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How To Start A Meal Prep Business

How To Start A Meal Prep Business

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How To Start A Meal Prep Business

How To Start A Meal Prep Business

What if you could combine your passion for food, wellness, and entrepreneurship into a profitable venture that isn’t as time-intensive as a restaurant? A booming business opportunity is simmering in the shadows, and it’s ripe for the taking – starting your own meal prep business.

Starting a meal prep business requires more than just a love of cooking and nutrition, though these are vital parts of it. No need to worry, though; this guide is designed to give you a roadmap to navigate these areas.

Business Description

A meal prep business makes ready-made or near-ready-made meals for purchase. Clients enjoy the luxury of having delicious, healthy meals without the hassle of shopping, cooking, or cleaning. The business can operate wholly online and provide delivery services, or it may run out of a retail space where customers can visit in person.

The two most common meal prep niches are meal kits and ready-to-eat meals.

  • The meal kit niche provides all the ingredients, including spices, sauces, meats, veggies, and dairy products, for the customer to cook the recipe quickly at home. The customer may need to do some dicing, slicing, and cooking. But all the measuring and gathering of ingredients is done – a huge time-saver.
  • Ready-to-eat meals are similar to ordering a meal from a restaurant’s menu. The food is pre-cooked and packaged, ready to be reheated and consumed at home.

Many meal prep businesses operate on a membership or subscription basis. These memberships provide stability because they ensure regular income and help the business account for how many customers they will serve each month by better forecasting ingredient and labor costs.

Industry Summary

The U.S. meal prep industry has exploded in recent years, growing by an average of 16.3% each year over the last five years, where it reached $7.7 billion in 2022.1

What’s driving this growth, you might wonder? There are several factors at play. People are increasingly conscious of their health and the benefits received from a well-balanced diet, but finding time to cook healthy meals can be challenging. That is where meal prep services step in, offering a convenient solution.

Steps To Start A Meal Prep Business

Step 1: Write a Business Plan

If you’re thinking about starting a meal prep business, the first thing you need to do is write a business plan. Now, you might be asking, why is a business plan important? Here are a few reasons why:

Clarifies goals: A business plan is like your business’s GPS. It helps you figure out where you want to go and how to get there. It outlines your goals and the steps you need to take from the beginning. This clarity is essential, especially when trying to figure out so many moving parts.

Financial projections: Money matters, and your business plan is where you estimate how much money you need to start the business along with estimating the income and expenses. Lenders highly scrutinize this part of the plan, but it’s also important for your peace of mind, as it gives you a realistic view of your business’s potential profitability.

Building your brand: Your business plan isn’t just about numbers and strategies; it’s also where you define the soul of your business. What makes your meal prep service special? Who are you cooking for? This plan helps you shape your brand’s identity, from your unique value proposition to the ideal customer profile.

Related: How to write a business plan

Step 2: Source Funding

You’ve got your business plan ready for your meal prep business. The next big step? Figuring out how to pay for it. Meal prep businesses can be started inexpensively, and personal savings often serve as the funding source. However, if personal savings do not cover the startup costs, here are some funding avenues to consider.

Business credit cards: Business credit cards can be a quick and accessible way to finance your startup costs. Some even offer 0% introductory rates, which can be great initially, but if not paid quickly, they can also come with high interest rates.

Bank loans: If you’re thinking about a loan, know that lenders usually want you to put in some of your own money, often at least 15% of the total project cost. They’ll also check your credit score and ask for collateral (like property or other valuable things you own). If a bank needs more security to back the loan, a Small Business Administration (SBA) loan guarantee can sometimes help. This guarantee gives the lender more confidence to give you the loan.

Friends and family: Borrowing money from people you know is another option. It can be more flexible than a traditional loan. But, it’s super important to keep things professional, so put all agreements in writing to avoid any misunderstandings later.

Microloans: For smaller funding needs, microloans are worth a look. These are smaller loans often offered by local economic development organizations. The cool thing about microloans is that some organizations also provide business training, which can be a big help when you’re just starting out.

Related: Finding the money to start a business

Step 3: Register the Business

Before you can start to sell your delicious meals, you need to properly register and make it legal. These will vary based on the state and town where the business is located, but here is a general overview to help you get started:

Choose a business structure: First, you will need to set up a business structure. There are four types to consider for your business.

