Starting a Catering Business

This document is a guide prepared by the Canada-Saskatchewan Business Service Centre and is intended to provide you with general information and suggested resources to assist you in researching your project. The extent to which this information will apply to you is dependent upon the circumstances related to your project.

For further information on individual topics identified herein, contact the respective governing body or the Canada-Saskatchewan Business Service Centre. Because this document is only meant as a guide, the Business Service Centre will not accept responsibility for business decisions made based on the information provided.

Before proceeding, reference should be made to the Business Start-up Info-Guide, which covers the basic steps involved in establishing a new business in Saskatchewan; as well as the document titled A Current Index of Business Fact Sheets. These fact sheets cover a wide variety of business topics. Be sure and also request the Sources of Information and Required Licenses for your area or view these on our Business Fact Sheets Web site.

TABLE OF CONTENTS

• Industry Overview
• Licences and Regulations
• Managing Your Operation
• Associations and Contacts
• Education and Training
• Resources
• Recommended Books in Our Library
• Video Collection
• Recommended Internet Web Sites

INDUSTRY OVERVIEW

SIC codes
Canadian 1980 standard industrial classification codes for various industries.

Sample SIC Codes:

• 9214 Establishments primarily engaged in catering whether by mobile canteens or in private halls, camps, etc.

NAICS codes
A few years ago, the statistical bodies of Canada, the United States and Mexico got together to come up with a classification that was the same for all three countries, so that data collected in all three countries on a specific industry could be compared accurately across country boundaries. This system is called the "North American Industrial Classification System" or NAICS (pronounced "nakes").

Sample NAICS codes are:

• 72232 Caterers - This industry comprises establishments primarily engaged in providing food services for events, such as graduation parties, wedding receptions and trade shows. These establishments generally have equipment and vehicles to transport meals and snacks to events and to prepare food at the event site. Caterers who own or manage permanent facilities in which they provide event-based food services are also included.

Franchising
As a potential business owner, you may be considering buying an existing or opening a new franchised store. As a franchisee, you enjoy the benefits of "Good Will" that the name and reputation of the franchise already possesses. You also have, in many cases, the support of the parent company in issues such as location selection, management training, free advertising and support during the start up phase of your operation. Also you have the advantage of capitalizing on an already profitable concept. However, as a franchisee, you must pay the franchisor for the benefits provided, and these costs come off the top of your sales revenue and may add up to more than 10%. Also your freedom is somewhat restricted when you own a franchise. You must adhere to the standards set by the franchise.

For further information regarding Franchising, see the document Checklists For Franchisees .

Visit the Links Franchising section on our Web site.

Links and resources for Franchising

Canadian Franchise Association   
The Canadian Franchise Association represents over 350 franchise companies and the professionals who support this way of doing business.
Publication:  Franchise Canada Magazine   

International Franchise Association   
IFA provides information and resources on franchising and the Virtual Franchise Opportunities Mall--one-stop-shopping place for obtaining your franchised business.

Franchise Opportunities   
Franchise Opportunities provides the Web's largest directory of franchises and franchise business services available on-line.

Location
Choosing a location may be your single most important decision. Do your research. Look at population trends and the business climate. Check statistics on traffic counts, community characteristics, and demographics. Consider six key factors: regulations, costs, accessibility, parking, the neighbourhood and the competition.

For further information regarding Location, see the document Store Location - "Little Things" Mean A Lot .

Marketing/Advertising
Word-of-mouth advertising and good public relations are often the best ways of promoting a catering business. Depending on your market and its size, also consider flyers, newspapers (especially for holiday promotions), radio, TV, the business pages of the telephone book and the Internet. Also bear in mind that a satisfied customer is good advertising. Contact your local city/town/RM office for bylaws on signage.

If you are planning to have a Web site you should have details to your hours of operation, menus, telephone and fax numbers, and anything else you think may be of interest to potential customers. However, once you launch a Web site, you must update it on a regular basis. For more information on this subject see the document E-Business Info-Guide, see the document E-Commerce - Exploring Your Options or visit the E-business Sask. section on our Web site.

Participating in community events is another way of advertising your catering business.

