How to Start a Meal Prep Delivery Business | Northwest Registered Agent (2024)

Usually operating on a subscription-based model, a meal prep delivery business offers a weekly menu of meals tailored to the customer’s lifestyle. Food delivery in general saves customers time, stress, and the kitchen mess, but unique to a meal prep business is the level of customization and consistency.

In essence, your business offers a specific meal plan—vegan, gluten-free, or just a satiating and nutritionally dense selection of dishes, to name a few possibilities. Customers will select their preferred breakfast, lunch, and/or dinner from that plan, and your business will prepare the meals, package them, and deliver them to the customer. Unlike ordering delivery from a restaurant, turning to a meal prep delivery business allows customers to choose their meals for the week in advance. Plus, since the service is usually tied to a specific type of meal plan, customers will no longer have to figure out what they can or cannot eat from a menu.

Before you get started, you’ll need an idea of what resources you’ll need—and how to monetize your business in a practical way. We’ve answered the biggest questions about clients, costs, and profits below.

Who is the target audience?

Meal prep delivery services attract customers who are typically trying to meet a specific need that standard take-out and delivery cannot.

• Health goals: Some services prepare nutrient-dense meals to meet weight loss goals, low-sodium meals to help with blood pressure issues, or protein-packed meals for physique goals.
• Dietary restrictions: Many meal prep services cater to vegan, vegetarian, paleo, keto, kosher, halal, gluten-free, and other diets with specific ingredient or preparation requirements.
• Convenience: Novice cooks, consumers with limited motor skills or mobility, and busy professionals seeking simplicity are just a few groups who can benefit from the convenience of meal delivery.
• Environmental values: Services may cater to customers seeking organic, local, or sustainable ingredients.

Again, the market really is limited only by your approach. What do you enjoy preparing? How far can you deliver while ensuring the freshness of the meal? Within your delivery range, are you closer to a university and commercial offices? Would you prefer preparing and freezing the entire meal? Or would you rather ship prepared, uncooked meals that allow your audience to experiment with the dish a bit? These are just some of the questions to consider when determining your target audience.

How do I get clients?

Social media platforms are a powerful tool for reaching your audience, but word of mouth and heartfelt client testimonials are what secure new clients. Here are some ways to get the word out there.

• Start locally: You’re probably getting started in your own kitchen with your own pots, pans, and utensils (more on this in the licensing and permits section). Working in a small space, you can start by preparing meals for family, friends, and neighbors. Fellow parents at the next school assembly. Co-workers. Really maximize your local presence depending on your key demographic.
• Promote digitally: If you really want to leverage your social media presence to gain new clients, then collect your share of testimonials from the local folks who’ve tried your food. Once you’ve been able to get your family and friends on board and you’ve established a digital presence, begin incorporating testimonials as it suits your demographic. Meals designed for weight loss? Gather some concrete numbers and share your clients’ successful health journeys on your website. Got a client with arthritis who can finally make delicious dishes pain-free? Share that story with prospective clients!
• Research competitors: Check which companies are ranking on the first page of Google. For instance, Pantry Fuel and FreshBite are among the top-ranked meal prep delivery services in Spokane, WA. Who are your local competitors? What plans do they offer? What’s your competitive edge? You’ll be doing this kind of research and self-examination at every stage of your business operation, but when it comes to getting clients, keep an eye on what’s trending, what’s faltering, and most importantly, who’s already in the marketplace.

How does a meal prep delivery business make money?

Meal prep delivery services have traditionally run on subscription-based models. This model allows customers to choose their weekly meals at a lower cost than buying per meal. Once you have enough customers to start offering weekly plans, a typical business model for meal prep delivery is to offer several pricing tiers. By including shipping along with the cost of the meals, the typical meal prep delivery business can present on its website a tier of plans for the client to choose from.

