Cottage food start-up sales, aided by food incubators, have soared from $5 billion annually in 2008 to over $20 billion annually in recent years. Chances are if you can make it, there is a market that will buy it – provided you are prepared to do more than just deliver the goods.
The benefits of bootstrapping a food start-up come from being able to dive right in without significant upfront costs, while the downside is a lack of resources that will allow you to grow consistently. However, food incubators offer a solution to a lack of resources so that you can have your cake and eat it too.
If you are known as the local chili specialist or have the chocolate lava cake recipe everyone is always asking for, then a specialty food business might be ripe for future success. While some homegrown food start-ups will grow to regional distribution in under a year, others will struggle to get out of the local farmer’s market.
What they have in common is that all food startups are started by real people with a concept they believe in. The difference between the two is strategic resources.
Photo Credit: Peerspace, Bite Unite Commercial Shared Kitchen
What Is A Food Incubator
To begin with, most cottage food businesses will be making high-value goods in low quantities, a sure recipe for quality but one lacking in a plan for scale and growth. No matter how good the idea is, you’ll need to front the investment for commercial space or a licensed home kitchen (depending on state law), equipment, and possibly most time-consuming, find your way through laws, licensing, and insurance.
The average start-up cost for a food business can easily be in the neighborhood of $100,000 before you’ve even labeled your first hot sauce.
The solution? Enter the food incubator model of the 1980s; a communally licensed and shared kitchen space. To “incubate” a business idea is to give resources to a fledgling idea before it leaves the nest.
Kitchen Incubators
Food incubator, shared kitchen, cloud kitchen, and ghost kitchen all refer to a magical place to start your food concept without the need for a big investment. These licensed commercial kitchens have been a place where small food business renters have the umbrella of shared preparation space, storage, and commercial equipment while sharing the costs with other creators. Kitchen incubators have allowed tens of thousands of “foodpreneurs” to start with minimal resources. These spaces can be rented hourly or monthly with limited contracts, allowing foodpreneurs who outgrow the space to move on and scale up without the liability of a long-term lease.
SAPi APP is an example of how a platform can make a great food incubator for a new business.
Platform Incubators
Kitchens aren’t the only business incubators available to hustling food entrepreneurs. A food APP platform, like Save A Plate (SAPi) , can also can address meaningful resource gaps as you grow. Food start-ups are more than the product. You can have the hottest biscuit in town, but without the ability to market, show proof of concept, and connect with your community, your biscuit will get cold.
This is where a digital platform, like a food APP, can help you fly. A crucial part of any operating budget is in marketing and sales. SAPi is a food incubator in the sense that it provides a shared platform of resources to reach a broader customer base. It also advertises for you, connecting your food concept to a local community looking for unique, fresh plates and products.
A food APP gives you the exposure you need without the legwork that usually follows. An APP also provides an organic marketing opportunity where the product pitch is coming from an established platform instead from just the creator. It also gives you a level of professionalism that is naturally associated with aligning yourself with a well-respected platform.
Utilizing a food incubator APP like SAPi will help you:
Reach new audiences.
Give you a place to trial concepts.
Save money on marketing costs.
Save valuable time.
Allow you to focus on the details of your product instead of sales.
Join the SAPi APP as a vendor, or find your local plate here.
Whether you are selling your famous oatmeal cookies or artisan sourdough bread, at some point, after the millionth question you’ve received about ingredients, calories, or volume, you’ll want a label whether it’s required or not.
Laws in every state have been written to help companies referred to as; home-based kitchens, cottage food businesses, or homestead businesses to comply with food health and safety while allowing commercial operations in domestic locations.
We’ll dive into the ins and outs and food labels and the reasons that this information is always good to have on hand, whether it is mandated by state law or not.
In this guide to Cottage Food Business labeling, we’ll explore the following:
Who Requires Labels
Examples of Home-Based Food Production Labels
Why You Should Have a Label, Whether It Is Required Or Not
Resources To Help Create A Label
Each State’s Cottage Food Law For Labeling
Who Requires A Label
Most states require some version of labeling for home-based food products. However, the actual contents can range from essential to complex depending on the stipulations of Cottage Food Laws in your state.
Suppose you decide to partner with, for example, a local coffee shop to sell your baked goods, a farmer’s market, or a retail outlet. In that case, they may also have their own standards to ensure safety regulations are met and to minimize liability.
