Incubators, like Union Kitchen in Washington, DC, though, can help entrepreneurs fill in their knowledge gaps and find footing within the larger manufacturing and retailing communities.
“Many individuals come to us with a passion, with a dream or a skill set. But not all of them have the business acumen to really make a business succeed – especially in the food industry where margins are small and competition is fierce,” said Mary Beth Marks, director of marketing and partnership at Union Kitchen.
She explained that Union Kitchen helps “round out that picture for each of our members” by pooling resources to access shared commercial equipment at the incubator’s original 7,200 square foot kitchen or its new 16,000 foot facility, which features “pods” for more permanent set-ups.
“We looked to … form a community, so we have members who are coming in and getting to know their companions at their work stations to the left and to the right and they are helping to build cultures of accountability and shared resources and shared expenses,” she said. “So, not only do they share knives with each other, but also they share best practices.”
Union Kitchen is able to build this community in part by using a unique monthly membership structure instead of hourly kitchen rentals that may offer less interaction or continuity than the longer term monthly arrangement.
This membership model also helps separate determined entrepreneurs from hobbiests so that each member has a common goal to help bring them together, Marks said.
More than kitchen access
Union Kitchen also is unique among incubators because it operates “a series of businesses that help drive revenue right to members,” Marks said.
For example, the incubator recently became a distributor for some of its members, other affiliates that do not use the kitchen and alumni that outgrew the incubator.
The distribution arm has partnerships with retailers in the District’s metropolitan area and stretches up to Baltimore and Annapolis, MD. These include arrangements with area Whole Foods Markets, MOM’s Organic, Yes! Organic and soon with Giant locations in the area.
“What this does is create a pipeline so that within Union Kitchen you can make your product, move your product and sell your product,” Marks said.
She acknowledged that distributing for the same companies it serves as an incubator is a “symbiotic relationship” that easily could be “wrought for sticky negotiation and tenuous negotiations.”
To eliminate that risk, Union Kitchen charges a “simple percentage” of the amount quoted by the brand “so it is very straight forward,” Marks said.
The kitchen also requires a minimum order for retailers to ensure its delivery trucks go out full and efficient.
Catering to members and the community
“In addition to the distribution team, we have a catering and events team that is working to book businesses and special events all across the region” that use food and drinks provided by the incubator members, Marks said.
“This is a direct line of revenue for the members that they might not otherwise be able to secure,” she added.
A local store with local products
The most recent addition to Union Kitchen is a brick and mortar corner store in the Capitol Hill neighborhood in DC that serves as another outlet for members to stock their products and drive consumer awareness.
The store “is really helping to define what local can and should be in our minds. It is putting local products on local shelves that have been able to … showcase more than 50 members of Union Kitchen, as well as 200 products,” Marks aid.
A large focus of the store is showing consumers that “local” does not mean “specialty,” but that it can mean staples that are just as easy to access as national brands, she added.
A solid return on investment
These services, combined with access to the kitchen and equipment, more than paid for members’ monthly fees last year, Marks said.
“We have a really nice calculator that we do every month where we give full transparency into the amount of money that goes in through the facility, through rent and repair and maintenance, as well as the money we are driving back through catering and distribution,” Marks explained.
“And this month it was 146% return. So for every $1 a member gave us, we gave them back $1.46,” she said.
Joking, she added: “You are not seeing that anywhere except, as our director of finance says, in money laundering.”
Once again serious, Marks added that Union Kitchen, as with many incubators, “is about the surest and best bet when it comes to the food business, where margins are normally so small.”