Sunday, April 29, 2012

Can I start my business by just cooking at my house?

Need to Know More?
This interview is the first in a series of questions posed to experts in their field.

Interview by Jeff Yoskowitz

Marc Lehmuller is a Vice President of RBL Associates with over 25 years of insurance experience. Marc insures food companies of all types and sizes.

Jeff: Marc, I get questions all the time about baking at home to get your business started. What is your perspective from an insurance point of view?

Marc: The answer to your question, about using your home to bake your goodies, is that it is illegal in most places. You must bake in a commercial kitchen to have the proper licenses.
Your homeowners or renter’s insurance policy does not cover “Business in Pursuit.” That means if you have a home-based business it should have a separate insurance policy only covering what you do. Home-based businesses are usually consultants, CPAs and other professionals not related to food manufacturing.

Starting a food business, you should incorporate first to protect your personal assets in the event a claim or suit is brought against you. The most important aspect is to get Liability insurance for your business, which will protect you for product liability (someone getting ill from your product for instance).The limits vary, but most landlords, farmer markets, street fairs and public parks require $1,000,000 each occurrence (each claim that is brought against you) and $2,000,000 general aggregate (maximum payout for the policy period) as well as naming them onto your liability policy as an additional insured. This protects them and also people who buy and consume your products.

Here is a scenario of what can happen if you don’t have Liability insurance for your company:

Your neighborhood church is having a bake sale or you are giving away your cookies for free as a promotion or let’s say you are selling them at a farmer’s market. Mrs. Smith buys from you and claims that there was a foreign object or that the cookies made her ill and she had to seek medical help. She contacts you and wants to be compensated for her illness and asks if you have insurance to pay for her bills and lost wages. If you don’t have insurance she could give you the medical bills and tell you what she lost in wages or seek an attorney who will look to sue you personally putting your home and personal assets at risk.

THE most important thing is to get Liability Insurance for anything you bake or give away. You are responsible not only for everything you make but also if a friend of yours gives her product to you to sell or give away.

 Remember, set up your corporation and get Liability Insurance before you hand out your product.

Jeff: Thank you Marc, great advice.

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Friday, April 20, 2012

Bringing a Packaged Product to Market

Meet the Entrepreneur
An in depth interview (with future follow up) to explore the lessons learned by others like you in the baking business

Interview with Jenny McCoy and Diana Lovett by Jeff Yoskowitz and Kathryn Gordon
Name of business: Cisse

This is the initial interview in a series with the partners of Cisse, a partnership to bring “guilt free” free trade cocoa products to the consumer

Jeff:  First of all, what is everyone’s involvement?  Are you partners in Cisse? 
Jenny:  Diana and I are co-founders of Cisse and will be managing the day-to-day operations.
Diana:  I am the fundraising, financing and business operations side of the business for long-term-growth planning, and meeting supply chain logistics.  For example, all the cocoa is ethically sourced, and I will manage those relationships because I have worked in developing countries, non-profit enterprises and socially responsible businesses before. 
Jenny:  My background is baking and pastry.  I went to culinary school after high school and worked in restaurants for over 10 years.  Last summer, I met Diana and we decided to work together on the brand development for Cisse. 
Diana:  Jenny is responsible for product development, and will do any required business writing given her interest and background in writing cookbooks.  Jenny will represent the brand from the food side and be the name and face of the brand. For this to be a successful partnership, we refined our roles right from the beginning and established a business partnership through legal papers (regarding vesting, likenesses, profit sharing, etc.).  After this formal structure, our roles fall into natural patterns given our particular backgrounds and passions. 

Jeff:  Did you use attorneys?
Diana:  In the beginning we used a friend-of-a-friend as a third party for negotiating the general terms, and then turned the specifics over to an attorney. 

Jeff:  Are you self-financing?
Jenny:  Diana has provided the seed capital and we are now evaluating financing options, raising additional capital. 

Jeff:  Was there a particular defining moment for deciding to go into business for yourself?
Diana:  You can purchase product at a fair price in communities to help support community development and I felt that the price premium for doing it ethically and through fair trade practices was do-able.  This business became viable when I met Jenny. 
Jenny:   A few years before meeting Diana, I was thinking about the bigger picture and what would challenge me beyond restaurant work. I wanted to transfer my work as a pastry chef into other projects.   An editor at Epicurious introduced us and our initial conversation led to a request to be involved more as a partner than a consultant.   It helped me that I was talking to my very business savvy, conservative father and he said:  “If this is something you want to do, this sounds like a cool opportunity.” That did it for me, and I took the leap and said okay to Diana.

