Local is hot. It’s the buzz word of food marketing and everyone is getting on board. The Bay area (and Davis, too!) is over-flowing with foodies who drool for small batch, artisanal nibbles. In the grocery industry, “local” is one of the fastest growing markets. Never mind that there isn’t really a standard definition in terms of distance, although the Davis Food Co-op defines local as within a 100 mile radius. Local implies fresh, community growth, and a low-environmental impact. But the real up-and-comer buzz phrase in the food world? “Made in a home kitchen.”
As of January 2013, California has joined at least 32 other states that have passed laws that allow small business entrepreneurs to use their home kitchens to prepare for-sale foods that are not potentially hazardous. Supporters say the Cottage Food Law of California, also known as the California Homemade Food Act, will help eliminate barriers for small business entrepreneurs to enter the market. According to the bill, it will “help to supplement household incomes, prevent poverty and hunger, and strengthen local economies.”
Before this law passed, aspiring home cooks and bakers faced trying to find a commercial kitchen and having to come up with $50/hour or more to rent space. They were also forced to jump through regulatory and zoning compliance hoops. The regulations for operating a CFO or “cottage food operation” vary from county to county. Some are more strict than others. Fortunately, the Yolo County Department of Environmental Health has embraced the new law. They even made a handy informational video.
However, if you’re considering getting a permit to sell those amazing cookies (the ones that everyone begs for), you might want to think again. Fredrick Smith, COO (Chief Operating Officer) of Forage Kitchen, a fledgling incubation kitchen soon to be in SF, says “you need to have a solid business plan and really crunch the numbers before quitting your day job to do this.” Smith, a recent UCD graduate in the MBA program, gave a very informative overview of the law in late February on the UCD campus, to a small but excited group of hopefuls. The law has sales limits of $35,000 (gross revenue) in 2013, $45,000 in 2014 and $50,000 in 2015. Smith stressed to future start-ups, “Don’t forget to pay yourself a salary. I’ve seen very smart people fail because they didn’t think to pay themselves.” The law is intended to increase opportunities, but not necessarily to allow folks to immediately strike it rich. It’s intended to encourage people to work out the kinks of a notoriously shaky venture (food sales) before investing loads of money. The law legally allows entrepreneurs to figure out who their customer base is, what they want, and how much they want to spend on it. It seems designed to help first-timers build a strong foundation to impress investors when the time comes to expand into a more commercial setting.
It’s an exciting time in the food world! As a grocery store and community hub, we can’t wait to see all of the interesting off-shoot businesses that might crop up to cater to food producers. And of course we’re drooling for a slew of new, local products. There is potential for innovative food events (home-grown food pop-up events, supper clubs, food truckish goodness), collaborative marketing, web design, social media integration and more. People are clamoring for home-made, rather than industrialized food, and the law is finally making space at the table. So the question is... what foodie business are you cooking up? (Tell us, so we can follow you on Twitter!)