canadiancookie Posted 23 Apr 2013 , 1:36pm
post #1 of

Hello to everyone!

 

I have a shop in Toronto that has become a kitchen incubator or sorts. 

 

The short version is I now have just about finished building our second commercial kitchen which we use for rental to help support small biz. I have many businesses ready to sign in once we are complete as there really isn't a lot of commercial kitchen space available in our area. 

 

While going through the process of building our first kitchen, and then second kitchen, I started thinking about how I would expand my new kitchen rental business and my thoughts came back to my days as a cake decorator. 

 

I would love some feedback and honest opinions from all of you before I move forward with the next phase of my plans. 

 

My shop is currently divided up into a kitchen with a small dine in and retail area on the main floor. Big double doors open up from the kitchen to the dining room to allow for cooking classes and demo's. once you go down the stairs, I have a second kitchen, storage, office space, washrooms etc. 

 

I am considering getting out of the restaurant biz all together as I find I have more passion for helping new food biz launch, and have some big plans for industry shows and ways of promotion for my clients, and just small biz in general. 

 

I was thinking about turning my front dining space into a bakers studio. have 6-8 individual work stations, a few convection ovens, mixers, an air brush station, etc..... the ovens would be shared and the space would be open like a studio, but each client would have their own work table....

 

I know when I was baking, I had to stick to friends and family because I just could not afford the kitchen space. I have also had to deal with a few bakers "pretending" to work from my kitchen but actually baking from home to save their money. So I was looking for ways to make this more feasible for small bakers. 

 

Would you use a space like this? Would you join a "bakers club" of sorts....

Would you pay hourly? Or would you prefer to pay a monthly fee giving you access 24/7? How much would you be willing to pay hourly for this space?

How much would you be willing to pay for a monthly membership??

Would you be bothered sharing a studio space? 

Would you find it helpful to be in a small community with other bakers where it would be possible to share resources, tips, and other useful things?

Would it be more financially feasible to have equipment shared by all, decorating tools etc......

 

ANY feedback you have would be great!!!

 

Thank you all for reading my extra long post and Thank you in advance for any thoughts you may have!!

 

Sonya

 

*Mod edited to remove bits not allowed.

39 replies
SystemMod1 Posted 23 Apr 2013 , 8:04pm
post #2 of

I've allowed this thread to remain because I think it asks some really insightful questions from the landlord perspective that don't get discussed very often here.  Lets keep advice and feedback very general and in no way a direct solicitation.

 

Thank you.

canadiancookie Posted 23 Apr 2013 , 8:28pm
post #3 of

Sorry. I didn't mean to offend. I am just interested in feedback. 

jason_kraft Posted 23 Apr 2013 , 9:08pm
post #4 of

ADepending on how representative your shop is of your prospective tenants, you may be able to answer these questions yourself by looking at the business plan for your shop as if you had to rent kitchen space. Depending on your other costs and market prices for various products you should get a pretty good idea of how much you would be able to spend on rent and still make a decent wage and profit -- this will be your maximum rent. Don't forget to factor in costs for renting dry storage, refrigerator space, and freezer space.

On the other side of the equation, you need to take into account the costs you will incur (operating and overhead) from tenants using kitchen areas and prep areas. Adding profit to these costs will give you your minimum rent, hopefully this will be lower than the maximum rent outlined above.

To discourage "pretend" tenants I recommend a minimum membership fee on a monthly and/or yearly basis (we paid $1000/year for the kitchen we rented). For the rent itself, there's no reason you can't offer both an hourly rate and a monthly "unlimited" rate, with the hourly cost sliding down as tenants purchase more hours.

There's nothing wrong with sharing space (and some equipment like ovens and large mixers) but remember that your tenants will probably be competing against each other in the marketplace so too much sharing may not be appropriate. You also need to make sure tenants will clean up after themselves and be ready to charge them accordingly when they don't.

Regarding the layout, we worked in one rental kitchen that was an open studio setup, and one rental kitchen where each area was clearly separated with walls (not fully enclosed, more like dividers). It was much easier to work in the latter, since with an open studio people tend to "spread out" beyond their area.

FromScratchSF Posted 23 Apr 2013 , 9:22pm
post #5 of

I'm glad this didn't get deleted because I think you asked some great questions.  I work in a commercial kitchen, and the reason I work in the one I do is because it has a separate baking area with a separate walk-in.  Savory chefs cannot ever use our (MY!) ovens, no matter how full the main line is, and only baked goods and baking ingredients can be stored in our walk-in.  

 

I've only ever tried to use he burners in the main kitchen once - I needed to cook a huge batch of SMBC while my assistant was making caramel and I only have one induction burner in the bakery.  So I went out on the line.  It was a full house, like it always is there.  Next to me I had a dude frying massive batches of chicken, the huge tilt cooker had a massive batch of tiki marsala in it etc.

 

After I got my eggs cooked up I took them back to the bakery to whip and add all 20 lbs of butter.  When it was done mixing, my entire batch of buttercream tasted like onions and curry.  icon_mad.gif  Now I know better and don't ever cook out there.

