Starting a meal prep business is a rewarding venture that combines a passion for food with sharp business acumen. The industry is already worth billions, fueled by consistent demand from busy professionals, fitness enthusiasts, and families looking for convenient, healthy meals.
This guide will take you through the practical steps of validating your business concept, obtaining necessary licenses, building supplier relationships, and acquiring equipment to help you launch a successful meal prep business in the U.S.
Step 1: Plan your business and validate your idea
First, define your niche. Decide if you will serve athletes, busy families, or clients with specific dietary needs like vegan or gluten-free. Survey potential customers in local online groups or at nearby gyms to confirm interest in your menu concepts.
A frequent misstep is designing a menu you love without checking if customers will buy it. Use simple surveys to validate demand before you invest in ingredients. This helps you find a market gap you can fill effectively.
Startup costs
Your initial investment will vary, but you can expect startup costs to fall between $2,000 and $7,000. Budgeting for these expenses upfront helps you set realistic financial goals. Key expenses include business registration (LLC fees are $50-$500) and food permits ($100-$1,000).
In addition, plan for initial inventory ($500-$1,000) and packaging ($1,000-$3,000). Renting a commercial kitchen space might add another $500 to $1,500 per month to your operating costs, depending on your location.
Here are 3 immediate steps to take:
- Survey at least 50 potential customers about their meal preferences and budget.
- Create a spreadsheet comparing the menus and prices of three local competitors.
- Draft a preliminary startup budget based on the cost ranges provided.
Step 2: Set up your legal structure and get licensed
You might want to consider forming a Limited Liability Company (LLC). This structure protects your personal assets if the business faces legal issues. It also offers pass-through taxation, meaning profits are taxed on your personal return, which simplifies paperwork compared to a corporation.
Once you choose a structure, get a free Employer Identification Number (EIN) from the IRS website. You will need this for tax purposes and to open a business bank account. The application takes only a few minutes to complete online.
State and local permits
Next, contact your county health department for a Food Facility Health Permit. Costs range from $100 to $1,000, and approval can take several weeks. Also, everyone who handles food needs a Food Handler's Permit, which is about $15 and can be obtained online.
A frequent misstep is assuming you can operate from home. Many states’ cottage food laws prohibit selling meals with meat or other perishables made in a home kitchen. Always confirm these rules with your local health department before you commit to a location.
Here are 4 immediate steps to take:
- File for an LLC with your state’s Secretary of State office.
- Apply for a free Employer Identification Number (EIN) on the IRS website.
- Contact your local health department about food facility permit costs and timelines.
- Check your state’s cottage food laws to see if a commercial kitchen is required.
Step 3: Secure your insurance and manage risk
You will want to start with a General Liability policy, which typically costs between $400 and $1,500 annually. Aim for at least $1 million in coverage. This should include Product Liability to protect you from claims related to foodborne illness or allergic reactions.
If you use a vehicle for deliveries, you also need Commercial Auto insurance. Once you hire employees, most states require you to have Workers' Compensation insurance to cover any injuries that happen on the job. This protects both your team and your business.
Finding the right provider
You might want to consider providers that focus on food businesses, such as the Food Liability Insurance Program (FLIP), Next Insurance, or The Hartford. They understand the specific risks of meal prep better than a general agent and can offer more relevant coverage options.
A frequent oversight is not getting coverage for spoilage. Ask your agent about adding a rider for equipment breakdown, which can cover inventory losses if a refrigerator or freezer fails. This small addition can prevent a major financial setback.
Here are 4 immediate steps to take:
- Request quotes for a general liability policy with at least $1 million in coverage.
- Confirm with potential insurers that product liability is included in your policy.
- Contact a specialized provider like FLIP to compare their rates and coverage.
- Ask about adding coverage for equipment breakdown and food spoilage.
Step 4: Find a location and buy equipment
A small meal prep operation can function in 200-500 square feet of space. Look for shared-use commissary kitchens or locations zoned for commercial food production, often labeled C1 or C2. These spaces reduce your initial overhead significantly.
When you review a lease, ask about a Tenant Improvement (TI) allowance to help pay for modifications. Many new owners overlook existing infrastructure. A space with a pre-installed ventilation hood and grease trap can save you over $10,000 in setup costs.
