Kitchen Rental

Business By nicoles0305 Updated 3 Feb 2014 , 10:42pm by LeanneW

nicoles0305 Posted 2 Feb 2014 , 4:04pm
post #1 of 14

So I want to go for it this year and make my business happen! I've been dragging my feet for too long, lol.

 

Anyway, I'm in PA, have three young kids, a dog, and a cat, so therefore licensing my own kitchen in my small house is pretty much a no go.

 

So I'm looking at renting kitchen space. There is a fairly new kitchen incubator here, which sounds perfect....except it is $25/hour.

 

I only do cakes for family and friends currently, so its not consistent. I worry about renting this space because of the price and being able to make it worthwhile.

 

So I have a bunch of questions for those who currently rent or have rented kitchen space in the past. First, do you have consistent bookings to support the cost? Do you have helpers to help maximize your time? How much do you pay for your space? What all do I need to know/plan for when looking to rent kitchen space?

 

I may be back in a little while with more questions. Thanks for all the help! :)

13 replies
Stitches Posted 2 Feb 2014 , 7:12pm
post #2 of 14

Play around and do some math using that number as overhead. Keep in mind that over head number doesn't include your labor or insurance etc...

 

If you went at caking as a full time job $25. x 40 hours a week= that is $1000. per week in rent.

Say you sell $2,000. in cakes per week. 1/2 your profits go to your rent, leaving you $1,000.

 

 

 

Can you generate 2,000 in sales?    $2,000. income

                                                         -$1,000. rent

                                                          $1,000. profit (so far)

 - 25% income for ingredient costs   -$500. costs

                                                           $500 profit  

if you pay yourself $15.00 per hour  -$600 labor costs per week

                                                        It doesn't work, you can't pay yourself $15. per hour with-out being in the negative. So you can only make $10.00 per hour.

                                                      

 

   $500. profit

  -$400. labor cost per week @ $10.00 per hour (not including income taxes)

   $100. per week of business profit (but wait, there's far more costs involved then the few I mentioned above)

 

 

Now you can only pay yourself $10.00 per hour to run a business that takes you far more than 40 hours worth of labor and costs. You couldn't possible afford to pay someone to help you with $100. left per week. You've got to do paper work, sales, shopping and delivery when your not in the kitchen baking those 40 hours. You've also got to pay for gas, an accountant and save for your own brick and mortar store out of that remaining $100. of profit per week. Oh and that all assumes you already own all the equipment/pans you might possibly need to bake $2,000 worth of product in.

 

The bad news is you can't do it. The odds of being able to generate $2,000 worth of business per week with-out a store front is not good. The only person here to makes a nice profit is the rental kitchen. You'll wind up making less than you would in a min. wage job. Is that what you want to do?

Sassyzan Posted 2 Feb 2014 , 7:40pm
post #3 of 14

ASince you're doing a small volume if business right now, try it on one big wedding cake order. Can you make gumpaste flowers at home? Certainly all paperwork, box and board prep, etc can be done at home for no rental fee. You need to be as efficient as possible. Get your cakes in the ovens as quickly as possible. Make frostings and fillings while the cake bakes. Is there secure dedicated storage space for your cakes to settle or sit overnight? Is there a discounted rate available for times you won't be using a lot of appliances? $25 an hour for a caterer who is blasting all the burners on a commercial stove makes sense. It's steep for little old you whacking some icing on a cake over in the corner using one light bulb and some counter space.

How many dedicated kitchen hours would it take to do one wedding cake for 100 people? 4? 6? 8? 8 hours is $200. That's $2 per serving. That's steep...but people do use this as a business model.... Hopefully you get responses from some who do it successfully! .

MimiFix Posted 2 Feb 2014 , 7:48pm
post #4 of 14

Nice try Stitches, but I don't think anyone would rent a kitchen for 40 hours per week. With all due respect, Nicole needs to redo those figures using her own guesstimate of time needed in a kitchen. If anyone generated that much business to need 40 hours, it would make more sense to simply rent a storefront rather than pay more than $4000 monthly rent. Back to the drawing board, or spreadsheet, so to speak.

liz at sugar Posted 2 Feb 2014 , 7:58pm
post #5 of 14

I think Stitches is saying it wouldn't make any sense to do it.  She just did the basic math for the OP.