Some states have exemptions for:
Hot, ready-to-eat foods
Simple Items with low nutritional value; coffee, tea, etc
Spices
In all cases, you should check our guide below for what each state’s Cottage Food Laws mandate. Below we indicate typical information asked to be included on home-based food labeling.
Typical information found on food labels includes:
(1) The name of the food product located on the primary panel.
(2) The name, city, and zip code of the Cottage Food Operation (CFO) that produced the food product. (A contact phone number or email address is optional but may be helpful for contact in case a consumer wishes to contact you.)
(3) You must indicate it was prepared in a home kitchen by one of these statements, depending on state regulation, in 12-point type on the principal display panel:
“Made in a Home Kitchen”
“Repackaged in a Home Kitchen”
“This food is made in a home kitchen and is not inspected by the Department of State Health Services or a local health department.”
(4) The registration or permit number of the CFO who produced the cottage food product (if applicable).
(5) The ingredients of the cottage food product, in descending order of weight, if the product contains two or more ingredients.
(6) The net quantity (count, weight, or volume) of the food product, stated in both (pound) units and metric units (grams).
(7) A declaration on the label in plain language if the food contains any of the major food allergens such as milk, eggs, fish, shellfish, tree nuts, wheat, peanuts, and soybeans.
Regarding allergens, there are two approved methods prescribed by federal law for declaring the food sources of allergens in packaged foods: a) in a separate summary statement immediately following or adjacent to the ingredient list or b) within the ingredient list.
Examples Of Cottage Food Labels
If you’d like to know what it looks like to create a label for your products, many states provide mockups for what meets regulations.
South Carolina’s Department of Health and Environmental Control released this example under their amended October 2022 Home Based Food Production Law Guide.
South Carolina Cottage Food Label Specification
Why You Should Have a Label On Hand No Matter What
You may be a part-time home-based food producer who only sells on the weekends at the farmer’s market or to friends and think, I don’t need labels!
If no one requires you to have a label, why should you bother investing effort, time, and money out of pocket? There are a few benefits to having this information on hand that goes beyond meeting regulations. Even if you don’t put it on the physical product, keeping information on hand about nutritional values, ingredients, and sourcing can come in handy when you least expect it. Here are five solid reasons to make creating labels a priority.
1. Streamline Questions From Customers
People will ask all the questions. What are the ingredients? Do you know the caloric content? Is it gluten-free? Does it meet an allergen requirement you may have never heard of?
Consumers have a right to know all of the above, and even if they are satisfied with your answer, you may not want to answer the question several times over. You also might not be available if you end up hiring staff to answer every question, and a label can help your staff point the customer in the right direction.
2. Free Marketing
So you make the best BBQ sauce this side of the county? What better advertisement is there than a label on your product while it goes to a family get together or event? Never miss a free marketing opportunity by having your product do the talking when you aren’t around. Adding your social media and contact information is also a great way to get leads and gain momentum in your customer base.
3. Levels Your Business Up
Intuitively customers trust a brand that looks polished and professional. Your product might be made in a home kitchen, but if you put effort into making it, you should communicate that passion in the packaging. When you make social posts, a sleek labeled product will help separate you from the pack.
4. Shows You Are An Authority On Your Product
Adding nutrition, allergen, and health benefits information shows that you’ve put thought into your products. While you may not need all categories of information (check your state’s regulations in our guide below), adding it demonstrates that you know your product intimately and have done the research.
5. Opens The Doors
Building on all of the above, a labeled product infers that you are ready for partnerships with retailers, events, and expansion. A polished label will open the door to opportunity in a way that an unlabeled and “green” looking product may not.
Resources To Create Your Own Food Label
The good news is, you don’t need to be a graphic designer to put together your own labels. There are plenty of easy-to-use tools online that will help you put together the needed information, design, and print them with ease.
Nutrient / Nutrition Labeling and Analysis
You don’t need a lab to do your ingredient analysis and create a professional-looking nutritional label. Each of these online generators has free options. All you need is a set recipe with defined measurements, and the generator will do the rest. You can save the nutritional information box generated and pop it into one of the design programs below.
In addition, these platforms are a great way to experiment with recipes, especially if you have a health target like a “low calorie” product. Adjusting ingredients will help you envision where the recipe needs to go to achieve the goal.
You don’t need to have knowledge in complicated design programs to throw together your first label. If you feel intimidated, reach out to design friends or try freelance sites like Upwork, Envato, or Fiverr to hire someone. Freelance designers can range in price depending on experience, but it’s not difficult to find an economical option.
