The Pros and Cons of Starting a Commissary Kitchen

Have you thought about starting a food business? Maybe you’re planning to open a food truck so your community can have better access to your gourmet sandwiches. Perhaps it’s time to start selling your vegan cheesecake to local retail establishments. Either way, you will need a place to create and store your product. 

Legally, almost any food business must operate out of a commercial kitchen. This is due to health department requirements that food sold to the public must be produced in a licensed, commercial kitchen. But what kind of kitchen do you need? More importantly, where do you find one? Do you need to own a facility or could you just…borrow one for a while, like leasing an apartment in a new city.

The ability to “borrow” a kitchen short-term is the basis for the commissary kitchen (you may also see the term KaaS, which stands for Kitchen as a Service or even “Cloud” Kitchens). Commissary kitchens are established commercial-grade kitchens where foodservice providers can safely and legally prepare, cook, and store food and equipment—without having to own and maintain the facility themselves. 

Will your food business benefit from using a commissary kitchen? Or should you look into getting a dedicated facility for your business?

The answer to this question largely depends on your needs. As with any business venture, there are pros and cons to each side of the decision. 

Pros of Using a Commissary Kitchen

Commissary kitchens provide flexibility.

If you’re just starting out and don’t want to commit to a lease payment or long-term commitment, you should move toward using a commissary. New and emerging businesses who need kitchen access only periodically will benefit from a commissary kitchen’s flexibility. Because you’re simply renting space, there is a lower financial barrier to entry for a food entrepreneurs. Often priced by the hour, by the month, or on a membership basis, using a commissary kitchen means not having to commit to a long-term lease on a brick-and-mortar building. You also won’t have to invest in expensive kitchen equipment or appliances. Leases, equipment, and licensing could easily run into the tens-of-thousands of dollars or more. That’s a lot of financial burden to take on if you’re a small business.

You’ll have added storage options. 

Many commissary kitchens supply additional space to store equipment, food prep items, or food. This is something you should look for when investigating commissary options. Storage can be rented in the form of shelves, refrigeration space, or freezer space. Having the option to rent storage space offers additional flexibility to increase or reduce capacity as needed. Plus, it can make your time in the kitchen far more efficient.

You can gain access to special equipment. 

Need a Hobart Mixer? Industrial scale equipment is extremely expensive to purchase and maintain. One of the most valuable assets of a commissary kitchen is on-demand access to these unique pieces of equipment. Before committing to a commissary, investigate to see what equipment is included and what can be rented. The equipment needs of a baker will be different from someone launching a virtual restaurant.

Increase your workspace. 

This is especially true for food trucks, food carts, independent caterers, and other mobile food operations. Food trucks are tight spaces and commisary kitchens allow you all the space you need to adequately prepare your product. If you’re a food entrepreneur, this can also give you the room to develop new product lines or start scaling up your operations to reach more customers. Now you can offer four flavors of hummus versus one! 

Then there’s delivery. Perhaps your business is seeing rising demand for delivery. That’s great for business, but it can take a toll on an already crowded restaurant kitchen. Restaurants are designed for service, so searching out commissary space strictly to fill the need for delivery orders can be a great pathway to growing your business.  

Avoid responsibilities of ownership. 

This is a huge benefit! Being responsible for a building and maintenance can eat up a lot of time and money. Renting a commissary means relinquishing the responsibility of overhead and maintenance to the owners, giving you the freedom to focus your time and energy on your business. Otherwise you may find yourself fixing broken, expensive equipment, maintaining licensures, dealing with plumbing (sinks get clogged all the time!), or investing in specialized cleaning. Those aren’t responsibilities you need if you’re trying to run a food business. 

Turn-key community.

These “co-cooking” spaces enable interactions with other entrepreneurs and influencers in your industry. If you’re just starting out, more seasoned business owners can help you navigate the industry or comply with local laws. Access to other food businesses can also open the door to mutual benefits such as bulk purchasing of product to decrease costs and collaborations for events like food truck rallies and pop-up dinners. 

Central location. 

Often, getting access to a kitchen in your preferred area of town can be prohibitively expensive. Are your customers centralized in a dense or high-dollar area? It can be helpful to have an affordable nearby space for food prep.

Often commissary kitchens are likely to have more accessible parking areas as well—maybe even a place to park your food truck overnight.

Connection with additional specialized services. 

If your unique food needs involving disposing of water, grease, or other waste, commissary kitchens may provide ways to do so on site. They often also have relationships with specialized service providers that you’d otherwise need to pay out of pocket to use.

Cons of a Using a Commissary Kitchen

So what are the downsides of using a commissary? When should you think about renting a dedicated space?

Limited access. 

Physical space is finite. If the commissary kitchen you’ve selected is full, you’re out of luck. Plus kitchen scheduling can often be an issue. If you prefer to work late at night or early in the morning, you’ll likely be fine. But kitchens can book up quickly during peak hours.

Lack of privacy. 

If you’re working on R&D for a new product, there’s no guarantee you’ll have the privacy to keep your work to yourself. Just like any shared space, you can expect people to be moving in and out often. 

You get what they have. 

If you find yourself needing specialized equipment or space beyond what’s available, you may have to find a new facility. Since you don’t own the space, introducing a large appliance would most likely be frowned upon by the owners. So if you are going to need deeply specialized tools that you can’t carry in a basket, you’ll likely want to look into getting your own dedicated space. Some commissaries may let you rent space to store pieces of equipment, but this can vary.

Scaling may mean moving. 

While scaling up is great news for your business, once you scale, it’s likely you’ll outgrow the commissary. If you plan to grow a massive business, you may want to move into a new space before the growth begins in order to be adequately prepared. 

You’re subject to the facility’s reputation. 

If the commissary you’re renting fails inspections or, worse, is shut down, you may face loss of access to the facility. Plus, there are potential PR and legal implications if the facility you’re using isn’t up to code or is involved in a foodborne illness breakout.

It may get too expensive as you grow.

While initially renting space is certainly cheaper than opening a restaurant or even a food truck, at some point, if you use a kitchen enough, it can become cheaper to lease or purchase your own. Rental costs for kitchen commissaries can range between $15-35 an hour and can vary depending on location, time of day, amenities, and other factors. But if you start needing to rent more hours and add staff, it may become cheaper to lease your own permanent facility. You’ll need to do the math based on your own location and needs

So What’s the Verdict?

For smaller entrepreneurs, stick with a commissary as long as it makes financial sense. It provides much more flexibility and lets you avoid all the pitfalls of owning or renting your own space, leaving you free to concentrate on growing your business. However, once you start to scale, you’ll eventually need to rent your own dedicated space. Your unique needs and the prices of real estate and commissary rentals in the area all impact this decision. But ultimately, you must decide when to make the switch.

 

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