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Setting up a Food Business from Home

All you need to know about starting and running your business

Business guides » Setting up a Food Business from Home

What is a Food Business from Home?

The food catering industry in the UK is worth a whopping £1 billion. With more people than ever changing careers post-pandemic, making the move into the food industry could be more lucrative than ever.

The catering industry in the UK is not dominated by big companies. Food from home businesses generally thrive as the market has the space to accommodate them. Starting a food from home business is a great way to run your own successful business, with no qualifications necessary and fairly low start-up costs.

If you have a flair for business and a passion for cooking or baking, you could start a food from home business today.

There are many different ways you could start a food from home business, with several different pathways you could take. To decide which option is best for you, consider your cooking strengths, your business goals, your target market and your local competition.

Below is a list of food from home businesses you could consider:

Catering from home business

This could involve cooking food and catering for a wide variety of events, such as parties, weddings and corporate events. You could cater for a sit-down meal or a buffet, plan your own menu or create tailor-made menus specific to each event or client.

Bakery from home business

Homemade cakes and other baked goods are increasingly popular. Many bakery from home businesses create personalised, bespoke cakes. You could also bake cupcakes, cookies, brownies and other baked goods.

Meal preparation business

With more people focused on living a healthier lifestyle, meal prep businesses have never been more popular. You could provide a wide range of meal preps for customers or focus on a specific niche.

Speciality food

You could start your own food business focused on a specific product. You could then sell your product at markets or food fairs or sell it online with a delivery option. Examples of speciality foods include gourmet pies, afternoon tea delivery and homemade jams or condiments.

Cooking classes

Depending on the space you have available at home, you could offer cooking classes. You may need to focus on a specific type of food, such as a Japanese cooking class or a vegetarian cooking class. This type of food from home business is more likely to require you to have qualifications or prior experience.

Food delivery

This type of food from home business is growing in popularity. It could encompass any type of food so consider what is likely to be popular and if there are any untapped niches you could focus on. Food delivery services that offer home-cooked food such as Sunday roast dinners or speciality pizzas are ideas you could consider.

Food trucks and carts for hire

It is becoming increasingly popular at weddings and other social events to hire food trucks, carts and stalls that guests can take advantage of. It is likely that you will also work at the event, managing the cart and providing the food. Examples of this type of business include wood oven pizzas, ice-cream stands, candyfloss and popcorn carts and burger vans.

Your responsibilities as part of your food from home business can vary significantly depending on the type of food business you choose.

Some of your responsibilities could include:

  • Sourcing and ordering food stock and ingredients.
  • Planning a menu.
  • Preparing and cooking/baking the food products.
  • Displaying the food, including ensuring food is correctly labelled and stored.
  • Transporting or delivering food.
  • Presenting or serving food.

Types of Customers

The types of customers you will target with your food from home business will depend on the type of business you opt for. You could choose to target one specific type of customer or keep your target market varied.

Potential target markets could be:

  • Businesses and corporations.
  • Parties, baby showers and other social events.
  • Weddings, christenings, bar mitzvahs and other formal celebrations.
  • Outdoor events.
  • Children’s events.
  • Pop-up events.
  • Customers with specific dietary requirements, such as vegetarian, vegan or gluten intolerant.
  • Customers with specific religious beliefs, for example halal food.
  • The healthy eating or weight loss market.
  • Online food delivery.
  • Regular or repeat customers.

 

Choosing your target market can be difficult. Focusing on the wrong market could result in a loss of business or the failure of your food from home business.

You should consider several factors when deciding the types of customers you will aim to attract:

Your competition

Research other food businesses in your area. This will allow you to see the types of food businesses that already exist, if there are any gaps in the market and the businesses that are most likely to succeed.

Your strengths or experience

To create a successful business, the most important factor is the quality and taste of your products. If you make beautifully decorated cakes, this should be the type of business you focus on. You can then base your target market on the type of cakes you want to make and the customers that are most likely to be attracted to your business.

Your pricing strategy

The price point you want to sell your products at could also affect your target market. For example, a cake that is purchased for a child’s birthday party is likely to have a lower price point than a wedding cake.

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Equipment You’ll Need

The type of equipment you will require for your food business will vary depending on the type of business you will run. A food from home business can be a low investment enterprise, with equipment costs being much lower than many other businesses. There are certain pieces of cooking equipment that will be more expensive than others. We will take a look at some equipment requirements for your food from home business.