Take Nutrition Solutions, a meal prep delivery service located in Tampa, as a representative business model. They offer a 5-day, 6-day, 7-day, and starter package. The starter plan is the cheapest overall ($132), but the cost per meal is the highest ($10.15). For the full 7 days, customers pay $239, but the cost per meal is only $8.24. Customers choose the plan that best fits their budget and goals, and from there, they subscribe just as one would subscribe to Netflix. The draw of this model is that customers have their choice of plan, can modify that plan whenever they like, and can end their subscription whenever they want. The draw for you, the business owner, is that once a customer subscribes, you likely have a locked-in source of revenue.

How much money will it take to get started?

On average, you can probably get the business up and running with a $15,000 investment. At the bare minimum you are looking at about $1,000 to get started if you try to do it from your own home or share a commercial kitchen space, but if you opt to rent out a space, you might need up to $30,000 to get started. While this is a huge range, you have to make some crucial decisions:

• Kitchen and office space: Where exactly will you operate? You might start by cooking in your home kitchen and working from your living room, but the legal restrictions quickly add up. See if you can sub-lease a commercial kitchen or share a space with someone else—this move might also save you time on certain permits and licenses if the kitchen has already gone through that process.
• Cooking materials: Do you need to buy pots, pans, a walk-in refrigerator, and all the other kitchen essentials? Other business owners have built their initial inventory through hand-me-downs and funds accrued through crowdfunding sources like Kickstarter.
• Utility bills: You’re going to be cooking and cleaning, right? Don’t forget that you have to pay to keep the lights on, so to speak.
• Ingredients: You can’t make food without ingredients, but you’ll probably be spending for high-quality ingredients if you want to ensure repeat customers.
• Design and packaging: Whether you decide to purchase Adobe Creative Cloud or hire an in-house designer, you’ll need to factor in the cost of aesthetic appeal. Likewise, your packaging will need to be both appealing and functional—if you’re shipping food that needs to be refrigerated, then you have to factor in how that affects the overall cost.
• Online presence: At the bare minimum, you should have an e-commerce website for your customers to complete their transactions.

While you will need to purchase all of this as your business grows, you likely want to start off by optimizing what you can do with what you have. When you first get started, you just want to be sure to satisfy your existing clients. A good approach in the early stages of your business is to allocate your finances toward high-quality ingredients and world-class packaging—the last thing you want is to spend all your money on a fancy kitchen and end up sending food packaged in a duct-taped carton.

How much do meal prep delivery businesses make each year?

Your potential to make money will depend largely on the market you cater to and the kind of food you offer. On one end of the spectrum, Full-Belly Fare, a certified commercial commissary kitchen serving “handcrafted dinners” in Oregon makes about $14,000 a month by focusing on local deliveries and hearty, homey meals. On the other end, Cameron’s Seafood, which delivers crabs nationwide within 24 hours, averages $300,000 in monthly revenue.

This is an industry with a lot of growth potential. On average, a meal prep delivery business can expect to net roughly $10,000 monthly revenue after the first couple of years of overhead costs. Of course, that number can vary greatly depending on a number of factors. Preparing chicken, broccoli, and rice that will be hand-delivered in Tupperware won’t cost nearly as much as a dish with seasonal foods that must be frozen and transported across the state. But for those who strive for six-figure monthly revenue, the cost of more niche markets can eventually yield great profit.

How much should I charge?

A typical markup of 25 to 35 percent is usually appropriate for meal prep delivery services that are just getting started. Once you’ve nailed the cost of the ingredients, a good rule of thumb is to base your markup percentage on the cost of labor, packaging, and delivery.

As your business grows and you begin to offer weekly packages, you should revisit the markup and decide if it’s profitable and sustainable.

Have a great name idea? Before you start marketing and branding your business, you’ll need to ensure your name is available. Most states prohibit or restrict businesses from adopting names that are already in use. Even if it’s legally allowed, a copycat name puts your business at risk of a lawsuit.

See if your business name is available in your state with our Free Business Name Search.

Trademarks and Domain Names

Plan to trademark your business name? You can see if the trademark is available on a website like Trademarkia. It’s also a good idea to see if the domain name is available, which you can do on websites like Network Solutions and GoDaddy. Even if you don’t plan on putting together a website right away, you can buy the domain name to make sure no one takes it in the meantime.

Should you form an LLC? A sole proprietorship? Your choice of business structure will affect many aspects of your business, from liability to taxes.