Kitchen equipment and suppliers
You can start with a few key pieces. A commercial refrigerator will cost $2,000-$5,000, while a convection oven runs $1,500-$4,000. You can find used equipment from restaurant auction sites to cut these costs by 50% or more.
For supplies, look to wholesalers like Restaurant Depot or online retailers like WebstaurantStore. Restaurant Depot requires a business license to enter but has no minimum order quantity, which gives you flexibility as you manage your initial cash flow.
Here are 4 immediate steps to take:
- Tour three local commissary kitchens to compare rates and amenities.
- Ask a potential landlord about their Tenant Improvement allowance policy.
- Create a price list for new versus used versions of your top three equipment needs.
- Check the requirements to get a free membership at your nearest Restaurant Depot.
Step 5: Set up your payment processing
Most meal prep businesses run on a subscription model with weekly recurring payments. This secures your revenue and helps with ingredient forecasting. You can also offer one-time orders, but subscriptions should be your focus for stable cash flow.
When you choose a payment processor, look for low transaction fees and no long-term contracts. Many new owners overlook the total cost. Some providers charge 2.5% to 3.5% per sale plus monthly fees, which can eat into your profits quickly.
For businesses that accept payments on-site or on-the-go, JIM offers a streamlined solution. You can accept debit, credit, and digital wallets directly through your smartphone—just tap and done. It is particularly useful for taking payments at farmers' markets or upon delivery.
At just 1.99% per transaction with no hidden costs or extra hardware needed, its rate is often lower than the average commission other providers offer. This makes it a cost-effective option as you start out.
How JIM works
- Get Started: Download the JIM app for iOS.
- Make a Sale: Type the sales amount, hit sell, and ask your customer to tap their card or device on your phone.
- Access Funds: Your money is available right on your JIM card as soon as the sale is done—no waiting for bank transfers.
Here are 3 immediate steps to take:
- Decide on your payment model, such as weekly subscriptions or one-time orders.
- Compare the total fees of two other payment processors against JIM’s 1.99% rate.
- Download the JIM app to explore its interface and features on your phone.
Step 6: Fund your business and manage your finances
You might want to explore an SBA Microloan, which offers up to $50,000. New businesses often qualify for $10,000 to $25,000 with interest rates between 8% and 13%. These loans are great because they have less strict requirements than traditional bank loans.
In addition to loans, look at grants. The FedEx Small Business Grant or the Amber Grant are good options for food startups. These do not require repayment but have a competitive application process. Check their websites for deadlines and eligibility rules.
Working capital for your first 6 months
Many new owners focus on one-time startup costs but forget cash for daily operations. You should budget for at least six months of working capital. This can range from $12,000 to $24,000, which covers rent, inventory, and marketing before sales become consistent.
Here are 3 immediate steps to take:
- Research two SBA Microloan lenders in your area to compare their terms.
- Draft a six-month operating budget to calculate your specific working capital needs.
- Review the eligibility requirements for the Amber Grant or FedEx Small Business Grant.
Step 7: Hire your team and set up operations
Kitchen staff and roles
You will likely need a Prep Cook first. This role handles chopping, portioning, and basic cooking for $15-$20 per hour. As you grow, a Head Chef ($22-$30 per hour) can take over menu creation and kitchen management. Everyone who touches food needs a Food Handler's Permit.
A frequent mistake is to hire friends without clear expectations. You should draft a simple job description for each role. This defines responsibilities and helps everyone stay aligned. It prevents misunderstandings down the road.
Operations and management
For scheduling, you might want to look at apps like 7shifts or Homebase. They simplify shift management and communication. As a benchmark, aim for one full-time employee for every $75,000 to $100,000 in annual revenue. This ratio helps you scale your team sustainably.
When you calculate labor costs, remember to include payroll taxes (about 7.65% for FICA) and workers' compensation insurance. Factoring these in from the start gives you a true picture of your expenses and protects your budget from surprises.
Here are 4 immediate steps to take:
- Draft job descriptions for a Prep Cook and a Delivery Driver.
- Check your state’s requirements for obtaining a Food Handler's Permit.
- Compare the free plans for scheduling apps like 7shifts and Homebase.
