Location, Location, Location

Business By itsacake Updated 9 Sep 2008 , 12:38pm by loriemoms

itsacake Posted 2 Sep 2008 , 6:57pm
post #1 of 36

As I frantically try to figure out how to find space for a kitchen in this very high-cost-real-estate part of the country( where home food businesses are emphatically not allowed), I wonder if any of you who have special-order only shops have them in totally industrial parts of the town/city where you live.

It doesn't seen as though I can afford a retail area and yet it seems crazy to be in an industrial complex with machinists, printers, people doing things with cars!?, etc. I'm not looking for walk-ins, but this somehow seems wrong.

I'm looking for experienced advice on this as I'm talking about $300,000.00 to buy an industrial condo and build a kitchen, but I'm not convinced this is anything but idiotic! If you have any sort of experience with this, please chime in!!!!!! This is a serious amount of money (some part of which would have to be borrowed ) and I am quite intimidated. I'd love to hear that others have done this kind of thing in this kind of area.

35 replies
ThatsHowTcakesRolls Posted 2 Sep 2008 , 7:24pm
post #2 of 36

WOW - with that kind of money available to you through a loan, why wouldn't you think about a store front location? I just opened my store front location last month and it only took me $25,000 to do it so it was really worth it. I think you could easily find something for much less money than $300,000 that is in a retail location. Perhaps you're only thinking of doing a cake studio but you could still do that and maybe only offer a few things for those that may stop in to buy a sweet treat.

Just my thoughts - Good Luck in whatever you decide to do. Speaking from experience, all the stress & worrying will pay off once you've found your location. Best of luck!


acookieobsession Posted 2 Sep 2008 , 7:37pm
post #3 of 36

I think there is a large difference in San Jose store front property and that in Mechanicsburg....but durely not 275!!

By the way Tammi....where in Mechanicsburg are you? My dh is from there (went to Cumberland Valley). My MIL is always telling me no one there would pay $2.75 for a slice of cake. Apparently EVERYTHING is cheaper in PA.


ThatsHowTcakesRolls Posted 2 Sep 2008 , 7:44pm
post #4 of 36

I live in Mechanicsburg but my store front is in Carlisle, it's only about 12 minutes away from me. Carlisle isn't a large town so I'm sure that it may not compare to San Jose - I think it also helps that I did not buy - I'm leasing and had a lot of stuff already, except for the large equipment. I do serve the entire Central PA area though so it does make it easier to charge more. My Buttercream starts at $3.00/slice and everything goes up from there - I do seem to be about average for my area.

My husband went to Cumberland Valley High School - I think he was class of '80. I wouldn't say that everything is cheaper here though - I am from Oregon and I think everything is more expensive here. Definitely a lot more for groceries & rent though the gas prices are outrageous on the West Coast!! lol

I live near a restaurant called Vissagio's - it's a pretty popular Italian Restaurant here - I'm actually a lot closer to Enola than the center of Mechanicsburg - are you familiar with that area at all?

itsacake Posted 2 Sep 2008 , 7:45pm
post #5 of 36

Thanks for your reply Tammi. I do need to be clear that about a third of the money would have to be borrowed, the rest is money my husband and I have saved up for retirement--which is probably 15 years away. I don't think anyone would loan me that much for a start-up. How could I make payments? I don't think I can bake that fast !

I'd love to hear how you could do this for under $25,000. I can't build any kind of commercial kitchen for that, even with used equipment, and in more than a year of looking I haven't found any places with appropriate kitchens already built for lease. I did see a couple of restaurants for sale but they were over over a million dollars. icon_lol.gif
What is your lease/mortgage and build-out like that you could do this for less than $25,000? How big a shop do you have?

Jenni2383 Posted 2 Sep 2008 , 7:50pm
post #6 of 36

Even though you don't need a store front, wouldn't you want a place to meet with clients? I guess if they want a great cake they will go just about anywhere. As long as it's clean and without crime and such it would be ok.

itsacake Posted 2 Sep 2008 , 8:02pm
post #7 of 36

Hi Jenni. Yes, exactly. I would have an area for consults with brides/clients. Do you think they'd be put off by machine shops and printers and having to go to an industrial park? It is pretty clean. There is sort of a smell of machine shop in the air (maybe my being there would change that?) but no one is actually working on cars in the parking lot (I'm not sure about in the buildings) It isn't exactly a bad part of town. It is actually an industrial part of the next town over-- but only about 20 or so minutes from my house. There is an established residential area not far away. Not a great part of town, but not crime or gang-ridden.