Sole Proprietorships & General Partnerships

If you don’t file any paperwork to legally form a different kind of business—you have a sole proprietorship or general partnership. Essentially, these are “default” business structures. A sole proprietorship has one owner, and a partnership has multiple owners.

These structures have a few initial benefits. They’re easy, fast and cheap to start and maintain. However, the limitations and risks of these business structures quickly become more apparent as your business grows. In both of these business types, you are your business, legally speaking. Your company’s legal business name is YOUR name—so you’ll need a DBA to operate under any other name. Any business debt is YOUR personal debt. If anyone sues your business, they are suing YOU personally.

LLCs & Corporations

Limited liability companies (LLCs) and corporations are business entities formed at the state level. The entity is legally separate from its owners, meaning the owners are not personally liable for the debts and obligations of the business. As a separate entity, the business also has multiple tax election options. For example, both LLCs and corporations can choose to be taxed as S-corps if they meet the requirements.

LLCs and corporations are not quite as simple and inexpensive as default structures. LLCs and corporations come with formal requirements like state reports. They also have more fees than default structures, such as formation and annual report fees. However, the benefits of an LLC or corporation—especially liability protection and tax flexibility—are significant.

Check out LLC vs Corporation and Why Turn a Sole Proprietorship into an LLC to learn more about choosing the best structure for your business.

If you opt for a sole proprietorship or general partnership, there’s no formal paperwork to file to legally create your entity—you just start selling your product or business. However, you will not have any liability protections or tax flexibility.

LLCs and corporations are formed by filing paperwork with a state agency, typically the Secretary of State. To start an LLC, you file articles of organization. To start a corporation, you file articles of incorporation. In most states, you can file these forms online or download a paper form from the state’s website.

Whether you’re forming an LLC or corporation, your articles will require certain basic information about your business, such as your company’s:

• name
• business address
• registered agent and office
• business purpose
• members/managers or directors/officers’ names and addresses
• number and type of authorized shares (for stock corporations)

You’ll also need the signature of someone authorized to sign on behalf of the business, along with the state’s filing fee. Fees vary by state but are typically between $100 and $200. If you hire Northwest to form your LLC or corporation, we complete and submit your formation paperwork on your behalf for just $100 plus state fees.

It’s important to put your company’s internal policies and procedures in a written document, especially if you’re starting your business with others. Partnerships have partnership agreements. LLCs have operating agreements. Corporations have bylaws.

These documents look a bit different for each kind of business, but they serve the same general purpose. They ensure there’s a clear path forward for any major issue that may arise, from changes in ownership to closing the business. LLCs and corporations also typically need an operating agreement or bylaws in order to open a bank account.

Get a free template for an LLC operating agreement or corporation bylaws.

Nearly all LLCs and corporations will need to request a federal employer identification number (EIN) from the IRS. If you file corporate income taxes, have employees, or file certain franchise taxes, you must have an EIN. An EIN is also a common requirement for opening a business bank account. Most businesses can request an EIN by filling out the IRS’s online form.

Your EIN is for federal taxes—but you’ll likely have state and local tax obligations as well. You will most likely need to set up an account with the state’s Department of Revenue, and you may need to apply for a state tax ID or a sales tax license as well.

Learn more about how to Get an EIN for your business.

Many businesses will need a business license to operate. Licensing information—as well as any zoning requirements or other permits—can usually be found on the city or county website.

You are definitely going to be handling food in a kitchen. Food that people will consume, ideally. Regardless of where that kitchen is located, you are going to need cover your bases at the following levels:

