If you’re passionate about food or just want to jump on an exploding industry, starting a meal prep business might be the perfect biz idea for you.
According to Statista.com, the revenue of meal preparation industry is expected to grow to over ten billion US dollars in 2020. This industry was only one billion in 2015.
Big Picture For Your Meal Prep Business
What is your vision? Do you want to have a boutique, locally sourced meal delivery service? Do you want to have a gigantic national presence shipping across the country to rival Blue Apron?
Either way, once you dial in your dream you need to research food laws.
If you think you’re going to run something out of your house, contact your local health department first. Usually a department in your city or county, they can tell you exactly what you can and can’t do out of your home.
Laws are changing across the country and you cannot assume anything as you are putting not only your budding business at risk, but also will be liable personally.
TL;DR – Not following food laws sets you up for lawsuits, bankruptcy, and even jail time.
Different Types of Meal Prep Businesses
There are two main types of meal prep businesses.
Commercial prepackaged meal delivery subscription businesses
Meal prep business have exploded. They include both meal kits which are just ingredients and meal delivery of completely prepared entrees.
Hello Fresh, plated, and Blue Apron were the first on the US scene in 2012. They have continued what has become a bigger than ten-billion-dollar industry in 2020 according to Statista.
Personal Chef Business
If you’re more passionate about the food instead of scalability, another business model to consider is a personal chef business. Historically personal chefs have been considered contracted part-time private chefs. As clients become more demanding, personal chefs have expanded their services. Many personal chefs create meals in bulk and make them available to a wider office.
Research Meal Prep Business Requirements and Best Practices
The most important step is to do your due diligence (aka research) and draft a business plan.
This will give you a high-level picture of the business you want to create and help you determine if it’s actually feasible and profitable.
Like 99.9% of successful businesses (made up stat by myself), a meal prep business will take commitment and a lot of work. It’s not something to be started capriciously or with blinders on to the more difficult issues.
Determine Your Niche
Many currently successful meal prep businesses have an angle and area of specialty.
Some just provide ingredients and recipes like: plated, Hello Fresh, Blue Apron, Marley Spoon, Purple Carrot (vegetarian), Gobble (fast), Green Chef (special diets), Daily Harvest (smoothie bowls), Home Chef (variety), Sun Basket (healthy/sustainable), Every Plate (inexpensive), Yumble (kid friendly)
You can also do completely prepped like Hungryroot, which come with a higher price tag.
Or go all the way with completely prepared like Freshly, Sakara Life, Splendid Spoon, Fresh n’ Lean, Factor_, Snap Kitchen, Veestro.
Whether its organic ingredients, completely prepped, completely prepared, special diets, cheap, or high-end, having a niche can set you apart from the competition and make your marketing easier and more successful.
Are you passionate about living gluten-free to support people with celiac? PRNewsWire’s reports and data cite that global Gluten-free products market was valued at USD 4.35 Billion in 2018 and is expected to reach USD 7.91 Billion by year 2026. Or want to jump on the exploding keto bandwagon. A report published by Fior Markets states that the global keto diet market is expected to grow from 10.3 billion dollars in 2018 to 17.8 billion by 2026.
TL;DR – Special diet niches can be personally fulfilling and extremely lucrative.
A business plan is the most important tool you will have to build a successful meal prep business.
Your business name, type of entity, products sold, services provided, licenses/permits/insurance, business and production processes, revenue model, competitor analysis, hiring protocols, and more it can turn into a behemoth depending on your vision.
Some highlights of critical areas:
You’ll need to consider what type of business entity service your long-term goals best.
Business entities offer legal protections and benefits according to How To Start an LLC https://howtostartanllc.com
Sole Proprietorship is probably not the best choice due to it not offering any protections. When you’re dealing with food you’ll have liability so you need protection.
Partnerships – if you’re going to be working with business partners whether they’re silent (financial support only) or working partners, you’ll want to consider a limited partnerships (LP) or limited liability partnerships (LLP).
LLC – a Limited Liability Corporation is an all-around good choice to consider offering both protection and benefits.
Corporations – There are many different types, the most relevant here being the C Corp and S Corp. While they offer the most benefits, they also have the biggest amount of requirements. If your plan is to take over the world with your meal prep business you’ll want to consider these more robust options.
Cooperative – If your goal is to have a big employee owned company, like Shop Rite, Ocean Spray and Land o’ Lakes, a co-op might be an option you want to explore.