ThatsHowTcakesRolls Posted 2 Sep 2008 , 8:11pm
post #8 of 36

Honestly, I just think that this was meant to be because I had very little trouble getting it going once I found the location. There is a board trying to revitalize the downtown of Carlisle which is where I opened my shop so the landlords (I lease, not own) were very picky about who they considered. I wasn't the first to contact them but the goal was to find a business that would bring people downtown - there is no bakery in town so they were very enthusiastic to get me in. I don't mind sharing financial information so here goes...

My lease is $600/month and I'm locked into that for 1 year - after that it goes up only $36/year for 3 years. I have roughly 750 square feet total - it's not large but does what I need it to. The building owners had already done a lot before I started such as replacing the drop ceiling with drywall, replacing the carpeting with pergo flooring and such. The only equipment I purchased new was my full size convection oven and that was $2700 - I found a Refrigerated display case on an online auction for $1100 with shipping and a 2-door cooler from a local pizza shop for $90. Yes, $90 - they were provided a new one from Pepsi and were just looking to unload quickly. I did rent a U-haul to pick it up so with that I really paid about $200 for it. Totally worth it - it works great! I found a used 6 qt mixer on Craigslist for $200 - but it was only used twice and was practically new. I found a counter on Craigslist for $200 and bought new stainless steel tables on Ebay for $109 a piece (I bought 7) and some Rolling Baker's racks at a local Restaurant Store. I did have to buy a new Stainless steel sink - I couldn't find one used. That was $600 with the faucets and all. I found my mop sink on eBay as well and purchased the cheapest stove from Lowe's for my stovetop needs. I had a refrigerator in my garage that I was using for my home business and brought a freezer from home as well. The plumbing & electrical work wasn't cheap but my landlord's brother did the work and it was about $5000 total for both. I had all my pans needed and only had to buy about $1000 in supplies that I didn't have. It took about $2500 in ingredients to start up. Now, I had a credit card with no interest for year that I have maxed out - $9000 and I've already started to make payments on it to get it down before the interest kicks in in June and I took a personal loan for $5000 - I had the rest in the bank.

It seems like a lot but because I have been doing this for 4 years already from my home, I am booked through the first weekend in January with wedding cakes so I was pretty confident that I would make it through the beginning of my first year with only a little stress. I have quickly learned that I can't afford to keep my pastry chef and will have to give him a chance to find a full time job. I also realized though that with the space, I can work more efficiently than I had been able to before and can handle it all myself.

I sell breads, pies, pastries, coffee and of course do cakes for all occasions. It's a little stressful when I look at my bank account and see that it has dropped down so low compared to what it was in June when I began this venture but cash flow helps and it's always a surprise because I have never had cash flow to depend on.

That's so much for me to think of - I hope that anything I've said can help you to make yourself a success. Let me know if you have any questions or if you'd like any information on which Seller's I purchased from on eBay. Good Luck!


acookieobsession Posted 2 Sep 2008 , 8:40pm
post #9 of 36

I used to go to a candy store in an industrial park. I thought it was a strange placew, but I was never afraid. i would say as long as YOU are not scared to be there alone, it should not matter to them.


snarkybaker Posted 2 Sep 2008 , 8:47pm
post #10 of 36

I can tell you that we paid $500,00 for our buildout and still pay a bunch of rent. If you don't have good street traffic, you are going to need to spend a lot more on advertising. We are literally on campus, and on the main drag where students travel several times a day, at the main bus stop, and there is still a sizable portion of the student population that doesn't know we exist.

You really, really need to run the numbers. That is a lot of money to spend for a less than desirable location and you would need very strong sales to make it work. I'm think 1500ish a day. Can you make that much by yourself? If not, then you need to hire help, and that is even more expensive.

itsacake Posted 2 Sep 2008 , 8:49pm
post #11 of 36

Wow! Tammi! I am sooooo jealous!!!!! A lease for 750 square feet here would be over $2000.00/month minimum. In a NICE retail area it would be closer to $3000.00 or more.