 

The kitchen I rent from is the oldest, most decrepit in the city, and it's located, literally, in one of the most dangerous parts of town.  There are much fancier places with reputations more suited to the reputation of my baking business, but I ain't leaving where I am any time soon because *none* of them have separate baking areas, ovens, fridge space or storage.  I can't imagine how others bake and decorate cakes in the middle of savory cooks doing their thing in commercial kitchens.

Stitches Posted 24 Apr 2013 , 4:31pm
post #6 of
Quote:
Originally Posted by canadiancookie 

I know when I was baking, I had to stick to friends and family because I just could not afford the kitchen space. I have also had to deal with a few bakers "pretending" to work from my kitchen but actually baking from home to save their money. So I was looking for ways to make this more feasible for small bakers. 

 

Would you use a space like this? Would you join a "bakers club" of sorts....

Would you pay hourly? Or would you prefer to pay a monthly fee giving you access 24/7? How much would you be willing to pay hourly for this space?

How much would you be willing to pay for a monthly membership??

Would you be bothered sharing a studio space? 

Would you find it helpful to be in a small community with other bakers where it would be possible to share resources, tips, and other useful things?

Would it be more financially feasible to have equipment shared by all, decorating tools etc......

 

ANY feedback you have would be great!!!

 

Thank you all for reading my extra long post and Thank you in advance for any thoughts you may have!!

 

Sonya

 

*Mod edited to remove bits not allowed.

There's so many points in your post and other peoples responses I barely know where to begin.

 

Maybe if I list some of the random issues I had, would help you?

 

You must really maintain your equipment. I'd get really upset when I'd needed the 60qt mixer and it wasn't working. It completely ruined my production schedule and how I prepped before going to the kitchen.

 

Or times when I couldn't find all the parts I needed to make the equipment work.

 

Or the time I went to make buttercream just to discover the owner didn't buy the whip attachment for the large mixer and didn't understand why anyone would need it.

 

Then you turn to the smaller equipment and discover everyone else has used it all and there isn't a mixer available.

 

I couldn't get my egg whites to whip because their soap system was empty and everyone had been washing dishes for god know how long with-out any soap in the water. I lost time and materials!

 

They had 4 kitchens but only one had one double stack convection oven and just about everyone who rents there are bakers. So if someone else had the ovens tied up, you couldn't bake off your product, period.

 

The refrigerator's need to be separated into bakers and savory so the smells don't co-mingle. Savory people put hot food (soups) unwrapped to in the coolers...then left them over night steaming my cakes and stinking them up.

 

The refrigerators and freezers were the wrong size so you couldn't fit a full sized sheet pan straight into your shelf. That makes you spend more time figuring how to package/seal up your products and purchase smaller sized equipment just to use their space. When you paying by the hour, seconds count and having to do everything the hard way or with double steps was killer!

 

They had a bunch of sheet pans, bowls etc... but people stole them all, so now you must bring everything you can think of....and never have a problem because you couldn't reach for plan B. if you didn't bring plan B with you.

 

Pricing:

 

The place I use cost $25.00 per hour with a min. of 2 hour block each time you book. When I make a cake I need to bake it and let if cool for hours, after it's cool I can decorate. So it costs me $50.00 (their min.) to bake the cake. Then I have to book another $50.00 (2 hour min.) to decorate it. I can't build a business off of that.

 

The top shelf of the cooler costs as much to rent as the bottom. But the top shelf has less then a 12" clearance and the bottom shelf has over 24". If I make a wedding cake it must be placed on the top shelfs so no one can spill on it or drop crumbs on it. But the top shelf isn't tall enough to place a double stacked cake on and it drips condensation. So if I have a wedding cake I have to buy 3 shelfs for $75.00 a month.

 

So now I have $175.00 into rental fees just to make a double stacked cake. I can't run a business with that kind of over head.

 

I tried to negotiate a monthly rental fee with this owner and the best price I could get was $2,500. per month. If I had that kind of money I could rent a prime retail location! That was offering to work the grave yard hours when no one ever rented the kitchen anyway.

 

Space:

 

It was a huge warehouse and the sinks and small wares were on one side of the place. So everyone wanted the two kitchens closest to the sinks. The time I'd waste running around this huge building was a horrible time waster!!!!!

 

The community mixer was off in another direction no where near a sink or oven. Again creating a lot more running and a hard to work in space.

 

............that's just the start of things. I'll try to help you if I can because I really believe these kitchens can work if the owner is willing to listen and work with their customers.

 

Oh, my favorite, the owner would loose track of who paid and who didn't, and for how many hours you rented. So you could get double billed and there's nothing you could do about it.

 

Every single little change/issue you needed to call the owner to get their approval (and they were out of the country often). If you got stuck in traffic, too bad, so sad. If the cake got cancelled oh well you booked the time, no cancelling. But if their equipment wasn't working they didn't refund your money. If you couldn't get near an oven, that's your problem, no refunds.

canadiancookie Posted 24 Apr 2013 , 5:38pm
post #7 of

Wow. You guys are great!! Thank you for the feedback so far! SOOOOO much appreciated! 

 

The kitchen we are opening will be strictly sweet. My other kitchens are set up better for the savory guys and I prefer to keep those kitchens rented one business per kitchen at a time. 

