Help Me Understand

Decorating By dst10spr97 Updated 13 Jul 2011 , 10:43pm by jason_kraft

dst10spr97 Posted 29 Jun 2011 , 2:53am
post #1 of 56

Now that a few more states have passed their Cottage Food Law, particularly Florida, why are some people upset about it? I have seen a few snide comments on other sites from others, particularly those with professional licensed bakeries. Hope I'm not opening up a can of worms, but I'm just curious. Is it because it would be more competition? Because some are worried about individuals baking out of their home? Isn't there room for everybody to fulfill their dream of being a business owner?

55 replies
Jmlpitbull Posted 29 Jun 2011 , 3:16am
post #2 of 56

As the owner of a licensed and inspected bakery storefront it is a little upsetting. For me, because home bakers can charge considerably less than I can due to overhead, insurance, lease, payroll taxes, etc. I'm all for someone making it, but as someone who has taken the financial leap, it is disheartening. I almost didn't comment on this because I don't like all the tongue lashing that goes on here on the forums. But you asked, and I'm just giving my personal perspective on it. Thanks.

DerrellC Posted 29 Jun 2011 , 4:14am
post #3 of 56

DST10, overhead in a licenced bakery is HIGH. Everything JMLPITBULL said is correct. Some home bakers will operate with no liability insurance,pay no taxes,no advertising budgets,no payroll taxes, ETC. So their cost of doing bussines is considerably lower than a licenced bakery.
Now before I get flamed over this post I support the cottage food law here in Florida, and will be taking advantage of it. Our pricing will be about the same per-slice as the full bakeries,so any customer we get can decide who gets their business by the quality of the product not just on cost.

joycesdaughter111 Posted 29 Jun 2011 , 4:52am
post #4 of 56

I was hoping Wisconsin would be passing a cottage food law.

I don't want to make a ton of money or take anybody's business away.

I am just an enthusiastic hobby baker who wants to sell a cake here and there without ending up in jail! icon_smile.gif

scp1127 Posted 29 Jun 2011 , 5:00am
post #5 of 56

It would be difficult for any business to deal with going through all of the financial hoops to get a license and then a few years later the state decides to enact cottage law.

It is hard for me to understand the concept behind the law without some restrictions... mainly a limit to non-perishables and the same safe food requirements as any food establishment. For example, how can the law require Outback Steakhouse to have a three basin sink, drains in the floor, a grease trap (an environmental necessity by most standards), proper temps, etc., and then throw all of those precautions out the window for a baker making a cake with cream cheese icing and a cooked custard filling? I don't see it as an issue with just bakers, but every establishment that has invested tons of money to meet these requirements, right down to food trailers at a fair. None of those requirements are lifted.

If the law limits the offerings to non-perishables and restricts the advertising and amount that can be earned, it makes a little more sense, but it is still hard to understand how the HD's and Depts of Ag can have two sets of rules designed for the safety of the same people.

I'm not knocking cottage food law, I just don't get the two sets of rules.

labmom Posted 29 Jun 2011 , 5:23am
post #6 of 56

I am in a state where the cottage food laws have been in existance for quite a whle.
I don't know why all the bakeries being upset over these laws.

I think that the store front bakeries will always have an edge over the homefront bakery. More visitbility,what do they say location location location.. so thats a big advantage over the home bakery off the bat.. and some people will always go to what they think will be better than the home bakery. Some will go where it is more convient while there at the store, or the village or where ever the bakeries are located.
Most home bakeries are only advertised through a webiste, or word of mouth
at least the ones around here. And if there is a sign allowed in that area maybe a sign. But most will never have near the business as a storefront.

I would love to charge what some of the big bakerys charge but in our area you have to have a storefront to get that kind o money no matter what product your putting out.

our storfront was a good bakery for 9 years.. but the location was not as good as it could have been. we did pretty good.. but now i have a barn full of bakery equipment i can't get rid of and no place to put it and can do my cakes from home a licenced bakery and can be more picky over my clients.

When we were open I never felt that the ladies who were buying boards and decorating equipment from me were any threat to my business. I know many were selling cakes..from home.
I just don't see why all the compitition.. don't think home bakery will hurt the big guys.. lets not fight...

sebrina Posted 29 Jun 2011 , 5:26am
post #7 of 56
Quote:
Originally Posted by dst10spr97

Hope I'm not opening up a can of worms, but I'm just curious. Is it because it would be more competition? Because some are worried about individuals baking out of their home? Isn't there room for everybody to fulfill their dream of being a business owner?