  • Sole proprietorship: This is the simplest form, where you own and run the business alone. It’s easy to start and has the lowest cost, but there’s no separation between your personal and business assets.
  • General partnership: Similar to a sole proprietorship, but with two or more people, and there’s no separation between personal and business assets.
  • Corporation: A more complex structure that is a separate legal entity from its owners. It offers liability protection but can be costly and involves more formalities.
  • Limited Liability Company (LLC): Combines the simplicity of a sole proprietorship with the liability protection of a corporation.

Related: Comparison of business structures

Forming an LLC sounds complicated and expensive, but using an entity formation service guides you through the process so you know it was done right.


Some popular LLC formation services include:


IncFile - $0 plus state fees & free registered agent for 1 year!

ZenBusiness - Best for beginners. $0 plus state fees & free registered agent for 1 year!

Northwest - Best privacy protection. $39 plus state fees & free registered agent for 1 year!

Business name registration: After registering the business structure, you may need to register your business name. This process will vary depending on what business structure you pick. Sole proprietors and partnerships will often be required to register a “Doing Business As” (DBA), while corporations and LLCs register with the state during the formation process.

During this time, it’s also a good idea to check if the name you want is available as a web domain, even if you’re not ready to set up a website yet.

Related: Finding a domain name for your business

Food service license: Depending on your location, you may need a food service license to prepare and sell food, which the local health department typically enforces. Smaller meal prep businesses may fall under the state’s cottage food laws, which means relaxed health department requirements and meals can be prepared from a personal home kitchen.

Obtain business licenses and permits: Depending on your location, there will likely be a variety of general business registrations needed before opening. These could include a business license, seller’s permit, and Employer Identification Number (EIN).

Related: State guides for general business licensing

Zoning and building compliance: Verify that you’re operating in a building or facility that is zoned for commercial use, meets the safety and environmental requirements for your business, and is fire code compliant. If you’re operating from home, check that there are no zoning, HOA, or landlord restrictions that would stop you from being able to operate your business.

Step 4: Set Up Operations

After lining up funding and registering your meal prep business, the next part is establishing your operations. Here, you start taking all of the planning and putting things into action.

The first task is to find a place to cook. In some areas, you might be able to start right in your home kitchen as long as it meets health standards. If that’s not an option, or if you need more space, renting a commercial kitchen or a shared kitchen could be your solution. These places often come with professional equipment and more room to work.

Next, you’ll need to invest in the right equipment. This includes basic appliances like stovetops, ovens, and refrigerators, along with meal prep essentials such as containers, cutting boards, and knives.

Planning the menu is an important aspect of your meal prep business. Develop a menu with a variety of meals that accommodate different dietary preferences, such as vegetarian, vegan, keto, and gluten-free. With the initial menu in place, you’ll need to find who you buy supplies from. This could be a grocery store, warehouse club, farmers market, or food distribution company. Don’t overlook suppliers for packaging materials like boxes, bags, and labels. Be mindful of preparation time and the cost of ingredients so you can profitably price meals.

Finally, finalize out how customers will order and receive meals. Will they order on your website, and the meals are delivered to their doorstep? Or will you set up accounts with gyms and other outlets, and customers purchase there? Regardless, work through the process and figure out how to make the process convenient for your customers, but also profitable.

Step 5: Prepare to Launch!

As you move closer to launching your meal prep business, we’ve tackled some major steps; however, there are a few more tasks to complete. Each business is unique, and this list isn’t exhaustive, but here are some common additional steps to consider:

Business insurance: Common types include general liability insurance, which covers accidents or injuries, and product liability insurance, which is especially important since you’re dealing with food. These help protect your business from unforeseen events.

Setting up bookkeeping: To keep track of your daily transactions, taxes, and financial statements, you’ll be setting up your bookkeeping system. This could involve hiring a bookkeeper, or you could use a software program designed for small businesses.

Opening a business bank account: Having a separate bank account for your business helps keep finances organized.

Creating a marketing strategy: To let potential customers know about your business, you’ll want to develop a marketing strategy. As part of your strategy, you’ll create a logo and a website where customers can find out more about your meals and place orders. Furthermore, you might want to use social media advertising and local event sponsorships.