 

I think a studio type setting is more workable in a bakers setting, it also would help keep the cost for bakers down by having a number of businesses in at the same time. 

 

I do like the idea of half walls/dividers....a little privacy and also allows for some shelving for storage. Thank you. 

 

I love hearing all the complaints and issues you've come across. It is very helpful to me as I want to make it an enjoyable and efficient work space! 

 

I'm a bit strict with things like cleanliness and supplies. I know when I happen to be missing even one pairing knife. But it is definitely something to keep in mind. 

 

8 workstations. Each one fitted with their own bowls, utensils, small 6qt mixer, food processor, etc. (would help know when something is missing and who might be responsible for it I would think)(we also have security camera's onsite currently...and have never come across any issues in our two years with theft) A wall with what I was thinking would be 3 sets of double stacked convection ovens. An air brush center. Is 6 ovens enough with 8 stations? I would assume not everyone will be baking at the same time. 

 

You mentioned a 60qt mixer. Do you all think that is going to be a common request? Something of that size? (I was never busy enough to require that) Would one of those suffice? With a few 20 qt? Is 20 qt too small?

 

I would like to see a sheeter in there. (only because I have been asked once or twice if I have one currently) Is this something most would use? Or have you managed without it?

 

I currently use commercial double door fridges, which I can fit a full size sheet pan in. Are these the same size you are referring too? I wonder if I would be better off with a walk in?

 

What else is a must have? 

 

 

Pricing:

 

I know the market is different everywhere. However I was thinking about setting the place up into shifts and charging a monthly fee. For ex. days, afternoons, nights, and the weekend warrior shift. 

 

Would you pay $800 a month to use the kitchen whenever you wanted in the shift of your choice? That would be 40 hours a week (days/aft/midnights/or weekends)....break it down is about $5 an hour. Would you pay more? How much more? Would you only pay less? How much less?

 

In my current kitchens I charge MUCH more then this, however I do not like having more then one business in there at a time. I think any baker who is interested in having a more private space could rent one of these kitchens. I have had a couple bakers here in the past, however I feel guilty charging them $25 an hour knowing that they are mostly just sitting there decorating.....so I charge less for them, however it's a catch 22 because I know I could be making more renting to a caterer or food producer. 

 

I strongly believe these kitchens can work too! My current kitchens have been working great. I've had to deal with a few messy caterers, but once you threaten to charge them insane cleaning fee's, they suddenly remember how to clean. 

 

 

Please keep any feedback at all coming! Love it! 

liz at sugar Posted 24 Apr 2013 , 5:46pm
post #8 of
Quote:
Originally Posted by FromScratchSF 

I'm glad this didn't get deleted because I think you asked some great questions.  I work in a commercial kitchen, and the reason I work in the one I do is because it has a separate baking area with a separate walk-in.  Savory chefs cannot ever use our (MY!) ovens, no matter how full the main line is, and only baked goods and baking ingredients can be stored in our walk-in.  

 

I've only ever tried to use he burners in the main kitchen once - I needed to cook a huge batch of SMBC while my assistant was making caramel and I only have one induction burner in the bakery.  So I went out on the line.  It was a full house, like it always is there.  Next to me I had a dude frying massive batches of chicken, the huge tilt cooker had a massive batch of tiki marsala in it etc.

 

After I got my eggs cooked up I took them back to the bakery to whip and add all 20 lbs of butter.  When it was done mixing, my entire batch of buttercream tasted like onions and curry.  icon_mad.gif  Now I know better and don't ever cook out there.

 

The kitchen I rent from is the oldest, most decrepit in the city, and it's located, literally, in one of the most dangerous parts of town.  There are much fancier places with reputations more suited to the reputation of my baking business, but I ain't leaving where I am any time soon because *none* of them have separate baking areas, ovens, fridge space or storage.  I can't imagine how others bake and decorate cakes in the middle of savory cooks doing their thing in commercial kitchens.

 

ALL OF THIS!  I find it virtually impossible to use our restaurant kitchen for baking . . . stuff smells like garlic, every walk in/prep station has got something "savory" (read offensive) smelling in it that keeps me from storing any baked good in it.  If smoked salmon has been in the oven, you have to reverse the convection fan to try and get every bit of odor out of it.  My only solution has been to bake when no one is working, and you have to be able to blast freeze almost everything you make, so it won't pick up odors.

 

Liz

jason_kraft Posted 24 Apr 2013 , 5:57pm
post #9 of

AThe commercial kitchens I've seen usually have separate areas for prep work vs. cooking/baking. Renting a prep area costs less than a cooking/baking area.

How big of a space do you have? 8 workstations will get pretty crazy unless you have a huge space. Since you have 3 double ovens you may want to go with 3 cooking/baking areas with the rest of the space prep only.

jason_kraft Posted 24 Apr 2013 , 6:02pm

A

Would you pay $800 a month to use the kitchen whenever you wanted in the shift of your choice? That would be 40 hours a week (days/aft/midnights/or weekends)....break it down is about $5 an hour. Would you pay more? How much more? Would you only pay less? How much less?