Jeff:  So you have a partnership, and everyone knows their roles. What happened next?
Diana:  The phasing of the sales channel dictates every other aspect of how we structure the business.  Our focus is on long term growth and ultimate profitability.  We felt the grocery sales channel was the best fit, since it has a national presence.  That initial decision focused our energy. We knew that Whole Foods was the biggest player and they were the company we needed to approach.
Jenny:  We set up a deadline to race towards – the Whole Foods “Round 9” category review deadline (which includes items such as cocoa mixes and baking mixes).   We started to work on product development, which meant me getting into a kitchen while we were simultaneously working with a graphic designer and doing market analysis.  We wanted something that would be accessible and generate repeat sales, nothing too crazy like lavender brownie mixes (which might only appeal to a group of pastry chefs!). 
Diana:  Jenny’s teaching background and cookbook writing project helped a lot with being able to focus on consumer needs.  Given our business model, the core ingredient had to be ethically sourced, so we went to the Dominican Republic to meet with the farmers. 

Kathryn:  How did you decide who to work with on this project?
Diana: At first it was cold calling for brokers, suppliers, graphic designers, co-packers, etc. We started with a list of questions and put the answers in a spreadsheet, to make an analysis and an apples-to-apples comparison possible.   Otherwise we’d still be floating in a sea-of-data! 
Jenny:  We found some good fits through people who were also starting off and were very enthusiastic about working with us, like our graphic designer.  
Diana:  The costs for the initial development of our website, logo and packaging ranged from $2,500 to $140,000.  It was definitely interesting to see that price range! 

Jeff:  So designing packaging is always interesting -- tell me about it.
Jenny:  It’s amazing, learning that a small box of cocoa mix, or a baking mix, has to have so much stuff on it!  It was overwhelming.  Bar codes, our story, what shade of blue? There was the hurdle of getting through the actual design and then finding printers to generate a small run for samples.  30 pieces per SKU is very expensive!  We had to call and convince people we were legit and going to grow as a company to get it done without a run of 15,000. 
Diana:  The consumer design interface took so much time – we didn’t know what would be required.  Each step is so interrelated.  Jenny had to finalize the recipes before the nutritional panel could be generated, for example.  It takes a lot of manpower to get all those deliverables in.

Kathryn:   What’s the timing of when you approached Whole Foods to market?
Jenny:  We had some counsel from an insider’s perspective in the form of a meeting with the Whole Foods Round 9 product manager about a month before submitting the product.  They originally asked if we could be up on the shelves in 1-2 months, but it will about 5-6 months when we think we’ll be ready (aiming for this September).
Jeff: Can you tell us a bit about the product development?
Jenny:  I learnt that my 100% is too much -- that the product I initially designed was “too rich” or “too fancy” for what the ultimate product is going to be on the shelf. My 100% would have cost too much to produce for a variety of reasons.  Maybe my original method to make that brownie was too involved for basic steps in consumer baking.  Maybe I would have preferred a richer chocolate percentage, but it wouldn’t appeal to a wide range of people.  I had to adjust my recipe approach from a 3-star restaurant experience, to make a product I still feel good about, and see how people react to the products that can be made from these mixes.

Kathryn:  Did you put together any formal tasting panels or focus groups for the product development phase? 
Jenny:  It was mostly informal through families and friends.  One interesting experiment was when I baked all available brownie mixes and all available cocoa mixes and had everyone react to it versus mine. That feedback was instrumental in reformulating my recipes.

Jeff:  If you were able to achieve the quality you’re looking for, how about the price point?
Diana:  Well, that’s a production volume question.  To get gourmet ingredients with a socially responsible angle to them is the overall challenge – but luckily we’re now within their range for the price point. 

Editors:  We’ll track the progress of Cisse putting their products on the shelves of Whole Foods and report back to you!

Short bios on Jenny and Diana:

Diana Lovett, Co-Founder: While completing a Fullbright program and a year of volunteer work at an orphanage in South Africa, Diana became committed to a lifelong pursuit in creating social justice. Her experiences at such an early age inspired her to pursue a B.A. in African Studies at Yale, followed by an M.A. in Internal Development Studies from the University of Cambridge.

Her many experiences include being a legislative analyst for Governor Bill Richardson and being Director of Regional and International Campaigns for singer Alicia Key’s charitable outlet “Keep A Child Alive.”

As culmination of all her experiences, Diana co-founded Cisse, a small business that combines her dedication to social responsibility by aiding small growers of cocoa to ear living wages, and her love of chocolate.

Jenny McCoy, Co-Founder: Jenny held positions in a variety of Chicago’s top restaurants including Charlie Trotter’s, Blackbird, Gordon and Bittersweet Bakery.

After traveling to various countries to broaden her culinary vocabulary, Jenny completed a B.A. in Food Writing at DePaul University. She returned to the pastry kitchen where she would run three restaurant pastry departments for Emeril Lagasse.
Jenny has also worked in New York City as the opening pastry chef at Marc Forgione; for A Voce, where she oversaw pastry operations for both their Madison Square and Columbus Circle locations; and at celebrity Tom Colicchio’s flagship restaurant, Craft, where she helped earn its second three-star review from the New York Times.

