To start a catering business you need a legal food operation (a commercial or commissary kitchen plus the right licenses), basic transport and serving equipment, insurance, and enough cash to float your first few jobs, usually $10,000 to $50,000 depending on how much you rent versus buy. The part most new caterers get wrong isn’t the food, it’s the pricing: charge a food cost of roughly 28-35% of the plate price and build in labor, overhead, and profit on top, or you’ll cook all weekend and net nothing.
Cooking for 80 people is not cooking for 8 with more pans. Catering is a logistics business that happens to involve food. The good news: it’s one of the few food ventures you can start without signing a lease on a storefront. Here’s what it actually takes, what it costs, and how to price so the work pays.
What do you legally need before you cook for money?
Selling food to the public means operating out of a licensed, health-inspected kitchen. Your home kitchen almost never qualifies (cottage food laws cover shelf-stable items like jam and baked goods, not hot catered meals). Your realistic options:
- A commissary or shared commercial kitchen. You rent time by the hour or month in a licensed space. This is how most caterers start. Expect $15-$35/hour or $500-$1,500/month for a regular slot.
- A restaurant’s off-hours. If you know an owner, renting their kitchen overnight or on a dark day can be cheaper and comes pre-inspected.
- Your own commercial space. Only worth it once you’re booking consistently. It’s the biggest fixed cost you can take on.
On top of the kitchen, plan for: a business license and EIN, a food handler or ServSafe manager certification, a health department permit tied to your commissary, and in many states a resale/sales-tax permit. Rules vary by state and county, so call your local health department before you spend a dollar on equipment. That one phone call saves people from buying gear their jurisdiction won’t let them use.
Watch out: Insurance is not optional and clients will ask for proof. Get general liability (often $500-$1,200/year) and, the second you pay anyone to help, workers’ comp. Many venues won’t let you through the door without a certificate of insurance naming them as additionally insured.
What does it cost to start?
Your number depends almost entirely on one choice: rent or buy. A caterer who rents kitchen time, tables, and chafing dishes can launch for under $10,000. One who buys a used van and their own equipment is closer to $40,000+. Here’s a realistic range for a lean launch:
| Startup item | Lean (rent/used) | Fuller setup |
|---|---|---|
| Licenses, permits, certifications | $300-$800 | $800-$1,500 |
| Kitchen access (first 3 months) | $1,500-$4,500 | $6,000+ |
| Equipment (chafers, cambros, prep tools) | $1,500-$4,000 | $8,000-$15,000 |
| Transport (rental vs. used van) | $0-$500 | $8,000-$20,000 |
| Insurance (annual) | $500-$1,200 | $1,200-$2,500 |
| Website, branding, first marketing | $300-$1,500 | $2,000-$5,000 |
| Working cash to float first jobs | $2,000-$4,000 | $5,000+ |
That last line is the one people skip. You buy groceries before the client’s balance clears, so you need cash on hand to cover ingredients, staff, and rentals for a job or two at once. Ask for a deposit (25-50% at booking) on every event and you’ll ease most of the cash-flow strain.
How do you price a job so it’s actually profitable?
Forget “cost per plate” as a starting point. Build the price from your costs, then check it against the market. The four buckets on every quote:
- Food cost. What the ingredients actually cost you. Aim to keep this at 28-35% of what you charge for the food. If a plate’s ingredients cost you $9, the menu price for that plate lands somewhere around $26-$32.
- Labor. Your prep hours, cooking, service staff, and cleanup, at real wages. Undercounting labor is the number one margin killer in catering.
- Overhead. Kitchen rent, insurance, fuel, packaging, disposables, software. Spread it across your jobs.
- Profit. An actual line, not “whatever’s left.” Target 15-25% on top after everything else is covered.
Rather than pricing every event from a blank spreadsheet, sanity-check your numbers with a tool like the catering quote calculator, which lets you plug in guest count, per-plate food cost, and staff hours to see your margin before you send the quote. It’s the difference between quoting on a hunch and quoting on math.