That seems like a pretty low price, it might be OK for off-peak time only but if your $5/hour tenants are reserving prime times and crowding out your $25/hour tenants you are losing a lot of money.

How much is your fixed overhead for the space, and what is the operating cost per hour based on different utilization scenarios?

Stitches Posted 24 Apr 2013 , 6:47pm

Everyone needs their own ovens. You can't share ovens, it doesn't work.

 

What temp. is it set at? Everyone bakes at a different temp..

 

What if the other persons stuff burns...it ruins the smell of your items in the same oven.

 

Every shelf in every oven bakes differently. For example the top shelf always browns more then the middle. Someone making macaroons doesn't want a browned cookie.

 

I LOVE the idea of charging different rates for different areas of the kitchen. I'd pay more for oven time considering there's at least 8 racks in a double stack oven, so you can bake a lot at one time. But then when you decorate or package items, things that take a lot of time paying a lesser fee would be great.

 

I need the bigger mixers. It's why I rent kitchen space. It's just like using a bigger oven. If you can't work in volume it's cheaper to cheat and work at home.

 

A 20qt. mixer does nothing for me. If I have to make multiple batches of frosting for one wedding cake, it increases my time/labor....so it's less profitable for me.

 

I don't think you need a sheeter. That strictly depends upon the type of baking happening. Sheeters are for laminated dough's like croissants or puff pastry (both of which aren't profitable for the small time baker to bake)...so they are rarely used by professionals in a rented kitchen situation. A sheeter for fondant would be super cool. But I think it will bring more headaches then you want. Instead, I would love to personally buy my own sheeter or piece of equipment and store it at your kitchen safely. Just as I would need to bring my own pans (and more) and store them at your shop.

 

I prefer a monthly rent verses an hourly rate!! Life in a kitchen for bakers has a lot of waiting. We can't bang out product like the hot side can, as you already know from your experiences with caterers.

 

You have to shop out what retail shops are getting in your area. I can rent a place for $1,000. all over town.

 

So your have to choose who your targeting just like the bakers have to attract their customer. At $500. dollars per month, it would keep your kitchen FULL all hours of the day,(with a waiting list). Verses $800. to $1,000. per month is probably not going to sell out around the clock. That changes who your appealing to. Those that have more money will rent their own place.

 

The place I use is strict on cleanliness too.....which make me loose time worrying about keeping things perfect. But it still doesn't protect me from picking up dirty bowls or being certain there is soap in the dispenser or someone is there when the drain clogs. They "think" they are doing great.....but the truth is unless your there 24/7 you really don't know the struggles that go on in your own kitchen.

 

Refrig. space I'm referring to is that you can insert a sheet pan length wise into the cooler. If you have to turn it sideways and tilt it on an angle to get it into the cooler, that doesn't work well at all!

 

Another thing that's WAY cool is having tight spacing storage in your coolers and freezers. In professional kitchens we have shelving like carts with-out wheels where full sized sheet pans can be stacked very tight. Where as with a standard shelved cooler and freezer you can't stack 14 sheet pans of product on one shelf space.

 

Double door coolers are another point. I did a wedding cake with an 18" base and it didn't fit into the cooler! Even though it's a double door doesn't mean that it doesn't have the center wall between the two doors. It might still only have a 16" width for inserting product.

Stitches Posted 24 Apr 2013 , 6:52pm

What's your sink area like? It's pretty frustrating if someone else is washing two sinks full of dishes and your waiting (loosing time)in line to rinse out a dirty mixer bowl that's preventing you from producing.

 

Sink areas are big congestion areas. Teach people to use bus boxes in their own area and only wash when they have a full sink full.

 

Better YET, a small under sink commercial dishwasher is a miracle worker!!!! The ones I've used cycle faster and hotter then you can hand wash. That would be FAR FAR smarter then investing in a sheeter  only a few would use.

jason_kraft Posted 24 Apr 2013 , 7:03pm

A

Original message sent by Stitches

You have to shop out what retail shops are getting in your area. I can rent a place for $1,000. all over town.

For an apples-to-apples comparison you need to take into account all the expenses associated with running your own shop, not just rent. As a landlord, tenants who are paying cheap monthly rent filling your kitchen to capacity is exactly what you don't want.

Also, baking processes do not necessarily have to include a lot of waiting time. Even at low volumes there are ways to redesign your operations to utilize slack time and improve efficiency.

FromScratchSF Posted 24 Apr 2013 , 8:47pm

AI am intimately aware of 3 different kitchen set-ups where I live.

1). My kitchen has the desperate bakery space. It is slightly larger then an average bedroom and has 1 metal prep table, 1 giant wood table, a double convection, a triple deck oven, sink, 100q, 30q and a 5q mixers and one speed rack. We are entirely self contained. But you have to book your hours in advance and only one baker is in there at a time. The plus side is I am totally self contained and share zero. The bad side is if I need to work off my regularly booked hours I have to pray the bakery is not already booked. I pay hourly and monthly. I pay extra for my sub zero, a while section in the walk-in, and 2 lockers for all my equipment. If I were a savory chef all the prep tables and ovens are in one big room, they work when they need to and log their hours based on honor system.