The federal Competition Act governs misleading advertising and deceptive marketing practices for all businesses in Canada. The Act defines which marketing practices are illegal and the process of complaint investigation. For more information see the document Competition Act - Misleading Advertising and Deceptive Marketing Practices or refer to the pamphlet on this subject administered by Industry Canada online - Misleading Representations and Deceptive Marketing Practices or visit the Competition Bureau Web site.  

For further information regarding Advertising, see the document Signs And Your Business or the document Plan Your Advertising Budget, or the document Advertising Do's And Don'ts, or the document  Ways To Promote Your Product Or Service.

The Online Small Business Workshop   
Marketing Basics listed in Session 2, covers the basics from developing your customer profile to promoting your business.

Market Research
Successful businesses have extensive knowledge about their customers and their competitors. Acquiring accurate and specific information about your customers and competitors is a critical first step in market investigation and development of a marketing plan.

In developing a marketing plan, your primary functions are to understand the needs and desires of your customer, select or develop a product or service that will meet customer needs, develop promotional material that will make the customer aware and ensure product or service delivery.

For further information regarding marketing see the document Market Analysis , the document Guide to Market Research and Analysis, the document  Marketing Plan Outline, or the document  Recommended Information - Demographics/Statistics.

For more information on marketing and advertising refer to our web site; Links Sectors  and Business Fact Sheets..

Preparing Menus and Setting the Right Price
Plan your menu carefully. Know what items your customers prefer and how they like them prepared. Provide variety while maintaining stable cost averages. Menu prices are a combination of food costs and what is needed to meet expenses and realize a profit. Generally the price of an item is approximately three times the food costs, depending on your type of catering business, operating expenses and competitors' prices.
To establish pricing:

• Estimate your sales. Counter-balance higher cost items tagged with lower mark-up with higher mark-ups on lower cost items;
• Maintain a desired overall food cost percentage, usually 33-40% of gross sales, and a normal margin of profit; and
• Balance items ranging in popularity. Monitor high demand items which can determine your success.

For further information on setting the right price see the document Setting The Right Price .

LICENCES AND REGULATIONS

One area of rules and regulations that all new businesses must comply with is that of licenses and regulations. When creating a business, the entrepreneur must contact the municipality involved, along with the provincial/territorial and federal governments.

Each municipal government has the authority to issue its own business licenses within its jurisdiction. Since there is no uniformity throughout the country regarding municipal licenses for businesses, you should consult with the appropriate local officials to determine whether your business will be affected by local regulations and licensing requirements. Businesses (including home-based businesses) must also meet the zoning by-laws that control property uses in their municipalities.

Regulations
Saskatchewan Health and the local health districts have developed provincial standards to guide the catering industry in meeting the requirements of the Public Eating Establishment Regulations, 1988. All public eating establishments must be constructed and operated in accordance with these standards. In order to begin business operations, the establishment must pass a mandatory health inspection. Catering activities must not be operated out of the business owner's home unless the city/town/RM has zoned the home for cottage business. Check with your municipal government and the Public Health Inspector.

Food safety regulations in Saskatchewan require that at least one person who is certified in safe food handling is working in a public eating establishment at all times when food is being prepared or served. Public health inspectors employed by health districts and other agencies conduct courses. Please contact the public health inspector in your area for more information.

For further information regarding Health Regulations and Requirements, see the document A Current Index of Business Fact Sheets and choose the Sources of Information and Required Licenses for your area and locate the Public Health Inspector nearest you.

You can get permit, license and regulation information by contacting your province/territory, local city hall, town or village office or rural municipal office. Contacts for local, provincial and federal governments can be found in the government listings of your telephone directory.

MANAGING YOUR OPERATION

Insurance
Insurance needs for businesses vary greatly. It is best to choose an insurance agent or broker familiar with your size of business and, in particular, an agent familiar with your type of operation. If you don't have an insurance agent, it could be a wise decision to ask other business owners in your area to recommend one. Your local restaurant association may also have information about insurance packages specifically tailored for caterers.

The following list is included to remind you not to overlook the complex areas of business insurance. It is best, however, to discuss your specific requirements with your insurance agent.

Basic insurance:

• fire insurance (extended coverage on buildings and contents);
• liability insurance;
• burglary protection (theft coverage);
• dishonesty insurance (covers thefts by employees).

Accounting/Bookkeeping
A good record keeping system should be simple to use, easy to understand, reliable, accurate, consistent and designed to provide information on a timely basis.