Preparing for the grand opening: Plan an event or a special promotion to mark the launch of your business. This could be a discount offer, a tasting event, or collaborations with local businesses. It’s a way to attract initial customers and create buzz around your new venture.

Common Questions When Starting a Meal Prep Business

How much does it cost to start a meal prep business?

Starting a meal prep business involves several upfront costs and could cost around $2,000 for a home-based business to $25,000 if setting up a commercial kitchen. These costs include:

Location: If you plan to rent a dedicated commercial kitchen space, the costs can range from $1,000 to $5,000 per month, depending on the size and location. The initial deposit may equal a month’s or two’s rent plus any renovations. While possibly not as convenient, a shared kitchen is a much less expensive way to test your concept.

Kitchen equipment and supplies: Regardless, when setting up the location, you could spend anywhere from $1,000 to $10,000 on things like stovetops, refrigerators, food processors, cooking tools, and meal prep containers.

Inventory: Initial inventory may set you back $100 to $1,000.

Business registration: Generally, expect to spend between $50 to $500 for business formation and another few hundred dollars for licensing.

Insurance: General Liability Insurance, a common choice for meal prep businesses, can cost around $500 to $600 per year

Marketing: Initial marketing costs, such as designing a logo, setting up a website, and launching your first marketing campaign, can range from $500 to $2,500

How profitable is a meal prep business?

Estimating the potential profitability of a meal prep business involves considering various factors, including revenue streams, operating expenses, and market positioning. Let’s break down these components to understand the potential profit.

Revenues: The revenue of a meal prep business primarily comes from the sale of prepared meals. Suppose you plan to sell meals at an average price of $10 each. If you can sell 50 meals per day, 5 days a week, your weekly revenue would be $2,500, leading to a monthly revenue of approximately $10,000.

Expenses: Key expenses include ingredients, kitchen rental, utilities, labor, marketing, and insurance. Assuming shared kitchen rental and utilities cost about $1,000 per month, ingredients for meals amount to $3,000 (30% of revenue, a common assumption in the food industry), labor costs (if you have one part-time employee) are around $1,500, and marketing and insurance collectively cost $500 monthly. This totals to $6,000 in monthly expenses.

Profit Calculation: With $10,000 in monthly revenue and $6,000 in expenses, your net profit would be $4,000 per month.

This is, of course, a simplified example, and actual profitability can vary based on factors like location, pricing strategy, efficiency of operations, and demand.

What skills are needed to run a meal prep business?

Running a meal prep business requires some skills to help ensure your business runs effectively and profitably. Here are some of the essential skills:

Food handling: Food handling knowledge is one of the most important skills for a meal prep business. Knowing how to prepare and store food correctly will ensure that the ingredients are kept from spoiling and free of bacteria or foreign objects.

Cleanliness: Reputation is vital for a meal prep business. Unclean workspaces, spoiled food, or cross-contamination can harm your customers and your business’s reputation. So, keeping a clean environment is essential.

Diet awareness: Your business will likely cater to unique diet plans and restrictions. So, understanding allergens and nutrition will help you meet your customer’s needs.

Employee management: You may hire employees to help prep and deliver meals. As such, being able to manage your team efficiently and uphold operational standards ensures that you maintain a positive reputation and happy employees.

Order management: Order management is another essential skill that involves taking, filling, and delivering orders. Good order management skills ensure that your deliveries are made on time and sent to the correct customers.

How much should I charge for meal prepping?

When setting a price for your meal preparation business, it’s important to consider not only the labor to prepare the meal and the cost of ingredients but also any overhead such as rent, marketing, etc. You should also research what other people are charging for similar services in your region to stay competitive, but don’t be afraid to charge more for a better product.

Setting a price too low can undervalue your service or cause customers to question the quality of your meals while setting it too high could drive away customers.

How to start a meal prep business from home?

While many areas allow a meal prep business to operate from the home, there are many regulations to follow. Every location is different, but most areas have relaxed rules for low-volume businesses under cottage food laws, so check with your local health department to learn more about the rules for your area.

Sources

  1. IBISWorld ↩︎

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

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How To Start A Meal Prep Business

How To Start A Meal Prep Business

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