How To Take The Cake. . . .

Business By KuyaRomeo Updated 25 Aug 2011 , 1:59am by KuyaRomeo

KuyaRomeo Posted 17 Aug 2011 , 12:18pm
post #1 of 21

Hello everyone!

First off, I am new to the forum. Have peeped in from time to time looking for information or a little help now and again, but today is my first official day as a member.

Background: I worked for several years decorating cakes in a high end bakery here in New York. It put me through college, where I became a computer programmer (go figure!! lol). But I never ever lost the interest and passion for decorating cakes.

Over time, I missed it so much that I started building up my home kitchen with high grade baking pans, cake tools, wheels, kitchen aid mixers, hundreds of dollars in tips, bags, etc . . . and I began making cakes for family and friends. Had never baked before, but it is certainly not hard to follow a recipe . . . so I was off and running with home made cakes from scratch and high quality ingredients, and full 100% butter - butter cream. Home made filling. Before you know it . . . I have friends and family and co-workers wanting to place orders.

So, here I am . . . wanting to do the right thing. Wanting to sell a few (maybe 10 - 15 per month) cakes legally, and not under the table. Not looking to open a bakery, just make sure I don't cheat the government of their share . . . trying to just be honest here. Sounds easy, right? WRONG.

Contacted Food & Agriculture dept. here in NY and they were super nice. Explained that NY has a "Home Processors Exemption" whereas you can have your home (non commercial) kitchen inspected, and then qualify for selling your (very limited, non perishable) baked goods that you have made at home. I would qualify for this, as I meet the requirements.

Stipulation: you can't sell to the public directly. Can't take a special order, for say . . a Birthday Cake. You can only sell to wholesale (Restaurants, catering businesses, farm markets, etc). He explained that once you "take an order" for a specialized cake or event cake . . you are considered a retail bakery and will need a commercial kitchen.

GREAT.

I find out that I can co-rent a commercial kitchen in my area for $400/month. Which is not bad - BUT . . . reminder, this is more of a hobby and I am only making about 10 cakes per month. This will no way afford me the ability to rent a kitchen.

I struggle for finding the right way to do this. They have made it so hard for me to do business "above the line" rather than under the table.

Anyway, I have some questions that maybe some of you, who have shared my struggles/experience can help shed some light on:

1. What are the risks/consequences of selling a few cakes from home without being approved? A small fine? A large fine? A slap on the wrist with a scolding "Don't do that 1".

2. We gout our DBA, business cards, etc . . . so that we can look professional because I am considering trying to get a home exemption and doing my best to land a small deal with a local restaurant, banquet hall . . etc. This way I can get the number of cakes I need to finally be able to pay for the co-rented kitchen . . . Has anyone had any success in being a home baker and landing a small contract with local businesses?

3. Label printers (for ingredients, contents, etc). What does everyone use? I see I can order labels but that is expensive. I found lots of label printers that range from $75 - $2,500. What do you use? I certainly want to print something professional, with our logo . . even if black and white.

4. Cookie, Cake, Pie packaging? Where can I order small amounts of personalized cake boxes, etc?


I have lots of questions, but will leave it at these for now . . .


Thanks to everyone for their help and information.

20 replies
MimiFix Posted 18 Aug 2011 , 12:26am
post #2 of 21

Greetings KuyaRomeo,

The NY Home Processor exemption will allow you to sell non-hazardous (non-refrigerated) baked goods. It's a free permit so I suggest you go ahead and get it. You'll need your water tested if you're not on city water, and they require a sample of a product label. Labels can be made on your computer using software that's probably already loaded in your computer. Or purchase address labels from any office supply store and follow the package directions.

Retail sales are only allowed at certain venues such as farmers' markets and green markets. But any wholesale account is fine. You're on the right track by thinking about setting up a relationship with a commercial food establishment.

Good luck!

AmysCakesNCandies Posted 18 Aug 2011 , 12:56am
post #3 of 21

I'm not in NY, so I can't specifically help you there. I am fortunate enough to live in a state that makes it relatively easy to legally sell cakes from your home.