2). Kitchen #2 is a giant room with prep tables in the center, equipment along the walls. You work when you want and log your hours based on the honor system, tables are free for all and so is the equipment.

3). Kitchen #3 is also a big room, tables in center, equipment along the walls, but you have to book in advance each and every thing. So first you book your day, then book your table, then your mixer, oven, sink time etc. So tedious.

Anyway, examples of 3 set-ups.

jason_kraft Posted 24 Apr 2013 , 9:02pm

AHere are some pictures of the kitchen we rented in San Jose, showing each of the three separate work areas and the sinks. There was also a shared walk-in fridge and freezer.

http://www.cookithere.com/Kitchen/KitchenDetail?kitchenId=88

Stitches Posted 24 Apr 2013 , 9:15pm
Quote:
Originally Posted by jason_kraft 


For an apples-to-apples comparison you need to take into account all the expenses associated with running your own shop, not just rent. As a landlord, tenants who are paying cheap monthly rent filling your kitchen to capacity is exactly what you don't want.

Also, baking processes do not necessarily have to include a lot of waiting time. Even at low volumes there are ways to redesign your operations to utilize slack time and improve efficiency.

I respectfully disagree. As an incubator kitchen you do want it filled every second of the day, time is money. As a landlord who just wants to be a landlord you do want the most money for the least work. The OP has to decide which she is a landlord or a kitchen incubator, they are two different things sort of at odds with each other? And which type of business model she wants. In the food business you can choose to have high prices that attracts less clients or moderate prices with more clients...you rarely get your cake and eat it too.

 

She needs to work her numbers out for which profile will net her a better/consistent income....or what she desires from this adventure.

 

"Also, the baking processes do not necessarily have to include a lot of waiting time." When you renting hourly your working completely differently then someone with unlimited time, you can't compare those as if it's apples to apples. The hourly situation doesn't give you enough time in the kitchen to start any small projects you can't complete. Plus you have to lug back and forth those small time fillers with you. Instead your have to work toward getting out of the kitchen as fast as possible. You start packing light, learn how to pre-mix ingredients for recipes before you leave home, learn to clean up the kitchen so the second your work comes out of the oven your out of there. Going over 10 minutes cost the same as going over one hour...........you don't work in a "normal" manner this way.

jason_kraft Posted 24 Apr 2013 , 11:08pm

A

Original message sent by Stitches

I respectfully disagree. As an incubator kitchen you do want it filled every second of the day, time is money. As a landlord who just wants to be a landlord you do want the most money for the least work. The OP has to decide which she is a landlord or a kitchen incubator, they are two different things sort of at odds with each other?

I don't see how the two are at odds. If anything, being a landlord is an integral part of running a kitchen incubator, since it wouldn't be much of an incubator if there was no kitchen to rent. An incubator can offer all sorts of value-added services to its tenants over and above providing kitchen space, these services would complement the OP's role as a landlord.

And which type of business model she wants. In the food business you can choose to have high prices that attracts less clients or moderate prices with more clients...you rarely get your cake and eat it too.

In this case, the product is available kitchen time. If OP produces a high quality product that's clean, reliable, and promotes efficiency, there should be sufficient demand to charge a decent price to hourly renters (e.g., $25/hour and down).

Offering unlimited time to monthly renters sounds like a great idea to fill the schedule, but the goal here is to maximize profit. Since the amount of product available is fixed, every hour you sell to a monthly renter has a significant opportunity cost, as that hour is not available to more profitable hourly renters. Allowing unlimited time to monthly renters also means those monthlies will fill up the schedule very quickly and lead to reduced tenant satisfaction from hourly renters when their preferred times are booked.

When you renting hourly your working completely differently then someone with unlimited time, you can't compare those as if it's apples to apples. The hourly situation doesn't give you enough time in the kitchen to start any small projects you can't complete. Plus you have to lug back and forth those small time fillers with you. Instead your have to work toward getting out of the kitchen as fast as possible. You start packing light, learn how to pre-mix ingredients for recipes before you leave home, learn to clean up the kitchen so the second your work comes out of the oven your out of there. Going over 10 minutes cost the same as going over one hour...........you don't work in a "normal" manner this way.

It might be different in California...before the cottage food law, you were not allowed to work on products for sale outside the commercial kitchen at all, which means (for example) no pre-mixing at home. Any commercial kitchen should offer secure on-site storage so you shouldn't be lugging anything back and forth.

Whether you are renting hourly or monthly you still have to account for your labor and any employees, so you should be focused on filling your orders and getting out of the kitchen as fast as possible, without compromising quality of course. If you're not working as efficiently as you can, you are paying for it out of your own pocket, even if rent is free.

Regarding overages, this will depend on the kitchen. If we went over 10 minutes we would just note that on our time log, and we would only be charged for those 10 minutes.

Stitches Posted 25 Apr 2013 , 12:19am

I do honestly do follow your logic Jason and I can't disagree too much. Logic and reality can't always co-exist.

 

The OP asked about opinions........... and they also seem to know that people cheat the system. I'm just saying for the average bird, those $25.00 per hour rental fees closes the door for most people/small businesses to use them. It forces people to cheat the system to get started. If the person/business had enough income and business generated where they can afford to pay $25.00 per hour fees, they'd have enough money to rent their own space. At least they'd have a better chance of securing a loan based on their current income from their business.