Here are several sites to design labels on your own.
Forming a relationship with a local printer is always helpful for a number of reasons. You can work together in real-time on location to get your label locked in perfectly. In addition, there is also generally faster turnaround and lower minimum order quantities if you explain that you are a new business and want to grow with them. Plus, it’s always great to support a local business.
However, this isn’t always an option. You could opt to print your labels at home. Conversely, as you scale your business, the pricing may be better with larger online companies, albeit less personal. Here are a few options for online printing services.
Below we have curated a list of resources for Cottage Food Laws in each state. When possible we listed the government link for the Cottage Food Law in that state. The regulations, labels requirements, and exemptions vary from state to state and are essential to understand before launching your food business.
The Ultimate Checklist For Starting A Catering Business
For many entrepreneurs who want to dip their feet into “foodpreneurism,” going all out with a full dine-in restaurant may seem daunting. However, a private catering business is the perfect intermediary step to test the waters, work out your menu, and build your reputation in the local food world.
Catering has become an umbrella term for many food hustles, including private events, regular pop-ups, or even a weekly stand at the Farmer’s Market. Catering is the perfect entry point into a food business for those with entrepreneurial dreams but without the hefty initial investment or desire to swing full-time kitchen life.
Benjamin Franklin once said, “If you fail to plan, you plan to fail.” From that wisdom, we have created the Ultimate Checklist For Starting a Catering Business.
Why Start A Self Catering Business
After COVID shook the food world to its foundation, many people gravitated towards a food business model less susceptible to unforeseen changes. As a result, catering businesses saw a 5.5% surge in 2022, which amounted to over 30 000 individual catering operations in the United States.
Running your private kitchen or catering service can have a lot of benefits over other types of food business models.
They have versatility. Menus, hours, and offerings can change as the business evolves.
You can make your own hours. Anyone in the restaurant industry will tell you there are no weekends and few holidays in a brick-and-mortar business.
Lower liability. While catering liability insurance is a good idea, you won’t have to worry about the regular maintenance of a standing restaurant.
Low overhead costs. Depending on where you operate, you might have little to no rent. Ditto for utilities and
Low initial investment. The money needed to start a catering business is relatively minimal at the beginning, and if you reinvest your profits wisely can be built as you grow.
Can be extremely lucrative. Due to the minimal overhead, low staffing needs, and fewer middlemen, catering can have big profit margins.
Opportunity for creativity. Catering offers a great way to stay creative with custom or seasonal menus that can change as you learn and grow. By comparison, a restaurant menu needs to stay more or less the same to reduce logistical hassle and to maintain tight margins.
Finally, catering or running a private kitchen can be a much more intimate experience than running other types of food businesses. You have the opportunity to work closely with people to create bespoke menus and be part of setting the ambiance for special events. It allows you more personal access to the community and a genuine opportunity to create connections.
So what do you need to know before you jump into self-employment and start your catering business dream? We’ve created the ultimate checklist to consult before your first gig.
The SAPi Self Catering Business Eight-Step Checklist
The Eight-Step Checklist To Start Your Catering Business
1. Do Your Market Research
The first and most important step to founding your self-catering business is complete due diligence on the market’s potential. This means studying the competition, examining gaps in the market, and comparing pricing. Of course, you don’t want to enter the market blindly, against obvious competition, or by outpricing yourself. You don’t want to walk into an oversaturated plan unless you are looking to disrupt the market.
Before you move on to the next step of opening your catering business be sure to know:
Competition
Pricing
Targeted customer base
What food niches or services are underserved
2. Draft A Business Plan
Unfortunately, just being known for your food quality and reputation are not enough to create a sustainable business. Drafting a plan from the start is imperative to understand what is ahead and to create a long-term strategy. Failing to plan can land you in difficult situations without the tools to recover.
Part of your business plan will be the market research you have already done. In addition to having proof of concept, an idea of your audience, and an understanding of your competition, you’ll need to develop a roadmap. This should include the following:
A mission and vision statement.
Your unique value proposition.
A twelve-month budget of expenses and projected income.
A plan to reinvest profits into growth.
Funding plans.
Menu with cost-out projections.
A marketing strategy.
A note on setting your business budget and projected costs. Entrepreneur Magazine estimates that self-catering business start-up costs can run anywhere from $10,000 – $50,000, depending on the scale of your project.
