With one of the most diverse populations in the world and an internationally acclaimed foodie scene, Southern California is a prime location for culinary entrepreneurship. From brick-and-mortar establishments to food trucks and farmer’s market sales, restaurant professional and SBDC Consultant Greg Bell examines how to get started in this field.
In his first year as a consultant at Mihaylo College’s office of the Small Business Development Center (Lead SBDC), Greg Bell has reviewed numerous business plans for restaurants, catering, food trucks, commercial kitchens, farmer’s market stands and other food-based concepts. His advice: The sector can be a rewarding entrepreneurial path, but feasibility and a strong business model is essential.
“A business plan needs to be a short, concise description of you and the business you want to start,” said Bell at a recent SBDC workshop at the Cal State Fullerton Irvine Center. “It has numbers and facts that present your business as a success. I like to think about feasibility as literally ‘can I do this?’”
Bell, the former executive chef at The Fish Tale in Long Beach, previously worked for six years in the Irish pub concept Bennigan’s, opened 24 locations with Koo Koo Roo’s Restaurants and was the first operating franchisee of Blaze Pizza. With more than 23 years of experience in catering, Bell recognizes the many niches of the food-based business sector, which encompass a wide range of financial commitments.
The Startup Cost and Commitment
In examining the various subsets of the field, Bell summarizes the cost of launching concepts as follows, while noting that the actual price tag varies greatly based on the individual business model, location and numerous other factors:
- Cottage food operations $1,000-$2,000
- Certified farmer’s market sale $2,000-$3,000 (per market)
- Commercial kitchen/co-packer $15,000
- Catering $15,000-$20,000
- Food truck $30,000-$50,000
- Traditional brick-and-mortar restaurant $80,000
Here’s an in-depth look at each of these paths.
Cottage food operations
These are home-based food startups, such as baking cookies for sale or preparing fine candies for special events from your residence. These can be governed under Permit A, which does not require an inspection, and Permit B, an inspection-based allowance for more complex operations that involve cooking for retailers or guests.
“This is an excellent way to start out, with low cost of entry and low volume of production that makes it possible to get started on the road to a commercial kitchen or co-packer,” says Bell.
Commercial kitchens or co-packer operations
Where do caterers, food trucks or others go to prepare their culinary delights? Many use incubator kitchens, rental-based facilities providing a food court of sorts that acts as an incubator of their entrepreneurial concepts.
“With a commercial kitchen, you are allowed to produce items, such as dairies or jerkies, that you can’t make at home,” says Bell. “Virtually anything that can be made in a restaurant can be made in a commercial kitchen.”
In addition to establishments specifically designed for kitchen rentals, existing restaurants and churches can offer similar venues for entrepreneurs to try their hand at food preparation, usually offered through rental.
Co-packers make what they are told to make by another party and package it. They blend spices and ingredients and implement packaging, enabling consumer packaged goods (CPGs) to be marketed and presented ready to the consumer.
Farmer’s market sales
With the rise of health consciousness and organic growing, farmer’s markets are a growing concept, with many communities having at least one market meeting at least one day or night per week.
In addition to providing a sales location for local agriculturalists, farmer’s markets provide an inexpensive, part-time outlet for food concepts of all kinds, which may have been developed in a cottage or other environment. Users pay for a table space.
“You are getting exposure, but you are paying to be there,” says Bell. “You can pass out samples and business cards and generate business by having a visual.”
In recent years, food trucks have increased in popularity in the United States, and California boasts nearly a seventh of such establishments nationwide. Expanding beyond ice cream and cotton candy, mobile food establishments now encompass the full range of culinary delights.
Food trucks offer mobility and ease of access to your product. However, it requires the commitment of working in a controlled environment and satisfying the rules and regulations of each individual municipality that is part of the service area, including storage requirements.
Bell says entrepreneurs in this space should expect to spend about $3,000 per month to lease and prepare for a food handler’s permit, fire inspections and insurance.
Space is also a challenge. “Diagraming your food truck is essential, to see where everyone will stand,” says Bell. “You have to do everything without even moving your feet.”
From weddings to corporate functions, catering serves a broad clientele. “Catering is the fingerprint of food presentation,” says Bell. “You never have the same event twice.”
By providing a slower start with less up-front investment, catering can be a “grow as you go” business, starting initially in a given geographical area and serving a particular client or event type, and then expanding as conditions warrant.
Efficiently obtaining directions from clients and recognizing the best approach to use based on the facilities available are some of the considerations that must be routinely made to be successful in this field. Having a strong vendor also provides flexibility and versatility.
Gamma radiation, the industry standard for safely sterilizing environments, is particularly useful for caterers in maintaining optimal health standards in diverse locations.
“This is one of the most creative pursuits in the food business, because you create the events and the memories,” says Bell.
Signing a lease and launching your concept is the big step of the brick-and-mortar restaurant, the coveted prize of many culinarians. Two factors are essential: location and lease.
“You have to show your landlord that you are stable, credible and have the ability to go forward, so having three months of payroll and six months of vendor payments and utilities available at the get-go is desirable,” says Bell. “While $80,000 is the bare minimum for start-up, $150,000 is more desirable.”
The challenge of starting a traditional restaurant is the need to put money in before opening your doors or hiring your first employee. Once in business, the restauranteur will have to perform accounting, human resources, administration and marketing functions, in addition to food preparation. “It is like having a dinner party for 300 or 400 of your closest friends every day,” he says.
Bell says he and the SBDC staff are available to review leases, assist with brokers and identify locations, help you work through your startup financial projections, and even connect you to their network of bankers if you need a small business loan.
For More Information
Through the six-week SBDC EATS incubator program, fostering food-based entrepreneurship in Orange County, the Inland Empire and Coachella Valley, Bell is assisting startups throughout the region in developing versatile and viable business models and connecting them with the funding sources and industry partners needed to thrive.
For more information, visit SBDC EATS online. To schedule a no cost, no catch consultation with Bell at the SBDC at the Irvine Center, contact him at 657-278-1801 or reach out through email at email@example.com.