Are you ready to make food not only work for your body but also your bottom line? The meal prep industry shows no signs of slowing, and with projected growth, for years to come, it’s a great market to jump into if you’re considering starting a business.
Our lives are busier than ever! And while that busyness used to mean fast food and frozen dinners, we’re also more informed than ever before – including more information about nutrition and health.
Now people want fast, delicious, and HEALTHY meals for a reasonable price.
And who will deliver such a tall order? Why not YOU?!
Whether you’re after a simple side hustle or you’re ready to launch the ‘next big thing,’ it’s time to start your business and get your meal prep company cooking. While starting any type of business can feel stressful and confusing for some, starting your meal prep business doesn’t have to be with these simple steps.
How to start a meal prep company in 11 easy steps
1. Make sure this is right for you
It’s important to know what you’re getting yourself into before taking on the work and cost of a meal delivery business.
PROS of a Meal Prep Business
The growing popularity of meal prep delivery services means these businesses tend to sell themselves. Potential customers already know they’re saving time and money with a meal kit.
This work offers a lot of flexibility, including full-time or part-time options and you can run your business from your home.
If you love cooking, turning a personal passion into a career can be very fulfilling. And you don’t need any special degrees or certifications to get started. Your customers tend to care more about how the food tastes than where you went to school.
If you’re starting small, you can get going with very little startup costs. Launching from your home kitchen is possible with as little as a few thousand dollars. This industry is on fire right now and with such low startup costs, you can not only break even in a relatively short period of time but you have the potential for high profit margins and income.
There are also a lot of tools, including software, to make running this business easy. Software options can not only support your online business storefront, but can manage your inventory and ingredient shopping lists based on customer orders. The software can also create your nutrition labels to give your products a truly professional look.
CONS of a Meal Prep Business
Like any business, buckle up because this is going to be a lot of work!
Prepared meals are so popular that the market is full of food delivery businesses, making this a highly competitive industry. As you consider the business models that will support your goals, don’t forget to do a competition analysis to know what you’re up against. Standing out from the crowd may be one of the greatest challenges for your meal preparation business. Knowing what makes your business unique will be critical to your marketing strategy.
Although you don’t need a degree to launch, licensing and compliance requirements can be tricky for food businesses. Making delicious meals is one thing, but keeping the health department happy while you do so is an entirely different challenge. Make sure you know and follow the laws and regulations for healthy food.
When you’re cooking with fresh ingredients, meal deliveries to far away customers can be difficult. So growing your business can be tricky depending on the types of meal products and services you offer. you may need to open new manufacturing locations and invest in faster shipping if you want to get fresh food to more people.
Customers can require quite a bit of support, which can turn into a full-time job all on its own! You’ll need to answer questions about cooking, ingredients, spoilage, and deliveries. Building customer loyalty in this industry can take time, and providing quality customer support is important to keeping customers happy.
2. Refine your business ideas
Before hitting the grocery store to purchase ingredients or starting an online presence with a website and social media, it’s important to take time to really define your business structure. Your meal delivery model and your target audience will impact all other business decisions, so defining them early is critical to ensuring you’re off to a good start.
Remember that it will be tough to stand out from the crowd if you don’t offer something unique within the meal prep industry. So, clearly identify what makes you different from your competitors. As you refine your niche, consider focusing on unique services like kid-friendly meals, plant-based meals, vegan meals, specific allergy or dietary accommodations, etc.
These options will help you refine your business model and customer base:
Types of Business Models
What type of preparation business are you ready to start? Exploring the big names in the industry can help you brainstorm. Check out companies like HelloFresh, Purple Carrot, or Blue Apron for some ideas. Here are some models to consider, but you could always branch out and get creative:
- Uncooked, yet prepared meal ingredients model:
Ship raw, portioned and prepared ingredients to customers. Include simple step-by-step instructions for customers to prepare and cook the food themselves.
- Precooked, storable meal delivery model:
Ship fully-cooked meals for customers to reheat when ready. The meals may be shipped with perishable elements like salads.
- Onsite cook-and-go model:
Meal prep workshops require a commercial kitchen where customers will arrive at a designated time to prepare a meal under the supervision of an instructor and then take the meal home to eat.
Shipping can be a real headache in this industry. Identify how far out you’re willing (or able…) to ship your fresh food. If a commercial kitchen isn’t your thing, a nationwide meal business probably isn’t your thing either. In this case, you should consider a localized business where you run your meal prep business from home with a simple storefront for local pickup.
Consider contacting shipping companies for more information. A quick phone call could help you understand your options, as well as the costs involved in any state regulations for shipping fresh food. Regulatory costs in some states can be so high that shipping becomes unprofitable.
3. Create a business plan
Your business plan should not only include details about your business model, ideal customer, and business goals, it should also detail many of the legal elements required to launch your business. There are lots of meal prep business plan PDF options you can search for online to guide you through the best structure for your business.
Answering these questions should help you get started:
What products or services will I sell and what will I charge?
What demand is there for this product or service?Who is my ideal customer and what problem am I solving for them?
What is my buying and delivering process?
What are my costs (supplies and other)?
And what are my short-term and long-term business goals?
Here are a few additional topics to consider as you write out your plan:
Choose a Business Name
A good business name can go a long way in contributing to your marketing efforts. You can check a name’s availability on your secretary of state’s website. You could also search a business name online and on social media sites to give you an idea of existing content associated with the name. If the name is available, you’ll want to register it quickly, along with a domain name and social media handles, so you don’t lose it while you’re finalizing the other elements of your business.
Choose a Business Entity
You’ll want to identify the right legal structure for your business before you register your business. You may want to consult a business attorney or tax expert before you register with the required federal and state agencies. But here are a few helpful definitions to consider as part of your research:
- Sole proprietorship:
An unincorporated business, owned and run by a single person. The owner is liable for any debts incurred by the business.