 

In an ideal world there could be some compromise. Yes, I realize it's not that kind of world! I understand over head and costs, etc... but as long as the over head is too much money people are going to need to cheat the system to get started, unless they are already wealthy enough to start with-out a rental kitchen.                                                                                                                                                                                                                                                                                   Isn't that partly tied to the laws allowing producing baked goods from home? It's somewhat of a realistic reaction to controlling the reality of the situation. Poor people can't afford high rents.

 

If rental fees were in line with what we could realistically charge customers for baked goods, we'd charge more and pay more in rental fees. Unfortunately, they are completely out of balance. Which the OP seems to realize.

 

You can maximize profits by keeping the business busy/occupied. The owners need to decide if they have other goals in addition to making the most money possible? Many people do volunteer their skills and knowledge.........just as we are doing right now talking about this topic. Sometimes it's not what I receive in return that makes me happiest..........sometimes it's giving someone else a hand that is the best return on my dollar and time.

 

I kind of see this whole situation to be similar to investing. What kind of investor are you? Do you believe in the long term steady course investing or do you do you seek constant large profits? What's your tolerance, what's your goals and do you mix your ethics with how you spend and invest your money?

jason_kraft Posted 25 Apr 2013 , 12:46am

A

Original message sent by Stitches

I'm just saying for the average bird, those $25.00 per hour rental fees closes the door for most people/small businesses to use them. It forces people to cheat the system to get started.

It's more difficult to be profitable at that price point, but it's certainly not impossible, even without cheating. I agree that it requires a business to be better than average.

There are ways to address this...the hourly rate would drop as you purchase more hours up front, which is why I said $25 and down. You could also offer a discount to new businesses for the first few months.

It's somewhat of a realistic reaction to controlling the reality of the situation. Poor people can't afford high rents.

The business owner passes rental costs to the customer, so as long as the customers aren't poor there shouldn't be an issue.

If rental fees were in line with what we could realistically charge customers for baked goods, we'd charge more and pay more in rental fees. Unfortunately, they are completely out of balance. Which the OP seems to realize.

If OP lives in an area where the market for his customers is depressed, then I agree that $25/hour would be too high. In low cost of living areas the range for rents is often more like $10-15/hour with decent volume.

I kind of see this whole situation to be similar to investing. What kind of investor are you? Do you believe in the long term steady course investing or do you do you seek constant large profits? What's your tolerance, what's your goals and do you mix your ethics with how you spend and invest your money?

I have a moderate risk tolerance, and I'm a buy-and-hold investor. My portfolio is on autopilot, mostly in VTTHX (Vanguard's Target Retirement 2035 ETF) and rounded out with additional international equity and some treasuries. My only interaction with my portfolio is to rebalance every year or two, and my ethics don't impact my investment decisions.

Stitches Posted 25 Apr 2013 , 3:09am
Quote:

The business owner passes rental costs to the customer, so as long as the customers aren't poor there shouldn't be an issue.

You've got to be kidding.......have you been reading anyone's posts at this site? People place limits on the prices they want to pay for non-necessary purchases such as cakes. If cake decorators lived in wealthy neighborhoods where people were freely spending money left and right we wouldn't all be here talking about pricing and how hard it is to get people to pay us a living wage.

 

Sometimes when I read your posts I hope you realize how blessed you are to get the prices you say you get for cakes. CA must be a really different economy then the rest of the states in the US. In IL, there's only so many rich people and a lot of them don't eat cake...instead they pride themselves with how little they eat.

Quote:
Originally Posted by jason_kraft 

There are ways to address this...the hourly rate would drop as you purchase more hours up front, which is why I said $25 and down. You could also offer a discount to new businesses for the first few months.
 

The place near me does give a discount on the amount based off the hours rented in each calendar month. That never worked for me.....my business sales are never evenly spaced. It depends upon how much they drop the rate too. The place near me drops it like 2 or 3 dollars, which is still $22 or $23 per hour which is more then the starting business can afford realistically.

 

They do provide storage. Everything is charged ala carte, you pay by the month not by the usage. Some days I need the whole cooler to store raw ingredients and product, then I have a week or two when 1 shelf is too much. Who can afford to rent extra shelves and storage.........so you lug the stuff back and forth with you. When you do need a burst of extra space the place doesn't have it available or own it, so your still lugging your stuff.

 

Again, money is a factor! All the rental fees eat every penny of profit from a young baker. It forces them to get out of there as soon as they can make other arrangements. They can't make enough money this way to save up to buy their own place...........it forces people to cheat to survive.

jason_kraft Posted 25 Apr 2013 , 3:24am

A

Original message sent by Stitches

You've got to be kidding.......have you been reading anyone's posts at this site? People place limits on the prices they want to pay for non-necessary purchases such as cakes. If cake decorators lived in wealthy neighborhoods where people were freely spending money left and right we wouldn't all be here talking about pricing and how hard it is to get people to pay us a living wage.

