, coffee/beverage stations, ovens, pans and pots, refrigerators, utensils, stoves, etc. The storage equipment includes cabinets, multiple-compartment sinks, disposable containers, etc. Other equipment required are plastic wraps, tin foils, garbage bins, stainless steel prep tables, serving equipment, heated and non-heated holding areas, etc.

Get the Required Permits and Licenses

A caterer must obtain the required registrations and licenses before starting the catering business. The Indian government issues various licenses to food-related businesses. The respective authority that issues these licenses considers several factors like cleanliness, the safety of the location, contamination-free food, personal hygiene and hygiene of containers and workers.

The health authorities might want to inspect the kitchen and preparation area in some instances. All the registrations and licenses applicable to a catering business in India are explained below in detail.

Hire Adequate Workforce

A catering business needs a quality and dedicated workforce. A caterer can approach an agency to hire the servers and cooks in the initial stages. When a caterer has enough funds, he/she can hire an experienced and trained workforce.

The minimum number of people a caterer needs to start a catering business is around 10-12 persons, including cooks, head chef, junior chef, delivery people, and menu designer. The staff must be well trained and maintain high standards of work hygiene, cleanliness and dedication.

Use Technology

Automating the catering business is a necessity in today’s times as it prevents errors in taking orders and saves the caterer from overlapping a particular order. Along with that, automation helps the caterer take care of the inventory and analyse the per day consumption. Having a detailed analysis of the consumption and wastage helps manage the inventory better. Catering software will help streamline the operations and reduce manual labour to a great extent. 

Market your Catering Business

A caterer must prepare a marketing plan and execute it in the right way to reach out to the customers and clients. An effective marketing strategy provides quality service to the existing clients and helps gain new clients. When the clients spread a positive message about the business, there are higher chances of getting more orders. 

Caterers can run various campaigns and offers about the catering business to gain more customers. They can design pamphlets, brochures, business cards, etc., and distribute them to attract customers. Caterers can also effectively use social media accounts like Facebook, Instagram, and Google Adwords to promote the business to large audiences. 

A caterer can even take the help of email marketing strategies to retain customers. Caterers can create a website of the catering businesses where they can showcase the items to a larger audience. They can have blogs on food items to build trust and engage potential customers.

Registrations Required for Catering Business in India

A caterer needs to obtain various licences and registrations to start a catering business in India, which are as follows:

Business Entity Registration

Any good cook, chef, or passionate food enthusiast who wants to enter the catering business must first decide the kind of business entity they want to set up. They can set up a private limited company, One Person Company (OPC) or a Limited Liability Partnership (LLP) to establish a catering business and give the business a separate legal status. Establishing a business entity will also help the catering business obtain funds and expand quickly.

FSSAI License

The Food Safety and Standards Authority of India (FSSAI) is the authority that grants a food license to the food operators in India. The FSSAI lets the food operators carry on the activities related to manufacturing, packaging, storage, distribution of food, processing, transportation, import and export of food services and products, including catering services. The catering business should mandatorily obtain the FSSAI registration or license based on the annual turnover and food manufacturing capacity.

GST Registration

A catering business requires a GST registration as per the turnover and the state a caterer decides to run the business. Thus, if the catering business is carrying on its business through an e-commerce platform or its turnover is covered under the GST law in India, it must mandatorily obtain GST registration.

Trade License

A catering business must obtain a health trade license from the concerned department of the state where the business is located. The department of a municipal corporation is the authorised body for the issuance of the health trade license. Thus, the caterers should approach the municipal corporation department of their area or city to obtain the health trade license.

Registration under Shop and Establishment Act

A catering business must obtain registration under the Shops and Establishment Act by applying to the state authority where the business is situated. The labour department of the state issues the shop and establishment registration. The Shops and Establishment Act states that it is mandatory to obtain the shop and establishment registration to run a commercial establishment or establish a shop.

Business Licenses

A No Objection Certificate (NOC) from the electricity and fire department is mandatory since electricity and fire are extensively used in the catering business and to ensure the safety of the building from potential fire hazards. Other necessary licenses that a caterer needs to obtain are water licenses, sewage licenses and permits to ensure that the labour in the business is above 18 years.

Trademark Registration

A trademark of the catering business is its distinct and unique identity. It helps customers to recognise the business and to create a brand image. There may be cases where others may use the trademark for their business, thus creating confusion in the clients regarding the business. In such situations, the trademark registration will help the caterer and prevent competitors from using the same trademark for their business. 

Though it is not mandatory to obtain trademark registration, it is recommended to obtain this registration to protect the trademark from competitors. Also, trademark registration plays a major role when opening a new branch.

MSME Registration

The government provides many benefits to businesses having an MSME registration. A Micro, Small and Medium Enterprise (MSME) can apply for MSME/Udyam registration. Catering businesses having an annual turnover of less than Rs.250 crores and investments below Rs.50 crore can apply for the MSME registration.

It is not mandatory, but it is advisable to obtain MSME registration. The businesses having an MSME registration can benefit from many schemes introduced by the government for small industries, such as tax benefits, easy access to capital, low-interest rates on loans, etc.

A catering business can be started with low investment, even from home. The demand for caterers is there for every occasion. People prefer to order food from caterers even for a small event like a birthday party nowadays. Thus, starting a catering business is profitable in India.

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