Seek out new avenues for profits
The hot topic in the food industry these days is incubator kitchens. From large cities to rural communities, these learning labs are growing in popularity and drawing a diverse crowd. Beginning caterers, specialty food entrepreneurs and even folks cooking for large parties or fundraisers are giving these kitchens a try. For fruit, nut and vegetable growers, they offer a wealth of new revenue opportunities.
What is an incubator kitchen?
An incubator kitchen isn’t like the old summer canning programs sponsored by high school home economics departments. These kitchens are large, fully equipped professional centers that allow growers and others to try out value-added products. Often, the kitchens extend their licensing to users, allowing them to produce foods that meet local and state regulations without investing in their own facilities. Staff may be available to consult on everything from food safety, nutrition and recipes to business planning.
Many incubators are open 24 hours a day, seven days a week and may offer additional services such as dry storage. Both for-profit and nonprofit kitchens are available, all charging a rental fee for their use. Mary Lou Surgi, who operates a North Carolina center, says that there are now more than 100 kitchens across the country, compared to about 15 five years ago.
Kitchens gaining popularity
Surgi says she loves running Blue Ridge Food Ventures in Candler, N.C. (www.advantagewest.com; click on Food Ventures). She’d have to because she is the lone employee of the 24-hour operation. She manages that schedule by living just 1 mile away and allowing experienced kitchen users to work without her supervision. Since the 11,000-square-foot facility opened in February 2005, 92 small businesses have used its services. Nineteen of those have moved on to operate their own facilities. Blue Ridge, the first such kitchen in North Carolina, is also a popular work spot for caterers during the holidays.
As proud of Surgi is of her “graduates,” who are now operating independent businesses, she says that is a disadvantage for the center because of the rental fees lost. New users must be continually recruited to keep the kitchen afloat. She says that she may work with a potential client for up to a year in planning and training activities before revenue is generated.
Blue Ridge, an initiative of Advantage-West Economic Development Group and the North Carolina Department of Agriculture, was launched with grant funding from the Golden Leaf Foundation, the Farm Bureau Foundation and several other private and corporate organizations. Now three years old, Blue Ridge earns about half of its operating costs through clients’ rental fees. It charges an hourly fee for food processing and rents storage space. Surgi says grant funding becomes less available as the kitchen gets on its feet; as a result, bridging the gap between expenses and revenue will be challenging.
Incubator kitchens have a lot to offer growers, Surgi says. For those who are preparing small batches of value-added goods on the farm, moving to a professional kitchen allows them to process 800 jars of jam in two hours versus turning out 16 in the same amount of time in an ordinary kitchen. Value-added products help growers extend the season and keep customers interested when local, fresh produce isn’t available.
For those who are squeezed for time during the growing season, Surgi suggests hiring others to process foods or freezing unsold produce for later processing. One Blue Ridge client freezes surplus tomatoes and creates sauce later in the year.
Other entrepreneurs create apple cider and import olives from Greece for olive oil. During the first two years, grower participation wasn’t strong, so Blue Ridge launched a farmer outreach program late last year. Those who direct-market their produce will be especially encouraged to try expanding into value-added items. The kitchen will provide support, such as recipes and marketing tips.
Across the state, the Rockingham Community Kitchen opened its doors in September 2006. The Rockingham County Business & Technology Center partnered with Rockingham County Cooperative Extension and Rockingham OpportunitiesCorporation and obtained a $24,000 demonstration grant from the Rural Advancement Foundation International-USA, with the support of the North Carolina Tobacco Trust Fund Commission. The start-up costs were relatively modest because an existing, underutilized, certified kitchen was upgraded with new equipment. Since the project has no staff, only minimal utility costs must be covered when the kitchen is idle.
Although the community benefits from the low operating expenses, the lack of a dedicated staff has been challenging, according to Mark Wells, director of the business and technology center. He, the Opportunities Corporation’s Jeff Pruett and extension agent Brenda Sutton support the kitchen operation in addition to their other job duties. This has proven to be limiting in terms of marketing the kitchen. In hindsight, Pruett would recommend recruiting volunteer public awareness personnel until the kitchen has adequate business to employ a manager. The program does have the assistance of a kitchen advisory board, composed of growers who produce value-added items at the facility.
Kitchen users must complete a required food safety and sanitation course provided by the cooperative extension prior to production. This carries a $10 fee. Other costs include a refundable $50 cleaning and security deposit and $15 per hour fees for using either the kitchen or the dehydrator. Each session has a $2.50 per person supplies fee, which covers cleaning materials. Overnight freezer space is available for $10.
Among the products regularly processed at Rockingham Community Kitchen are jelly, dried herb mixes and sugared pecans. Caterers may also lease the kitchen, along with most anyone who needs temporary access to professional equipment.
Both Surgi and Wells say that those managing kitchens must be prepared for equipment failures and maintenance needs. These can be unexpected and costly.
Wells urges interested growers to obtain some business savvy and recognize the differences between selling value-added products and operating a farm. They need to carefully analyze costs, resources and markets to ensure that the venture will be successful. New types of insurance, such as product liability coverage, may be needed.
“The kitchen is a great resource for folks to have access to [for] a relatively small amount of money, especially until markets and products are developed beyond the capabilities of the community kitchen,” Wells said.
Using a kitchen
Sarah Richards of Lavender Wind Farm in Coupeville, Wash., would be thrilled to have access to kitchens such as Blue Ridge and Rockingham. When she began creating jams and jellies made with her own lavender and local fruit and berries, it was difficult to find a place to experiment and develop the perfect recipe. With no nonprofit kitchens available in her area in 2002, she rented space in home-based commercial kitchens for about $30 a day.
“[It] was a huge advantage that the kitchens were set up and functioning already; I didn’t have to put any capital money into the project, “ Richards says.
Initially, she sold her wares at farmers’ markets and later opened an on-farm shop. Her Web site (www.lavenderwind.com) generates steady sales. As the business grew, she needed a co-packer to assist her in meeting the demand. With no facility available in her area, she uses a company in Oregon, which leads to issues with shipping and local ingredients. Lack of local kitchens and co-packers makes value-added production costly in terms of time and expense. For that reason, and because Richards is sold on the concept, she hopes to construct an on-farm commercial kitchen for product development and to prepare foods for farm guests.
“I’m always amazed at the creativity of farmers [in getting] products made from their crops,” Richards says. “We should be grateful that they are willing to do that and bring their ingenuity to the marketplace so our food supply is both safe and unabashedly creative.”
Jenan Jones Benson is a freelance writer based in Greensboro, N.C.
Incubator Kitchens across the United States