Cake Central › Cake Forums › Cake Talk › Cake Decorating Business › Will my state's new Cottage Laws put me out of business?
New Posts  All Forums:Forum Nav:

Will my state's new Cottage Laws put me out of business?

post #1 of 79
Thread Starter 
I am seriously wondering! I have a lot of money and time invested in my legal business and just found out my state's cottage law goes into effect June 25th.

There are already people in town with FB pages up and running, taking orders for cakes, cupcakes, etc anticipating the 25th. Of course they are charging considerably less than me, across the board.

I am in a small town with a limited number of customers--how do I protect my customer base when these newcomers have such a different price point than I do since they are working from home, without rent/insurance/inspection costs?

This is so disheartening to me after all this work and expense to become legal and then almost 4 years of work building up my clientele, educating them and working my a** off making sure I have a quality product.

Any suggestions from someone that has a legal business with a cottage law in their state? Do you see it affecting your business or am I panicking for nothing?
post #2 of 79
Amber~~I think your concerns are valid and you are wise to anticipate the problems that may occur as Cottage Law Food providers compete initially with low pricing.

I cannot help you with direct experience, however, I strongly suggest you immediately contact each of these resources:
Your local Chamber of Commerce
Your local Better Business Bureau
SCORE: http://www.score.org/
Tell them what your concerns are and see if they have specific suggestions.

Each of the resources listed above may be able to help you formulate an aggressive marketing plan to counteract the initial offerings of lower priced cakes.

As you may know from reading threads on the Business forum, most new bakers who bake from home have no grasp of the fundamentals of business/cost/overhead/marketing to a targeted customer base, etc.
These bakers typically use one approach to gain customers: low prices. Eventually these same bakers (who do NOT pay themselves a wage) will burn out and quit when they discover they are making pennies per hour. However, in the meantime, they will lower the overall cost for custom cakes in your geographic area.

I wish you well.
post #3 of 79
SO, I am on the other side. I am a licensed home baker and when I had 2 cake places come into the town I am in I was mad. Mad that I had worked so hard to get my name out there with a quality product. People assume that its my place in the town and I have to correct them all the time. Its frustrating. But when one of the places opened I went to them and introduced myself and we now have a great business friendship as well as a outside friendship. I, a home baker charge more than the store front, My work is far superior but people go to them because they are cheaper. Sometimes competition works in your favor. You have to be confident in what you produce and confident with what you charge. Learn how to sell quality and not quantity. I do believe that the cake world is getting over saturated with with sub par decorators but this is going to happen in every aspect of business out there. strong it will all work out and some of the people's will be weeded out when they cant handle the demands of being an artist.
No Cake is too pretty to eat!

Paula M Surrette
Reply
No Cake is too pretty to eat!

Paula M Surrette
Reply
post #4 of 79
This is the exact reason I poopse cottage food law. Why do you and I need a three basin sink, grease trap, and floor drains and the next door neighbor does not? For that matter, why does Applebee's need a three basin sink? Isn't it a food safety issue? I guess with CFl, safety is only important for some. Now off my soapbox, but CFL wreaks havoc on the economic system of the small businesses that are in the same industry.

With no 'skin in the game", people with little business experience sell at a loss, don't count taxes (or pay them), and have less investment, are now your competitors.

What you need to do is to look at the limitations of the law in your state and find a niche in which they cannot compete. Learn the law and work on your strengths and the areas where you are not limited.

My no restrictions commercial kitchen is in my home, but it is one of the largest in square footage even when compared to retail operations. Lower costs and that extra room have allowed me to branch out in areas that put me at more output than the retail spots. The opportunity to wholesale, seek national accounts (with a little more investment), employ more advanced marketing and PR strategies, and even branch out to retail are all possibilities that a full license can persue.

Set yourself apart with your website and be as professional as possible.

My prices are the highest in my market and my overhead is the lowest. All of that money is now in my pocket because of my investment. Look at the opportunity instead of the limitations. I am not in competition with the illegals in my area (no CFL, so these are the home bakers), but you don't have to be either. I actually have aspects and growth areas in my business that are unique to me, that not even retail stores are competitors. Of course, retail has advantages that I do not have, reinforcing the idea that there is room for everyone.