Get more info on business entities and licenses at Up Counsel https://www.upcounsel.com
TL;DR – Definitely contact a qualified attorney to review your options, requirements, and expense. Yes, it does cost money to setup a business properly.
Funding For Your Meal Prep Business
After you determine your big pictures and future plans, you’ll need to develop a funding plan.
How much is it going to take to get started? What buffer do you need to have if profit projections aren’t made?
Will you consider private investors? If so, what role will they play in the business?
If you are going to pursue bank funding, you’ll need to research loan amounts, application requirements, and legal implications.
Supply Chain For Ingredients and Packaging
How big do you want to grow? How fast?
You will need a solid fulfillment plan in place to consistently acquire quality food and packaging and then distribution to customers.
Will you work with a giant food supply company like Sysco? Or are you going to focus on local food businesses?
How will people order and how will you get the food to them? Companies like FATbit Technologies have developed software specifically for online ordering which is used companies like Hello Fresh.
Will you be providing meals only locally? Will you handle delivery internally or externally with a delivery company like Shipt?
If planning on shipping nationally, what shipping company will you use? What are their costs? Do they require contracts? Payment up front? What are the food laws when shipping across state lines? (Yes, that’s a thing.)
After learning how to start a meal prep business, f you’ve decided this isn’t the one for you, start looking for a new business idea at Just Business.
Marketing Plan For Meal Prep Business
Who are you targeting with your niche? Single guys watching Tosh.0 aren’t going to be lured by your family friendly meal prep concept.
Your marketing plan needs to consider your ideal client, where they are, and how to most effectively and cost efficiently get in front of them and compel them to purchase.
No small feat.
Marketing routes to consider include:
Paid advertising online, social media, google, youtube
Paid advertising on tv, radio, billboards
Print advertising like direct mail and magazines
Nonpaid advertising (though by no means free) also needs to be included like a website, social media accounts for your brand, content creation, networking etc
That is just a few, there are literally dozens and dozens to consider and evaluate.
In addition to this marketing includes everything from your company name, brand message, and colors to competitor analysis, price positioning, public relations, customer service and satisfaction, and sales.
TL;DR – Your marketing plan demands a lot of thought and expertise to develop and even more to execute well.
Short Cut To A Meal Prep Business
If you’re not passionate about the food part of the business, and just want to ride the coattails of this booming industry, check out white labeling the product. Get Meals By Melissa is a company in Atlanta, Georgia that sells whole sale prepped meals that you can retail with your own branding. This way you don’t worry about menus, production, etc you just focus on branding and marketing. http://www.getmealsbymelissa.com/start-your-meal-prep-business.html
Personal Chef Meal Prep
Personal Chefs also provide a service that is more commonly being referred to as ‘meal prep’.
If you are mainly interested in the food and preparing it yourself, this is a great option.
Similarities to large commercial meal prep:
- FIrst research and follow all food laws and business requirements.
- Then decide what food you want to prepare and market.
- Next you need to have consistent access to great quality ingredients.
You don’t have any concerns about:
Staffing, shipping, funding or many of the areas that the big commercial outfits have.
The one thing to be aware of though is that unless you are doing huge volume (which has its own complications) you’re not going to make as much as you do with other personal chef services.
Personal Chef Meal Prep Pricing
The range of prices for prepared meal delivery companies is anywhere from $4.99 (Every Plate, even cheaper with a discount code) to about $12 or so per entrée. These are for the high end, organic, or special diet plans.
These prices are from large commercial entities that are buying food and deeply discounted wholesale prices and have minimum wage staff.
When you are preparing meals as a personal chef, it can be difficult to find menus that are affordable enough for people that want cheap plates and to make you enough money. You’re not going to make a living wage churning out $8 plates.
Some personal chefs try this style of meal prep thinking it’s a steppingstone to regular clients. Typically, however, the people who want meal kits are either very interested in cooking themselves or are more interested in cheaper prices than the benefits of a personal chef.
Other Personal Chef Meal Prep Services
If you’re looking to make a solid income from cooking, it’s best to leave this model to the commercial types and stick to the more traditional services personal chefs offer like these.
Clients that hire personal chefs for regular services, like weekly or every other week are paying anywhere from $250 – 500+ per service according to the free 2018 Personal Chef Income Report you can get here which is a good wage for the personal chef and allows the client to completely determine their menu and food needs.
If cooking is your highest priority in exploring this booming food industry, you can learn how to prepare a personal chef service here.