How to Start a Meal Prep Business? A Step-by-Step Guide
If you’re wondering how to start a meal prep business, this post is for you. In it, we’ll discuss the step-by-step process that you need to follow to create quick, easy, and delicious meals for your customers.
Starting a meal prep business has become increasingly popular in recent years. Now more than ever, customers are demanding instant and healthy food that they can make quickly, without the hassle of coming up with their own recipes or shopping for ingredients. It’s become so popular that some food prep companies have sold for millions of dollars.
Starting a food business, though, isn’t always easy. Not only do you have to think about the logistics, but the marketing, food quality, and recipes too.
Read on to learn more about what’s involved in creating a successful venture in this thriving industry.
Why Starting a Meal Prep Business From Home Is a Great Idea
Before we get into the step-by-step process of actually setting up a meal assembly business, it’s worthwhile asking why you might want to do that. So, what are the benefits?
The obvious one is that starting a meal planning business allows you to be your own boss. If you can create a sustainable business model, you’ll be able to leave your regular 9 to 5 behind and pursue something that you really care about.
What’s more, meal prep businesses are a form of public service. Yes, profit is still important, but you’re also helping people eat healthier at the same time. By offering meal preparation services, you’re getting your customers out of the habit of ordering take-outs and helping them eat a balanced diet.
Lastly, the financial rewards of setting up meal prep companies and later selling them can be extraordinary. Many entrepreneurs scale their businesses and then sell them to large conglomerates for millions of dollars.
How To Start a Meal Prep Delivery Business
So what do you need to do to start a meal preparation business? Let’s take a look:
Step 1: Find Your Niche
There are already several big players in the meal prep market, each with loyal followings. Therefore, like any other industry, you'll need to find a niche – a specific area in which you can excel.
When it comes to niches, you have multiple options. One place you can start is with uncooked meals. Companies that follow setups like this include Green Chef, Mindful Chef, and Hello Fresh. The value for consumers is that meal kits supply all of the ingredients they need in the proportions they need them. While nothing is cooked beforehand and some chopping is required, they dramatically reduce the amount of mental energy (and often cost) involved in preparing daily meals.
The other option is to prepare ready-to-eat meals. From a logistics perspective, this is slightly more challenging since it is harder to keep pre-cooked food both fresh and healthy. However, there are businesses experimenting with this model, such as Allplants. Meal prep programs go beyond traditional microwaveable ready meals but keep preparation required by the customer minimal.
Then there are companies that host meal prep workshops. Here customers learn how to make tasty meals quickly from simple ingredients. They can then go home and practice what they’ve learned in the kitchen.
Here are some more meal prep niches that you might want to explore:
- Vegan and plant-based: With the rising popularity of plant-based living, there’s increasing consumer demand for meals that eschew meat and other animal products entirely. They do exist right now, but the space is growing rapidly. In fact, this could be the perfect niche to get into: most consumers want to eat more vegan meals at home, but they’re not quite sure how to do it. Your business can show them the way.
- Kids meal prep: Parents have to prepare breakfast, lunch, and dinner for their children, which is incredibly time-consuming. Therefore, a meal prep business that provides kids’ meals could be the solution they’re looking for. It would cut down on planning, save time, ensure that kids have a balanced diet, and meet their nutritional requirements.
- Work meal prep: Busy professionals often don’t have the time or energy to make lunches for themselves in the morning or the night before. Therefore, your meal prep service could take care of the meals on weekdays, freeing up their time.
Step 2: Create a Business Plan
Once you have a rough idea of what your niche will be, the next step is to create a business plan.
Your plan should include the following elements:
- Business name – what you will call your business and why its name will appeal to your customers.
- Business entity – the legal structure of your business. This is usually a limited liability corporation (LLC) and potentially a limited liability partnership (LLP) if you want to create a joint venture with a partner.
- Products and services – including information on the types of meal prep kits that you will offer, whether delivery will be part of your service, the cost of supplies, the cost of labor and production, and the amount of money you’ll need to invest upfront
- How to charge for meal prepping – including information on prices, margins, and so on.
If you get stuck, use an online meal prep business plan template to guide you.
Step 3: Get the Necessary Licenses and Permits
For your meal prep services business to function legally, it requires various licenses and permits.
The type of licenses and permits you require depends on the business entity you choose and your location. Entrepreneurs starting up at home have different permit requirements from those setting up in commercial premises. Furthermore, federal, state, and local governments may also require different types of permits. Since this step often takes the most time, it’s worth beginning it as soon as possible.
Here we list some of the food prep licenses and permits that you might need. Check the following:
- Business license: This license is necessary to open and operate a company in the US. You can apply for these on your state government’s website.
- Employer Identification Number (EIN): The EIN is another requirement for setting up a business in the US. It’s a code assigned by the IRS and is equivalent to a tax identification number.
- Certificate of Occupancy: Certificates of Occupancy may be necessary if you plan on occupying physical premises.
- Foodservice licenses. These are obtainable for city or county health departments, either online or in person.
- Sign permit: Depending on your area, you may have to ask for permission to put up a sign outside your business. Fees depend on the size of your sign and start from $20-$50, depending on the state and location.
- Seller’s permit: If you collect sales tax, you’ll need this permit. In some states, it is called a “sales tax permit.”
- Dumpster placement permit: If your business produces commercial waste, you’ll need a dumpster placement permit. These typically cost between $10 and £100.
- Building health permit: This permit confirms that the building you operate in is suitable for food preparation and service.
Step 4: Get Insurance
Learning how to start a meal prep business also requires finding out more about insurance. You’ll need the following:
- General liability insurance will protect you if you cause a bodily inquiry to someone else, property damage to another person’s belongings, or there is a libel/slander lawsuit against you.
