I have found a local restaurant who is interested in having me use their kitchen (I want to jump up and down but had a similiar situation fall thru a few years back so I am afraid to jinx it!) and the owner likes all the baked goods I have given her as samples.

She said she didn't want to charge by the hour because it would be too expensive for me and said once I started using the kitchen more, I could chip in for electricity and gas.

We haven't really sat down and worked out the exact details of what I will be providing for the priviledge of being able to use her kitchen to become legal. (Hope that doesn't sound sarcastic - I don't mean it like that.) I offered to work for free for a set amount of hours per week or provide baked goods for the shop, etc.

She is very sweet and seems not to want to take advantage of me. She even offered to pay me for the 5 items I brought down at our first meeting. I refused, of course, but I don't want to be lulled in complacency or naive. I realize business is business and she is out to make money, as am I.

The think I could use some help on is when I meet with her next week, what is reasonable as an exchange? She has a cafe and doesn't bake but there is quite a demand for it so I know she is eager to sell some goodies.

Here is what I was going to propose and I was hoping some of the veteran business people could read it thru and tell me if it sounds reasonable or if I am off my rocker, etc.

I was thinking I could deliver a tray of pastries each Monday. These could be new things we are trying out (she is loving the idea of me creating fresh stuff so her customers don't get bored). I would make these and pay for the ingredients myself. She can taste them and sell them to see what is going to be popular. Then she can decide what will sell the best. I then thought she can tell me what to make (again, ingredients and labor are out of my pocket) and then she can sell them in her shop and we could split the sales.

Am I crazy? Is this too generous - not generous enough? I figure after cost and labor, it's more like a 70/30 split with her getting the 70.

I make a tray of brownies that 'cost' me approx. $6-7 (not counting gas, labor, etc.) She can cut these and sell them in her shop for $50+ - so after the 50% division, she gets $25 and hasn't had to do anything, I would get $19 (subtracting the ingredient cost) which might not sound right, but these would never even be able to be sold without her shop.

She is also letting me have a portfolio out and use of her bakery case for samples or a dummy cake. Do I also cut her in on the cake orders that are generated from her shop? This is different from just renting kitchen space during the off hours - she seems to want to have me sort of showcase my stuff there and I am lost as to how to make the financial arrangements.

Ok, I need some help. Any input is appreciated and thanks for reading this novel.

hmmm....... so no one does this?

I was just wondering, cause I'm not sure I understand, you'll be using her kitchen to be legal, but delivering her things to sell? So will you be making them at home illegally & then selling them legally?

I guess that's the way it sounded. I am so used to baking from home that in my mind, I am "delivering" them when in fact I would be making them there. So no, I would not be illegally baking - I just meant that they were my recipes and I would be baking them as well as paying for ingredients, etc...

Sorry for the confusion.

Oh, and the reason why I said bring them on Monday was because she was saying that she doesn't work Sundays so that would be a good day to bake. So actually I would leave them there Sunday nights for her to sell on Mondays.

bump

Thats what I thought, but I just wasn't sure. Okay, I'm no business expert, as far as that type of arrangement but heres what I think. First, what I'm getting is that she will let you use her kitchen so she can have pastries at her coffee shop. After awhile you'll see how it goes & then she'll let you know what your cost will be for electric & all that stuff, in the mean time, you will do all labor involved with baking AND pay for all ingredient cost, and she will get a majority of the profits, not only that, you will eventually start paying some utilities, etc. , and YOU will still be doing all the baking labor AND paying all the cost involved, and she will still be getting a majority of the profits? Is that right? And you also want to know if you should give her profits for cake? Maybe I'm not understanding you again, but if I am, I have to ask you, does ANY of that arrangement sound fair to you? I mean it's real fair to here, for sure, but is it to you? She wants pastries for her customers, I get it. In the long run she WILL make more profits in coffee cause of that, not to mention get more customers, and that is why people PAY for pastries & then turn around & resell them at a marked up profit. I'll tell you what sounds fair to me & I could be wrong, cause like I said, I'm not familiar with this type of arrangement, if you just paid her rent or a kitchen use fee & kept all your profits. MMAybe you even give her 10% plus a fee, at best. Or you can share profits,(and not with you getting less either) but then you share cost as well. I could be wrong, it didn't really sound fair to me. But I'll tell you who you really need to ask, cause she's a shrewd, straight forward business women, & thats Inydebi. I suggest you PM her.

This is like my dream come true! I have had this idea, but I can't find a kitchen to rent!

My only suggestion/comment is about her cafe - does she own the building or is it rented? If its rented you have to be careful b/c if she doesn't pay her rent and the landlord locks up shop - they lock up will all the "stuff" inside - meaning that if you take equipment in plus your ingredients will be sold to pay her rent! (I really hope that made sense!)

I wish you all the best of luck! Let me know how its working out - so envious of you!