This is America and we will always have competition. Look at what you do and love to do best and you will find your place.

Good luck with looking into new avenues. Don't ever think that the economic demographics of your area will remain the same. This is why the business owners must always improve, educate, and adapt to stay on top in the market.
post #5 of 79
Quote:
Originally Posted by scp1127

This is the exact reason I poopse cottage food law. Why do you and I need a three basin sink, grease trap, and floor drains and the next door neighbor does not? For that matter, why does Applebee's need a three basin sink?


The reason is because scale does matter. There is a difference between me, making one cake per week, and Applebees, serving 250 people dinner per night.

Quote:
Quote:

Isn't it a food safety issue? I guess with CFl, safety is only important for some.


75% of all foodborne illness originates in commercial facilities. This is a fact per the testimony of Texas' Department of State Health Services. If you have some data, or a news story, that compares the incidences of foodborne illness between commercial and cottage food producers, please post it.

I'm happy to be on the right side of history on this one. As Jason said in another thread, cottage food laws are really about righting a wrong. Small-scale production of low-risk foods should never have been illegal in the first place.

To the OP, you have many advantages that cottage food producers do not have, which have been pointed out in this and other threads. I wish you the best of luck with your business.
post #6 of 79
I could be completely wrong but I thought people operating under the cottage food law were extremely limited in the ingredience they are allowed to use. If it becomes a problem maybe you could advertise different flavor options, like SMBC and fresh fruit fillings. Just a thought......
post #7 of 79
I agree with Jesse1019. what will happen to those who bake for 'bake sales' for non-profit fundraisers? BC is one thing we can not put on cakes or cupcakes as well as fresh fruit fillings etc . Will the days of homemade be gone for those who bake for fun not profit??? icon_cry.gif
post #8 of 79
Quote:
Originally Posted by kelleym

75% of all foodborne illness originates in commercial facilities.


I'm not sure how relevant this fact is on its own, given the volume of food processing in commercial facilities compared to food processing at home, not to mention how often such illness is actually reported (you will probably see overreporting for commercial facilities and underreporting for home food processing).

A more useful stat would be incidences of foodborne illness per capita (normalizing the stat). For example, if 85% of all food processing happens in a commercial facility while the remaining 15% happens in home kitchens, home kitchens would actually have a higher rate of foodborne illness on a per capita basis.
post #9 of 79
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by kelleym

75% of all foodborne illness originates in commercial facilities.


I'm not sure how relevant this fact is on its own, given the volume of food processing in commercial facilities compared to food processing at home, not to mention how often such illness is actually reported (you will probably see overreporting for commercial facilities and underreporting for home food processing).

A more useful stat would be incidences of foodborne illness per capita (normalizing the stat). For example, if 85% of all food processing happens in a commercial facility while the remaining 15% happens in home kitchens, home kitchens would actually have a higher rate of foodborne illness on a per capita basis.


I'm only relaying what the representative from DSHS harped on, repeatedly, in 2009. Except she said it the other way around, that 25% of foodborne illness originates in home prepared food. So you might want to ask DSHS and the CDC how relevant it is, since it's their statistic.

I'm confused by your "85%" number, since you appear to have pulled it out of thin air to make it appear that foodborne illness is more prevalent in home prepared food?
post #10 of 79
Quote:
Originally Posted by kelleym

I'm confused by your "85%" number, since you appear to have pulled it out of thin air to make it appear that foodborne illness is more prevalent in home prepared food?


I did pull it out of thin air to use as an example -- hence the preceding "for example" -- to illustrate how it was possible for a figure that seems to point to a higher incidence of foodborne illnesses at commercial facilities could in fact show just the opposite once it is normalized.

If stats show that less than 75% of food is processed commercially, then that figure could be used as an argument that foodborne illness is more likely in a commercial setting. As it stands the figure is pretty worthless though.

I could not find a source on the volume of commercial vs. home-prepared food one way or the other.
post #11 of 79
Quote:
Originally Posted by jason_kraft

Quote:
Originally Posted by kelleym

I'm confused by your "85%" number, since you appear to have pulled it out of thin air to make it appear that foodborne illness is more prevalent in home prepared food?


