Illinois Cake Decorating Business, Where To Start??

Business By Lori2240 Updated 21 Jul 2011 , 2:58pm by ranae5463

Lori2240 Posted 27 Jun 2011 , 10:05pm
post #1 of 32

Does anyone have any knowledge or input as far as Illinois law goes on cake decorating businesses? I am finding out lots of different info and am confused. Ive heard that you cant run a cake deco business out of your home but Ive also heard you can as long as it is in a separate kitchen (i.e. in a basement kitchen or something like that). Then I read that a cottage law was passed saying you can bake in your home but then I heard it is for farmers markets only. I guess what I am saying, what can I do to start a business that does not involve a storefront? Ive heard of asking another business to use their commercial kitchen, but not sure how much Id have to pay for that. Ive looked on Sec of State site and that didnt seem to be helpful to me. Does anyone have any knowledge about this? Thank you in advance!!!

31 replies
dawncr Posted 28 Jun 2011 , 12:19am
post #2 of 32

For current rules, see the top of the Business forum. Info on all states is in a sticky.

For possible new rules, there are a few relatively recent threads in the General forum. Or, just search the site for "Illinois." Easy to find.


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DSmo Posted 28 Jun 2011 , 1:08am
post #3 of 32

Here's info about the cottage foods bill:
http://www.ilga.gov/legislation/BillStatus.asp?DocNum=840&GAID=11&DocTypeID=SB&SessionID=84&GA=97

If you look around on that site, I'm sure you'll be able to find the complete wording of the bill.

I would check your local health department for regulations on a licensed home bakery.

jason_kraft Posted 28 Jun 2011 , 2:02am
post #4 of 32

From my reading, the IL bill would allow homemade cakes to be sold at farmer's markets only, based on (b)(2). Seems like an odd restriction.

http://www.ilga.gov/legislation/fulltext.asp?DocName=&SessionId=84&GA=97&DocTypeId=SB&DocNum=840&GAID=11&LegID=&SpecSess=&Session=

Lori2240 Posted 28 Jun 2011 , 2:25am
post #5 of 32

Yeah, reading that portion (B2) it does look like it is talking only about Farmer's markets. hmmm. I wonder why it would be in Farmer's markets but not one on one business transactions. I'm probably going to make some calls to see if I can find anyone health department-wise that can help me figure it out. We'll see how that goes!

katj012 Posted 28 Jun 2011 , 4:39pm
post #7 of 32

Not to be all illegal or anything here... but I just finished a course on Food Business, and one of the classes was called "Cover your Assets". Basically, it was all about how to get around what the restrictions are, because as starting off small business owners, sometimes they're too difficult if you're completely on your own. In IL (where I am), our teacher told us to rent commercial kitchen space, and have it on the company's letterhead that you rent space from them (you don't need dates). Try to rent from them as often as you can, but if you bake at home some other time and sell a cake and for some reason the Health Dept comes after you, you have proof that you rent space in an inspected kitchen.

Obviously, you can't do this forever... but after this class and talking to some people, apparently it's done all over in IL. Nice to know (at least I think so!)

jason_kraft Posted 28 Jun 2011 , 5:09pm
post #8 of 32
Quote:
Originally Posted by katj012

In IL (where I am), our teacher told us to rent commercial kitchen space, and have it on the company's letterhead that you rent space from them (you don't need dates). Try to rent from them as often as you can, but if you bake at home some other time and sell a cake and for some reason the Health Dept comes after you, you have proof that you rent space in an inspected kitchen.



That may be enough to fool the health dept (although it would be pretty obvious unless only a small percentage of working hours were at home), but if there is a liability issue with one of your products and the complainant's attorney finds out that you baked the offending product at home, you could be in serious trouble, since you would probably also lose your liability insurance coverage.

In a way this is actually worse than someone who just runs a bakery from home -- at least they can claim ignorance, but if you have a commercial kitchen you obviously know what the rules are and are intending to break them to save a few bucks.

katj012 Posted 28 Jun 2011 , 5:28pm
post #9 of 32

I agree - and I see the risks involved. This was actually given to us by someone who has owned several catering companies, and for the very beginning just didn't have the money to run a business somewhere.

I DO feel, though, that this limitation really hurts people who want to start a baking business. I can understand the risks from a cooking standpoint, but in way of making cakes, I feel there are less health risks involved. Looking at myself, I personally don't have the money to rent any commerical kitchen space, because it is upwards of $25 an hour where I live. So that totally screws me over from ever being able to make money on a cake.