Worked example: quoting an 80-guest event
A client wants a plated dinner for 80 guests: one entrée, two sides, salad, and rolls, with staff to serve. Here’s how the quote comes together.
| Line | Math | Amount |
|---|---|---|
| Food cost | 80 × $11/plate ingredients | $880 |
| Labor (prep + cook + service) | ~40 staff-hours @ $22 avg | $880 |
| Kitchen, fuel, packaging, disposables | Overhead for the job | $350 |
| Rentals (linens, chafers, some china) | Pass-through | $450 |
| Subtotal (your cost) | $2,560 | |
| Profit margin | ~22% on top | $565 |
| Client price (before tax/service fee) | ≈ $39/guest | $3,125 |
Roughly $39 a head for a staffed, plated dinner is a sane starting point in most markets, higher in major metros, lower for buffet or drop-off. Notice food is only about 28% of the price; labor is just as big. If you’d quoted “$15 a plate because that’s what it costs to cook,” you’d have lost money before you loaded the van. Run your own version through the Tabby catering quote calculator and adjust the food cost and labor to match your menu.
How do you land your first clients?
Nobody hires an unknown caterer off a cold website. Your first bookings come from proof and proximity:
- Cook for people who’ll refer you. A discounted first event for a friend’s shower or a local nonprofit buys you photos, a review, and word of mouth.
- Pick a lane. “Corporate lunch drop-off” or “intimate dinner parties” is easier to sell and staff than “we do everything.” Narrow first, widen later.
- Get on venue and planner referral lists. Event planners and small venues send repeat business to caterers they trust. One good relationship can fill a season.
- Make tasting easy. A well-run tasting closes more deals than any ad. Show up early, plate it beautifully, and follow up the next day with a clean quote.
Respond fast and quote clearly. Plenty of caterers lose jobs simply by taking three days to send a confusing estimate.
What kills new catering businesses, and how do you avoid it?
Three things, mostly. Underpricing labor, so busy weekends feel exhausting and broke. Poor cash management, so a big deposit gets spent before the next event’s ingredients are bought. And no idea of the numbers, so you can’t tell a profitable client from a money-loser. Track every job’s real food cost, labor hours, and margin. After ten events you’ll know exactly which menus and event types to chase and which to politely decline. Keeping tidy books from day one isn’t bureaucracy, it’s how you find out whether the business is actually working.
Frequently asked questions
Can I start a catering business from my home kitchen?
Usually no. Hot, made-to-order catered food generally has to come from a licensed commercial or commissary kitchen. Cottage food laws in many states only cover low-risk, shelf-stable items like baked goods or jams. Call your county health department to confirm what your area allows before buying anything.
How much money do I need to start catering?
A lean launch that rents kitchen time and equipment can run under $10,000. If you buy a van and your own gear, budget $30,000-$50,000+. Whatever your number, keep a few thousand in working cash to buy ingredients and pay staff before clients’ balances clear.
What profit margin should a caterer aim for?
Target a net profit of around 15-25% after food, labor, and overhead. Keep food cost at roughly 28-35% of the food price, and price labor at real wages. Many struggling caterers have healthy-looking revenue but thin margins because labor was never properly counted.
How do I price catering per person?
Build price from your costs (food, labor, overhead, profit), then express it per guest. A staffed, plated dinner often lands near $35-$60 a head depending on market and menu; buffet and drop-off are lower. Running the numbers through a catering quote calculator keeps you from guessing.
Do I need insurance to cater events?
Yes. Get general liability coverage, and workers’ comp once you pay any staff. Most venues require a certificate of insurance, often naming them as additionally insured, before they’ll let you operate on site.
How much deposit should I ask for?
A deposit of 25-50% at booking is standard and protects your cash flow, since you buy ingredients before the event. Collect the balance shortly before or on the event date, and put the terms in a written agreement every time.
The food is the easy part. Staying profitable means knowing your numbers on every job. Tabby handles the bookkeeping side of running a food business, tracking income, expenses, and margins automatically so you can see which events actually pay. Start a free trial and get your catering finances organized before your first big booking.