- Commercial property insurance, which covers any rented buildings or equipment you have.
- Professional liability insurance, which protects you against lawsuits arguing that you made a mistake with the services you provide.
If you have employees, you will also need to take out workers’ compensation insurance. This cover protects you if employees get sick or hurt on the job. It pays for things like medical bills, lost wages, ongoing care, such as physical therapy, and funeral costs.
Step 5: Get Funding
You can fund your meal prep startup out of pocket, but most entrepreneurs seek external sources to get them off the ground.
Small business funding options include:
- Venture capital or angel investments: Here, you’ll need to convince an individual or company with the required capital that your business idea will succeed and generate profit long-term.
- Equipment financing: This allows you to rent equipment for a low monthly fee instead of buying it outright.
- Business credit cards: Most banks offer business credit cards to business owners with strong credit ratings. Credit cards give you access to short-term cash to tide you over, but they are not appropriate for longer-term projects.
- Business lines of credit: A business line of credit is a facility you can use to borrow money when you need extra cash to cover your expenses. It is more flexible than a conventional business loan.
Step 6: Find Your Suppliers
The average meal kit delivery service works with dozens of suppliers. Not only do they have to source all the food for their boxes, but also the packaging as well. Many have an outer bag or box that they transport meal kits in, and then smaller pots and containers for ingredients with special requirements, such as yogurt, sauces, spices, oils, etc. They also need ice packs to keep certain ingredients cool during transit to prevent spoiling.
Start researching who your suppliers will be as early as you can, and then ask them if they are able to distribute units of food to you in quantities your customers need for a single meal. In some cases, you may find that preparation is necessary on your end since many wholesale food suppliers lack flexibility.
You’ll also want to work with a packaging provider that complements your niche. For instance, if you market yourself as a sustainable alternative to conventional meal prep businesses, it doesn’t make sense to put food in polystyrene containers. Recycled paper is a better option.
Step 7: Market Your New Business
Getting your food prep marketing strategy right is perhaps the hardest part of the process. If you can inspire consumers to use your brand, you can often set up a highly profitable business.
Here are some marketing ideas to help you along:
Make Customer Service Your Top Priority
Customers who have a great experience with you are much more likely to come back for more in the future. To achieve this, you’ll need to:
- Ensure that food is still fresh when it arrives at your customers’ homes.
- Create an easy-to-use and fast website that allows customers to select meal options without fuss.
- Deliver all your meals on time so that customers don’t wind up having to rush out to the store at the last minute.
- Offer helplines so that people can call you if something with your service goes wrong.
Tell People In Your Community About Your Project
Word-of-mouth is a powerful vehicle for getting more people to try your brand. Offer your core customers an impeccable service, and they will market your business to their friends on your behalf.
Make Your Packaging Bold
Like other products on the market, you’ll also want to ensure that your packaging is bold and stands out. Today’s consumers want sustainable, attractive packaging that they can recycle. Many also want to feel like they are treating themselves, not just going with whatever represents the best value.
Talk About Your Company in Social Media
Many Instagrammers prepare meals to go and share them on the popular social network. You can do the same. By posting images of your meal prep service, you can show your audience your processes to build trust and prove to them just how easy it is to prepare a meal using your service.
Social media is free to use and allows you to connect with a lot of people. You can post whenever you add a new recipe to your collection or come up with a new idea. Just make sure that whatever content you create is relevant to your audience. Listen to community feedback, and respond appropriately.
When it comes to selling food, photography is critical. Brands that take great images of their recipes whet their audiences’ appetite and get them in the mood for spending.
Taking and editing great food photos is very challenging, though. Therefore, don’t try to do it yourself. Instead, hire a professional food photographer to do it for you.
Prices for this can be quite high, but the investment is worth it. Just make sure that you finalize all your recipes and products before getting a photographer so you won’t have to hire them multiple times.
Sell at a Festival
Festivals are a great place for getting your brand message out to the public. The large audience combined with the spirit of the event creates positive associations with your brand with minimal effort.
If possible, look for suitable events in your niche. For instance, if you want to build a kids' food prep company, go to children’s events.
Print Out Leaflets
Physical leaflets or menus are another powerful way to spread the word about your business. You can hand these out to prospective customers directly, bypassing the need to raise awareness online, which can be challenging.
In summary, learning how to start a meal prep business is surprisingly easy. Mostly, you are following the same steps as you would for any other enterprise.
The biggest difference comes from how you market your business. The meal prep industry relies heavily on quality photography and marketing that explains the economic value of these services.
Customers can sometimes experience sticker shock when it comes to meal prep prices. Therefore, businesses in this sector need to educate their audiences on all of the benefits of the service. For instance, saving time on shopping and thinking about recipes or the cost of actually getting to the store.
Meal prep business profits can be high, but you’ll need to scale. The faster you can get to 10,000 subscribed customers, the better.
Because of lower overheads and the ability to scale rapidly, meal prep business profits can be high. The niche often offers higher margins than close alternatives, such as restaurants or diners.
You can start a meal prep business from home, so long as you obtain the proper licenses from your local state authority. However, as your business grows, you may find that your home does not provide all the space or amenities you’ll need. When thinking about how to start a meal prep business, you need to consider both immediate and long-term goals and decide whether you may need dedicated work premises sooner rather than later.
The average person spends around $60 to $100 a week on the food they prepare at home. Therefore, your baseline for your weekly kits could be anywhere between $60 and $100, plus a premium for the added convenience of your service.
Generally, chefs charge for meal prep as part of the price of the final goods that they produce. If the ingredients for a meal cost $5, but you sell it for $8, you get $3 in profit.
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