Note: All staff working with cash should be trained to recognize counterfeit currency.

The legal requirement concerning financial records specify only that they be a permanent, accurate and complete record of your daily income and expenses. There are many types of record books and bookkeeping systems available. For example:

• double entry bookkeeping;
• commercial bookkeeping systems;
• one-write systems;
• computerized systems;
• single entry bookkeeping.

For further information see the document Basic Bookkeeping, or the document  Bad Cheque Control.
 
Selecting Professional Services
The use of professional services is essential to the success of a small business. Professionals can provide knowledge and expertise in the areas where you may have little. They can round out your management team to ensure your business is operating efficiently.

As an entrepreneur, there are four main areas of professional services with which you may consult:

1. lawyer (contact a lawyer about legal issues);
2. insurance broker;
3. accountant;
4. banker - for tips and pointers on dealing with your bank, see the document  Dealing With Your Banker & Other Lenders.

Furnishings and Equipment
The menu, size of business and kind of service you offer will determine the type of equipment you will require. For assistance in this area, you may get the advice of a sales representative or consult trade publications and manufacturers' Web sites. List equipment and its cost to you. An important factor to consider when choosing equipment is the after-sales service and repair and their affordability.

Used Equipment - Consider buying used equipment as a cost-saving measure. Sources of used equipment could be a restaurant that is closing or dealers in second-hand equipment. The drawback to this approach is that, often, there are no guarantees with the purchase.

Leasing Equipment - Another alternative is to lease equipment to help keep start-up costs down. To obtain financing for capital leasing for new or used equipment for the creation of your business, see the document  Capital Leasing Pilot Project.

For more information on parts and materials, overhead, stock control and pricing, see the document Business Plan For Small Service Firms .

Setting Up A Pay System
Pay administration is a management tool that enables you to control personnel cost, increase employee morale, and reduce workforce turnover.

Cost Control
In the catering business, you must have procedures for controlling inventory and costs. Ask people in the industry for information about procedures for:

• Purchasing - Most of the time, purchasing is done over the telephone, by fax, or online. Often no contract is signed between the purchaser and the supplier; therefore, it is essential that you choose your supplier carefully. Develop specifications on food brand names, size, quantity, grade/weight, delivery time/place, emergency deliveries, availability and policies for substitutes or damaged goods. Entertain bids from multiple sources and get the best product for the lowest price. Use a Purchasing and Receiving Form.
• Receiving - Check all deliveries against the Purchasing and Receiving Form, focusing on three things: quantity, price and quality (i.e., temperature: frozen goods must be frozen); packaging should be intact. Make sure specifications are met. Careful recording will show short shipments, price variations and weight differences.
• Budgeting and Projecting - Establish a cash budget and maintain cash flow projections on a continual basis.
• Calculating Monthly Food Costs - Determine the actual cost of food consumed and the actual cost of food sold. This is a combination of opening inventories, purchases, adjustments and closing inventories. This ratio should remain relatively constant.
• Calculating Beverage Costs - Record all bottle deliveries and purchases.
• Preparing Food - Make sure staff understand portion sizes (photograph entrées or give written instructions) and set up a recipe reference file to list dishes, portions and supplies needed.
• Storing - Ensure refrigerated and frozen products are quickly placed in a cold storage- storage temperature for dry goods (between 10-21 C) and frozen goods (-18 C or less). Rotate your stock to ensure that oldest items are used first before the new stock.

Checklist For Profit Watching
Making a profit is the most important -- some might say the only objective, of a business. Profit measures success. It can be defined simply: revenues - expenses = profit. So, to increase profits, you must raise revenues, lower expenses, or both. To make improvements, you must know what's really going on financially at all times.

ASSOCIATIONS AND CONTACTS

Canadian Restaurant Foodservices Association   
If you wish to obtain more information on becoming a member, you can contact the Saskatchewan representative toll-free at 1-877-209-1680.

Hotel and Restaurant Suppliers Association  -  1-800-567-2347
The Hotel and Restaurant Suppliers Association (HRSA) is the resource centre for suppliers in the hotel, restaurant and institutional sectors. The Association wishes to ensure exposure for its members and to establish business relations between buyers and product and service suppliers in the industry.

