I was wondering if I found a kitchen from an existing business (currently a caterer that doesn't seem to have much business) if I rented her kitchen (me - a very, very beginner) if you folks knew if rent could be offered as a percentage of each cake I sell in the beginning. I am new to this state and don't know anyone and would have to develop a following. If you thought that this would be feasible what percentage would be appropriate in the beginning and increasing as business increased?

Thanks for any input,
Carol

That's a sucker bet for the kitchen owner. What her space is worth on the open market is totally unrelated to how much business you do, what your costing is, and how honest you are in reporting to her your income.

That's a sucker bet for the kitchen owner. What her space is worth on the open market is totally unrelated to how much business you do, what your costing is, and how honest you are in reporting to her your income.

That's a sucker bet for the kitchen owner. What her space is worth on the open market is totally unrelated to how much business you do, what your costing is, and how honest you are in reporting to her your income.

That's a sucker bet for the kitchen owner. What her space is worth on the open market is totally unrelated to how much business you do, what your costing is, and how honest you are in reporting to her your income.

(Apologies for the multiple posts. I've been getting SQL errors.)

(Apologies for the multiple posts. I've been getting SQL errors.)

As a kitchen owner who would be willing to rent out her down time, I would NEVER take a percentage of the cake as rent. Let me share some reasons why:

If the renter is a bad business person, meaning, they don't have a good pricing structure in place and they haven't figured all of the actual costs when they figure their pricing, then the kitchen owner pretty much gets gypped.

Let's assume the renter wants to give a 10% commission (the figure I see thrown around here frequently). Let's say you are going to do a small birthday cake for $50. Mixing, baking, cooling, leveling, crumb-coating, icing, decorating, clean up ..... at least 3-4 hours. You're using my electricity, gas, water ... my big 20-qt mixer, my $8000 dishwasher, my double convection oven, my walk-in refrigerator, my freezer, my automatically dispensed soaps (and it costs $0.50 for each dishwasher run, not counting hand washing soap, floor soap, sink soap/sanitizers).

and you want to pay me 10% or $5 for all of that? That breaks down to about $1.25/hour rent.

If I agreed to that, I'd be the bad business person.

!Just curious, debi, if it was 20%, would it be worthwhile? I'm trying to find something attractive for the kitchen owner and feasible for myself. Trying to figure what would be fair...any opinions?
If you were to rent out kitchen space, what would you charge?
Thanks for any advice, I know you know the biz well

no, I wouldn't do a percentage. If I did, it means I'm only going to make money if YOU are a good businessperson and I'm not going to depend on that. If one of us is going under because of bad pricing, it's not going to be me.

I am interested in renting my kitchen space to those who are wanting to take the next step and work toward being a legit business. I'm not interested in tying up the kitchen time for the 1, MAYBE 2 cakes a week person ... I consider that a hobbyist because you're just not going to meet overhead with low sales like that. So I have a flat monthly rental fee. The person wanting to become a business needs to have the volume to cover that .... just like I do with my own rent. (If I have no sales for two weeks of the month, the landlord .... for some silly reason! .... still wants a full months rent. )

So ... no percentage .... flat rental fee.

Thanks debi, it really helps to have input from somebody on "the other side"...if you don't mind my asking, what in your opinion is a fair monthly rate? I'm not sure how I can estimate how many cakes I will bring in since I can't advertise until I'm legal...so I'm trying to work the equatiion backwards. If rent, insurance, materials, etc cost X, then I need to bring in $X in order for it to work.

I figured it this way ...... I have priority scheduling for 10-16 hours of the day, so anyone else would have access for 8-14 hours a day. On average, that's 1/3 of the time, so it would be 1/3 of my monthly rent.

Considering I'm throwing in all of my equipment and utilities, that's a heck of a bargain.

I have considered renting out space but I just can't figure out how the public knows you are a separate business from the person you are renting to. Their customer's come in to pick up and order cakes, it is the same store...I just can't figure that one out. I am worried about the reputation of my business when someone else is connected to it. Does that make sense? What suggestions do you all have?

Of course, you'd only rent space from someone with whom you'd want to be associated.

And YOUR company name would be on the invoice, receipt, box label, etc.

(I own the store) I am talking about renting to someone not from someone.

The part I am having a hard time with is how to differentiate to the public the renter's business from the owner's business since it is the same space. Say the renter's cake that a customer isn't happy with goes out the door and all they know is the store they got it from. They don't know that person is renting a space from me. They just know and say they got it from my business name. I guess in the end, it has to be a decorator that I would want my store name associated with and I do have to worry that their customers are satisfied.

I would never rent space (assuming I HAD space to rent) to another cake decorator. Caterer, BBQ sandwiches, Lions Club whatever, yes. But no one doing anything like cake. I agree--how would it be seen as two different businesses?