It is also not allowed here to use any kind of residential refrigerator or mixer or stove or oven, the health department mandates only commercial equipment. Even used that can be expensive--and you have to find what you need icon_rolleyes.gif Also can't use Pergo for the floor, I don't think. The lighting, flooring and walls allowed are mandated--even the light-colored, washable paint for the walls!!!!! And there are specific plumbing needs like a floor drain for food prep with which one has to comply. Although I'm hoping it isn't true, one health department inspector told me that installing a floor drain can cost up to $40,000!!!!!! Yikes!!!!!

I can charge $6.00 or $7.00/slice, but that is still a ton of cake to make to cover costs. It would be really stressful to have to come up with that much cake/pastries all by myself every week and I'm not sure I can afford help. Still trying to come up with realistic numbers as I haven't really been able to try it out from home since that isn't legal here. How much do you figure you have to sell each week to make the rent and overhead? How busy does that keep you?

BTW, not to worry. I do have a Plan B. I am working out an agreement to rent space from a colleague who has a kitchen in the next county--about 45 minutes away. I just wanted to be closer to home and have my own place where I could do my own thing Renting is OK, but I'm not good at doing things the way others want, which is a prerequisite in someone else's space icon_lol.gif

Anyone who has space in an industrial area have something to add? I'd really like to hear if that is working for anyone.

itsacake Posted 2 Sep 2008 , 9:16pm
post #12 of 36

txkat, I had actually sent you a PM back in August becasue I knew you had spent a ton on your build-out. (I'm not sure you got it) You are way bigger and doing more retail than I have in mind, but in the end, it is still the same kind of business more or less. What you are saying is exactly what I was thinking. I can't do $1500.00 a day by myself!!!!! And help is expensive even though from the help end it seems pastry positions are underpayed. Also, I'm afraid that even if I advertise to my niche market (I plan to be kosher) there won't be enough people who know about me if I am in such an out-of the way place.

My DH says I want everything to be perfect and I have to be willing to compromise on some things, but location seems critical. With a smaller mortgage I probably don't actually have to do $1500.00/day by myself, but probably still more than I am confortable with, since I was always the slowest in my pastry class. People keep telling me I'm talented and passionate and I'm only limited by myself, but the lease rate does seem pretty limiting too icon_biggrin.gif

As I said, I'm working on Plan B. I'm just too old an inpatient to be very happy with it icon_lol.gif

Still hope to hear from someone who is making this work from am industrial type place.

Mike1394 Posted 2 Sep 2008 , 9:23pm
post #13 of 36

Let me ask you one question? What will you do for retirement if the business fails?


JanetPlanet Posted 2 Sep 2008 , 9:24pm
post #14 of 36

Strictly my opinion, but I think you need to remember how much the prices you can charge depend on "image". Your presentation, your packaging, your "cache" that makes brides WANT to choose you (so they can then go brag lol). If you are targeting the high-end specialty cake market, then I think the industrial park is definitely out. If you want a basic, volume-oriented business, then it would be OK if it's truly safe for visitors to go there at night. Consider any neighborhoods they will have to pass thru to get to you, too.

Can't remember which rich and famous cakemaker said it, but I think it has value... You need to decide beforehand where you hope to be in 5-6 years and be sure you START at that level of quality with your ingredients and decorating skills. It will be hard to change people's opinion after their first impression. That also meant that you can't make a sudden leap from $3 to $10/slice.

Also, if in 5-6 years, you see yourself with a storefront ~ it might be a lot harder to make that leap from the industrial park.

Personally, when I think industrial park I think "automation, volume, cookie-cutter"... nothing wrong with that at all if you want to target the most affordable market and crank 'em out. I do know of baking enterprises in industrial parks now, but they strictly sell wholesale to restaurants.

Good luck however you choose!

itsacake Posted 2 Sep 2008 , 9:53pm
post #15 of 36

Mike, If the business fails, I'd still have my house and be able to eat. The funds being risked are the ones earmarked for travel, for spoiling my grandkids if my kids ever get around to getting married and providing them, and for life's little extras. Nevertheless, I want to be able to have those things, that is precisely why I am leery and trying to do due diligence.

