What’s in the oven? Maybe it’s Grandma’s infamous homemade apple pie or an improved version of the chocolate chip cookie. While many people are content to dabble with such recipes in their own kitchens, others have a passion for creating food-related products to bring to the marketplace. However, an overwhelming number of steps, particularly related to licensing and regulations, need to be taken before food startups can taste the feeling of success. As the number of food-related startups has increased in recent years, so have the number of incubation and acceleration programs to support them.
According to the survey conducted by Econsult Solutions, Inc. (ESI), along with American Communities Trust and Urbane Development, food incubators have increased by 50% since 2013, which translates to more than 200 facilities across the United States. Business Incubation Works report stated, “eighty seven percent of businesses that graduate from an incubation program are still in business within five years, versus 50% of those that have not had this support.” Food incubators and accelerators provide essential services and resources for “foodpreneurs,” helping them establish sustainable businesses and aiding in the rise of specialty food products and jobs.
Take a moment to discover a few ways food incubation programs service their local entrepreneurial ecosystem and food industry.
Appetite, Apron, Apparatus
Food incubators and commercial kitchens have the same goal but provide different services. Food incubators provide programming to help an entrepreneur grow from idea stage to a thriving business, while commercial kitchens provide the space and equipment for established startups to produce large quantities of food. Often, but not always, these two types of facilities and services co-exist in the same organization.
Econsult Solutions’s research shows that “kitchen incubators operate in 39 states across the country and tend to be located in urban areas.” Over half of the incubators ESI surveyed recognized themselves as for-profit, “20% are USDA-certified and 53% are made up of women tenants, down slightly from 61% in 2013.”
Within food incubators, entrepreneurs go through a strict licensing and regulations process. This requires both the entrepreneur and facility to meet high standards in food safety and operations. In addition to the required regulatory practices , entrepreneurs are also mentored and coached on how to acquire retail space, how to design food labels and packaging products, as well as many other vital services and programs that are unique to food entrepreneurship. In an article about Kitchen incubators, Solani Dashi writes that food incubation programs help “entrepreneurs gain access to great inputs without spending extensive time finding the right suppliers, and gaining more competitive pricing from common vendors leading to significantly improved profit margins.”
Food incubators have a unique process in acquiring clients, they either take businesses on a rolling basis or allow applicants to apply two or three times a year. Requirements from applicants vary depending on the incubator’s mission, storage space, and the viability of the client’s business. Take InBIA member La Cocina for example, this program takes in low income and underrepresented applicants for their incubation program.
Commercial kitchens or shared use kitchen spaces are different in that their primary service is the provision of both production and storage space as well as specialty equipment. Depending on the facility, most entrepreneurs need these spaces for two to three months at a time to set up production and allocate space for their products. Some commercial kitchens even move from one location to another depending upon their food network. For example, InBIA member, The Food Corridor, launched a network to provide entrepreneurs with local cooking spaces within their community’s churches, restaurants and unused spaces.
This New Food Economy article called this type of model an “AirBNB for commercial kitchens.”
Food Incubators Whip Up Community Engagement
The programs and shared spaces connect “foodpreneurs” so they can collaborate on recipes, business models, packaging, and more in hopes of creating a tastier, more sustainable, impactful and profitable market. While the network connecting the entrepreneurs is critical, it’s equally essential for incubators to introduce clients to the community. Making connections to new grocers, specialty markets/stores, local farmers, packaging companies and others creates a network of partners who are helping to enhance the long-term success of a startup.
Sharpen your Knives
When the top food corporations can’t take the heat, food entrepreneurs gear up and protect themselves from the flames.
Food incubators and accelerators train “foodpreneurs” how to be adaptable in a market with quickly changing trends and consumer behaviors. The Top 25 food manufacturers’ share of U.S. food and beverage retail sales declined from 66% in 2012 to 63% in 2015, while small food companies grew their share of these sales from 11% to 15% during this timeframe, according to the 2016 Nielsen Breakthrough Innovation Report. Staying competitive, relevant and up-to-code can be difficult, but food incubators give entrepreneurs access to all the necessary resources and services to maintain their goals, whether they want to stay small and local or expand nationally and pitch to large-scale buyers.
A Global Network for Food Incubation
Food incubation programs will continue to grow and contribute to the economy by creating jobs, cultivating business innovation and economic development. These programs are geographically and thematically diverse, but share many common challenges and opportunities. InBIA, in partnership with the Rutgers Food Innovation Center, is committed to fostering collaboration between food programs through the formation of the Food Business Incubation Network (FoodBIN). The inaugural FoodBIN Conference, to be held at Rutgers University in New Brunsick, N.J., September 13-14, will bring together people from food programs all over the globe to discuss best practices, explore current trends, and look to the future of the industry.
This is just the beginning of food leadership and innovation.