Don’t let this discourage you if you are cash-strapped. There is a great ability to make a good profit margin with a catering business and you can invest in your equipment inventory as you go. In addition, you won’t necessarily need a commercial space to rent. However, you may also be able to finance a self-catering business for much less than $10,000. If you are bootstrapping and light on start-up cash, consider applying for a small business loan or looking for investors – in which case a complete business plan will be a necessity.
3. Draft a Menu and Set Pricing
Start with a rough draft menu of signature items that you have a proof of concept for – and had good feedback from. Then, build on those items with dishes that meet an unfulfilled niche or can compete with what is already in the market.
Ensure that the menu has ingredients that can be regularly sourced and can meet your price point. For example, avocados as a year-round ingredient can be difficult to source and have a fluctuating price point.
For catering, consider a customizable menu with multiple options and price points for different packages. Set pricing that is within the range of market competition that also meets the needs of your profit margin. Pricing is a science and something that can be difficult to change after creating a loyal customer base.
Lastly, you’ll need to address a minimum order quantity and lead time. This should reflect the speed at which you can procure your ingredients from suppliers and the minimum order quantities they require. You’ll also need to make sure that the total order value is enough to cover your costs. This can include staff, set up, breakdown, and other variables.
4. Get Legal; Licensing, Insurance, and Permits
You will need to check your local requirements. However, most states require any food business to obtain a business license, insurance, and potentially permits.
Licensing will come with the formal incorporation of your business. In addition, you may need liquor licenses, health and safety, and food handlers permits. Venues you service may cover part of these requirements.
Business insurance is imperative in protecting your catering company in the case of the unexpected. It is not only wise to protect your assets and shield you from being sued, but it may be mandatory.
Furthermore, there are several kinds of small business insurance, the most common being general liability coverage. Other types of coverage you might consider are commercial property insurance, business interruption insurance, employee insurance, and personal liability.
Before you launch your self-catering business, investigate the licenses, insurance, and permits you’ll need with the United States Small Business Admistatrative services.
5. Make An Equipment List & Budget
You won’t have to start with much to launch a self-catering business. The great thing about having flexibility is that you can start small with the equipment and materials you have and scale as you grow. It is helpful to create a complete list of what you have (your assets), what you will need to start, and what you have on your wishlist as you grow.
No need to worry about buying everything new. Checking resellers like Craigslist for second-hand commercial equipment can be very cost-effective. One of the secrets to any food business start-up is to look for restaurants that are scaling their equipment and want to unload their older kitchen goods or even a business that is closing and clearing out. This can lead to great deals on normally expensive commercial equipment.
6. Plan & Execute A Marketing Strategy
Word of mouth is an invaluable touchpoint of marketing, but it won’t be enough to gain elite status. Fortunately, there are many strategies you can employ as a self-catering business to get the word out.
Decide where and how you want to spend your marketing budget. Set a monthly plan and adjust as you see what is working and what is not. Social media presence is imperative in modern times and if you aren’t savvy, hire someone who understands your goals and brand aesthetics to make regular posts to show that the lights are on and you an active business.
In addition, to considering where and how you want to market, you can do several other things to gain momentum and build traffic to your business.
Invite reviews and engage with your commenters.
Give a real-time look at your business with regular photos and videos of events.
Get personal, invite people into your business to see how things are made, and meet your team.
Engage, engage, engage! Create conversations on your and other local social media sites.
Encourage your friends and happy customers to spread the word and photos of your events and signature dishes. The opinion of others is possibly the most important free marketing you can get.
7. Create A Staff List
Creating your team is imperative. Even if it is just family to start, you should know who is available and when. Catering is usually geared towards weekends and evenings. Strategically speaking, you will need people who are available during these peak times and are alright with part-time hours.
Keep a primary list and backup list of available people. The worst scenario for any catering service is that you have the opportunity but not the staff to execute the event. In addition, consider potentially training staff on evenings when you don’t need their manpower so that they are ready to be called up for future events.
8. Plan Your First Gig, Contact Potential Venues
Your first professional gig when you are launching a catering business is crucial. Many people find it more relaxing to promote your business with an event that will have a friendly audience of people they know. Think about hosting an event with friends to get the word out, get great marketing photos, and spread word of mouth about your services.
Self-catering means that you will often be at venues for the first time. Be sure to check out the facilities well in advance. When doing a site check, take notes on entrances for loading, kitchen amenities if any, on-site equipment and electricity, and available staging items (like tables).