JanetPlanet, You are making a very good point. In fact, I had told the realtor that industrial parks were not an option as someone spending $3000.00 on a wedding cake would want to see a nice storefront. I looked at this place as a last resort and now that the realtor wants to know if I want to schedule a health inspector and a contractor to come look at it, I'm having second thoughts, which is why I posted.

By what I'm reading here, my gut feellings are pretty well being supported. I was hoping to hear that others had done this and it was going well. That is not what I'm seeing....

Anyone think this is a good idea?

JanetPlanet Posted 2 Sep 2008 , 10:12pm
post #16 of 36

I know nothing about San Jose, but maybe you could cut the difference, and have the property be a great investment in an old, up-and-coming warehouse district targetted in a revitalization zone? A brick loft screams art, style, cutting-edge, trendy..... (and naturally the cakes ain't cheap icon_biggrin.gif )

Or is there a university district with old homes that are zoned commercial and could be usable? That reads quaint, quality, style.... (and better yet if you can squeeze a rental apartment into the 2nd floor).

Cities throw cash and incentives like tax breaks at manufacturers to get them to relocate in their industrial parks ~ and very often that includes sites with new buildings. Is it possible you could invest in this building and then not be able to sell it later? Just food for thought.

snarkybaker Posted 2 Sep 2008 , 10:49pm
post #17 of 36

Do the math backward....

$1500 a day X 25 days ( assuming closed for Sabath of your choice)=$ 37,500
less food costs( 25%) = $28,125
Mortgage ( 6%@10 years) =$22,241
Property Taxes ( domainia.com) =$19,241
Utilities ( using mine, CA has much higher energy and water costs than NC)=$17,690
sales tax=$13,637
condo maintenance fees(loop.net)=$13,057
dry goods( seriously, we use $40 worth of paper towels a week) = $12, 630
cleaning service/towel service= $11,510
cost of investment ( amount you'd make just shoving the money in the stock market=$8,613
income tax=$7220
building repairs etc ( 3% annual reserve)= $6520
misc expenses ( 5% reserve- as recomended by accountant) =$4,700

$4700 net income per month selling $1500 a day. That's about $55,000 a year.

Very average income, and a huge amount of money tied up.

littlecake Posted 2 Sep 2008 , 11:16pm
post #18 of 36

i opened up 7 years ago with 28K....of course i'm renting....

lost my partner in the second year, sold my house, paid off the bakery and bought a distressed property with the equity.

i'm small, 1 man show...except for my cleaning help.

but my overhead is pretty low, and will be lower once i get my place fixed up...then no rent.

i got about 1100 square ft for 530 a month...don't be hatin...it's oklahoma, and i can't get as much for my cakes here either.

wow txcat...yikes those numbers scare me, my shoulders are not that broad to have so much responsibility at my age....maybe if i was 20 years younger.

Cascades Posted 3 Sep 2008 , 12:01am
post #19 of 36

Just a little note. I went last week to Napa to see if I could find the storefront for Perfect Endings. They do alot of celebrity weddings. He did Oprah's 50th. I think he did Eva Longora's cake too. Guess what-- it was in an industrial park in Napa. No traditional store front.

itsacake Posted 3 Sep 2008 , 12:36am
post #20 of 36

Janetplanet, I LOVE your thought process!!!! I did look at a few houses zoned commercial. They were in more industrial parts of town and small--about 1000 to 1200 square feet. One was over a million dollars!!!!!--entirely due to location near a good public school. It was and surrounded by dirty industrial properties. The others which were all next to each other on a busy street and were $700,000+ each. I saw a couple of places with retail space below and housing above. They wouldn't allow my use because of odors. I'm considered manufacturing. Hello! Anyone object to the smell of cakes and cookies? Hope the neighbors never cook or bake. The area around the university is pretty run-down and actually is the same as the downtown district, and nobody really goes there--though I hear at night there are nightcubs with occasional drunken brawls. I think the attempts at re-vitalization are not going very well.

Txcat. I will go and run my numbers. I keep putting it off, since I don't really have any. But I'm getting a good idea of what they would be, so yes. A business plan with financials is a priority. I think I'll have to do my own towels (but add a washer and dryer, then) and my mortgage may be less, but there are a lot of expenses. I get that!!!!! I haven't fornally put then down, but I'm keeping track.