Sometimes when I read your posts I hope you realize how blessed you are to get the prices you say you get for cakes. CA must be a really different economy then the rest of the states in the US. In IL, there's only so many rich people and a lot of them don't eat cake...instead they pride themselves with how little they eat.

California doesn't have a monopoly on wealthy neighborhoods, they exist in every metro area. Even middle class brides will pay $3-6/serving for a wedding cake if they want a quality cake. Using some back-of-the-envelope math, if you sell a cake at the middle of that range with 100 servings the price would be $450. If ingredients and overhead are $100 and you spend 7 hours on the cake (with a $15 wage and $25/hour kitchen rental) your cost would be $380, which leaves you a decent 20% markup.

Stitches Posted 25 Apr 2013 , 3:51am

Here's the math I face. The average cake wedding cake is $3.00 per person, x 100 people is $300.00 per wedding cake. Kitchen rental fee is $100. not including any storage. Ingredients are approx.. $60. for cake ingredients, $20 for cake base, cardboard circles, supports, box.

 

That's $180. in costs before I add my labor and general business costs (insurance, home office supplies, accountant fees, etc...).

 

I put in:

2 to 3 hours worth of customer contact emailing details at night with bride from the time of tasting to wedding day

1 to 2 hours shopping for ingredients

Cost of gas and car expenses getting products

1 hour drive to rental kitchen each way

4 hours baking cakes, and prepping.cake boards, making frosting

4 hours decorating cake

= aprox. 14 hours labor

 

$300. - $180. = $120. for me. $120. divided by 14 hours of labor is $8.57 per hour. Not enough to live off of, not enough to save up for your own kitchen.

Costs can only be lowered by increasing business volume. Business volume usually is increased by advertising. But if you don't make enough money to advertise you have to build slowly off of word of mouth.

Or we could all move closer to richer neighborhoods because living in rich neighborhoods is no problem at $8.57 per hour (minus business overhead).

canadiancookie Posted 25 Apr 2013 , 3:53am

Engaging conversations! Thank you all for taking so much time in sharing your view points. I can not express how much I value your thoughts. 

 

I would have to say that while I enjoy money very much, I am not money driven. I have always had to struggle for every dime I make, and even now money does not come easy. I struggle and work hard every day in my restaurant, not because it pays me great money, or even good money, but because I get great satisfaction from hearing people tell me they love my food. 

 

When I first got into kitchen rental, it was because I honestly just needed some money to help me pay the bills. Then my goal was to rent enough time out so I could produce my wholesale product cost free. But then one day I rented to a lady who drove over an hour every day to use my kitchen. She did this for 6 months and then decided she was doing so well that she felt confident opening up her own brick and mortar. I will never forget that feeling. She was so thankful to have been able to use my kitchen to test out her products. To hear that if it wasn't for me, she never would have taken that risk. From that day on, it wasn't about the money as much as it was about helping people enjoy the freedom of being their own boss.

 

If you do very quick numbers, 5 people per shift, 4 shifts, is only 20 people. At a monthly rate of $800 or even $1000 inclusive of storage space etc....those numbers aren't so bad for myself considering my rent is under $3000 per month. I would almost have the best of both worlds, earning a good income AND being in a position to afford others who share my passion for baking a suitable place to work which is fairly priced. 

 

Although I should probably be more like other rental kitchens, I was never one to nickle and dime my clients. I do not charge extra for storage. I try to be as fair as possible. I feel I have had great success with my first kitchen, and I have a waiting list for my second kitchen. I do not charge the most in this city....which is pretty well off financially. I do not charge the least. I do try to be fair to each one of my businesses, while being fair to myself as well. (something I've had to learn to be better at) Could I have made more money? I'm pretty sure I could have. Would I have a higher turn over rate of clients coming in and out? I think so. 

 

I know I am also merging both a kitchen rental program with a kitchen incubator program. I don't feel I should define or separate the two. I have and will continue to offer advice and advisory support to those who need it. I offer recipe development and nutritional label creation for them as well. I also plan to offer a few more services and perks to my clients involving trade shows, industry nights and a sales team. I am a creative thinker and feel there are always additional ways to make money while helping my businesses grow. While I was struggling with my start up, I was WISHING there were resources available to me but it just wasn't there. 

 

I work with both our local Gov funded Food Business Incubator and Gov Funded Small Biz Development Centre. I know the Incubator here has not done well. It has become a money grab for suits who make big promises and then leave those start ups to fend for themselves. That is something that burns me up. They were charging fee's that were just not reasonable. A business might as well take the risk 100% and go get their own spot. It would nearly be the same costs for a fraction of the hours. 

 

I do have clients who have no issues with $25 an hour. Heck....some restaurants are charging $35 or $40 an hour plus $500 a month just to be allowed to work from their kitchen. whoopidy doo.  Some recent interviews I've done said that even the community centers here are charging $80 an hour! Who of us could or WOULD pay that? 

Who has the right to even ask that much? It's greed. Simple as that. 

Savory foodies can and do pay more then bakers. And I think they should. It's a completely different ballgame. The bottom line is bakers just can't pay that much and still make money on cakes. The wait times stall everything. Yes you can plan other things to do while waiting....but should you pay me $25 an hour while your sitting there decorating, which is the same rate the guy pays me if hes catering the wedding...and using every resource in the house?? Doesn't seem right or logical......from the production side of things. 

