For entrepreneurs interested in starting food businesses, the hurdle of finding a commercial kitchen can be one of the toughest barriers to entry. Not only is kitchen space hard to find, but the intricacies of regulations from different licensing agencies supervising different types of food production can feel confusing and even daunting.
Here is some basic information that can help your clients to navigate this tricky territory:
- Food that is being sold retail should be made in a kitchen licensed by a local health department, such as the Kitsap Public Health District. Retail food businesses include restaurants, food trucks, farmers market concessions, and home meal delivery services.
- Food that is being sold wholesale, that is, through a third party, should be made in a kitchen licensed by a state agriculture department such as the Washington State Department of Agriculture (WSDA). This includes most packaged food products, as long as they are being sold within a single state and contain no more than two percent meat.
- Food products that contain more than two percent meat or are going to be sold in multiple states should be licensed by the United States Department of Agriculture (USDA). Unfortunately, the agency is stretched thin and doesn’t have much capacity for working with small startup businesses.
- Most states have cottage kitchen laws that allow food businesses to license home kitchens for commercial use. However, food prepared in a cottage kitchen cannot contain ingredients that licensing agencies consider to be high hazard, such as uncooked dairy products. In addition, there is often a cap on the dollar value of food that a business can sell if it is producing in a cottage kitchen.
A food startup can save money on rent and equipment by working out of a licensed cottage kitchen. However, a food business poised for growth will eventually find this constricting because home kitchens don’t usually have the capacity for high volume production, and the limitations on allowable sales volume can hinder a company’s ability to grow.
A good starting place is to think about short, medium, and long-term goals. For someone who is mainly interested in staying small and making a bit of extra money, a cottage kitchen may make perfect sense. Someone with limited capital and ambitious plans might be better off renting space in a licensed kitchen, at least during the startup phase. And someone with big plans and sufficient capital may be ready to build and license their own commercial kitchen right off the bat.