- Limited liability company (LLC):
Also owned and run by a single person. A key difference is that an LLC offers personal liability protection. The owner also has more flexibility in how the business is taxed.
Two or more people share ownership, funding responsibilities, profits, and losses.
While there are different types of corporations, all are more expensive and complicated to start and manage than the business options listed above. Corporations exist completely separate from shareholders and owners. Different corporation types have different tax requirements.
Perform an In-depth Competitive Analysis
Identifying your key competitors and assessing their strengths and weaknesses will help you pinpoint exactly where your business fits into the market. Noting your competitors’ pricing, unique offerings, and what their customers really like and don’t like about them gives you direction on where you can attract your future customers and take over the market.
4. Register your business and obtain business licenses
In order to ensure legal protection and tax benefits, register your business with the government. Again, reach out to appropriate legal and tax counsel as needed. Searching online for your state’s requirements and processes is a great place to start. Business registration and licensing information is available from your state’s statutory entities. Make sure you consider any state and city license requirements.
5. Register for taxes
It’s likely you will have one or more staff to support your growing business. Before hiring staff you’ll need an employee identification number (EIN). Again, a simple online search will get you access to the application for a federal tax ID, along with great resources to guide you in your research for what is best for your business needs.
6. Apply for licenses and permits
By this point, you may be tired of the paperwork and hoops you’re jumping through to launch your business, but it’s crucial to have all of your licenses and permits in place before you start. Each business model will have different requirements, so checking with your local chamber of commerce or SBA resources can guide you.
Here are a few licenses to look into for meal delivery businesses:
- Food handler’s license
- Food service license
- Building health permit
- Employee health permit
- Liquor license
- Catering license
- Sales privilege license
- Zoning permits
- Recycling and waste removal
7. Obtain funding
Show me the money! By starting a business, you’re certainly hoping to make some (or a lot!) of money along the way, but you know it often takes money to make money. When building your financial plan, don’t forget these steps:
Create a Budget
When starting a business it’s important to stay within a strict budget and to document EVERYTHING to ensure your business remains profitable. To begin, estimate your total forecasted sales and subtract your total costs (including ingredients, preparations, packaging, delivery, etc.). This is your “gross margin” and the foundation for your budget. Make sure all of your expenses (software, building maintenance, utilities, licensing, salaries) fit within this margin. And don’t forget to pay yourself! Since many of these costs will be refined over time, it’s okay to make your best estimates at this point and continually improve your budget as you get more precise information.
Apply for Funding
Now that you have a good idea about your finances, you can calculate how much money you need in order to launch. Don’t forget to add the starting costs for your business, like building a website or mobile app or setting up a storefront. It’s likely that you’ll need some small-business funding to get started. Again, we can’t know the best financial or legal decisions for your individual business, so make sure you do your own homework before jumping into anything. Here are a few popular options for funding that you may want to look into business lines of credit, business credit cards, equipment financing, and startup funding.
For business banking and business loans, keep an eye out for processing fees and interest rates to make sure you don’t get hit with higher banking charges in the future.
It’s important to keep your personal and business finances separate. Either a business savings account or a business checking account is an important part of this step in the process as well.
8. Get business insurance
Business insurance offers great protection for you and your employees. It can protect you from major losses and damages and lawsuits. If you choose to hire staff, your employees may need workers’ compensation, disability, or unemployment insurance. For home-based businesses, you may also need homeowner’s insurance to cover your home and kitchen equipment.
If someone gets sick as a result of your food, you could lose your entire livelihood. Remember, not all insurance policies are created equal, and a business lawyer can provide counsel on the best insurance coverage options to protect you and your business.
9. Purchase supplies and set up shop
Starting your business and keeping supplies stocked will require constant access to fresh food and packaging materials.
Buying in bulk is a great way to keep costs down if you can manage the shelf life of each ingredient so they stay fresh until use.
Make sure you’re checking with all of your vendors on any dietary commitments you’ve made to your customers. If you have a plant-based menu or advertise “all locally sourced ingredients,” you’ll have to find suppliers that can support those needs.
An inventory management system will help you track your incoming and outgoing supplies so you can be sure you’re serving the freshest ingredients available. There are various software options specifically designed for meal prep businesses that can take a load off your shoulders. Software support is especially important if you have a subscription-based delivery model.
Getting your storefront ready for customers may include an in-person or online shop. Either way, you’ll likely need to invest in some high-quality food photography and at least a minimal website.
Depending on your business model, setting up a shop may also include preparing a commercial kitchen.
10. Create a marketing plan
Remember that unique element you noted earlier that sets your business apart from your competitors? That’s the foundation of your marketing plan!
If marketing isn’t your expertise, it may be helpful to enlist the support of a freelancer or agency to get the word out.
In our digital age, digital marketing is a MUST for businesses. Here are a few digital marketing options to consider:
- Social media
- Content marketing
- Search Engine Optimization (SEO)
And don’t underestimate the importance of a quality website and a simple ordering process.
Other traditional forms of marketing include billboards, newspaper articles, and press releases. Consider promotions to attract new customers as you launch your business.
And in the food industry, photos are king! So include that high-quality photography in your marketing to get your customers’ mouths watering!
11. Sell your amazing products!
You’re ready to launch! This is the step you’ve worked so hard for – so enjoy it!
Feeding people delicious food and making their lives easier with fast and healthy meals is an incredibly satisfying career.
Consider reviewing your business plan and business model every quarter to see if you’ve outgrown them. Make adjustments and hire staff as needed to keep up with increasing sales.
And don’t forget to enjoy a dessert on the house once in a while!