Littlecake, I'm always so impressed with your determination. You are definitely a good example of what you can do with really hard work. Yes, I realize California is a whole different ball game. And part of me thinks if I were 30 years younger I wouldn't be hesitating--then again, 30 years ago I really didn't have the money!!!! (But I would have needed less...) I definitley don't have the energy or stamina I did years ago. But I'm pretty determined.

Cascades. I will check out Perfect endings. Just looked them up on Yelp and the first review dings them for being uppity, but that has nothing to do with location.

Just went to the bank and saw multiple "for lease" signs on the way. I called two of the brokers. I know they will be too expensive, but I keep trying anyway, LOL. With all the empty storefronts you'd think prices would come down, but no such luck.

BTW, I know we are supposed to be heading into recession, but we went to the really huge shopping mall yesterday--that has three big parking structures and acres of parking lot. We almost left because we couldn't find a parking space. People are definitely still shopping here--and this is a center with fairly high-priced stores!!!!!

littlecake Posted 3 Sep 2008 , 2:44am
post #21 of 36

i think if you do cool stuff they will find you in an industrial park...it won't matter....you're not looking for a bunch of walks in lookin for a cupcake anyway are ya?

years ago before i started doin' cakes, there was a show about this lady in california doing cakes...it looked like a hole in the wall....guess what?...her cakes were super, and she had a big celeb following...they didn't mind going to an out of the way place to get something great.

i think about how different things could be if i was younger....then i was broke and dumb....my mother was so right saying youth is wasted on the young....lol

keep us posted!

southernbelle Posted 3 Sep 2008 , 2:51am
post #22 of 36

I am in a completly diffent demographic area but here is my story, hope it helps you:

I looked downtown in our quaint little old fashioned downtown area....rent was outrageous and the landlord was not willing to do any build out. I didn't want to make a loan so I held onto my job while still looking (and baking out of my home) I finally contacted a real estate agent that specializes in commercial real estate.............I didn't have to pay him so he took me to several places in town to take a look at property for lease. I finally found a small 630 square feet space that used to be a beauty shop. It was in a complex behind a large real estate office. I knew when I walked in that this was the place. I knew since I wasn't going to take out a loan that I needed to start out small. I signed a 3 year lease....they did the whole build out down to the painting (I got to pick my colors) The only thing I was responsible for was the hook up of the 3 compartment sink and the line for the oven. Oh, and they pay the WATER BILL!!!! My rent is $630.00 a month.............cheaper than anything I found.

I took $15,000 out of my 401k and paid for everything including my start up supplies. I found a 3 compartment sink for $350.00 which included the nice faucet, I started out with my 2 kitchen aids and a household oven. I have now purchased a 12 quart hobart off craigslist and found a used Blodgett oven for $1800.00. I have small space but it works for me while I am building my business. I just celebrated my 1 year anniversary and am doing well!!! I have orders into 2009 and have just been made an Ambassador of my local Chamber of Commerce. I divided my space to have small area in front for consultations and purchased a small display case in which I have cupcakes, cookes, muffins brownies and decorated cookies. My walk in's help pay the bills and they are good returning customers and have given me good referrals. While I'm not downtown where I originally wanted to be....this is a good start and once my lease is up I will be in a good position to negotiate larger space icon_smile.gif

littlecake Posted 3 Sep 2008 , 3:25am
post #23 of 36

wow southernbelle, that's so cool!

you know you really can do stuff on a shoestring, if you really want to can't ya?

it's funny how you "just know" when you find the place...kinda like fallin in love...ya just know!

i got about half my stuff used, with no problems at all.

tonia3604 Posted 3 Sep 2008 , 4:21am
post #24 of 36

Thank you ALL for being so willing to share information. It is a tremendous help to the rest of us. Tammi, Southernbelle, and anyone else with a small shop, how many hours are you putting in per day, how many employees do you have?

southernbelle Posted 3 Sep 2008 , 4:42pm
post #25 of 36

I am open Tuesday through Friday from 9-5 and Saturday from 9-12. I had to play with those hours to get something I was comfortable with and that worked for my customers.