Yes, you will find this is a mighty big can of worms... LOL! This discussion is what started the Florida Cottage Food Law Updates facebook page. Some (not all but some) of the storefront owners can get really, um, 'touchy' about this subject.
There are points to argue on both sides. Home bakers have less overhead but they will a cap as to how much money they will be allowed to make. The bakeries have food safety inspectors popping in to check on them but they also have a storefront & will be reaching quite a larger number of people than the home baker will be. Home bakers will still be required to follow the food safety laws but will only be inspected if a complaint is made. Which leads me to believe that they are probably only going to get one shot to make it right.
It's really geared to be a starting point to help incubate a bakery business or supplement a homes income. There seems to be a lot of talk about who is going to have it easier. I personally think that unless you have done both, it's just an opinion...
Be sure to join us on facebook if you haven't already. thumbs_up.gif

all4cake Posted 29 Jun 2011 , 6:01am
post #8 of 56

Other than an equipment investment and rent on a separate facility, my cost/overhead are the same as one with a storefront. I pay taxes, insurance, and license fees.
I don't get the lower cost of delivery to a business address. I don't get to have walk-in customers. I don't have the luxury of leaving my work AT work. I don't get to sell items that require refrigeration (and I make some serious kick-ass pies!). When I started business, there was only one storefront bakery within a 30+mile radius and the owner actually encouraged me to be a business.
Now, there's about 5 (open and close open and close open and close...)within the same radius

IMMHO those with a storefront have the upper hand in the bakery business.

platinumlady Posted 29 Jun 2011 , 6:58am
post #9 of 56

dst10spr97... I will just say this...there is always gonna be someone that don't like something...whether it be cottage laws or new trend of clothes. I rent a kitchen & have all my licenses...My office is out of my apartment. I have a good friend that is getting started in this business & she is trying to get all of her licenses so she can rent a kitchen. I don't consider her competition & I'm doing whatever I can to help her out. It's all the way you look at things IMO. So yes I could gripe & say to her well you shouldn't be selling anything yet because of xyz....but that's none of my business. My business is to make sure I keep things together on my end. Honestly I don't have time to worry about what the next baker is doing. Have I lost customers because my overhead is more so I have to raise my prices?...yeap do I care, Nope...cause there's another customer right around the corner. Yes it was a sacrifice to get everything done. I had to get licensed in two states because of where I live & where the kitchen is...So I came out of a lot...not as much as someone with a storefront...but still a pretty penny. However, If there is someone that is around the corner from me & are able to cook at home. I don't sweat it.

I just say all that to say....no matter what it is in life there will be someone that don't like xyz ... Spend your time on the positive...which is now you have a way to legally run your business from home. Everyone is entitled to feel the way they do & nothing is going to change that. So yes some will be a little bitter some may be out right pissed off...Don't worry about that...Just do You & watch your business grow & prosper.

Congrats on the new cottage law being passed!

myslady Posted 29 Jun 2011 , 7:02am
post #10 of 56

I think it just comes down to money for business owners, potential revenue lost because of undercutting and increased competition.

I also think that comparing a home bakery to outback is comparing apples to oranges. Cottage laws vary from state to state. In my state a store front bakery has to go through the same regulations as any other food operation business which falls under the health department. The cottage law for home bakeries limits what is sold licensed or not.

scp1127 Posted 29 Jun 2011 , 7:13am
post #11 of 56

I have a full commercial kitchen with no restrictions in my home. I charge more than all of my storefront competitors. I don't think it is the perception of the customer, but the perception of the baker who thinks they cannot charge the same price. There are many home bakers on this site that are major competitors in their market, if not the top.

And I do not agree that the storefront has an advantage. A great marketing plan will work in any arena. We own a commercial building a mile from our home. I could have had a storefront for the same investment, as our requirements are steep here. My choice was for the convenience, because the rent was free in both locations. My husband keeps asking me if I want to expand. I wouldn't need another kitchen as mine is already built. I could just transport the goods to the storefront. The storefront would just tie me down or require me to hire a clerk. I don't need either one.

Again, my issue is the reduced safety requirements... the two sets of rules.

myslady Posted 29 Jun 2011 , 8:04am
post #12 of 56

My state does not allow you to have commercial equipment or more than one stove in your home. If you want to sell perishibles, you have to be inspected and have a thermometer in your refrigerator.