 

From the landlord side of things...maybe I shouldn't care. Or maybe if more did care, there would be a lot less of us working from our homes illegally (at least here). Maybe I would be contributing to changing lives, even if in the smallest ways. 

Stitches Posted 25 Apr 2013 , 4:14am

Wow! Your are an incredible person! People like you DO make the world a better place, thank-you.

 

Help the baker figure out how to be as profitable as the hot side/savory chefs are or the plumbers and oven repair persons.That would be a great gift to give to society. The world would be a lesser place with-out great desserts, but it's hard to convince people they are worth supporting.

jason_kraft Posted 25 Apr 2013 , 4:50am

A

Original message sent by canadiancookie

If you do very quick numbers, 5 people per shift, 4 shifts, is only 20 people. At a monthly rate of $800 or even $1000 inclusive of storage space etc....those numbers aren't so bad for myself considering my rent is under $3000 per month. I would almost have the best of both worlds, earning a good income AND being in a position to afford others who share my passion for baking a suitable place to work which is fairly priced.

If you can put together a schedule that will keep 20 people with unlimited hours happy that scenario can work, but it might be more challenging than you think. Just don't forget about your other expenses - administration, security, insurance, taxes, depreciation and maintenance, utilities, etc.

I will echo Stitches' post above...you're doing a great thing giving back to the community in this way.

jason_kraft Posted 25 Apr 2013 , 4:58am

A

Original message sent by Stitches

$300. - $180. = $120. for me. $120. divided by 14 hours of labor is $8.57 per hour. Not enough to live off of, not enough to save up for your own kitchen. Costs can only be lowered by increasing business volume. Business volume usually is increased by advertising. But if you don't make enough money to advertise you have to build slowly off of word of mouth.

That's why it's so important to have enough money to cover startup costs when you launch a business. Your startup fund should be able to cover your initial out of pocket expenses, your living expenses until your business becomes profitable (if you have no other source of income), and the costs involved in executing your advertising strategy. It's possible to be successful without a startup fund, but it requires both lower overhead (e.g. a cottage food law) and luck.

Or we could all move closer to richer neighborhoods because living in rich neighborhoods is no problem at $8.57 per hour (minus business overhead).

You don't need to live close to a rich neighborhood to target rich people. Using your example with a sale price of $4.50/serving, you would be making $19.28/hour, or $15.71/hour at $4/serving.

jason_kraft Posted 25 Apr 2013 , 5:20am

AAs an example, using ArcGIS I was able to find a census tract (IL 170318042.01, near Crabtree Forest Preserve in Barrington) about 15 miles from Crystal Lake that has 566 households with an annual income over $250K. With some research you should be able to find dozens of similar areas to serve as a base for marketing high quality custom cakes.

Stitches Posted 25 Apr 2013 , 2:26pm

That's a whole different discussion, which I'd LOVE to have. How about I start a new thread on marketing and we meet there?

Stitches Posted 25 Apr 2013 , 2:45pm

Canadiancookie if there's anything else you want feed back on please don't hesitate to ask.

 

From a clients perspective if I'm paying top dollar then I expect top notch service from the kitchen owner. I think great communication is essential, it's like running a large family. I'm really into suggestion boxes where people can communicate anonymously with you. Or having a board where people can write messages telling others issues or concerns would be cool, too. So they can tell you what they need from you with-out you reacting personally. They also need to be able to tell you that there was a problem when they entered the kitchen space so you can follow up with whom ever left a problem. Where I rent she'd like us to call her and tell her about issues. But the truth is, she can be really hard to get a hold of and I just want to focus on my business and not spend time whining about someone else.

 

When there is a problem, I don't understand the mass emails to everyone about one persons screw up. You have to be tough and confront the person who abuses the space directly so they know it's them who's the problem.

canadiancookie Posted 25 Apr 2013 , 3:14pm

I do have a board that clients can write on, however I never thought about people wanting to be anonymous. I will definitely consider the drop box as you suggested to get more honest feedback from others. We also have a facebook group where everyone communicates and we are working on launching a social network side to our site for ALL local entrepreneurs to communicate through, make contacts etc. 

 

I am also guilty of sending out the mass email. I don't do it because I am afraid to confront that person, I usually confront the person first and then send out the email once in a while to everyone with a bunch of different things I've dealt with. I was thinking it was my effort to avoid those problems with others, to help keep others aware of potential situations that have come up. I try to make it newsletter-ish....not just me complaining, but also fill it with positive information and events that we have coming up that they might be interested in as well. Maybe that is what other landlords are trying to achieve by doing this as well? I'm not sure but it's just a thought. 

 

I was curious about freezers. Do you think it's a necessity to have walk in freezer space? Is that something that could wait to see about demand? I do agree about walk in cooler space. I think I would start straight with that and save the hassles that you have all mentioned. 

 

I also really appreciate the feedback about dish washing. I don't know why, but I never considered a jam up an hour before everyone has to leave. I think a dishwasher makes the most sense. 

 

And Thank you both for the kind words. I hope it all works out as well as it sounds on paper. 

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