- Calculate your estimated weekly labor cost for one employee, including payroll taxes.
Step 8: Market your business and get customers
Your first customers will likely come from your local area. Use Instagram to post high-quality photos of your meals. You can run targeted ads on Facebook for as little as $5 a day, focusing on specific zip codes or demographics like “fitness enthusiasts.”
Also, consider partnerships. You might want to offer a unique discount code to members of a local gym or employees at a nearby corporate office. This gives them an incentive to try your service and helps you track where your new customers come from.
Key marketing metrics
Once you start marketing, track your Customer Acquisition Cost (CAC). A good target for a meal prep service is $50-$100 per new subscriber. For your website, aim for a conversion rate of 2-4% from visitor to paying customer.
A frequent misstep is to boost posts without a clear goal. Instead, tie every ad to a specific offer, like “Get 3 free meals with your first order.” This lets you measure the ad’s direct impact and makes your marketing spend more efficient.
Here are 4 immediate steps to take:
- Set up an Instagram business account and post five high-quality meal photos.
- Contact one local gym or office to propose a partnership.
- Define a specific introductory offer to attract new customers.
- Calculate your target Customer Acquisition Cost (CAC) based on your prices.
Step 9: Price your meals and set up billing
Pricing models and margins
Most meal prep businesses use a cost-plus pricing model. First, calculate your cost per meal, which includes ingredients, labor (around 20-30% of the price), and packaging. A meal that costs you $4 to produce should be priced between $10 and $14.
Aim for a food cost of 25-35% of your menu price. This target leaves room for other expenses and helps you achieve a gross profit margin of 40-60%. You can offer meals à la carte or in weekly subscription bundles, which provide more predictable revenue.
Many new owners fall into the trap of matching competitor prices without a full picture of their own costs. This approach can quickly lead to losses. Always calculate your break-even point first, then adjust based on what the market will bear.
Billing and payments
For subscriptions, you need a system to handle recurring payments automatically. Website builders like Squarespace or Shopify have built-in features for this. You can also integrate payment processors like Stripe directly into a custom site to manage weekly or monthly billing cycles.
Here are 4 immediate steps to take:
- Calculate the total cost per meal for three of your menu items.
- Set a menu price that gives you a 40-60% gross profit margin.
- Research the subscription and à la carte prices of two local competitors.
- Explore recurring payment features on platforms like Stripe or Shopify.
Step 10: Maintain quality and scale your operations
Quality control and consistency
Your reputation depends on consistency. A meal that tastes great one week but different the next will lose you customers. Standardize your recipes with exact measurements and cooking times. This ensures every dish meets your quality standard.
Track your customer retention rate, and aim to keep it above 80%. You should also monitor complaints, keeping them under 2% of total orders. These numbers give you a clear view of your performance.
Many new owners see quality drop as they get busier. To prevent this, get a ServSafe Food Protection Manager Certification. It teaches you to create systems that maintain food safety and quality at scale.
When to scale your business
Once you consistently produce 150-200 meals per week, it is time to think about expansion. This could mean hiring another cook or finding a larger kitchen space. Do not wait until your current setup is overwhelmed.
As a rule of thumb, plan to add one full-time kitchen employee for every $75,000 in new annual revenue. This keeps your labor costs in check while supporting growth.
As you grow, manual order tracking becomes difficult. You might want to look at industry software like Sprwt or Nutri-Liem. They automate subscriptions, manage menus, and organize delivery routes, which frees up your time.
Here are 4 immediate steps to take:
- Create a standard recipe card for one of your most popular meals, including exact measurements.
- Look into the ServSafe Food Protection Manager Certification for yourself or a lead cook.
- Set a weekly meal order number that will trigger your search for a larger kitchen.
- Review the features of a meal prep software like Sprwt to see how it could automate orders.
Conclusion
Your meal prep business is built on consistency. Customers return for the reliable quality you deliver week after week. Focus on that, and you will build a loyal base. You have the steps, now it is time to start cooking.
Speaking of simple steps, manage your payments just as easily. JIM turns your phone into a card reader to accept payments for a flat 1.99% fee, with no extra hardware. Download JIM and you are ready for your first customer.