It is possible to get in with busineses, I sell Cake balls to 2 small coffe shops in my area. I just went in with a brochure stating what they can order and the pices and a few samples and sold myself to them. I primarily do wedding cakes and I do not work with a venue on those, I decided to try wholesale in cake pops to use up wedding cake scraps and thats why I decided to approach the coffee houses. I also have a few local small businesses that I make & deliver cookie packages for at Christmastime for thier employees and local clients. The first company I got because I knew someone there, but the next two callled after recieving a box from the first company. I just put a business card in the bottom of each cookie gift box.

When I lived in Illinois I rented a kitchen space, I just had to figure the rent into my cake prices.

As far as labels I have an inkjet at home and use Avery labels (available at any office store), they have templates online to set up the labels for printing.

Good Luck, it can be frustrating when you are trying to do everything right and the red tape makes it almost impossible.

MimiFix Posted 18 Aug 2011 , 1:15am
post #4 of 21
Quote:
Originally Posted by KuyaRomeo

Hello everyone!

1. What are the risks/consequences of selling a few cakes from home without being approved? A small fine? A large fine? A slap on the wrist with a scolding "Don't do that 1".




For the first offense, you will not be arrested. Police do not show up at your door... You will receive a cease and desist order. That means you must immediately stop work and do whatever they have instructed.

If you persist, they will confiscate/destroy your products and revoke your permit. You may receive a citation and will need to show up in court; be prepared for a fine.

You can follow the rules, or not. What you do, how you proceed in setting up a business, is a matter of your personal comfort level.

leah_s Posted 18 Aug 2011 , 1:18am
post #5 of 21

It sounds like you need to visit all the local wedding venues and strike up a deal with them. The order is placed thru them and you wholesale to them.

matthewkyrankelly Posted 18 Aug 2011 , 1:36am
post #6 of 21

Leah is right. The deal should be something where you generate the business and give a percentage to the owners. They do almost nothing except pass the food to the customer. However, they will want something for the relationship and the liability and protecting the name of their business.

It can be done with someone who isn't doing it now.

scp1127 Posted 18 Aug 2011 , 4:00am
post #7 of 21

But if you are limited to non-perishible, won't that knock out all of your recipes? It would mine.

MimiFix Posted 18 Aug 2011 , 11:01am
post #8 of 21
Quote:
Originally Posted by scp1127

But if you are limited to non-perishible, won't that knock out all of your recipes? It would mine.




The NY cottage law was agriculture-based, meant to help farmers increase their income by creating value-added products. This allowed farmers to use their excess produce without having to meet all the requirements of the commercial kitchen. But the kinds of allowed products are limited for safety reasons.

Unfortunately, this excludes the decorated cake business because of limiting (1) direct retail sales other than at agricultural venues and (2) production of non-hazardous foods. For some decorated cakes there are ways around this, such as selling wholesale the way Leah suggested. But there's no way around the rule of non-hazardous foods.

I always suggest to my students that if they have no business background and no food service experience, they start with the no-fee Home Processor exemption and limit their products. Once they learn about running a business and they are used to the daily reality of food service, they can expand to the next level and use a commercial kitchen.

If someone is a dedicated cake decorator, they must follow the rules or start up a business based on their comfort level. Jason is way more direct than I am. icon_smile.gif

scp1127 Posted 18 Aug 2011 , 12:39pm
post #9 of 21

Mimi, that's what I thought. If the OP must begin her business without her great recipes, this is a problem. Either she will get the reputation for recipes without her fine ingredients, or once she saves the money, she must totally re-invent herself and hope the cakes of the past with non-perishible ingredients do not have an effect on what she is ultimately trying to achieve.

I am not saying one is better than the other, but the clientele for one is usually not a crossover for the other. If you start with one product, changing mid-stream will be difficult.

In this scenario, waiting and saving for a commercial kitchen rental will start her on a path that she can continue to build.

MimiFix Posted 18 Aug 2011 , 1:00pm
post #10 of 21
Quote:
Originally Posted by scp1127

Mimi, that's what I thought. If the OP must begin her business without her great recipes, this is a problem. Either she will get the reputation for recipes without her fine ingredients, or once she saves the money, she must totally re-invent herself and hope the cakes of the past with non-perishible ingredients do not have an effect on what she is ultimately trying to achieve.