The rules probably vary because of the potential volume of people being served. As you are operating on a larger scale, you have more requirements.

all4cake Posted 29 Jun 2011 , 8:33am
post #13 of 56

The dual hd standards also include the fact that storefront bakeries are subject to multiple, non-scheduled inspections by both the state and the county. Home-based get inspected once unless reported and then, an inspection gets scheduled aaaaaaaand it's only a state health inspection.

btrsktch Posted 29 Jun 2011 , 12:21pm
post #14 of 56
Quote:
Originally Posted by Jmlpitbull

As the owner of a licensed and inspected bakery storefront it is a little upsetting. For me, because home bakers can charge considerably less than I can due to overhead, insurance, lease, payroll taxes, etc. I'm all for someone making it, but as someone who has taken the financial leap, it is disheartening. I almost didn't comment on this because I don't like all the tongue lashing that goes on here on the forums. But you asked, and I'm just giving my personal perspective on it. Thanks.




DITTO.

You are not alone! I'm really hopeful it DOESN'T EVER pass in Maryland. I work so hard getting funding together to open my doors, and struggle everyday to meet payroll and expenses. It's HARD.

jason_kraft Posted 29 Jun 2011 , 3:24pm
post #15 of 56
Quote:
Originally Posted by all4cake

Other than an equipment investment and rent on a separate facility, my cost/overhead are the same as one with a storefront.



Equipment investment can run $100K+ in many areas, and hourly rent for a commercial kitchen can be $20-30/hour. That's a significant difference.

sebrina Posted 29 Jun 2011 , 3:45pm
post #16 of 56
Quote:
Originally Posted by scp1127

Again, my issue is the reduced safety requirements... the two sets of rules.




Home bakers will still be required to follow the same food safety requirements as store fronts.

Quote:
Originally Posted by all4cake

The dual hd standards also include the fact that storefront bakeries are subject to multiple, non-scheduled inspections by both the state and the county. Home-based get inspected once unless reported and then, an inspection gets scheduled aaaaaaaand it's only a state health inspection.




Home bakers will not be producing the volume that store fronts will. Less volume = less mistakes. Home bakers cannot sell items that need refrigeration or anything that is perishable.

There will be no dual standards, home bakers will be required to follow the same safety regulations as a bakery.

all4cake Posted 29 Jun 2011 , 4:10pm
post #17 of 56

My statement was based on how it IS in NC.

Home-based, regardless of volume, should be held to the same standards as a full production bakery.

I am home-based. I feel I and every other home-based baker should be held to the same standards as any other bakery. Mistakes will be made regardless of the volume produced. Some storefronts don't produce as much volume as some home-based businesses even though their allowed amounts are set higher. (recent thread brought that one to mind).

Further upthread, a pper stated perishables in her area were allowed as long as the fridge had a thermometer? A thermometer in the fridge, I thought, was a basic requirement. I can't sell perishables but a thermometer was required.

My comments are based on what I know, for fact, to be true, in the area I do business.

KatieKraft Posted 29 Jun 2011 , 4:11pm
post #18 of 56
Quote:
Originally Posted by DerrellC

Some home bakers will operate with no liability insurance,pay no taxes,no advertising budgets,no payroll taxes, ETC. So their cost of doing bussines is considerably lower than a licenced bakery.




I don't mean to poke any bears here, but I don't see how anything you've mentioned changes the current situation that professional bakers are in when combating home bakers. For example:

A) If a home baker operates under the cottage food law but still does not have a business license, nor do they pay federal taxes for their business and the income it provides, they are still operating illegally and still run the risk of not only being shut down but being fined and audited to boot; just like they can be without a cottage food law in place.

B) A person refusing liability insurance is their own ignorance. In the case of a home baker, they are taking a huge gamble because their home owners insurance is not going to cover a business related claim, and without business insurance they could essentially be handing someone their house, car, any other current assets and future income depending on the injury because they have no coverage. Yes, it is an added expense for a reputable business, but you are protecting your livelihood and will likely be around because of that consideration 100x longer than any sketchy home baker.

C) If they arent legal, they probably wont advertise. If they are legal, but run the typical, small, underfunded home business, they dont have the budget to advertise. Either way, this is not a positive for them; its a positive for professional bakeries that can. I would imagine that because of that, they are LESS competition, as they have to rely on word of mouth and rock bottom pricing. Use this to your advantage. Being able to say youre licensed and insured makes consumers feel safe.

