How to Start a Catering Company: Legal Considerations

The catering industry has an appetite for growth, fuelled by increasing demand from airlines, corporations and mining companies. Today, caterers vary from food-service operators to specialist caterers at specified events. In 2015-2016, the industry generated $6.6 billion and is expected to grow 5.5% over the next five years.

Setting Up Your Catering Company

You may have your canapes recipe sorted and your friends have tasted and approved your satay chicken skewers. Regardless of whether you are servicing multimillion dollar contracts or operating a smaller independent business catering for weddings, there are a number of legal obligations in setting up your company. Due to significant price competition at the lower end of the market, there’s not much room to risk not setting up your catering company correctly from the start.

Register your business with an Australian Business Number and decide on the business structure you want to operate. This can vary from a sole trader to a partnership, to a private company. Our article on the different business structures sets out the advantages and disadvantages for both, such as tax obligations, liability and ease of expansion.

Labour and wage costs are significant for most catering operators. Having the correct employment agreements in place, whether you employ employees or contractors, will protect your business. If you employ casual or part-time staff during peak demand periods, you should have separate contracts that set out their conditions rather than use the same contract for all the people you employ.

Catering Contracts

As you are likely to operate primarily as a service based business, a Service Agreement must be drawn up to protect your business’ operations. If you outsource any of your catering business, separate contracts should be drafted for each contracted business. You should have an agreement with each customer or client you provide catering services to, regardless of whether it is a business, government department or sports and entertainment venue.

Whether you are operating on-premises catering or meals for takeaway consumption, it’s likely you also deal with suppliers for your ingredients. A Supplier Agreement sets out the agreement between you and the supplier about the schedule of delivery, contents and what to do in circumstances where one party does not deliver.

If you offer liquor, whether for on or off-premises consumption, you must hold a liquor licence from your state or territory. A Service Agreement should also state whether the liquor or beverage consumption is on a prepaid or per-head basis.

Food Regulations

There are increasing regulatory requirements for the provision of catering and food services in Australia. Australia New Zealand Food Standards govern food safety laws. These regulations not only set out food safety but also handling and storage procedures. If you are opening a catering company, your employees should be aware of the strict food handling requirements and food preparation regulations.

Key Takeaways

The catering industry is highly fragmented and diverse, with many small businesses in the market servicing catering of small events. From employment contracts to food licences, there are a number of important considerations to factor in before signing on your first client. Our business lawyers can assist in registering and structuring your catering company. Get in touch on 1300 544 755.