I am not saying one is better than the other, but the clientele for one is usually not a crossover for the other. If you start with one product, changing mid-stream will be difficult.

In this scenario, waiting and saving for a commercial kitchen rental will start her on a path that she can continue to build.




You're absolutely right, Susan. We all have choices and people must decide what is best for their lifestyle and ultimate goals. Creating a business plan first can be highly beneficial. That plan should lead people to do serious market research and have them map out everything they need to do before moving ahead.

My heart is filled with dread when I see posters who write, "Hooray for me, I just signed a storefront lease. What should I do now?" Cake Central is a great resource and support system, but there's just so much we can do for our fellow CC members.

luckylibra Posted 19 Aug 2011 , 1:06am
post #11 of 21

I am curious as to why she cannot use her recipes? Maybe I missed it but in Indiana HBV prohibits Potentially hazardous.. is that different that perishable and if so.. how could anyone sell anything as it is eventually perishable..

"Potentially hazardous foods (PHF) cannot be sold by a home based vendor (HBV)

PHFs have ingredients, packaging or storage that allows disease-causing bacteria to grow, potentially leading to human illness.

Foods that have a pH greater than 4.6 and a water activity greater than 0.85 allow disease-producing bacteria to grow and are considered to be PHFs. "

jason_kraft Posted 19 Aug 2011 , 1:47am
post #12 of 21

The line for potentially hazardous (at least in NY) is that the finished product must not require refrigeration. If buttercream made with real butter is OK at room temperature (not sure since we only make dairy-free buttercream) then there shouldn't be a problem.

Re labeling, I find it's much more cost-effective to buy labels and print them yourself (use a laser printer, not an inkjet). I use Onlinelabels.com to order oval labels, print our logo on them, and stick them on a plain pink cake box.

jason_kraft Posted 19 Aug 2011 , 1:59am
post #13 of 21

The legal situation in NY wrt home baking opens up an interesting opportunity...if selling wholesale is OK but retail is not, then a small shop set up solely to act as a retail conduit for home bakers could provide a pickup location and delivery service that would allow the home baker to sell to the public -- the home bakers could even handle everything themselves as long as the retail side of the transaction was under the umbrella of the shop (i.e. the home baker would be "selling" the cake to the shop, then acting as a contractor for the shop in the capacity of customer pickup/delivery) and not the home baker's business directly. A single retail conduit could provide this service to any number of home bakers.

There would probably be some expense associated with licensing as a retail shop, but there would be no kitchen so it shouldn't be nearly as expensive as a full-fledged bakery with a commercial kitchen.

The prohibition of internet advertising could also be worked around by having the retail shop handle all the advertising, although it's not clear if the retail shop would be allowed to mention the name of the home bakery in its advertising. This could get a little tricky if a single shop retails for multiple home bakeries unless they are all targeting distinct markets.

MimiFix Posted 19 Aug 2011 , 2:34am
post #14 of 21
Quote:
Originally Posted by jason_kraft

The legal situation in NY wrt home baking opens up an interesting opportunity...if selling wholesale is OK but retail is not, then a small shop set up solely to act as a retail conduit for home bakers could provide a pickup location and delivery service that would allow the home baker to sell to the public -- the home bakers could even handle everything themselves as long as the retail side of the transaction was under the umbrella of the shop (i.e. the home baker would be "selling" the cake to the shop, then acting as a contractor for the shop in the capacity of customer pickup/delivery) and not the home baker's business directly. A single retail conduit could provide this service to any number of home bakers.

There would probably be some expense associated with licensing as a retail shop, but there would be no kitchen so it shouldn't be nearly as expensive as a full-fledged bakery with a commercial kitchen.

The prohibition of internet advertising could also be worked around by having the retail shop handle all the advertising, although it's not clear if the retail shop would be allowed to mention the name of the home bakery in its advertising. This could get a little tricky if a single shop retails for multiple home bakeries unless they are all targeting distinct markets.




