Making Money Selling Food

Lou Ann Good
Reporter

MOUNT JOY, Pa. — “Wannabe” food entrepreneurs packed the Food-for-Profit class at the Lancaster County Career and Technology Center in Mount Joy last Wednesday. Many participants had already received rave reviews from family and friends for their specialties, which ranged from olive oil pesto to pulled pork barbecue.

Having their own label sounds glamorous, participants admitted. But taking a plan from the idea stage to create financial success isn’t an easy feat, they heard from the workshop instructors.

It almost sounded like a fairy tale when Susanne Spurlock opened the event by sharing how she developed Happy Jalapeno Company in Lancaster. “I’m a terrible cook,” she admitted. But after hearing her physician father chalk up good health to “hot peppers, red wine and exercise,” she looked for a way to incorporate hot peppers into her family’s diet. She concocted a jalapeno relish that impressed friends and family. Their encouragement caused her to respond to a newspaper ad placed by Whole Foods, an upscale grocery store chain recruiting Lancaster County producers.

Spurlock took a few jars of her relish and was picked up by Whole Foods. She became an almost overnight success — but not quite. Spurlock revealed that it took lots of her own money, mountainous legwork in promotion and only a hope of breaking even at the end of her second year.

Spurlock encouraged the audience not to become overwhelmed by the obstacles along the way. “You never know who you might meet,” she said of a stranger who tasted her relish and offered $30,000 to help Spurlock release a new jalapeno relish on the market.

“A business plan is a must,” said Winifred McGee, Penn State extension educator, who developed the Food-for-Profit course. A business plan is a tool to get a loan and is even needed to get legal approval for home processing. McGee described a business plan as a road map to success. She explained how to build a plan and refine it.

Packaging your food product is another obstacle. For most food products, packaging represents 22 percent of the product cost. There are basic label requirements. In addition, packaging can either attract or repel customers.

McGee held up some examples of packaging and asked the audience’s reaction to the product. Participants remarked how one item appeared to appeal to upscale shoppers. McGee pointed out that a person must also consider where it will be marketed. If it appears too upscale, it may not be as marketable at a roadside stand as it would be in a specialty shop. Some packaging did not enable customers to see any of the product inside, which is often considered a negative. According to McGee, the five senses of sight, feel, smell, sound, size and shape should be brought into packaging decisions.

Perhaps your friends and family love your product, McGee said. But when pricing your product, you must cover costs and bring income into the household to make it profitable.

For pricing considerations, potential entrepreneurs must also research how much the competition charges and how much customers are willing to pay.

Research shows that it does not pay to introduce a product a few cents lower than a competitor’s. It may not cover all your costs.

McGee introduced the differences between fixed costs and variable costs that must be considered when pricing an item. One of the most compelling reasons for deciding whether or not to go into business is to determine the break-even point. McGee asked, “How many jars of apple butter do you need to sell each month before you pay variable and fixed expenses and start to make a profit?” If you need to sell 300 jars a month before you begin to make a profit, how many more do you need to sell to make the venture worthwhile? Are you willing to make only a few dollars?

Although research, calculations and planning appear daunting, it is better to realize the odds before undertaking a new venture than failing later because too many details were overlooked.

Peggy Fogarty-Harnish, Penn State agricultural economic development educator, explained the importance of finding the right niche for a product. To do so, she said, it’s important to define qualities that make your product different from your competitors’ products and to determine the type of customers it will attract and how to promote it. “Have fun sharing your company brand with the world,” Fogarty-Harnish said of selecting ideas on how to market products. She encouraged food entrepreneurs to pursue newspaper coverage by contacting editors about events and ideas.

Nancy Wiker, Penn State food safety educator, stressed the importance of safe food handling practices. “Time is critical,” she said of the need to keep cold foods cold and hot foods hot. She gave the example of picking up chicken at the grocery store with only five salmonella specks on it, but how it could spread to 10,000 within the time it took an average shopper to refrigerate the meat. Wiker explained proper cleaning and sanitizing of home kitchens and cooking equipment.

“You are not permitted to produce potentially hazardous foods in a non-commercial kitchen,” Wiker said. These foods include cheesecakes, pumpkin pies, custard and meringue pastries and desserts.

The Pennsylvania Department of Agriculture (PDA) Bureau of Food Safety and Laboratory Services are responsible for enforcing food regulations and inspecting home kitchens. Melissa White, food sanitarian for PDA, outlined the requirements. It is necessary for all home food processors to complete paperwork for registration approval prior to preparing and selling food. The state is divided into seven regions, but the counties of Adams, Cumberland, Dauphin, Franklin, Lebanon, Lancaster, Perry and York are in Region 6. Call PDA at (717) 346-3223 for more information and forms needed to complete the application process.

The annual registration fee is $35 but stringent rules regulate home kitchens. The water supply must be tested and approved. A written statement from the owner’s local municipality must be obtained to comply with zoning ordinances.

All ingredients must be separate from those used for personal use and properly protected. Restricted use of the home kitchen during any commercial processing requires no children permitted in the kitchen during that time. No animals and pets are permitted in the home at any time.

There are more regulations, but these alone deter many would-be entrepreneurs.

Edwin and Ellen Diller, both professional chefs, attended the workshop. They said they wanted to open a catering business in their home for many years, and were depressed to hear about the regulations. “It was either our dream dies or the dog goes, and that wasn’t an option,” Edwin said. Recently their dream has been revived by hearing about the possibility of renting commercial kitchen space.

For about four years, McGee has worked to open test kitchens at different sites throughout Pennsylvania. These sites offer access to commercial kitchen space to food entrepreneurs.

One of these sites is Lancaster Edibles Venture Kitchen on the campus of the Lancaster County Career and Technology Center, Mount Joy. Kimberly Patrick, project manager, explained the concept and gave a tour of the facilities. Five separate kitchens are available. Users receive equipment and safety training. Storage space for products is also available.

The Lancaster Edibles Venture Kitchen is operated by the Lancaster County Career and Technology Center in cooperation with the Center of Excellence in Production Agriculture, a project of Lancaster Prospers. Technical assistance is provided by Penn State Extension, PennTap, SCORE and ASSETS of Lancaster and the Library System of Lancaster County.

Several workshop participants viewed the certified kitchen space as the component that would enable them to start independent processing of soups, relishes, jams, baked goods and salad dressing.

“To be able to use a commercial mixer is wonderful,” Ellen said of the need to have one to establish a catering business with her husband. “It’s an item we can’t afford to buy.”

Space is rented to producers on an hourly basis. A tenant can rent the space for as little as 10 hours per month.

For more information about renting space at the Lancaster Edibles Venture Kitchen, call Patrick at (717) 653-3000, extension 3081.

Materials developed for starting food-for-profit businesses are available from the cooperative extension office in your county or on the Web at www.PaFoodVentures.psu.edu.