It’s official: in the UK we love to treat ourselves to meals out. In fact, every year Britons spend £56 billion on eating out and takeaways according to The NPD Group. If you are thinking of opening a café, bistro, or restaurant, that figure will be like music to your ears. But you’ll need more than just enthusiasm or a good idea if you want to succeed. With legislation to follow and plenty of competition, you also need to be organised. To help you turn your dream into reality, we’ve put together this complete guide to everything you need to know to start a catering business.
1) Find out about special licences and registering your business to meet your legal obligations
Before you start getting out the pots and pans or setting tables, you need to get your paperwork in order. Whether you plan to open a restaurant, café, or pub, use this checklist to make sure everything is ready.
- Register with your Local Authority. Any business that carries out ‘food operations’ needs to be registered with the local Environmental Health Department. ‘Food operations’ means anything where food is handled: including cooking, preparing and selling food. Don’t leave this to the last minute as you’re supposed to register at least 28 days before you start trading. If you don’t, you could be fined or even face a prison sentence.
- If you’re selling alcohol, you’ll need a special licence from your Local Authority.
- You may also need a licence if you plan to offer entertainment.
- When the weather is fine, people love to sit outside and eat al fresco. Do your premises have an area outside on the street that you’d like to set up tables on? This can significantly increase your service area, increasing profits. But if you do want to serve food on the street, you’ll need to apply for a licence to do this.
Do it today:
- Find the contact details for your Local Authority to register your business here.
- If you’re already trading and haven’t registered, do this as soon as possible.
- You local Authority is also the place to apply for alcohol, entertainment, and street trading licences.
2) Other essential paperwork for a successful business
Another essential piece of paperwork to get sorted is your insurance. You should buy the right level of insurance to meet your legal obligations and protect your business financially if something goes wrong. If you take the time to find this cover at an affordable price it can also help your new catering business to succeed.
The types of insurance you’ll need will depend on your catering business. It could include:
- Building insurance. This covers your premises if they are damaged, for example by a fire or flood.
- Contents insurance. Kitting out your new restaurant or café doesn’t come cheap. Contents insurance will cover everything from tables and chairs to wide-screen TVs.
- Public liability insurance. This covers you financially if anyone is injured or property is damaged because of something connected to your business. For example, this can include food poisoning and allergic reactions to mislabelled food. It will cover legal fees to defend your case and any compensation that is awarded. You can also rest assured that it will give you access to an expert legal team, which will handle the case. That means you can put all your efforts into the day-to-day running of your business.
- Employer’s liability insurance. This is a legal requirement if you employ any staff, even if they only work part-time. It must cover a minimum of £5 million. If you don’t have this in place, you can be fined £2,500 for every day that you’re not properly insured.
- Money cover. If you take cash, you’ll be a prime target for thieves. Money cover protects cash at your premises and on the way to the bank.
- Business interruption insurance. If your business is forced to close, you won’t be able to earn any money but you’ll still have suppliers and staff to pay. Business interruption insurance helps to take care of those bills.
- Personal injury insurance. What would happen to your business if you’re unable to work? Personal injury insurance pays out so your business can survive this tough time.
- Commercial vehicle insurance. If you have a delivery vehicle or use a vehicle to carry stock, you’ll need specialist commercial vehicle insurance.
For the best value catering insurance, look for a tailored package so you get the cover you need without paying for anything you don’t.
Do it today:
- Write a list identifying what types of insurance you need.
- Insurance may not be the most exciting way to spend your money. We know you’d rather spend the money on creating a special atmosphere in your restaurant, café or pub. But without insurance, even the best atmosphere can quickly turn sour. Instead of skimping on cover, shop around to find the best price. Comparing prices is the best way to save money on your insurance.
- Grab your list of what insurance you need and go online to contact as many insurance companies as you can. Alternatively, use a specialist independent insurance broker to do this for you. As a professional expert, a broker can help you to decide what insurance is necessary and can build a tailored package so you’re not paying for anything you don’t need.
3) Check your equipment is safe to meet your legal requirements
Gas and electric food preparation and cooking equipment are the tools of your trade, but they can also pose hidden dangers. By law, the gas equipment in your kitchen must be tested by a qualified Gas Safe engineer every year. A qualified electrician can check your electrical equipment is safe to use.