Very thoughtful, Jason, thank you for your insight and ideas. Unfortunately, the one regulation we cannot circumvent is the prohibition of non-hazardous foods.

jason_kraft Posted 19 Aug 2011 , 2:39am
post #15 of 21
Quote:
Originally Posted by MimiFix

Unfortunately, the one regulation we cannot circumvent is the prohibition of non-hazardous foods.



Has there been a definitive decision on whether or not buttercream made with real butter is considered potentially hazardous? I would think the sugar in the buttercream would keep it preserved enough that refrigeration would not be required. Apart from things like cheesecakes this shouldn't be too much of an issue.

jules5000 Posted 19 Aug 2011 , 2:58am
post #16 of 21

MimiFix: I have a recipe that a very good friend of mine gave me that is not perishable( out of the fridge). The only time that she refrigerates it is if she is going to be going out of town for awhile. She has been in business for 40+ years. I have used it ever since she gave it to me. It tastes wonderful. She tells me it is good for at least 2 weeks if not longer, but she has never had it around that long as she stays very busy. If you would like it, PM me and I will send it to you.

MimiFix Posted 19 Aug 2011 , 3:00am
post #17 of 21
Quote:
Originally Posted by jason_kraft

Has there been a definitive decision on whether or not buttercream made with real butter is considered potentially hazardous? I would think the sugar in the buttercream would keep it preserved enough that refrigeration would not be required. Apart from things like cheesecakes this shouldn't be too much of an issue.




Jason, we could really use you on staff at the Dept of Ag & Mkts. Currently, every inspector has their own opinion about buttercream. The answer we get changes daily.

jason_kraft Posted 19 Aug 2011 , 3:23am
post #18 of 21
Quote:
Originally Posted by MimiFix

Jason, we could really use you on staff at the Dept of Ag & Mkts. Currently, every inspector has their own opinion about buttercream. The answer we get changes daily.



I doubt they would let me telecommute from California. icon_wink.gif

I can completely understand each inspector doing things their own way, but it doesn't make sense not to have a clear written definition of which ingredients are allowed under the NY HPL. Ag & Markets got a new commissioner a few months ago, if the inspectors don't want to commit to a binding written definition you may be able to escalate to the commissioner and possibly even amend 276.3 to include that definition.

Actually I can't even find the full text of NY AGM 276.3 online, it jumps right from 263 in article 22 to 281 in article 23.

http://codes.lp.findlaw.com/nycode/AGM

MimiFix Posted 19 Aug 2011 , 3:43am
post #19 of 21
Quote:
Originally Posted by jason_kraft


I can completely understand each inspector doing things their own way, but it doesn't make sense not to have a clear written definition of which ingredients are allowed under the NY HPL. Ag & Markets got a new commissioner a few months ago, if the inspectors don't want to commit to a binding written definition you may be able to escalate to the commissioner and possibly even amend 276.3 to include that definition.

Actually I can't even find the full text of NY AGM 276.3 online, it jumps right from 263 in article 22 to 281 in article 23.

http://codes.lp.findlaw.com/nycode/AGM




It's not been easy to navigate the laws or receive any consistent response to questions. I'm on the Board of Directors for the NY Small Scale Food Processors Association and I've spoken with a few people at Ag & Mkts. Hopefully we'll see some changes soon.

jules5000 Posted 21 Aug 2011 , 3:12am
post #20 of 21

Hope everything comes together for you soon, Mimifix: I know how frustrating dealing with GOvt. agencies can be.

KuyaRomeo Posted 25 Aug 2011 , 1:59am
post #21 of 21

Thank you to all of you who replied and have shared some great information.

I have taken a step in writing a letter to my congressman . . . one letter won't amend a law, but I had to voice my opinion, regardless.

We are allowed to place our products in the hands of a reseller . . . so why can't we make to order (non perishables) directly to the consumer. Both scenarios put our products in the hands of consumers, so obviously it is not the health and safety that's an issue.

Many states allow this, on a small scale . . . and so I am asking NY to do the same.

I will create a website with a petition, if I have to, or if it will help . . this NYS home food processor law is 99% there, but we need to force our senators, assembly to hear us and take the final step.

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