Kitchen appliances

As you are running your business from home, you may be able to use some of your existing kitchen appliances. However, it is recommended that you have specific appliances that are solely used for your business to avoid any contamination. Some kitchen appliances you may be required to purchase include a refrigerator and freezer, oven, grill, stove, fryer, microwave, kettle, food processor, pressure cooker and stand mixer. If you are purchasing separate kitchen appliances for your business, you can expect to pay £10,000-£50,000, depending on the size and brand of the appliances.

Cookware

This could include pots, pans, woks, roasting pans, skillets, Dutch ovens and cake tins. Your cookware should be used solely for your business. As you will be using the cookware frequently, you should invest in high-quality items.

Utensils

Utensils include the additional items that keep your kitchen running smoothly and help you with food preparation and cooking. Utensils could include whisks, tongs, ladles, wooden spoons, peelers, spatulas, measuring cups, graters and tin openers. A good set of kitchen knives is also recommended.

Other kitchen accessories

Accessories that you may need to invest in include chopping boards, a thermometer and food timers. You will also likely need to invest in cooking accessories such as baking paper, greaseproof paper, aluminium foil and cling film.

Storage and transport equipment

Once you have cooked and prepared the food, you must ensure it is stored correctly. The food will also need to be delivered or transported to the customer or the event. This could mean you need to consider how to maintain the temperature of hot or cold food. You could invest in insulated food trays or containers for this purpose. For any food that does not require a specific temperature, storage boxes and containers should be sufficient.

Food labels

As we have already mentioned, food labels are essential when selling food. You will need to invest in labels that can be properly attached to your food items.

Transport

The type of transport you will require depends on the type of food business you run. A food delivery business will need to invest in a delivery vehicle. If you cater for events, you may be able to transport food in your own car or may need to invest in a specialised van. If you opt to start a food truck or cart, you can purchase this new, or second-hand.

Cleaning equipment

You will likely require different cleaning materials for different areas of your kitchen. Some cleaning equipment you should invest in includes cloths, sponges, a sweeping brush, a mop, antibacterial surface cleaners, sanitisers and dishwashing soap.

Costs setting up a catering business from home

Typical Costs

Start-up costs for your food from home business can vary significantly depending on the type of food business you are setting up. To help you get an idea of typical start-up costs, we will look at some of the expenses you can expect to pay when setting up your business.

Equipment costs

As mentioned above, equipment costs can vary significantly. The cost of your equipment could range from a few thousand pounds to as high as £100,000. You could consider starting small and purchasing more equipment as your business grows. You could also consider the pros and cons of renting vs. buying. You may also be able to purchase some of the larger equipment second-hand, which could save you a significant amount of money.

Licensing costs

Many of the licences you require when starting your business will be free of charge. Some local councils may require you to apply for planning permission, which could involve an additional cost. To find out if you need planning permission, contact your local council directly.

Advertising costs

It is generally recommended that you spend a maximum of 10% of your annual revenue on advertising costs. For example, if you make £70,000 a year, you should spend no more than £7,000 on advertising. You may be required to advertise more heavily when you initially open your business, as a way of attracting new customers.

Food hygiene training

Food hygiene training is a legal requirement and is something that many potential clients will look for. Food hygiene training with certification is available on our website for £20 + VAT. It is recommended that food hygiene training is undertaken every three years.

Insurance

You will likely need to purchase Legal Indemnity Insurance, Product Liability Insurance and Public Liability Insurance for your business. Depending on the level of insurance you require and your insurance provider, you can expect to pay £100-£400 per year. If you use your vehicle for your business, you will also require business vehicle insurance.

Food stock and ingredients

The amount of money you spend on food stock will depend on the quality of your ingredients and the amount of food you are making. It is recommended that food stock costs no more than 30%-40% of your food sale price. When estimating your food stock costs, you first need to estimate your price point and how much business you plan to conduct per month.

Running costs

Running costs, also known as operating costs, could encompass a huge number of costs. This could include your overhead costs such as electricity, gas, petrol and delivery costs. It could also include the cost of replacing or upgrading your equipment. You should aim to have low running costs to help maximise your profits.

Safely Running a Food Business from Your Home

As a food from home business involves preparing and cooking food, it is imperative that you are aware of the safety and hygiene requirements and that you are running your business safely. Food from home businesses will receive a visit from the Environmental Health Office (EHO) in the first weeks or months of beginning trading. The EHO will check that your business is being run safely and that you are aware of legislation such as HACCP, the 14 allergens and hygiene requirements.