Lastly, if you want to spread your services to launch regular pop-ups, make connections with weekend markets and event promoters. Send them a menu or sample dish to engage them with possible partnership opportunities.
Top 5 Ways You Can Adopt Localism In Your Food Business
Why Local Tastes Better And How Supporting Your Community Is Important To Your Food Business
How can supporting local vendors and community members increase moral, create momentum, and boost your business at the same time? Let’s look at five easy ways to support local while running your food business and how they can help both you and your community.
Localism is the belief that goods should be created and purchased within a local area for the benefit of people in that area. It is the “Support Small Business” movement on a higher level supporting more than just the visible brick-and-mortar storefronts.
In addition, Localism draws attention to every part of the logistics chain from the farm to the packaging design. For example, a food business with a local ethos prioritizes seasonal ingredients sourced from local farms, uses a local fabricator to build its kitchen setup, and supports community initiatives.
Supporting local suppliers and vendors should be a top priority for small food businesses. An ecosystem of community partnerships shows an investment in your neighborhood and can pay off in dividends should you need help or advice. In addition, a purchase from a local farm to fuel your menu shows personal loyalty and expresses support with your dollar to hard-working local families.
Finally, there is no stronger community than the small business community who will rally behind each other in the hardest of times and the biggest of successes. A vote with your business dollar is a vote for the community you want to see thrive.
So how can a food business adopt a localist perspective while gaining brand loyalty along the way? Let’s break down some of the ways your daily business decisions can positively impact your community and foster a sense of togetherness in your community.
Top 5 Ways You Can Adopt Localism In Your Food Business
At the end of the day, supporting locally owned businesses outside of your own creates a more vibrant community linking people in a nexus of economic and social relationships. Here are five ways you can lead the charge in localism.
Support local farms, distributors, and grocers.
Support your local farms. Grabbing your produce or meat cuts from the farmer’s market or having a direct relationship with a local farm will not only help the quality of your menu but forge invaluable relationships with the local food system. Even if you live in a city without farms, there are ways to support the circular food economy.
When possible, pursue the most local farm possible and arrange for a group delivery among other interested food businesses. Support a locally-owned family grocer. Supporting local food growers and distributors is supporting a healthy local food ecosystem and will get your stock to you with a lighter carbon footprint as well.
Support local packaging suppliers.
2. Look for packaging supply locally. When you are a new foodtrepreneur, just starting out, it can be challenging to meet high minimum order quantities. Not only does supporting a local supplier help support local families, they might also be willing to work with you as you grow. In addition, local suppliers can put a face with a name that creates a personal connection where you are mutually invested in each other’s growth.
Support local talent.
3. Hire local services. From the architect to the accountant, source your backend needs within your community members. You’ll likely find recommendations within your community to keep your dollars within the local working economy. This small show of support for local talent goes a long way in modeling your values.
Support local artists and musicians.
4. Need art? Look local. While not everyone will have a sit-down restaurant that needs a mural or a food truck that needs a splashy paint job, all food businesses need a local graphic designer. Support local artists on with artwork on your walls. Use a local graphic designer to create our logo or menu. Work together with an aspiring artist or designer. Not only are they providing a service that they will then spread organically through their social media channels, but you are also helping to grow the culture in your community and an artist’s portfolio.
Support local youth sports teams with banquets and promotions.
5. Support local sports teams and creative events. Donating to the local sports team so they can travel to a big tournament or to a local art walk night has deep and meaningly intangible value. Consider hosting a celebration for the local sports team or an open mic night for aspiring talent. Aside from supporting the people who support you, donating to these causes fosters brand loyalty.
Final Tips On Taking On a Local Approach To Your Food Business
Is it easy to take a localist approach in a competitive food community? Not always. This difficulty can be especially apparent if you are in an especially saturated large foodie-centric city, like Austin, Portland, or Seattle for instance.
Whether you are a start-up catering business, provide home delivery, or are a full-fledged cafe, there are always ways to support your local community. What you put into your neighborhood will repay you tenfold.
Start with your immediate neighborhood if you are in a bigger city where the business community is less intimate. Is your neighboring restaurant not so warm at first? Did you pull up next to a fellow food truck as the new guy and got a dose of side-eye? Kill them with kindness. Send over your signature plate of food. Be the change you want to see in your food community. Set the example for a localist approach and commit to helping other foodpreneurs, especially the ones who look as lost as you did on opening day.