All in all I can see where the added competition is a pain in the butt, but youre going to have competition no matter what. No one likes change, but when it comes, you have to find a way to re-invent yourself and roll with it. Find a new niche, represent your business in a way that highlights various reasons why people should come to you instead of anyone else, home bakers included. If you run a good, professional business and have the best product out there people will come.

It took me a long time to come to terms with the idea that in a business, not every person is going to be your kind of customer. If a person wants to go to a sloppy, unprofessional, unlicensed home baker for a bargain basement cake...just accept that they are clearly not your kind of clientele and be done with it. If the home baker they go to is professional, licensed insured and has a great following because they do great work theyve earned it! And I would consider them fair competition. They are still at a disadvantage by not having a store front or a place where they can mass produce on the scale of a professional bakery. So, it seems to me that it is still fairly level playing field. People just need to learn to share the playground again.

TexasSugar Posted 29 Jun 2011 , 4:13pm
post #19 of 56

From the non business standpoint, I am happy to see the cottage law passed in Texas. I don't want to own a bakery, I don't want to do cakes as a full time business. I have a full time job that I can count on to pay my bills, that I have health insurance from and get great perks. I just enjoy doing cakes now and then, and while my job pays my bills I can't afford to put $100 into supplies for my SIL's Sister's Baby shower cake.

I just want to be able to do a few cakes a year for my family with out having to worry about having to pay a big fine if the health department comes knocking on my door.

And yes while home bakes don't have the same overhead, they do need to realize that they do have over head, and that they should charge more than barely enough to cover supplies. But honestly, if they are undercutting themselves, they are going to get burnt out and they aren't going to be able to keep up with it.

kimmisue2009 Posted 29 Jun 2011 , 4:26pm
post #20 of 56

TexasSugar for President!!!

sebrina Posted 29 Jun 2011 , 4:35pm
post #21 of 56
Quote:
Originally Posted by all4cake

My statement was based on how it IS in NC....My comments are based on what I know, for fact, to be true, in the area I do business.




Sorry, I was referring back to Florida, since that was where the OP was referring to particularly. We are held to the same standards, the laws do not differ for us. It is the inspections that will differ.

I find it personally offensive that people have such a problem with this. I will be using the same safety guidelines as any restaurant or bakery. I will follow those guidelines, not because I am afraid of being shut down or because I don't want to pay a fine. But because I care about what I do & the people I do this for! This is not just my 'name on the line', this is who I am. I want people to think of me as part of an event that made them happy. I guess maybe I am still new enough at this that it still matters to me on a personal level.

enchantedcreations Posted 29 Jun 2011 , 4:40pm
post #22 of 56

This is all relative......... small home based business will have small over head. Large based bakeries will have large over head. Hence; the cottage food law. It's geared to help the "small" business owner get going. And......there will always be the ones that "fudge" on their taxes, etc. It doesn't have to be home bakers. There are all types of business people out there who do not report everything. So just because I "might" be a home baker does not mean I'm not reporting every dollar earned.

lanana Posted 29 Jun 2011 , 5:17pm
post #23 of 56

For most states where the cottage food law applies, home bakers have to:

inform their customers they are home based bakers by placing stickers or business card etc with such information "bake good produced at a non inspected kitchen" along with business address. As a customer I have the decision of where I want to get my order from.

they cannot sell perishable products, fillings, frosting etc

they cannot sell more than certain amount of total gross per year. I believe Texas is $50.000, Ga $10.000, Fl $20.000 (not so sure about this one)

Some states also required that the baker has other income, this cannot be the only job he/she has.

What I believe is that this is a country of around 300 million people, there is space for everybody to FAIRLY have an income, job, work etc.
There are also customers that can pay $15 per serving, some others can barely pay for $1.50 per serving. I rather buy this cheap cake from the home baker in my neighborhood than to pay it to walmart.