To ensure that your business is being run as safely as possible, there are certain protocols you should ensure you follow.

Food safety and hygiene requirements

You and any staff your hire should be trained in food safety. It is the responsibility of you, the business owner, to ensure that food safety legislation is complied with at all times and that you are aware of and following the principles of the Hazard Analysis and Critical Control Point (HACCP).

Risk assessments

Risk assessments should be carried out when you set up your food from home business. An additional risk assessment is now required for risks relating to Covid-19. Risk assessments are a legal requirement for businesses that have more than five employees. However, even if you do not meet this requirement, risk assessments can be used as clear evidence for the EHO that you are able to manage and reduce risks and are following all hygiene and safety requirements.

Safe storage of food stock

It is a legal requirement in England, Wales and Northern Ireland that chilled food must be kept at 8°C or below at all times. If chilled food is out of the fridge for more than four hours, it must be disposed of. You should also endeavour to keep raw food, such as raw meat, separate from other foods. Frozen food must also be stored at the correct temperature. You should also make sure food is covered at all times to prevent it spoiling or deteriorating in quality. NI Direct has some great information on their website on how to safely store food stock.

Catering food hygiene from home

Correct cooking temperatures

Ensuring you are cooking at the correct temperature helps to reduce or eliminate the risk of food poisoning. You should always ensure your oven or other cooking equipment is set to the correct temperature. Using a food thermometer can also ensure food is thoroughly cooked.

Correctly labelling food products

There are strict regulations regarding labelling food. Any food that contains any of the 14 allergens must be labelled correctly. For more information on allergen labelling, consult our knowledge base. It is also important to keep in mind that any food containing genetically modified soya or maize or any additives and flavourings from GM sources must also be correctly labelled.

Cleaning requirements

Ensuring all equipment and surfaces are washed thoroughly is vital in the food industry. You should have dedicated cleaning products and cloths for different areas of your kitchen and food equipment and different cleaning purposes.

Personal hygiene requirements

Personal hygiene is something that can be easily overlooked in the food industry. However, it is an important aspect of ensuring food safety. There are a variety of personal hygiene requirements to be aware of including washing hands regularly, keeping fingernails short and clean, wearing gloves, using a hairnet or hair restraint, covering wounds with brightly coloured, waterproof plasters, and not wearing uniforms or aprons out of the food preparation area.

Keeping records

When a representative from the EHO visits your business, they may want to see up-to-date records of cleaning schedules, risk assessments, health and safety policies, allergens and temperature checks.

Legal Requirements

When setting up your food from home business it is crucial that you comply with all legal requirements. Failure to do so could result in a fine, forceful closure of your business or even a prison sentence. The legal requirements may vary depending on the type of food from home business you opt for. Below is a list of general legal requirements you will likely have to adhere to.

Apply for a food business registration

Ensure you apply for a food business registration at least 28 days before you begin trading. You can apply for your registration on gov.uk and it is free of charge. Obtaining your food business registration is essential. If you run a food business without registration, you can be fined or receive a prison sentence of up to 2 years.

Food hygiene training

It is a legal requirement that food businesses follow food hygiene regulations at all times. If you receive a visit from the Environmental Health Office (EHO), a food hygiene certificate is the most efficient way of demonstrating your compliance. It may also increase your likelihood of being awarded a five-star food hygiene rating.

Allergen requirements

It is a legal requirement that food businesses correctly label their food products with information regarding the 14 allergens. If any of the food you sell contains any of the 14 allergens, this information must be visible and easily accessible for customers.

Food Safety Management System (FSMS)

An FSMS is a legal requirement for food businesses. It is a systematic approach to controlling food safety hazards and ensuring safe practices are followed. Your business’ FSMS should be based on the principles of the Hazard Analysis Critical Control Point (HACCP).

Register as self-employed

All self-employed business owners must register as self-employed with HMRC. Even if you do not plan to run your business full-time, you still need to register as a sole trader and keep concise records of all your income, profits and expenses.

Purchase insurance

There are several types of insurance you may require as a food from home business owner. This could include Legal Indemnity Insurance, Product Liability Insurance and Public Liability Insurance. You may also choose to purchase Buildings Insurance and Contents Insurance to protect your business premises and equipment.