 

Liz

Stitches Posted 2 Feb 2014 , 8:13pm
post #6 of 14

Quote:

Originally Posted by MimiFix 
 

Nice try Stitches, but I don't think anyone would rent a kitchen for 40 hours per week. 

Perhaps you can show us how to make a profit (any which way for any amount of hours) from a $25.00 per hour kitchen?

MimiFix Posted 2 Feb 2014 , 8:43pm
post #7 of 14
Quote:
Originally Posted by Stitches 
 

Perhaps you can show us how to make a profit (any which way for any amount of hours) from a $25.00 per hour kitchen?

That's not my point. I don't want to fight. Simply that renting a commercial kitchen for 40 hours per week is more expensive than renting a storefront.

Stitches Posted 2 Feb 2014 , 9:59pm
post #8 of 14

I'm sorry Mimi, I'm not looking for a "fight" or confrontation by any means. My point which I'm not so great at making is: no matter how you do the math (how little or how much volume you produce) using a kitchen that costs $25. per hour eats every penny of profit a baker can make. It doesn't matter if you work for 40 hours per week or 4 hours a week, the kitchen rental is too high for what a baker can produce and how much we get for our product. NOW a cater can bring in 3 or 4 helpers and knock out prep. in a short time (not even turning on an oven), than finish their work on site. So that kind of kitchen rental situation only works for businesses that prep and cook quick and in serious volume.

 

I'm writing that from experience, myself. I rented a commercial kitchen at $25.00 per hour. I tried everything I could think of, but there was nothing I could make in that kitchen that left me with much of a profit to make it worth my effort.

 

So your point of renting a store front is much cheaper is sooo correct! I think that's why a lot of newbies do that, and take that gamble. They can work unlimited hours 24/7 and it doesn't increase their overhead much. Where as when your renting a kitchen by the hour the harder/longer your work the more you pay the other guy not yourself..........so you can't ever get ahead and build a business.

 

I'd suggest to the op to keep searching and asking people to rent kitchen space to you legally. I went from $25.00 per hour to $225. per month and I now can make a profit. The harder I work the more I keep.

nicoles0305 Posted 3 Feb 2014 , 2:05am
post #9 of 14
Quote:
Originally Posted by Stitches 
 

I'm sorry Mimi, I'm not looking for a "fight" or confrontation by any means. My point which I'm not so great at making is: no matter how you do the math (how little or how much volume you produce) using a kitchen that costs $25. per hour eats every penny of profit a baker can make. It doesn't matter if you work for 40 hours per week or 4 hours a week, the kitchen rental is too high for what a baker can produce and how much we get for our product. NOW a cater can bring in 3 or 4 helpers and knock out prep. in a short time (not even turning on an oven), than finish their work on site. So that kind of kitchen rental situation only works for businesses that prep and cook quick and in serious volume.

 

I'm writing that from experience, myself. I rented a commercial kitchen at $25.00 per hour. I tried everything I could think of, but there was nothing I could make in that kitchen that left me with much of a profit to make it worth my effort.

 

So your point of renting a store front is much cheaper is sooo correct! I think that's why a lot of newbies do that, and take that gamble. They can work unlimited hours 24/7 and it doesn't increase their overhead much. Where as when your renting a kitchen by the hour the harder/longer your work the more you pay the other guy not yourself..........so you can't ever get ahead and build a business.

 

I'd suggest to the op to keep searching and asking people to rent kitchen space to you legally. I went from $25.00 per hour to $225. per month and I now can make a profit. The harder I work the more I keep.

I get what you're both saying. Honestly, I'm thinking what Stitches has said. Basically, it will take me A LOT to make any kind of profit by renting at this particular place.

 

Stitches, you said you found a place for $225/month. HOLY DEAL! Would you mind sharing what kind of place it is? I've looked at Churches and Fire Halls before, but haven't had much success there. Maybe I'm overlooking an obvious place? lol

Stitches Posted 3 Feb 2014 , 3:30am
post #10 of 14

The place I'm currently using I found when I responded to a newbies question here. When I read their blog I found out they were renting kitchen space in my very own neighborhood. The business was struggling looking for more income to decrease their expenses. They are currently for sale so I'm looking again for a new home. My focus is looking for another struggling food business. It isn't fun changing kitchens, but it's a small sacrifice that gives me a reasonable rent. AND on the way, I'm meeting some terrific people!!