• Federal: Make sure that you are compliant with Occupational Safety and Health Administration (OSHA) and registered with the Food and Drug Administration (FDA). These agencies ensure workplace safety and proper food handling, including sanitation procedures, acceptable workplace conditions, and appropriate storage, handling, and preparation of food. Since you are not only preparing food but likely also labeling the food, you’ll want to review the FDA guidelines on nutrition facts labels.
• State: You will likely need to apply for a business license and a sales tax permit. While your LLC covers you for liability purposes, a business license (if required) is necessary for you to operate your business.
• Local: You will need a food service license (sometimes called a health department permit or a food handler’s permit). For a food service license, you’ll need to check in with your local health department. If your home is part of a homeowner’s association, you’ll also be subject to any of their restrictions for home-based businesses. Some areas may also require home-based businesses to obtain a Certificate of Occupancy (a document certifying the property owner has given the business permission to operate).
• Curious Case of Cottage Food Laws: Some states allow the sale of particular foods from an individual’s kitchen under the provisions of cottage food regulations. Most states with cottage food regulations in place allow foods such as baked and fried foods, but generally, foods that require refrigeration are prohibited. Check your local and state regulations—you might just be able to start up a limited menu for your business from your home kitchen!

These are the most common licenses and permits you will need to get started, but be sure to check with your local and state regulations. If you intend to engage in interstate commerce or your meals include certain foods (eggs, for instance), then you may need to obtain additional permits. Likewise, some states require home-based food businesses to complete a Department of Public Health food processor course.

After your business is up and running, there are a few additional steps you may want to take as you grow:

• Get online: With your domain name, you can create a business website. You can hire a professional or use a website-builder like Wix or WordPress. You may also want to invest in online ads through a program like Google Ads.
• Hire employees: Hiring employees requires quite a few steps. You’ll need to collect W-4s and I-9s from employees, report the new hires to the state, set up withholding, pay for unemployment insurance, distribute any required documents and notices to employees, and display wage and safety info in the workplace. Employer.gov is a good place to start, followed by your state’s tax or labor office.
• Get business insurance: While LLCs and corporations protect you from personal liability, you don’t want your business to go bankrupt in the face of an accident, injury or other disaster. At minimum, it’s a good idea to look into general liability insurance. Home-based businesses can sometimes add insurance onto their homeowner’s policy.

Since customers will be consuming food you’ve prepare, packaged, labeled, and delivered, you should look into obtaining product liability insurance in order to cover claims regarding the design, manufacture, or marketing and sales of your product. Generally, this could cover you in the event of failure to provide adequate labels or warnings and claims in which injury or damage occurred in the absence of negligence. While not mandatory, product liability insurance is practically necessary when you are part of a supply chain for a product that people will ingest. You can expect to spend an average of $0.25 for every $100 in product sales, but several factors can affect that price.

What’s it really like to work in a meal prep delivery business?

It’s a fast-paced, detail-oriented, and hands-on business. You don’t just get into this industry because you enjoy whipping up french toast now and then. Meal prep is a regimented and repetitive activity, so you can expect to spend a lot of time not only perfecting your recipes but optimizing your method of preparation.

That’s not to say that you’re just an automaton reproducing the same dish hours on end. Once you’ve got a handle of a handful of recipes, you can expect to spend a good chunk of time running experiments with your ingredients until you come up with new dishes for your menu. Parts of your week, then, will be producing tried and true meals for your customers. Other parts of your week will be dedicated to experimenting.

And finally, the business end: when you’re not devising new recipes or replicating the consistently good ones, you’ll be at your desk fine-tuning your business operation by crunching numbers and negotiating with wholesalers.

What does it take to succeed in the world of meal prep delivery?

A genuine passion for cooking goes a long way, but at the heart of success in this industry is a willingness to take risks and learn as you go. Cooking batches of meals requires focus and precision, but maintaining consistent quality while keeping the menu fresh requires a tolerance for trying new things. And, as your business takes off, being able to delegate is crucial. Chances are you’ll get to a point when demand exceeds your individual output, so be ready to hire cooks whom you can trust to stay true to your goals as a business owner and whom you can turn to for new ideas.

Like any business endeavor, you’re striking a balance between established routines and a spirit of adventure. It will get stressful week-to-week. Just remember that you are in a field that allows you to be inventive with a hobby you love, and the service you provide can be truly life-changing for clients.

Northwest Registered Agent is here to help with all your small business ideas and needs. Answer a few simple questions about your business, and we’ll deliver and submit your formation paperwork to the state. We also provide your new business registered agent business, free business forms and guides, and much more.

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