Question About Mail Order Cookie Business

Baking By HeatherHBA Updated 13 Jan 2012 , 6:49am by Orange_Blossom

HeatherHBA Posted 10 Jan 2012 , 6:15pm
post #1 of 13

Hi everyone, this is my first post! I am very new to baking but really enjoy it, especially decorating cookies. Obviously I need some time to practice, but if one day I get pretty good at cookie-decorating I would like to turn my hobby into a profitable enterprise. Etsy has several mail order cookie shops and this seemed like an easy way to begin. I have a feeling many of those shops are selling illegally out of their homes; I would prefer to rent a commercial kitchen. The problem is, when I try to estimate costs and pricing I'm not sure if I'm doing it right or being realistic. It seems like it may not really be possible to make a decent profit at cookies if you have to rent a kitchen. I wonder if you all who are more experienced could look at this and tell me where I may be off?

Cost estimate for NFSC Cookies
- Ingredients = 4.50 for 45 cookies = $.10 per cookie cost for ingredients
- Labor = $20/hour = est 5 minutes per cookie ? (this may be wayyy off) = $1.66 per cookie for labor
- TOTAL = $1.76 cost per cookie

Scenario - Rent a kitchen at $20/hr for four hours to make 48 cookies. Cost of labor and ingredients is $84.48. Cost to rent kitchen is $80. Total cost is $164.48. Cost of cookies is $192 charging $4 per cookie. Total profit is $27.52 ?

PS, I wasn't sure whether to post this in the cookie section or the business section, but chose the cookie section since the pricing aspect of my question would require the expertise of cookie-makers.

Heather

12 replies
jgifford Posted 10 Jan 2012 , 6:41pm
post #2 of 13

All else aside, if you're going to rent a kitchen for 4 hours, you'll want to be making more than 4 dozen cookies. Is this the minimum time for rental? I don't do decorated cookies and only make cookies for my family, but even then I don't bother for less than 6 or 8 dozen.

And, as others are going to point out, make sure you have all the legalities in place, etc., and add in costs of gas to and from the kitchen, packaging, shipping, etc.

writersblock15 Posted 11 Jan 2012 , 2:12am
post #3 of 13
Quote:
Originally Posted by jgifford


And, as others are going to point out, make sure you have all the legalities in place, etc., and add in costs of gas to and from the kitchen, packaging, shipping, etc.




If you mail across state line, there may be more regulations so be sure to check that out.

QTCakes1 Posted 11 Jan 2012 , 2:28am
post #4 of 13

Actually, there was another thread on this subject. It is a lot easier to sell actross state lines then locally. There isn't the same type of regulatons at all. I would PM FromScratchSF, cause she had all the 411 on it.

scp1127 Posted 11 Jan 2012 , 10:59am
post #5 of 13

The above information is incorrect. Selling across state lines is a federal FDA violation. Get the application, which nobody did in that thread and read it yourself. I am now selling across the country and everything I have posted has become a reality. The other companies involved have had to do exactly what I have been quoting (from the application). My information, which is all in the APPLICATION is correct.

My kitchen is FDA compliant, which was the very first requirement.

As I stated in the last thread, this came about to put tough codes on interstate and global shipping. In the scenario concocted in that thread, there are no rules, no sanctions, no inspectors. Basically, the scenario in that thread was that you could squat by a road with a fly infested cauldron and sell food as long as it was shipped. This is just wishful thinking. I guess all of those FDA shipping requirements with the minute details were just for fun.

If anyone on these threads has a license, correct me. But since my products are now sold around the country in a recent business expansion, and I have the information in the packet, and understand interstate commerce law because it pertains to my business, please be careful about spreading speculations as FDA law.

MimiFix Posted 11 Jan 2012 , 11:48am
post #6 of 13
Quote:
Originally Posted by scp1127

The above information is incorrect. Selling across state lines is a federal FDA violation. Get the application, which nobody did in that thread and read it yourself. I am now selling across the country and everything I have posted has become a reality. The other companies involved have had to do exactly what I have been quoting (from the application). My information, which is all in the APPLICATION is correct.

My kitchen is FDA compliant, which was the very first requirement.

As I stated in the last thread, this came about to put tough codes on interstate and global shipping. In the scenario concocted in that thread, there are no rules, no sanctions, no inspectors. Basically, the scenario in that thread was that you could squat by a road with a fly infested cauldron and sell food as long as it was shipped. This is just wishful thinking. I guess all of those FDA shipping requirements with the minute details were just for fun.

