Thinking of Buying a Catering Business in Australia? Here Are 3 Vital Questions to Ask

 

The Australian catering services industry is valued at $12.7 billion in 2025, employing over 69,000 people across 5,000 enterprises, with profit margins averaging 2.3%.

 

Revenue has grown at an annualised 7.0% over the past five years, driven by the return of live events, corporate outsourcing, and increased demand from health and education sectors.

 

Future revenue is projected to grow modestly at 1.3% per year through 2030, reaching $13.5 billion, supported by outsourcing trends and new sustainability-driven contracts.

 

However, rising food costs, labour shortages, and strong competition from restaurants and cafes continue to challenge operators, particularly smaller independent caterers.

 

1. Is the Business Financially Sustainable and Profitable?

 

Why It Matters:

 

Catering is a high-cost, low-margin industry sensitive to fluctuations in food prices, energy costs, and labour availability.

 

Profitability depends on operational efficiency, contract stability, and effective cost control in purchasing and logistics.

 

What to Check:

• Revenue and margins – Benchmark performance against the 2.3% industry profit margin and evaluate if the business maintains steady contract revenue.

• Labour and input costs – Wages total $3.99 billion (31% of revenue), while food purchases remain the largest expense category.

• Inventory and waste control – According to End Food Waste Australia, 20% of food prepared by caterers is wasted, highlighting the need for accurate forecasting and portion management.

• Energy and rent exposure – Rising electricity and rental costs are pressuring margins; assess whether energy-efficient equipment or lease renegotiations are in place.

 

2. How Competitive is the Business’s Market Position?

 

Why It Matters:

 

Competition has intensified as cafes, restaurants, and event venues increasingly offer catering services.

 

Success depends on brand reputation, contract diversity, and capacity to deliver large-scale or niche services efficiently.

 

What to Check:

• Client base – Key markets include businesses (22.6%), health providers (20.3%), education (11.6%), and government departments (10%), providing more stability than household catering.

• Service mix – Determine if the business covers on-premises events, takeaway catering, or full-service facility management (catering, cleaning, and security).

• Scale and integration – Major players like Compass Group (12.5%), Downer EDI (5.6%), and Sodexo (3.9%) dominate national contracts, while smaller firms compete on quality and flexibility.

• Technology and marketing – Evaluate digital ordering, CRM systems, and social media strategies, which are increasingly vital for customer retention and event bookings.

 

3. Is the Business Aligned with Industry Trends and Future Growth?

 

Why It Matters:

 

Trends such as sustainability, health-conscious menus, and integrated facility contracts are reshaping the industry.

 

Caterers that adapt to these shifts are more likely to secure long-term institutional partnerships and repeat event clients.

 

What to Check:

• Sustainability focus – 85% of hospitality operators report sustainability initiatives improve customer retention; government policy aims to halve food waste by 2030.

• Health and nutrition innovation – AI-driven menu optimisation and nutritious school or hospital meals are emerging growth areas.

• Outsourcing contracts – Hospitals, schools, and mining camps increasingly prefer multi-service contracts, with demand projected to grow 3.4% annually through 2030.

• Event resurgence – Domestic events and tourism recovery continue to lift demand for live-event catering and premium experiential offerings such as interactive cooking stations.

 

Ready to Invest in a Thriving Catering Business?

 

With renewed demand from corporate, education, and health clients, and rising interest in sustainable food solutions, Australia’s catering sector is positioned for steady long-term growth.

 

Success depends on cost control, efficient operations, and aligning offerings with sustainability, health, and experience-driven trends.

 

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