Renting a Kitchen

Hi, Jennifer. I actually started out by renting part of another caterer's kitchen. That worked well for me for a while - though I was doing cakes at the time, with heat-sensitive buttercream - so it was tough to be working where they put me, which was pretty close to their ovens. Below are some important considerations.

 

With respect to setting price:

1. I looked at comparables for renting other workspaces ($ per square foot) and also comparable purchase prices for commercial kitchens (then figured out what my mortgage might be if I were to get a loan to buy that kitchen). I then used these various figures to triangulate on: (1) whether I could afford to buy right away (I decided to rent first) and (2) a fair MARKET price for renting. I then chose a lower number than that market value for the proposed starting point in my negotiations with the caterer, recognizing that I would also have to pay them some extra for shared utilities.

2. I also had a business plan, which anyone starting in business should write. Part of your business plan should include a proforma income statement that projects your revenue and expenses over a reasonable period of time. Your expenses should include costs of: ingredients, labor, space rentals or mortgage, utilities, packaging/shipping, and other overhead. If you can't project a return on any initial investment (or can't cover your total costs) in a reasonable period of time, then you should should reexamine each cost element to make sure it is in line with industry standards and what you can afford.

 

Other considerations when renting/sharing space:

1) Will you have designated baking, storage and decorating areas? For cakes, it's imperative to have your decorating space pretty far removed from your ovens; it's also wise not to share refrigeration with savory (stinky) items so your desserts do not pick up off flavors. It's also nice to have allotted storage space so you don't have to schlep ingredients and tools from home each time you use the kitchen.

2) Will you be able to receive customers in this space?

3) Will they be charging you an allocation of their utilities and overhead, which they reasonably should since you are sharing electricity, water, etc. (This cost element should also be estimated in your planning process and negotiated.)

4) What are their hours of operation and when will you have access to the building? This is especially important to understand, especially if you anticipate having to work odd hours there around another paying job.

5) Do you like/respect/trust the people from whom you will be renting? (This is really quite important if you are subletting or sharing space.)

6) Who will assume the cost of repairs, esp. of any shared equipment?

7) Term of contract (i.e., length of agreement)

8) Conditions of terminating contract

 

These are the biggies for now; I'll let you know if I think of anything else.

 

Best of luck!

 

Thank you very much Julia.  I have been putting off writing my business plan so that will definitely be the first thing I do.  The business part of making cookies is all new to me. I appreciate your response.

Good luck!

This was a great help to me as well, since I have just started looking into renting kitchen space at an incubator kitchen. I have been putting off writing the business plan as well! It's like having a school report to write...I keep procrastinating! Do you have any advice on were to find a good business plan template online to use? I found a couple, but wondering if you knew of one specifically. Thanks! 

I don't have a direct link to one offhand. I went to business school and worked in business consulting for many years, so writing a plan was sort of second nature to me. I'd offer a copy of mine from my cake business, but I have no idea where it is some 8 years later. 

 

Your local small business association or commercial lender could certainly give you a good guide as to what it should contain, particularly if you're seeking financing. I'd start there - but basics should include concept/mission statement; target customers; profile of competition and how you're distinguished from them; market overview (to gauge your potential market share and revenue); financial projections; etc.

Thanks for this! I found a couple that I will muddle through. It's not for financing, just to give to the incubator kitchen I'd be renting from. I just need to rip the bandaid off and write it!

Maybe, you can rent the kitchen of a Community Center for a few hrs, at home I have a litte combined microwave/oven and most of my baking tins don't fit,  i do this sometimes, because they have professional kitchen equipment like convector ovens, big ones, and stainless steal tables, long ones, easy to clean etc... and its is cheap, (here in Holland)

Hope this helps... Best of luck  

Patricia, I have thought of that and will ask my town, but I am not hopeful.  I will have to call around to some local caterers.  I need to write my plan and do things like register my business.  One day I would love to buy my own kitchen.

Jennifer - Another idea: Many churches have Dept of Health-approved kitchens that are pretty underutilized most of the week. They would also be useful to explore, especially if you have a relationship with any.

Yes, I have thought of that too, Julia.  Now I have to just get moving!