If anyone on these threads has a license, correct me. But since my products are now sold around the country in a recent business expansion, and I have the information in the packet, and understand interstate commerce law because it pertains to my business, please be careful about spreading speculations as FDA law.




It's true, for businesses the FDA has requirements for mailed food products across state lines. Just because etsy gives non-compliant kitchens an illegal base, does not mean it's okay for everyone to avoid the regulations. Sorry, but scp1127 is correct, that is the law.

scp1127 Posted 11 Jan 2012 , 12:01pm
post #7 of 13

I forgot to add that while I have been complying with authorities for this national contract, not one time has any agency said to me, "You didn't need to go through all of that trouble. We didn't mean it. It was a joke." In contrast, I have found that the word-for-word regulations spelled out in the code for interstate and global shipping to be the exact standard to which we are being held.

Part of my contract will include sales to federal agencies. They also don't tell us that the rules were just a suggestion.

HeatherHBA Posted 11 Jan 2012 , 3:51pm
post #8 of 13

Thanks everyone for your help! I've been doing more research on the issue and there does seem to be a lot of incorrect information floating around out there. I've got a call in to the VA Dept of Agriculture and I'll probably also end up having to contact the FDA directly. I am most definitely *not* interested in violating state and federal regulations so that's not an issue. My problem is that it seems like the cost involving in selling legally is too high to be able to make a decent profit.

jason_kraft Posted 11 Jan 2012 , 4:08pm
post #9 of 13
Quote:
Originally Posted by HeatherHBA

My problem is that it seems like the cost involving in selling legally is too high to be able to make a decent profit.



That can be true for low volume shops -- but if you can make 2 or 3 times as much product in the same amount of time (5 minutes per cookie seems a little high) the numbers should work out. Supplementing retail and mail order sales with local wholesale orders will help, it will be very difficult to scale up with only mail order unless you have a significant competitive advantage.

HeatherHBA Posted 11 Jan 2012 , 7:40pm
post #10 of 13

Thanks Jason, I was wondering whether I should really be working more quickly! Speed seems to be the key to profitability.

As for the idea of mail order sales, for now that is on hold. I found out that Virginia allows an exemption from state inspection for baked goods that do not require time or temperature control for safety after preparation (which I assume includes cookies?? not really sure what "time control" means). They just have to be labeled as not having been inspected. So I think my goal at this point is just to sell locally and see how it goes. If it goes well, then maybe after a year or so I'll put together a plan for expansion.

Thanks again everyone for your input! I look forward to being a part of the community here.

Heather

scp1127 Posted 12 Jan 2012 , 11:46am
post #11 of 13

Heather, the cost for shipping is high. That is why most bakeries who now ship, first started out locally, achieved great success, and had the customer base plus the funds to make the venture profitable. A complete business plan is easier to develop if you already have true numbers from an existing business where the shipping would be an expansion.

Get the application and include the requirements in the business plan. I was approached by a successful online business to ship cakes nationally, but the business plan didn't work for my personal needs (volume could get too high, no control on volume). That offer is on the back burner. Next came an opportunity that did fit my needs and my products have gone national. This contract has a set production schedule with increases in increments that are pre-planned. Careful planning is the key.

bonniebakes Posted 12 Jan 2012 , 4:29pm
post #12 of 13

Legalities aside and focusing on your original question about the cost/time for 4 dozen cookies, there are few things to consider regarding your estimate for 4 hours....

Everything - from preparing the dough to packaging - has to be done in the rental kitchen, so much more time needs to be included in your estimate. Making and mixing icing, coloring it, bagging it, making dough, baking cookies, clean up... it all take time you have to consider. Perhaps I am a slow decorator, but 5 minutes per cookie (purely for decorating) is not much time, especially if you are using multiple colors, have "levels" of decorating or need to add details. When I considered renting kitchen space, I was estimating 10 - 15 hours for about 5 dozen cookies.

Orange_Blossom Posted 13 Jan 2012 , 6:49am
post #13 of 13

I can answer your question about time and temperature control, at least...certain foods have specific temperatures they can be held at for certain periods of time (hot foods, for example, have to be reheated to 165 degrees before serving within a two hour period, and then has to be held at at least 135 degrees and checked every four hours...cold foods have their requirements, too).

So food like a RI decorated sugar cookie, since it is not potentially hazardous, would not be subject to this in the same way that, say, a cheesecake would be (because that has a potential for bacterial growth and is considered a TCS food - Time/Temp Control for Safety).

Quote by @%username% on %date%

%body%