Positives of being a caterer

Positives of Owning a Food Business

There are many positives of owning a food from home business, such as:

Potentially high-profit margins

A food from home business offers high mark-up on products. This means that your selling point will be significantly higher than the costs of the ingredients and food products. Even when you factor in the cost of your time and other overhead costs, you should still make a significant profit. A food from home business could have unlimited income potential.

Fun and rewarding

As you will be doing something you are passionate about, your business is likely to be very rewarding. Cooking and preparing food can be enjoyable and serving at events or interacting with customers can be fun.

Low start-up costs

Compared to many other businesses, the start-up costs associated with a food from home business can be relatively low. Depending on the type of food business you choose, you may need to make only a small initial investment, meaning you can begin to turn a profit much faster.

High demand

The food industry in the UK continues to be highly successful with plenty of opportunities for new businesses. There are a huge variety of events to cater for, different industries and niches and constant demand. This should make it relatively easy to get your business off the ground and to maintain or grow your business.

Flexible hours

As you are your own boss, you can choose your own hours, working as little or as often as you want. You could even choose to work seasonally or only work at weekends.

Work from home

Owning a food business allows you to work from the comfort of your own home. This can help you to create a better work-life balance.

Few qualifications or training required

Other than food hygiene training, you are not likely to need any qualifications to run your own food from home business. Even though experience in the food industry could be beneficial, this is also not a requirement.

Ability to cater for various functions if you want to

There are an endless number of functions and events you could cater for if you choose. You could choose to specialise in one type of event or cater for a variety of functions.

Customer loyalty

Many food businesses see customer loyalty and repeat business. Your customers could also recommend your business to family or friends or write positive reviews online.

Negatives of Owning a Food from Home Business

Negatives of Owning a Food Business

However, there are some downsides to starting a food from home business that you should consider.

High stress

As the business owner and chef, you will have a large number of responsibilities. You will be responsible for every aspect of the business, including marketing, ordering stock, cooking and delivery or serving. This can be highly stressful, especially when your business first opens.

Can be time-consuming

A food from home business can be very demanding and time-consuming. A lot of time is spent on the behind-the-scenes preparation. Sourcing ingredients and marketing and advertising can also be very time-consuming. As you are in charge of your own schedule, it can also be easy to take on too much work.

Can require a high cash flow

Depending on the type of food business you run, you may require a high cash flow. This could involve a higher initial investment or require you to keep a constant flow of work to keep your cash flow steady.

Inconsistent profits

Certain times of year are usually more profitable than others in the food industry. For example, January is likely to have less business than other months. Furthermore, weekends are usually more profitable than weekdays. This could mean you are obligated to conduct business on certain days. You may also not be able to predict your earnings.

Competitive industry

Depending on where you live and your chosen sector, competition can be high. You may have to plan your business based on other successful businesses in your area.

Planning your Business

Achieving a successful business is likely to depend on how successfully you plan your business.

There are several important factors you should consider and decisions you should make, such as:

  • What type of food product do you intend to sell?
  • What type of food from home business will you run?
  • Who is your target market?
  • What competition do you have in your local area?
  • What will your price point be?
  • What equipment do you require?
  • Will you buy any of the equipment second-hand?
  • Will any of the equipment be rented?
  • Can you finance the upfront costs yourself or do you require a business loan?

 

Once you have answered these questions, you can begin to plan your business. There are several important steps you should consider when planning your food from home business.

Finalise your idea

This includes the type of business you want to run, the food product you want to sell and your target market.

Plan your equipment requirements

What equipment do you need to start your business? Calculate the costs of renting the equipment rather than buying it. Consider if there is any equipment you can buy later on, once your business is more established and you have begun to make a profit.

Calculate your start-up costs and running costs

This can help you calculate how long it will take you to begin turning a profit. You can also calculate how much you are able to invest in the business. If your costs are likely to be high, you could consider a business loan, accepting an outside investment or working with a financial partner.

Develop your business plan

This helps to give you a clear plan, aims and actions. It can also help you understand any potential risks to your business, such as food wastage and your competition. A business plan can help you to establish costs, potential profits, your target market, and any opportunities or threats you should be aware of. Take a look at our business plan template to help you effectively plan your catering from home business.

Choose a name for your food business

Your business name is the first impression customers will have of you and how they will recognise you. Your name should be catchy but easy to remember.

Ensure you have the correct paperwork and have followed all legal requirements

This helps you to avoid any fines or delays in opening your food from home business. Consulting the list of legal requirements above can be extremely beneficial. Ensure you prepare all your paperwork ahead of time in case you encounter any problems.

Download our business plan

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