Depending on how many cakes I have per week and weddings I usually put in about 60 hours a week. I do have an employee or what I consider my right hand person come in on average twice a week...less when I am not so busy and more when I am swamped. I did it all myself for several months before I hired someone tho.............she works on an independant contractor basis and it works for both of us. I wish I could pay her more and will when I can.............she is a God Send and I don't know what I would do without her. It is hard to find someone that you trust leaving your "baby" with while out running around and picking up supplies and going to the bank etc....not to mention someone that you work well with and your styles compliment each other. She was one of my Wilton students and I consider her more of a partner than an employee.........she is wonderful!

I do ALOT of birthday cakes and cupcakes and such but I also do alot of weddings. Sometimes it is the smaller cakes that give me headaches more than the wedding cakes.
Do your research, talk to people and network. It is amazing what you can find used............auctions are a great place to find equipment cheap....I just went to an auction from a bakery that went out of business and bought the coolest hutch for $200.00. And a whole box of pans and edible images and just to much to mention. They had big hobarts going for $900.00 and that is cheap!!!!

ThatsHowTcakesRolls Posted 3 Sep 2008 , 5:02pm
post #26 of 36

I'm really enjoying this thread - a lot of shared information that helps me too! My hours are Monday-Friday 6:00-6:00 (though I'm thinking of opening at 7:00 soon) and Saturdays, 8:00-5:00. During the week I'm here every day at 5:00 and am usually here until about 6:30 or 7:00. On Saturdays I'm usually here about 6:30 because of Wedding Cakes and then don't get home until my last delivery for the day or until 5:30 if the deliveries were earlier in the day.

I have 1 employee but he's not working out so well for me. Young kids these days have a sense of entitlement in my opinion which takes away from their work ethic. One of my first jobs was with my mother and although she wasn't my supervisor she was right there with me making sure that I did a great job and worked hard. She had a great work ethic and passed it onto me so I think my expectations are a little high for this line of work. Frankly, I can't afford him right now. There was about a month's delay in the opening of my shop so the cash flow started later than I'd anticipated and it put me farther behind than I'd like to be financially right now. I think that I'll have to hire someone eventually for next Wedding Cake season but with my sister moving here from Oregon in November to help me - I think I'll be Ok. In the meantime, my husband will help me if I need so that will help me to build some money back up for the winter months when they are slower.

It may seem like a lot of hours on paper but the time goes so quickly here and sometimes I wonder what I got done we're so busy! Ok...enough rambling for me! lol


mommyle Posted 3 Sep 2008 , 5:16pm
post #27 of 36
Originally Posted by itsacake

Also, I'm afraid that even if I advertise to my niche market (I plan to be kosher) there won't be enough people who know about me if I am in such an out-of the way place.

I don't want to hijack this, but... something for you to consider... The Muslim community eats pretty much the same way that the Jewish community does, so don't be afraid to advertise to that segment too. And don't forget about the vegetarians. If you are going kosher, it's not that much of a stretch. And someone here posted a really good book on baking for vegans on amazon. Can't remember off the top, though. And that broadens you a bit.

michellesArt Posted 3 Sep 2008 , 5:18pm
post #28 of 36

sigh...i would love to have a shop and all this talk just gets those fires burning again-ofcourse i have no money so to speak but i might just go talk to our local small business person (maybe they know of space and incentives to start up- our government seems to be pro small biz owner?) it's a dream i would love to come true and reading about others going through this gives me incentive and courage too think big or go home ?!!?

southernbelle Posted 3 Sep 2008 , 5:31pm
post #29 of 36

You might want to check into grants. I know for minority owned businesses there are grants out there. I am not a very patient person and I know it takes awhile and a lot of paperwork. Just an option....also check with your local Chamber of Commerce, they are a wealth of information!

margaretb Posted 4 Sep 2008 , 5:19am
post #30 of 36

If you are a superstar, people will go wherever you are. However, if you need people to be able to find your place (for consultations or pick ups or whatever), an industrial area might be a problem if the place is difficult to find. Maybe I just have directional difficulties, but I have a hard time finding places in industrial areas -- roads that are dead ends, streets and/or buildings not clearly marked, always thinking I must be lost.

On the other hand, once I found your shop, if I loved your cakes I would have no problem coming back.

Just something to consider.

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