Lori2240 Posted 28 Jun 2011 , 5:57pm
post #10 of 32

I called my county's health department and they told me you can cook from a home in your kitchen, BUT it needs to be a separate "commercial" kitchen. Not just a stove in your basement type of thing. They said floors, walls, ceilings, sinks, the works. So that in not an option because that is a big chunk o money. They said the best way is to start is by renting a commercial kitchen after hours and get a permit that says I am producing food products from so and so's kitchen. Then go on and get a business license and the works. I have no idea what commercial kitchens are renting for by me. Guess I need to make a few calls.

SweetIndulgences Posted 28 Jun 2011 , 6:39pm
post #11 of 32

I don't want to discourage any budding bakers, but I recently started my cake decorating business, and had to jump through a lot of hoops to do it. I started out of my house, but a local baker quickly reported me. So yes, I found out THE HARD WAY that there are A LOT of rules. Yes, the recent cottage law applies ONLY to goods being sold at roadside stands and farmers markets. If you are going to take orders and accept money, you HAVE to be healthcode compliant! You cannot prepare food to sell in the same kitchen that you make family meals. You have to have commercial equipment, work surfaces, flooring and many other requirements. You have to meet structural requirements as well. Then there are certifications and inspections... Overall, it has cost me A LOT of money to start this business, so all I can say is, if you are not planning on doing it all the way, don't do it - the fines are high, and the liability is huge. I have my commercial kitchen now, but this is not at all a part time thing. If you have less than 15 orders a week, in my experience, it is totally not worth the expense. Trust me, it was a horrible feeling having an officer from the health department knock on my door!!

dawncr Posted 28 Jun 2011 , 7:59pm
post #12 of 32
Quote:
Originally Posted by SweetIndulgences

If you are going to take orders and accept money, you HAVE to be healthcode compliant! You cannot prepare food to sell in the same kitchen that you make family meals. You have to have commercial equipment, work surfaces, flooring and many other requirements. You have to meet structural requirements as well. Then there are certifications and inspections... Overall, it has cost me A LOT of money to start this business, so all I can say is, if you are not planning on doing it all the way, don't do it - the fines are high, and the liability is huge. I have my commercial kitchen now, but this is not at all a part time thing. If you have less than 15 orders a week, in my experience, it is totally not worth the expense. Trust me, it was a horrible feeling having an officer from the health department knock on my door!!




Sweet Indulgences, thank you so much for posting and telling your story!

You're just one of several persons on CC who have been turned in, and lived to tell about it. You also have shown that you were able (with lots of perseverance and commitment) to overcome the obstacles and begin your own commercial kitchen.

Many persons say that your path is not an option because they don't have the money to do it. However, I don't think I've ever heard of *anyone* who had thousands of dollars lying around to start their own legal cake business. Instead, persons like you, who were able to do it, worked at another job or took on a second job or borrowed. They searched until they found some sort of commercial kitchen they could use for enough hours a week to start making cakes. They were creative and were able to find solutions to obstacles.

I'm not trying to make anyone feel bad. Instead, I'm trying to hold Sweet Indulgences up as an example to others that it is possible. You can do it, too. It may not be an easy or obvious path, but if you're a talented caker, take the first baby steps to become legal. If you hit a roadblock, post here and you may get some great ideas or brainstorming from the wise members of CC. It may take longer than you'd like, with a few detours or rest stops along the way, but you CAN succeed! Don't give up!

jason_kraft Posted 28 Jun 2011 , 8:11pm
post #13 of 32
Quote:
Originally Posted by katj012

Looking at myself, I personally don't have the money to rent any commerical kitchen space, because it is upwards of $25 an hour where I live. So that totally screws me over from ever being able to make money on a cake.



Startup costs for renting an existing commercial kitchen are minimal. You can certainly make money even if you have to pay $25/hour rent...just structure your prices accordingly.

For example, if a cake includes $10 of ingredients, takes an hour to bake and decorate, your wage is $15/hour, and you have $5 of other per-order overhead, your cost would be $10 + $25 + $15 + $5 = $55. If you set your price at $69, you would be making a 25% profit (after paying yourself a reasonable wage).

katj012 Posted 28 Jun 2011 , 8:39pm
post #14 of 32
Quote:
Originally Posted by jason_kraft

Startup costs for renting an existing commercial kitchen are minimal. You can certainly make money even if you have to pay $25/hour rent...just structure your prices accordingly.