I did pull it out of thin air to use as an example -- hence the preceding "for example" -- to illustrate how it was possible for a figure that seems to point to a higher incidence of foodborne illnesses at commercial facilities could in fact show just the opposite once it is normalized.

If stats show that less than 75% of food is processed commercially, then that figure could be used as an argument that foodborne illness is more likely in a commercial setting. As it stands the figure is pretty worthless though.

I could not find a source on the volume of commercial vs. home-prepared food one way or the other.


I provided a statistic that came from DSHS and the CDC, and you provided an imaginary one to make it look like something it isn't. I know what "for example" means. But your imaginary example was along the same lines as "When did you stop beating your wife?" If you find actual data, could you post it?
post #12 of 79
Quote:
Originally Posted by kelleym

I provided a statistic that came from DSHS and the CDC, and you provided an imaginary one to make it look like something it isn't


My point was that the statistic that came from the DSHS means absolutely nothing since it is not normalized, and it cannot be used to prove that commercial food processing is more or less safe than home food processing. That is the most serious problem with the stat, the other two major issues are bias based on the likelihood to report and an unclear definition of what constitutes commercial processing vs. home processing. I can expand on any of these issues if you need more clarification.

If I had data that shows the relative size of the two data sets I would certainly post it, since that would go a long way toward give the DSHS stat some actual meaning.

Quote:
Quote:

But your imaginary example was along the same lines as "When did you stop beating your wife?"


That's the textbook example of a "loaded question" logical fallacy, but it has nothing to do with statistics.
post #13 of 79
For the OP--Yes, it will affect you. I'm a home-based baker who started when you needed to be inspected, so I went through the whole process. My business is definitely being affected after the cottage law went into effect a couple of years ago. Prices are stagnating and I can count on finding a new baker in the area about every other day.

Your best bet is to advertise that you're licensed and inspected. A lot of people don't know that cottage bakers don't have to be inspected, so that's one point in your favor as far as consumer confidence goes. You basically need to emphasize what's different about your product, and why it's worth coming to you as opposed to a cottage baker. Feel free to email me if you have specific questions.
post #14 of 79
Quote:
Originally Posted by costumeczar

For the OP--Yes, it will affect you. I'm a home-based baker who started when you needed to be inspected, so I went through the whole process. My business is definitely being affected after the cottage law went into effect a couple of years ago. Prices are stagnating and I can count on finding a new baker in the area about every other day.

Your best bet is to advertise that you're licensed and inspected. A lot of people don't know that cottage bakers don't have to be inspected, so that's one point in your favor as far as consumer confidence goes. You basically need to emphasize what's different about your product, and why it's worth coming to you as opposed to a cottage baker. Feel free to email me if you have specific questions.


That's interesting, I didn't know there were different levels of home based operators in Virginia. Can you briefly tell me the difference, or maybe a link? Thanks! icon_smile.gif
post #15 of 79
You can bake out of your home kitchen with an inspection and business license, but you can't do catering out of a home kitchen. As soon as you start handling meats etc you have to have a commercial kitchen.

It was that way until a couple of years ago when some farmers in the western part of the state wanted to have the state lift the inspections on smaller farmers who do meat processing. Once it got through the legislature it had turned into a cottage food law, so they didn't get what they wanted, but you can now bake out of your home without an inspection as long as it's non-perishable and labelled that the food came form a non-inspected facility.

You can still get an inspection like you always did, which means that the Dept of Agriculture has seen all of my recipes and procedures, and an inspector comes to my house once a year for my inspection. You still have to have a commercial kitchen for catering, but baking is considered less hazardous. Although some of the stories the inspector tells me about some of the people he's seen who DID get an inspection make me want to never buy anything from someone who wants to avoid an inspection...

The Dept. of Agriculture doesn't like the cottage law (or at least the inspectors I've spoken to don't) because they have to respond to every complaint, so with a larger number of people who aren't inspected doing whatever they're doing the number of complaints have increased. They say they'd rather inspect someone and tell them what they need to change rather than have someone with no idea what they're doing sanitation-wise let loose on the public.
New Posts  All Forums:Forum Nav:
  Return Home
  Back to Forum: Cake Decorating Business
Cake Central › Cake Forums › Cake Talk › Cake Decorating Business › Will my state's new Cottage Laws put me out of business?