LKing12 Posted 29 Jun 2011 , 5:25pm
post #24 of 56

Well I live in a state/commonwealth that does not have a cottage food law. I did as a gift for a friend's daughter this past weekend her bride's and groom's cake.
I must admit that every counter in the kitchen, breakfast nook and dining room was filled with some form of cake or icing. I have a rather large kitchen 14 x 20, but I swore that this was the last time that I was going to do a cake in my house. I can't imagine what it is for home bakers that have less room or children that need to be cared for and fed.
I am counting the days until my commercial kitchen is finished!

enchantedcreations Posted 29 Jun 2011 , 5:31pm
post #25 of 56
Quote:
Originally Posted by lanana

For most states where the cottage food law applies, home bakers have to:

inform their customers they are home based bakers by placing stickers or business card etc with such information "bake good produced at a non inspected kitchen" along with business address. As a customer I have the decision of where I want to get my order from.

they cannot sell perishable products, fillings, frosting etc

they cannot sell more than certain amount of total gross per year. I believe Texas is $50.000, Ga $10.000, Fl $20.000 (not so sure about this one)

Some states also required that the baker has other income, this cannot be the only job he/she has.

What I believe is that this is a country of around 300 million people, there is space for everybody to FAIRLY have an income, job, work etc.
There are also customers that can pay $15 per serving, some others can barely pay for $1.50 per serving. I rather buy this cheap cake from the home baker in my neighborhood than to pay it to walmart.





""Some states also required that the baker has other income, this cannot be the only job he/she has. ""


Really? .....
Can you enlighten me as to where you got this info?

Thanks,
Amy

jason_kraft Posted 29 Jun 2011 , 5:38pm
post #26 of 56
Quote:
Originally Posted by TexasSugar

And yes while home bakes don't have the same overhead, they do need to realize that they do have over head, and that they should charge more than barely enough to cover supplies. But honestly, if they are undercutting themselves, they are going to get burnt out and they aren't going to be able to keep up with it.



Agreed 100%. I'm sure home bakers (illegal or not) get burned out all the time due to underpricing, but the barrier to entry is so low there are always more home bakers to take their place. The income limit also doesn't help much when multiple home bakers open up in your area.

IMO a cottage food law license should require a mandatory class on how to price products in addition to the mandatory food safety class some CFLs require.

all4cake Posted 29 Jun 2011 , 5:44pm
post #27 of 56
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by all4cake

Other than an equipment investment and rent on a separate facility, my cost/overhead are the same as one with a storefront.


Equipment investment can run $100K+ in many areas, and hourly rent for a commercial kitchen can be $20-30/hour. That's a significant difference.





Unless you have to pay that place a separate amount for insurance on that facility and utilities it figures about the same as that of renting a kitchen. Come to think of it, my costs would be similar to that of renting a kitchen...yep.

Equipment investment can also be less than 10,000 for everything (not new, of course, and with quite a bit of legwork.). I replace/repair my kitchen appliances more often due to the increased usage.

I reckon there's extremes to everything. If one happens to find an equipped bakery to open-re-open...There ain't much difference.

jason_kraft Posted 29 Jun 2011 , 5:53pm
post #28 of 56
Quote:
Originally Posted by all4cake

Unless you have to pay that place a separate amount for insurance on that facility and utilities it figures about the same as that of renting a kitchen. Come to think of it, my costs would be similar to that of renting a kitchen...yep.



I'm confused...how are the costs of working from home similar to renting a kitchen? Insurance and license fees would be roughly the same, but when renting a commercial kitchen you also have additional inspection fees and the hourly cost of the kitchen itself plus rental of on-site storage.

Are you really saying that an additional $20-30/hour in costs wouldn't make a significant difference? Labor costs (including hourly rental fees) are by far the biggest cost component in our products.

The up-front investment for your own space usually includes infrastructure improvements to get the building up to code, i.e. fireproofing, plumbing, electrical work, etc. If you find space that already has all this taken care of, you can expect the rent to be significantly higher.

btrsktch Posted 29 Jun 2011 , 6:23pm
post #29 of 56

[quote="sebrina"]

Quote:
Originally Posted by all4cake


I find it personally offensive that people have such a problem with this.




And I find it personally offensive that you are are saying this to the people who have invested TENS OF THOUSANDS of DOLLARS into getting a storefront, or pay exhorbitant fees to rent a commercial kitchen. Personally, to get my storefront open cost me over $100k and I am grateful everyday that the only cakers in my area who can do this are the ones who are willing to invest the same.

jason_kraft Posted 29 Jun 2011 , 6:28pm
post #30 of 56

There's no need to polarize the issue with an us vs. them mentality...there is room in the marketplace for bakers with retail shops, bakers with rented commercial kitchens, and legal home bakers (in states with CFLs) as long as everyone sets prices fairly.

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