brmagic Posted 16 Sep 2013 , 7:58pm
post #1 of

Hey all,

 

Here is a thought. I contacted the department of consumer affairs NYC. They told me the obvious answer. That I must register to a commercial kitchen in order to sell custom cakes. How does it work. Must I always create every order at a commercial kitchen. How do they know that this was done? It doesn't seem like it would benefit financially. 

 

Thoughts?

 

-Brian

8 replies
jason_kraft Posted 16 Sep 2013 , 8:25pm
post #2 of

AGenerally when a commercial kitchen is required, all baking and decorating must take place at the commercial kitchen. Your local health dept should be able to provide a specific answer for your jurisdiction.

On the financial question, it can work as long as you include the cost of the rental time in the price of your products. For example, let's say you are making a cake that requires $40 in ingredients, will take 4 hours of labor from start to finish, and you have another $30 in allocated overhead per order. Assume you pay yourself $15/hour and the kitchen rental is $25/hour. Your cost for this order would be $40 + $30 + (4 * $15) + (4 * $25) = $230, and if your markup for profit is 20% the final price would be $276.

Regarding whether or not they will know you are actually using the commercial kitchen, landlords generally keep records of how many hours each tenant has used for billing purposes. If the inspector checks those records and the number of hours you've rented is not in line with your revenue you could be in serious trouble. If you plan on baking illegally from home you might as well skip the commercial kitchen altogether...it's actually worse if you rent the kitchen as a front since it shows you deliberately tried to circumvent the law.

MimiFix Posted 16 Sep 2013 , 9:45pm
post #3 of

Brian, I recently wrote about Shared Use Kitchens and Profitability. You might find it helpful.

BrandisBaked Posted 16 Sep 2013 , 10:18pm
post #4 of

AThey don't know. Many people rent a space and get their license through it and then never show up again, and just bake from home. Many inspectors will turn a blind eye to it (at least where I live) but you don't want to get into trouble if someone calls and complains about you, they might pull up your rental records and see how many hours you used the kitchen and whether or not it jibes with the amount of product you are putting out.

Talk to your inspector and find out what they will and won't allow you to do from home. Mine didn't care if I made all the flowers, toppers, decorations and stuff from home and knew that most people operated primarily from home. They didn't care because they is only one commercial kitchen around here that rents out, and it's hard to get into it. So they let the small stuff go and care less about the low-risk items such as baked goods. They are very open about it if you ask - and I would rather be up front with the health department from the beginning than try to be sneaky and have it bite you in the butt the moment you have an unhappy customer or jealous competitor.

jason_kraft Posted 17 Sep 2013 , 12:05am
post #5 of

A

Original message sent by BrandisBaked

Talk to your inspector and find out what they will and won't allow you to do from home. Mine didn't care if I made all the flowers, toppers, decorations and stuff from home and knew that most people operated primarily from home.

If your health dept tells you this be sure to get it in writing, but note that even if you do have it in writing that your local health dept is currently declining to enforce the law, there is no guarantee the situation won't change in the future.

MimiFix Posted 17 Sep 2013 , 12:21am
post #6 of
Quote:
Originally Posted by BrandisBaked 

... Many people rent a space and get their license through it and then never show up again, and just bake from home. Many inspectors will turn a blind eye to it... Talk to your inspector and find out what they will and won't allow you to do from home. 

 

The OP lives in NYC. Not a good location for skirting the law.

JWinslow Posted 17 Sep 2013 , 12:26am
post #7 of

Quote:

Originally Posted by MimiFix 
 

Brian, I recently wrote about Shared Use Kitchens and Profitability. You might find it helpful.

Thanks MimiFix.  A short article with a ton of information!

scrumdiddlycakes Posted 17 Sep 2013 , 12:34am
post #8 of

Quote:

Originally Posted by brmagic 
 

Hey all,

 

Here is a thought. I contacted the department of consumer affairs NYC. They told me the obvious answer. That I must register to a commercial kitchen in order to sell custom cakes. How does it work. Must I always create every order at a commercial kitchen. How do they know that this was done? It doesn't seem like it would benefit financially. 

 

Thoughts?

 

-Brian

Yes, obviously everything edible must be made at the licensed kitchen.
Where I am, I am allowed to make gumpaste flowers, figures, etc that are not intended to be eaten, at home, (and yes, I have that in writing.) That's something you have to check with your local health dept though.
There are a lot of things they turn a blind eye to, until there is a complaint. All it takes is one person getting a stomach ache and reporting you, and the dept finding out you are baking at home for you to get into heaps of trouble. That most certainly wouldn't benefit you financially.

It's not too hard to figure out if you are using a commercial kitchen, a quick look at your utility bills, or in your pantry, is all they would need.

brmagic Posted 17 Sep 2013 , 11:42am
post #9 of

Thank you Jason for your breakdown. It is really helpful.

 

I appreciate all the info from you all. I want to do this the right way. I just want to understand all the mechanics behind it. We are obviously in this because we enjoy what we do and would like to make a living off of it. But, I don't want to seem like I'm overcharging because of commercial kitchen rent. I don't want to undercharge either. It can hurt myself and others in the business. 

 

I will be calling a few commercial kitchens in the area for price lists. 

 

Thanks again for the info...Very Helpful!!

 

Brian

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