Canadian Federation of Chefs & Cooks, Saskatoon Branch
602-245 3rd Ave. S.
Saskatoon, SK S7K 1M4
Telephone: 306-933-8045

For further information regarding Associations, see the document  Selecting a Business Association.

EDUCATION AND TRAINING

Safe Food Handling Course: Food safety regulations in Saskatchewan require that at least one person who is certified in safe food handling is working in a public eating establishment at all times when food is being prepared or served. Public health inspectors employed by health districts and other agencies conduct courses. Please contact the public health inspector in your area for more information.

Saskatchewan Institute of Applied Science and Technology (SIAST) offers diploma programs in the following four areas.

1. Food and Nutrition Management is a diploma program. It provides knowledge and skill development in applying the principles of nutrition and diet therapy to menu planning, staff training, patient teaching, promoting sales through marketing and merchandising, and maintaining high standards of food quality. You will develop a sound understanding of the fundamentals of food production, mixology and food and beverage service. The  Canadian Society of Nutrition Management  accredits the program. Contact Kelsey Campus at 306-933-8344 in Saskatoon.

2.  Food and Beverage Service  is an applied certificate program. It provides the knowledge and skill development needed to enter the hospitality industry. Theory and practical applications will help you develop professionalism and a strong foundation in food and beverage service. The program is offered as a special project through off-campus programming. The courses may be offered in a number of locations depending upon demand. Call 306-933-8047 in Saskatoon.

3. Hotel and Restaurant Administration  is a diploma program. It provides a thorough background in the hospitality industry. You will develop interpersonal, practical and conceptual skills in food and beverage preparation and service, hotel applications and management principles. The program is offered at Kelsey Campus in Saskatoon. For information call 306-933-8344 in Saskatoon.

4. Food Service Worker Program (Extension Division)  This Certificate Program is suitable for persons employed in commercial food services. The courses are offered by print and video correspondence. The Food Service Worker Program consists of ten courses: communication; customer service skills; food preparation & service; kitchen equipment; nutrition; special diets; food safe level I; food safe level II; kitchen safety; and the role of the Food Service Worker. For more information contact SIAST Kelsey Campus toll-free at 1-800-567-326.

For information including a list of SIAST offices see the document Saskatchewan Institute Of Applied Science and Technology - SIAST or visit the Contact Us Web site for additional details.

A shorter Hotel and Restaurant Administration course is often available through private vocational schools in the province.

Graduate, undergraduate and diploma courses in Administration or Commerce are also useful in preparing prospective managers for management positions in this field. Degree programs are offered at both Saskatchewan universities, through the College of Commerce at the University of Saskatchewan and through the Faculty of Administration and the Saskatchewan Indian Federated College at the University of Regina. Related diploma programs in administration are available through SIAST and Saskatchewan Indian Institute of Technologies.

Source: Human Resources and Skills Development , Occupational Profiles, Restaurant and Food Service Managers, 2002

Saskatchewan Tourism Education Council (STEC)
Skill specific training workshops and national professional certification are available for both Managers and staff. For a list of occupations available for certification which includes several food related occupations visit the Saskatchewan Tourism Education Council Web site.
For more information contact Saskatchewan Tourism Education Council (STEC), Division of Tourism Saskatchewan
101 - 230 - 22nd Street East
Saskatoon, Saskatchewan S7K 0E9
Telephone: 306-933-5900

Saskatchewan Food Industry Development Centre Inc.
The Food Centre:

• has a series of workshops to look at food safety, processing and packaging and labelling;
• has a series of training programs available to companies and individuals on subjects such as "Processing Foods Safely".

The Food Centre has been established as a partnership with Saskatchewan Agriculture and Food, the University of Saskatchewan and the Saskatchewan Food Processors Association. The Food Centre will be with you from the planning stages through to the packaged and labelled product that is ready for test marketing. The Food Centre is also an interim processing facility for small-to-medium processors.

There is no charge for the initial consultation to establish your expectations and the Food Centre's responsibilities. For additional information contact them at 306-933-7555 in Saskatoon, visit the Saskatchewan Food Industry Development Centre Inc. Web site or see the document  Food Centre.