LeanneW Posted 3 Feb 2014 , 8:13pm
post #11 of 14

Glad to see this post got back on track, let's talk about renting kitchens!

 

I have previously rented kitchens, one by the hour and the other monthly.

 

When I rented my kitchen by the hour I had to enforce a minimum order of $500 for a cake and I would only take cake orders for Sat or Sun deliveries, since I wanted to do all my baking on one day to be more efficient. I was fortunate and shared a kitchen with 4 cakemakers, where we all payed the owner cakemaker $10/hour. I made my GP flowers at home and did all my admin at home too.  The only thing I did in that kitchen was the actual cake, but still paying by the hour adds up at any price and limits your growth.

 

It is important that you understand some limitations of hourly rental, aside from the price:

1. You cannot control the other tenants who rent the same space. Consider how you will store your cake in the fridge to minimize other people ruining it. I would ALWAYS box it so that it can't get bumped or something spilled on it. Also the box will make it less susceptible to temperature fluctuations. Think about a caterer putting a pot of hot chili under your cake!!!

2. How will you prevent the cake from being moved? label the box very well with instructions not to place anything on top of the box, do not move, this side up, and might as well add your contact info to the box too.

3. you most often cannot have clients in the rental kitchen, so you still need a place to conduct tastings and business meetings, just a consideration that you don't run into when you have your own shop.

4. do you get dedicated (locked) dry and cold storage while you aren't in the kitchen? if you take a 25 lb bag of flour to the kitchen, bake a wedding cake, then take the flour home, you CANNOT bring that open bag of flour back into a commercial environment.  this means you have to buy new ingredients every time you use the kitchen if you can't store them there, this is expensive! new pail of fondant, new bag of sugar, flour etc.

5. do you have to commit to a minimum number of hours, do you get a discount if you commit to a regular schedule?

6. when can you have access?

 

The second kitchen I rented was better in the long term for my business. I shared a kitchen with a caterer. she owned the equipment and was on the lease and I paid her a flat rate each month. there were some limitations as to when I could use the oven, based on her schedule, but for what I was saving and all the other benefits, it was a small sacrifice.  I had my own dry storage shelves and my own fridge. I had a place to meet my clients and the added bonus of being referred by the caterer.

 

Possibly you could find someone who would be open to a similar arrangement. One note on shared space is that, at least in my situation, if any of the other people in the kitchen got a heath department infraction for what was happening in the kitchen, we all would have. For example, if the caterer had expired eggs in her fridge, I was implicated too, since it's one kitchen with one kitchen permit. You may have a different setup, but that was always something that concerned me. I would be mortified if my business had an infraction because of food safety, even if it wasn't my fault.

MimiFix Posted 3 Feb 2014 , 9:12pm
post #12 of 14
Quote:
Originally Posted by LeanneW   ... it's one kitchen with one kitchen permit.

 

Great information! Really helpful. In New York, however, renting a commercial kitchen is somewhat different; there's no sublet allowed without a license. Each business must have their own license (costs more than $200 per year), so the infraction issue wouldn't happen, 

Stitches Posted 3 Feb 2014 , 10:14pm
post #13 of 14

Quote:

Originally Posted by MimiFix 
 

 

Great information! Really helpful. In New York, however, renting a commercial kitchen is somewhat different; there's no sublet allowed without a license. Each business must have their own license (costs more than $200 per year), so the infraction issue wouldn't happen, 


In IL, each business has to be separately licensed too. I don't know how they deal with infractions, yet.

LeanneW Posted 3 Feb 2014 , 10:42pm
post #14 of 14

Quote:

Originally Posted by Stitches 
 


In IL, each business has to be separately licensed too. I don't know how they deal with infractions, yet.

 

Good to know, I had a food workers permit myself, but our inspector said we would share the kitchen permit. I wonder if it was just easier on him though, less paperwork. But we split the cost which was great! And FYI, we never had a problem, but it was always in the back of my mind every time she left dirty dishes in the sink.

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