It can be tough to make a living from commodity crops, but Wisconsin farmers may be in an ideal position to reap profits from value-added food processing. A wide variety of agricultural products are raised in Wisconsin. And many people living in nearby large urban centers are willing to pay more for unique and sustainably grown products.
Value-added processing can help Wisconsin farmers capitalize on this consumer interest. In nearly all cases, however, federal and state regulations prohibit commercial food processing in home kitchens and require small processors to purchase equipment that meets health codes. Because setting up this equipment can be very expensive, an increasing number of farmers and food entrepreneurs are pooling their resources and expertise to develop community kitchens.
Community kitchens offer specialty food processors, farmers, and caterers a relatively inexpensive place to license food processing activities. Kitchen clients are charged only for the time that they use the facility. They benefit from the technical knowledge of others using the kitchen, particularly those with extensive food processing, marketing, and business experience.
These kitchens can also support the local economy. “Community kitchens have been built to boost local job creation, diversify the local economy, and transfer ideas and technology from universities or companies,” says CIAS researcher Kaelyn Stiles. Stiles and CIAS Associate Director Steve Stevenson interviewed 17 kitchen organizers nationally. Private, public, for-profit, and non-profit kitchens were included in the study. Some kitchens were just getting off the ground, while others had many years of experience.
Some of the kitchens face significant financial challenges. The CIAS researchers found that successful community kitchens have clear goals, committed leadership, and solid plans for long-term profitability.
Successful community kitchens have clear goals. Recruiting potential kitchen users works best when the effort also has clear philosophical, economic, and social objectives. Enterprise goals will vary depending on whether the kitchen is organized by non-profit organizations, for-profit companies, universities, or state governments.
One Wisconsin community kitchen in the planning stage seeks specifically to promote local agriculture. The Kewaunee County Agricultural Tourism Association is working on developing this community kitchen to serve the needs of small, local farms.
Market research is an important step in the process of developing kitchen goals. It should survey potential clients and community leaders who will carry out the vision for the community kitchen project. “The kitchen project must generate enough support and energy in the community for it to survive past its original organizers,” says Stevenson.
“We found a well-targeted survey instrumental in planning our community kitchen,” says Karla Miller of the West CAP Crossroads Kitchen Incubator in Menomonie, one of three Wisconsin kitchens. The survey asked potential clients about equipment needs and the number of hours they would use the kitchen.
Surveying existing community facilities during the market research phase can also be helpful. A kitchen in a local church or community building may fit the bill with minimal modifications, at a fraction of the cost of constructing a new building.
Community kitchens are expensive to establish and maintain. As a result, financial self-sufficiency is a key issue facing community kitchens. Some kitchens generate enough income from rent to cover expenses, while others are supported by outside funding such as grants or public assistance. Based on their market research, organizers should decide whether they have sufficient potential clients to sustain a community kitchen before investing.
“Use conservative financial projections in setting rental rates,” says Stiles. Look at how other community kitchens have structured their rates, charging more for regular business hours or for the use of certain kinds of equipment.
Non-profit community kitchens often need long-term supporting grants or aggressive marketing plans to stay in business. For example, the non-profit West CAP Crossroads Kitchen Incubator is located in a visible downtown location and will house an established retail client. This client, a natural food cooperative, will act as an anchor tenant and a retail outlet for kitchen clients.
Community kitchens operated by for-profit companies typically stay in business by charging higher fees than non-profit kitchens. “One advantage of for-profit kitchens is their incentive to become self-sufficient,” says Stiles. A few for-profit companies with community kitchens have developed labels and product lines to supplement rental fee income.
Nationally, universities and state governments support some of the most successful community kitchens. In addition to regular community kitchen functions, they can offer additional regulatory and technical assistance. These kitchens report access to public funding and resources as key to their success.
State-supported kitchen incubators have also tapped into other government programs, like state welfare-to-work programs.
There is no blueprint for organizing a community kitchen. How a kitchen is organized depends on the original goal and the facilities, funding, and people involved. Through their survey, Stiles and Stevenson uncovered several unique strategies for organizing community kitchens.
Some kitchens are operated within a larger business incubator setting, such as the Superior Business Center in Wisconsin and the ACENet kitchen in Ohio. These kitchens were initiated as part of a larger effort to build businesses and promote job creation. Farmers and community members cooperatively operate some community kitchens, collectively paying rent and operating costs. Some have a kitchen manager to organize time, space, and equipment.
Most community kitchens offer shared-use kitchens-single kitchens available to several users-rather than private kitchens. Private kitchens tend to be more expensive and promote competition between clients rather than cooperation. Establishing kitchen guidelines can reduce conflicts about space, cleanliness, and product compatibility that can arise at shared-use kitchens.
Shared-use kitchens also offer networking possibilities. “At West CAP Crossroads Kitchen Incubator, we are building partnerships between farmer clients and food processing clients,” says Miller. For example, a farmer recently hired a licensed baker to make caramels for farm-based seasonal gift boxes. “We want clients to know that they don’t have to do it all-we can help them link to others who have the expertise that they may lack,” Miller explains.
One idea that surfaced during this study was a kitchen incubator without walls. In some cases, equipment and facilities at a community kitchen are less important than the marketing and product development support offered to clients. Small-scale, rural processors separated by large distances may find a central community kitchen hard to get to, but would benefit from ideas and information to help them get their products to market.
Accurately identifying the need for a community kitchen before it is built will contribute to its success. And committed management of the facility combined with technical and marketing assistance will help assure the best success rate for the community kitchen clients.
Key factors contributing to the success of community kitchens
- Identify goals and needs for the community kitchen at an early stage. Offer the right equipment for the set of clients identified.
- Organize a group of committed leaders who will rally support for the kitchen.
- Market the kitchen to a variety of clients.
- Set rental rates close to market rates at the beginning of operation, rather than starting lower and then raising them. The latter strategy can prove devastating for the clients.
- Involve local, state, and federal regulatory agencies in planning the facility, and identify start-up and long-term sources of financial support.
- Provide technical and marketing assistance in addition to kitchen facilities. Incubators with successful clients also tend to be successful.
- Plan for adequate storage, both dry and refrigerator/freezer.
- Manage conflicts between clients over time, cleanliness, or products.
- Try to find a stable funding source to subsidize the operation or lease the facilities or operate as debt-free as possible.
- Consider using existing community facilities such as churches or community buildings and tap into technical resources for marketing, labelling, and insurance.
For more information on community kitchens, visit the UW-Extension Emerging Agricultural Markets Team website.
Contact CIAS for more information about this research.
Published as Research Brief #54