RESOURCES

Restaurant, Caterer and Tavern Statistics
This publication presents the monthly estimates of total receipts of restaurants, caterers and taverns both at the national and provincial levels.
Available from Statistics Canada - Catalogue no. 63-011-XIE
Toll-free: 1-800-263-1136
Web Site: Restaurant, caterer and tavern statistics (look under Products and Services, For Sale, Service Industries)

Small Business Profiles -  Performance Plus
Performance Plus provides detailed financial and employment data on small businesses by industry for Canada, the provinces and territories. The Profiles have been produced every two years since 1985, with 1997 being the most current reference year available. The data provide performance benchmarks for the financial planning of start-up and established small and medium sized businesses.

Annual Buyers Guide
Available from the Hotel and Restaurant Suppliers Association
Toll-free: 1-800-567-2347
Fax: 514-334-1279
Web site: Hotel and Restaurant Suppliers Association 

Canadian Hotel & Restaurant Sources Directory
Available from Maclean Hunter Limited
Telephone: 416-596-5977
Fax: 416-596-5526

KOB Files
Saskatchewan Industry and Resources created "kinds of business (KOB's)" that include information on many different types of businesses. This information includes: product sources; fixture & equipment suppliers; trade shows; trade associations; trade journals; and other market data sources. Choose a KOB from the Table of Contents at the CBSC Kinds of Business Web site.

The CSBSC also has files started on various kinds of business topics such as restaurants, bars, coffee shops. Information located in these files includes possible suppliers, statistics, sample business plans, etc. To access the information in these files please come into the office and request the KOB file or speak to a Business Information Specialist.

RECOMMENDED BOOKS IN OUR LIBRARY

Canada-Saskatchewan Business Service Centre resource library search engine can be viewed at the Saskatoon Reference Library Web site.

Once you have located a particular resource you think might be useful, please contact us at the CSBSC office and we will discuss the material with you. Material is available to view in our Saskatoon office or regionalization site where available.

Below are some books that may be of interest along with their current shelf location.

Start Your Own Catering Business
Business Catering .004S
Prentice Hall Canada, 1997

Start and Run a Profitable Catering Business
Business Catering .001S
Self-Counsel Press, 1996
   
How to Start a Home-Based Catering Business
Business Catering .006S
Globe Pequot Press, 2000

How to Run a Catering Business from Home
Business Catering .005S
John Wiley & Sons, Inc., 1996

Catering Service
Business Catering .003S
Entrepreneur Inc., 1993

VIDEO COLLECTION

Canada-Saskatchewan Business Service Centre resource library search engine can be viewed at the Saskatoon Reference Library Web site.

Once you have located a particular resource you think might be useful, please contact us at the CSBSC office and we will discuss the material with you. Material is available to view in our Saskatoon office or regionalization site where available. Videos and audio cassettes may be loaned out to residents in the Saskatoon area.

We have many videos available in the following categories: aboriginal, customer service, sales, marketing, training, entrepreneurship, business planning, financing, e-business, starting a business, business skills, home-based, management, intellectual property, trade, quality, computer skills, and miscellaneous. Search the A/V Library on our web site for descriptions.

RECOMMEDED INTERNET WEB SITES

More links available on our Links Sectors Web site - (Under Business - Catering)

For further information regarding starting a business, contact the

THE INDIVIDUAL/BUSINESS/CORPORATION/PARTNERSHIP (HEREINAFTER REFERRED TO AS THE CLIENT) ACKNOWLEDGES AND UNDERSTANDS THAT THE CANADA-SASKATCHEWAN BUSINESS SERVICE CENTRE DOES NOT WARRANT OR REPRESENT THE ACCURACY, SUITABILITY OR APPLICABILITY OF THIS INFORMATION AND ASSUMES NO RESPONSIBILITY OR LIABILITY FOR THE USE THEREOF BY THE CLIENT AND ANY THIRD PARTIES AND THAT THE INTERPRETATION, USE AND APPLICATION OF SUCH INFORMATION SHALL BE THE CLIENT'S SOLE RESPONSIBILITY.

DISCLAIMER
Information contained in this document is of a general nature only and is not intended to constitute advice for any specific fact situation. Users concerned about the reliability of the information should consult directly with the source, or seek legal counsel.

Links Policy
Some of the hypertext links lead to non-federal government sites which are not subject to the Official Languages Act and the material is available in one language only.