Shared-Use Kitchens And Their Tenants: A Shared Path to Financial Sustainability
In Edible-Alpha™ Podcast Episode #14, Tera talks with Adam Haen of FEED Kitchens, a shared-use kitchen that also serves as a business incubator for food businesses like small-batch bakers, sauce makers, caterers and food carts. They have 5 kitchens, including: a training kitchen, a specialty/meat kitchen, a bakery, a deli, and a vegetable kitchen. In addition to providing reduced rates to nonprofits and community groups, FEED also has many community programs like its Bakery Training Program, which provides baking, cooking and customer-service skills to long-term unemployed and underemployed populations.
It took $1.4 million of initial investment to build FEED and would not have been possible without extensive community support. Their current location includes 5,400 square feet and currently has more kitchen space than storage space, prompting the need to expand and add storage. FEED now has about 3 and 1/2 full time equivalent employees and has their kitchen in use on average about 35% of the time, though weekly use varies considerably with the seasonal nature of food. About 80% of their revenue is from fee-for-service use of the kitchen. They would need to be at about 45%-50% use (24 hours a day, 365 days a year) with a few more “anchor tenants” using the space on a more regular basis to completely cover costs with fee-for-service revenue only.
Membership to use the kitchens at FEED includes orientation on the use of the equipment and extensive technical assistance to help navigate the many permits and other necessities needed to begin and operate a food business. In addition, Adam helps these entrepreneurs with business planning and developing a defensibly unique business. This includes helping them understand the need to raise money (maybe $50,000 if you are starting a food cart) and that they need to reach the proper scale to achieve and maintain profitability. Most entrepreneurs don’t realize the complex and expensive nature of starting any type of food business, regardless of size, and the technical assistance provided by Adam and FEED helps these businesses be successful so they can “graduate” from their kitchen, usually in 2-5 years.
Adam is also part of the team providing technical assistance to participants in the MarketReady program, an initiative focused on providing training, supportive services and micro-grants for entrepreneurs interested in becoming Madison Public Market vendors. Adam and FEED kitchen were recently profiled in the Isthmus.