Do it today:
4) Get to know the Food Hygiene Rating Scheme to fulfil your commitments
If you don’t know about the Food Hygiene Rating Scheme yet, it’s time to get clued up. It can help give potential customers confidence in your business and if your rating is too low, you could be shut down. The scheme is run by local authorities together with the Food Standards Agency and is relevant to any business that sells food. It’s designed to show the public how well you follow food safety and hygiene procedures. The ratings range from 0 (low) to 5 (high). A low rating may mean less business, while a higher rating could encourage customers to come in and enjoy a meal.
A food safety officer from the local authority will come and inspect your premises and give you a rating based on things like how food is handled and stored. If an officer feels that hygiene is very poor and there is a risk to the public, they have the power to close the business down until improvements are made.
Do it today:
- Use this Food Safety Checklist to prepare for your inspection.
- Find ratings for every catering businesses across the UK here.
- Find your local food safety team contact details here.
- Displaying your rating in your window lets potential customers know how well the inspectors felt you followed hygiene procedures. The public does actively look for these, so if you get a good rating, be sure to let everyone know.
- If you got a lower score, take steps to improve your procedures. Follow this advice from the Food Standards Agency.
5) Get the right food safety certificates in place
By law, anyone who handles food has to have appropriate training to ensure this is done safely. However, there’s no requirement to hold any specific food safety certificate.
Every catering business needs to have a Hazard Analysis and Critical Control Point (HACCP) plan. This outlines how the food will be handled and stored.
Do it today:
- Find food safety training courses here.
- Sign up for a MyHACCP This free online tool is an easy way to develop a food management system. It will take you step by step through the procedures you need to follow to help you to develop a plan.
6) Find the right premises to help your business grow
When it comes to making a profit, it’s all about location, location, location. Choose a spot that is convenient for or suits your potential customers. For example, if you’re going to specialise in lunchtime rolls, a location close to lots of offices (full of hungry office workers) could be a good bet. In contrast, if you’re tucked away down a country lane, you’ll need to work hard at getting people to know where you are and what you offer.
You have two options when it comes to setting up. You can either start your catering business from scratch in your preferred location, or you can look for an established restaurant business and buy that.
Do it today:
- Search for commercial premises to buy or let here.
- Find existing catering businesses for sale here.
- If you don’t want the constraints of a fixed location, read our guide on How To Start A Mobile Catering Business
7) Find your niche to make you stand out from your competitors
You need to decide why will someone come to your venue rather than go to eat elsewhere. Maybe you can offer something different in your location? For example, you could offer Italian cuisine when nowhere else nearby offers similar food. Or maybe you could follow food trends, such as the rise of veganism, to cash in before your rivals do.
Don’t limit yourself to just attracting customers to your venue. In the UK the takeaway market is huge. 60% of UK adults are active delivery users, ordering at least twice a month and spend nearly £10 per head per order. You could either offer your own delivery service or sign up to partner one of the UK’s major delivery apps, such as Deliveroo, Uber Eats, or Just Eat.
Do it today:
- Keep up-to-date with the latest food trends.
- Sign up with Just Eat
- Partner with Uber Eats
- Sign up as a Deliveroo restaurant partner here.
8) Get your tax in order to help eliminate money headaches
You’ll need to register your new business with HMRC. To do this, you need to decide whether you will operate as a Limited Company, Limited Liability Partnership, Partnership, or Sole Trader. To help you decide, we’ve outlined the benefits of each briefly:
· Sole trader. It’s generally the simplest option to register as a sole trader. If you take this option you will be personally responsible for any debts of the business.
· Limited companies. With a limited company, your business finances are kept separate from your personal finances, but you will need to do more detailed reporting.
· Partnerships. These are designed for when two or more people run a business together. Everyone on the partnership will share responsibility for the business’s debts.
A partnership is the simplest way for 2 or more people to run a business together.
You share responsibility for your business’s debts. You also have accounting responsibilities. Find out more about being in a partnership and how to register.
Do it today:
- Find out about becoming a sole trader and register here.
- Discover more about setting up a limited company here.
- Read more about partnerships and how to register your business here.
- Whatever structure you register with, you’ll need to keep a close track of the money going in and out. You can do this yourself or use a bookkeeper or accountant. Find a bookkeeper near you here. Find an accountant near you here.
There’s a lot more to starting a new restaurant, café or pub that you might think at first. From tax structures to food safety training, we’ve outlined all the essentials you’ll need to consider. Now you know how to start a catering business, you can stop dreaming of working for yourself and take the right steps to get the ball rolling. Good luck!