For example, if a cake includes $10 of ingredients, takes an hour to bake and decorate, your wage is $15/hour, and you have $5 of other per-order overhead, your cost would be $10 + $25 + $15 + $5 = $55. If you set your price at $69, you would be making a 25% profit (after paying yourself a reasonable wage).




The problem with this logic, is that it takes around one hour just to mix and bake a cake, and that's if you have enough pans to do multiple layers at one time (I only do based on certian sizes).

And it has NEVER taken me only an hour to decorate - between dirty icing, refrigerating, fully frosting, covering in fondant (if needed) and then all the details, flowers, etc. etc, it is SO MANY hours. I'm assuming that the idea of making all my gum paste decorations at home isn't a problem - because no matter what I would have to do that. If the cake was something super simple, that's one thing, but not many people request super simple cakes anymore unfortunately. That's where I think kitchen renting gets out of hand - that could be up to 5 hours total for one cake.

jason_kraft Posted 28 Jun 2011 , 8:47pm
post #15 of 32

My example was priced at $69, that would be a very basic single tier cake. I agree that if you bake one cake at a time the economics don't work out, but when you get multiple orders you can make the best use of your time (i.e. decorating one cake while another is baking).

For a more elaborate multi-tier cake, let's say there's $40 of ingredients. 5 hours of rental time ($25) + wages ($15) = $200. Add $5 of overhead and you're at $245, then your 25% profit margin and the final price would be $306. Depending on the size of said multi-tier cake you would be in the $3-6/serving range.

It's impossible to accept an unprofitable order if you use this formula, the biggest issue is pricing yourself out of the market in your area. For example, if people in your town won't pay more than $2/serving, this type of business is probably not sustainable unless your operating costs are reduced significantly.

Lori2240 Posted 28 Jun 2011 , 8:58pm
post #16 of 32

Thanks SweetIndulgences for your story! Kudos to you for seeing it through!!! Here is a dumb question. Can you rent a commercial kitchen for baking and then decorate at home???? Just curious.

katj012 Posted 28 Jun 2011 , 9:01pm
post #17 of 32

But what do you do when you are a new person into the market? That's where I feel it gets really hard - when you use your model and are making multiple cakes, that's fine. But for someone like me who would love to just break into the market, I don't have multiple cake orders at one time. Do I just have to eat the cost hoping that things will change?

jason_kraft Posted 28 Jun 2011 , 9:08pm
post #18 of 32
Quote:
Originally Posted by katj012

Do I just have to eat the cost hoping that things will change?



At the beginning, yes...it usually takes at least 1-2 years before a typical retail startup business becomes profitable, but a lower-overhead operation could be profitable in 3-6 months depending on how things go. The nice thing about a rental kitchen is that you usually only pay for hours you use, so the loss would be minimal compared with a retail shop with a fixed monthly rental charge.

katj012 Posted 28 Jun 2011 , 9:25pm
post #19 of 32

I'm wondering about Lori's question as well - can you decorate at home?

SweetIndulgences Posted 29 Jun 2011 , 4:16am
post #20 of 32

Thanks for all the positive feedback!!

Okay - after everything I have been through, I guess I should put my 2 cents in on decorating at home. The whole reason I went through with my own commercial kitchen is because I tried doing exactly that. I had an inspected kitchen where I baked - just enough to be able to say that I did, and I would do most of the decorating at home. Well, the health inspector warned me that he could actually ask (subpoena) me to produce invoices or a log of the times I baked there - and would compare it to my sales. I played dumb and said I didn't keep track, but that I would from that time on. It isn't worth it to try and fool the health department. If anyone complained, or (heaven forbid) became ill from one of your products, and you do any of your food prep at home, you would be including your home in the liability - I know I don't want to risk my home for the few extra dollars. The health department has seen it all, and they know that people are trying to fool them in so many ways, so PLEASE weigh the risks and the consequences! The fines are BIG, and commercial kitchen rental is pretty expensive, and unless you do a pretty good volume, in most markets you can't justify the expense. I know the economy is tough, but in the long run, you will be more profitable by being a legitimate baker. PLUS you can advertise without the worry that the wrong person will see it and cause problems for you. Good luck all!!

katj012 Posted 29 Jun 2011 , 2:39pm
post #21 of 32

Ok one last question. Even if I'm not doing any food prep at home, I still can't decorate there?