LaBella: You are right. I suspected I might be too eager and therefore giving it away instead of thinking like a shrewd businessman, lol. I think I was so happy to find someone willing to do this that I forgot about the big picture. Thanks and I will PM Indydeb.

I was going to bug her first but I figured if I posted it here, others could benefit from her pearls, ya know?

Janel: I feel you. I cannot tell you how excited I am - it has been a dream for almost 3 years and I came so close in '07 and then the owner backed out saying he was afraid I would sue for a slip-n-fall. I told him I would sign a waiver but it didn't make a difference.

The truth of it is I think he wanted me to bake and sell all my stuff for an hourly wage and then let him sell it. He even said I would need to add his name to my business cards. So after the whole thing fell apart, I started thinking that maybe it was for the best.

Now I am going to have to re-think this arrangement because I want to make money off this too - not just her. My gut instinct tells me she is a nice woman and she said she is excited too so perhaps I will get lucky and neither of us will want to take advantage of the other - but who knows.

My idea for rent in exchange for pastries went something like this - you buy all the ingredients and I will make you whatever you want (cinnamon rolls, brownies, cookies etc) my time is my "rent" - all the profits are yours. I will then also get space out in your shop to showcase cakes etc, I will provide all my own ingredients to make custom cakes/cookies/pastries to the public and all profits are mine.

basically I would exchange rent for my time and talent - thats all. It really hard to track sales of brownies in a coffee shop. I used to own a coffee shop - Its really hard to nail down how many chocolate chip cookies were sold when you are selling individual items. Sure I could tell you that we sold 5 brownies that day - but you couldn't tell from the register tape.

hope that makes sense - might work out better for you in the long run - you are not buying the ingredients and then you won't have to worry about a profit split - plus this way you could also sell your pastries to other restaurants and cafes at wholesale using your own ingredients. just an idea!

I totally understand the excitement of being able to do the things we really want to do. I would LOVE to opan a shop, but it's just not in the cards...right now. And I always assume the best in people, BUT there is always a but, cause I'm sorry & unfortunatley in this day in age you just don't know. When I was getting married, we booked this plantation to get married at. the lady was so excited & so into what she did & so helpful...and then she got our money...and then we lost our money. Come up with a fair proposal, she how she feels about it, that she answer your question! And Good Luck!

See now I thought that was a good idea too. I found a catering kitchen to rent and I thought I would offer a certain amount of wedding cakes each year for the caterer to sell at whatever price she saw fit and keep any money she made off the sale. I would just give them to her... All the biz guru's here thought it was a bad idea and that I should be paying her a fee to rent her kitchen, everything in writing, all the expectations set in place in advance. it makes sense from both sides. If you don't have alot of money to pay up front, then the exchange makes perfect sense but I would make sure that you specifically outline exactly what she's going to be getting each week so neither party feels slighted. maybe she's expecting 50 brownies a week and you only show up with 30 or the next week the item is more expensive to make then the week before so you come in with less product and again she feels slighted. not to mention what happens if she goes out of business and you have wedding cakes booked 6 months out and no kitchen to make them out of. it's a lot of unknowns when you're dealing with someone else's kitchen, I would just make sure that whatever you do, set the expectations up front and stick by them. I wish I could say this situation worked out for me but unfortunately after a fantastic meeting with the caterer here, she fell off the face of the earth and she hasn't returned my calls. Good Luck!

We used to be in a similar situation with a friend who owned a beer/wine cafe and made sandwiches/burgers/salads...He didn't have desserts...However....

We sold him the cheesecakes he wanted to sell on his menu...He advertised the desserts as our desserts...Any other orders from customers came to us directly from him...Those profits were ours...He charged $200/month to use his facilities.

Paul & Peter

How about you sell your product to her? You charge her your set amount that you usually sell minus a small discount. Instead of cash handed back to you, you exchange hourly kitchen rates.

I am trying to work out the same arrangement but CANNOT find a bakery or restaurant to take me in! Can anyone help me? I am tired of getting a door slammed in my face and shedding tears over it. I am in NJ and this seems impossible! Oh, and does anyone know who will insure someone with an LLC company?

I would put everything in writing to protect both of you. If you know any lawyers, ask them to look at the agreement. You can never be too careful.

Thanks for all the great advice. I am actually off to meet her right now, it's our second meeting, so we shall see if we are on the same page or not. I'll update when I come back....

Thanks for all the support.

No, I am not a member yet but will be joining shortly. I would love to support such a campaign!

I am from NJ too. What can I do to help you with this issue?

sorry for the stupid question, but what is NJCDC?

NJCDC: The New Jersey Cake Decorators Club

http://www.meetup.com/njcakedecoratorsclub/

you don't have to pay the dues just to sign up, you do have to pay them once you sign up for a class though. I hope you both join, we have a great time!