Sunday, June 6, 2010

Advice for Renting Commercial Kitchen Space (Portland Edition)



I find it encouraging that our phone is ringing more and more with people looking for kitchen space to either launch or upgrade their food start-up into. Regardless of if I am looking for a tenant, I’ll gladly spend a few minutes chatting with callers about where they are at in their process and what their next move might be. Based on the questions I get asked, and what I went through when starting LPPCo., it appears (and please send me some links if I’m wrong) that there really aren’t good resources getting a food business launched.

As much as I am full-force working on our company growth, I actually enjoy having a small tenant or two, as much for the overhead offset, as being able to help foster another food business.

The first questions I always ask people who call are, Where are you in the process? And/or where are you producing out of currently? This tells me a lot. First, it tells me if your product has legs or if you are a “tire-kicker”. Secondly, how much time/usage do you need in a commercial kitchen initially?

Generally the conversation then turns to licensing and insurance. In Multnomah County (where we are based out of), a food company is required to: be licensed by the health dept (either Multnomah Health, or Oregon Dept of Agriculture), have a City of Portland Business License and business insurance.

Not everyone realizes all of the above, and often they’re stymied as to what to do first. My advice is to get your business license and insurance in order first, as the health department licensing will be tied to the address of the kitchen you rent.

And speaking of rent, rent for kitchen space is based off of overhead. Almost everyone I talk to who runs their own commercial kitchen knows exactly how much it costs per hour to run. This is something you have to factor into your own business plan. The “friend” who could be lending you his (restaurant/kitchen/catering) space for some cheap hourly rate, while helping you out initially, could be also doing you a disservice at the point you want to grow. Understanding what the market rental rates are will help with your growth plans and mitigating any surprises when you start calling around to other kitchens.

There are a few scenarios for renting kitchen space.
One is a pure commissary kitchen, which will rent time & space to as many companies as will fit. They tend to be more accommodating with schedule and usage, as well as allowing you to move specialty equipment into their facility. The downside is, depending on how crowded the kitchen is when you want to use it, there could be a wait to use the equipment (like ovens and the dishwasher).

Another situation is a kitchen that was formerly (or is) something else. An event space, restaurant, or a church kitchen. It’s always best to ask up front what the restrictions are for usage.

Food companies which have their own production space, and might want to lease out the off times to a smaller company (where we fall) are another option. We tend to be your least flexible options in what we’re interested allowing for time and usage.

I once had someone pitch to me that they needed to extend our hood system to include their 80 gallon boiler for their bagel making business. Um, no.  A friend who runs a vegan food company is not interested in sub-leasing space to companies who work with meat. Then there are a few newly-sprouted gluten-free only kitchens.

In these scenarios it’s important to realize that these are facilities where companies (and their employees) are making their livelihood and sometimes your company is just not a good fit for us, whether it be how much time & space you need or the types of product you’re producing. Luckily, we are a small(er) industry here in Portland, and I try to refer inquiries to other kitchens who I think I might have time/space available.

As of now, I might take in one small tenant, a company who doesn’t need a lot of storage space and is interested in working at night. Which is based off of how I see my own company needs expanding. Should I see it change, you can bet you’ll see our rental ad up on Craiglist.

9 comments:

  1. Thanks for posting about this because I'm just trying to wrap my mind around all of the requirements necessary to launch a pickling and preserving business. I've been kicking tires for awhile, and I'm trying to find my real legs.

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  2. Great thoughts you got there, believe I may possibly try just some of it throughout my daily life Advice of Renting Commercial Kitchen Space ......
    Kitchen Equipment

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  3. This is so helpful! Thank you for all the advice and do let me know if you are looking for a small tenant :)

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  4. Hey there! I am wanting to restart my chocolaterie in the worst way and my friend just suggested that I look for a community kitchen, or a kitchen in a business that might let me rent. I stumbled across your blog and it was very insightful. I really appreciate you taking the time to write it. I had a couple questions for you, and you mentioned that people call and talk to you. How could I go about contacting you? I didn't want to just call your business because that seems a tad unprofessional. I don't need much space at all, I would love to work at night or early morning, I'm incredibly easy to get along with, and I can pretty much bend to any scheduling needs of the kitchen owner. I'll probably just be needing maybe 10 hours a week if not less since ill need to rebuild a client base. Also, I have no crazy remodeling plans and would never assume it was ok to come in and change someones business to fit my needs. haha. I look forward to hearing from you soon!

    ~Austin

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  5. You were right when you said there is not much information out there on the how to's of getting a food processing business up and running. My sister-n-law and I are starting Bella Sweet Boutique, we will be an online boutique but will also be selling sweets like pies in a jar, cupcakes and brownies. These will be sold and served to restaurants and coffee shops. People can also specialty order for parties and events. We are working with wedding planners and have some interest there as well. We have registered with Portland to do business and we have a registered kitchen that will rent their kitchen to us. It is a school and we will be using it at night. It is in Lake Oswego, so I still need to get my business license there. My question is since it is already a certified kitchen do I contact Clackamas County and let them know we will be using the kitchen for our business, so they can inspect it? What things do we need to be aware of for the inspection? Is there some sort of checklist out there I can look at as we set up? All people working in the kitchen have their food handlers license and we have business insurance. What am I missing? I do not want to do something that gets the school kitchen in trouble or the restaurants serving our pies. I appreciate your post and any direction will be appreciated. Wishing you continued success!

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    1. I'd like to know that same info ... can I help you write up a checklist?

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  6. Portland Community College has a 12 week course titled "Getting Your Recipe to Market" and is partnered with New Seasons and OSU's Food Innovation Center. http://www.pcc.edu/climb/small-business/recipe/

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  7. Nice Blog,Thanks For Sharig Information.
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