My thought was it I prepped everything in the rented kitchen (buttercream, etc.), then there is no risk of anyone getting sick unless I decide to put a raw chicken on top of the cake or something.

The decorating is the part that takes by FAR the longest... so even all the gum paste flowers, etc, would have to be done in the kitchen???

Lori2240 Posted 29 Jun 2011 , 5:38pm
post #22 of 32

Again, SweetIndulgences, your feedback is invaluable. Thank you for sharing. It sounds like they really went after you! I agree that decorating does take me a loong time and with baking, filling, covering with fondant, and decorating, renting a space may not be a possibility (thats a LOT of hours!). I most definitely would not have the volume necessary to pull a profit. I have 3 boys 3 and under and certainly cant swing 12+ cakes a month right now! :0

jason_kraft Posted 29 Jun 2011 , 5:56pm
post #23 of 32
Quote:
Originally Posted by katj012

Ok one last question. Even if I'm not doing any food prep at home, I still can't decorate there?

My thought was it I prepped everything in the rented kitchen (buttercream, etc.), then there is no risk of anyone getting sick unless I decide to put a raw chicken on top of the cake or something.

The decorating is the part that takes by FAR the longest... so even all the gum paste flowers, etc, would have to be done in the kitchen???



The way it usually works is that anything edible must be prepared in the commercial kitchen. If you were to make non-edible decorations those could probably be done at home.

But again the added cost would be reflected in your pricing. If a specific decoration would take you 4 hours to create, you would add a minimum of 4 hours of rent + 4 hours of hourly wage + ingredient cost to the price of the cake.

katj012 Posted 29 Jun 2011 , 6:03pm
post #24 of 32

But could I prepare all the elements (cake, buttercream, whatever else) in the kitchen and then assemble and cover at home?

Lori2240 Posted 29 Jun 2011 , 6:07pm
post #25 of 32
Quote:
Originally Posted by katj012

But could I prepare all the elements (cake, buttercream, whatever else) in the kitchen and then assemble and cover at home?




Yeah, that is what I was wondering, if I am using commercially prepared fondant couldnt I bake there and cover it at home? Unless they are that concerned with the surface you are rolling out on. Just thinking, every hour or so you can trim off the rental space adds up. Thanks again everyone!

blissfulbaker Posted 29 Jun 2011 , 7:32pm
post #26 of 32

This is what I am wondering...if we are selling cakes at our local farmers markets can we take orders for custom cakes there and have clients pick the cakes up from our home? Also, with the new law must we have a separate kitchen in our home? I have called my local board of health and they didn't have a clue what I was talking about. Gotta love IL government and politics!!! Lastly, I believe the cottage food bill does not become a law until 90 days after it is signed. Does anyone know for sure if Quinn signed the bill?

ranae5463 Posted 29 Jun 2011 , 7:47pm
post #27 of 32

No, the bill hasn't been signed yet. It was sent to the governor on June 24. My cousin is one of the sponsors of the bill. I will email him and see what kind of response I can get. Wish me luck!

blissfulbaker Posted 29 Jun 2011 , 7:52pm
post #28 of 32

Thank you ranae5463. Perhaps that is why my local board of health didn't know what I was talking about. I have been trying to follow Senator Koehler's web page regarding the bill, however there has been no recent updates since it past the senate. There was a rumor that the bill was suppose to be signed the end of May but I couldn't confirm it.

ranae5463 please keep us updated on anything you can find out. Thanks so much

Lori2240 Posted 29 Jun 2011 , 9:14pm
post #29 of 32

I was wondering the same thing about the farmers markets and orders. Yes, please keep us posted on any updates about the bill/law. Thanks everyone!

CWR41 Posted 29 Jun 2011 , 10:16pm
post #30 of 32
Quote:
Originally Posted by Lori2240

Quote:
Originally Posted by katj012

But could I prepare all the elements (cake, buttercream, whatever else) in the kitchen and then assemble and cover at home?



Yeah, that is what I was wondering, if I am using commercially prepared fondant couldnt I bake there and cover it at home? Unless they are that concerned with the surface you are rolling out on. Just thinking, every hour or so you can trim off the rental space adds up. Thanks again everyone!




It doesn't work that way... even if you purchased pre-baked frozen cake layers, fondant, and buckets of icing to slap it all together, you are still assembling/completing/manufacturing a finished edible product that you are responsible for producing in the correct inspected facility required by your health department.

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