Finally, Jenny won the 2011 Rising Star Pastry Chef Award; is the spokesperson for the Almond Board of California; and is working on her forthcoming dessert cookbook, to be published by Rizzoli in 2013.

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Saturday, April 14, 2012

Macaron Parlour Inteview: Former Students and Their Chefs

Meet the Entrepreneur
An in depth interview (with future follow up) to explore the lessons learned by others like you in the baking business

Opening a retail pastry shop
Interview with the Dynamic Duo, Christina Ha and Simon Tung by Kathryn and Jeff

Current Name of Business:  Macaron Parlour
111 St. Marks Place (between First and Avenue A) estimated summer 2012 (target July)

This is the first installment in our talks with Christina and Simon and we will continue to give updates on their progress.

The Story…
Christina originally came to ICE (Institute for Culinary Education) after working fashion PR, when she had realized over time that wasn’t the career she wanted.  Instead of sleeping at night, she started baking.  She happened to live right up the block from ICE and first took a macaron class with Chef Kathryn Gordon, and then the 12 week pastry series with Chef Jeff Yoskowitz.  After that, she went to Paris to Pierre Herme’s macaron school for a few days – which reinforced her decision to be serious about a career change.  She applied and won a James Beard scholarship and started at ICE.  In this timeframe, when she was deciding what to do with her career, she met Simon through mutual friends.  Simon was an attorney recruiter, and has worked in club promotions as well.   He always enjoyed baking, and has since taken the 12 week pastry series at ICE and other recreational classes. 

The Beginning
Christina began the program at ICE in January 2010, and she and Simon decided to form a business in March 2010.  They saw an ad for the Hester Street Fair in NY Magazine, which was looking for vendors.  They had about 6 weeks before starting to sell their macarons in April, to work on a website, establish a tax ID, and file the paperwork to form an LLC business.   A friend helped with the photography for the website.

Christina decided to try selling macarons and a few other items at the Hester Street Fair – but the macarons were always the most popular item.  They started with about 12 flavors, making 300 macarons per day. This took them 2 days to make renting commercial kitchen space, after the working illegally the first day of production out of an apartment (like most people who start!).  It didn’t hurt that Jeffrey Steingarten came the first weekend!  Soon they were making about 1,000 macarons a day using a commercial kitchen they saw listed through the ICE alumni posting.  Unfortunately, the person with that space lost their lease after a month – but utilizing a network of friends they had established at Hester Street, Christina and Simon were able to negotiate with a nearby bakery to use it on off hours. 

It was a struggle, because Christina still had a day job and was in school at ICE on the weekends.  By then she had given up her apartment and moved into Simon’s, which had lower rent.  They would bake Wednesday and Thursday nights until 4 am, and Simon would sell on the weekends.  Their macaron sales were profitable right away, even though they were ordering ingredients quasi wholesale thru l’  Some food was sourced thru BJ’s, before they obtained a Jetro (wholesale) account.

Christina quit her day job and got hired out of externship from ICE.   Etsy (an e-commerce based website) generated initial online sales that supplemented the two days a week they could sell at the Hester Street market. Simon was packaging the macarons and carrying everything to the post office himself.

The Effect of Getting Press
Suddenly, Macaron Parlour started to get some press, including a spot in Daily Candy in August to cover the macarons with “American flavors” vs. French.   In December, they were mentioned on the Today Show and Style Magazine, and sales came quickly.

At this point, Christina got recruited to help open a coffee/pastry shop in Brooklyn, and they initially thought that they could move their macaron production out to the new shop.  Simon started to help make pastries at the shop with Christina but there wasn’t a budget to hire more employees nor was there enough space to bake macarons necessary for their business.   The oven broke where they had been doing production, so they found another baking location through friends from the Hester Street market network.  After 4 months they were able to find another kitchen in Sunset Park and they have been there ever since.  In April, Christina came back to ICE to enroll in the management program. She applied and won enough scholarships to cover her tuition from organizations such as Les Dame d’Escoffier, WCR and AIWF.

Their Next Steps
Christina and Simon decided to do the Union Square Market, which is expensive to participate in -- but they applied anyway, knowing how difficult it was to get in and at the same time participated in Madison Square Eats, a food fair run by the same management company. Due to their participation, when someone backed out of the Union Square market at the last minute, Christina and Simon got the call. To pay for the booth, they took the money out of their wedding fund and Union Square ended up yielding a profit.  

Christina and Simon realized the most common question customers would ask was:  “Where’s your store?”  Meanwhile, Christina was completing her business plan project in her management class at ICE, and all that was missing was the location. Christina mapped out all the “other” macaron shops in NYC and realized there was a clear gap in the East Village. 

Using Craig’s List, Christina found their future location.  The place had good ventilation and enough square feet (1150) for their production that they would not have to share with anyone else – and would allow room for expansion.

Getting Ready for Construction
Christina says the real world is very different than school, where the practice exercises are theoretical. First, with a viable location open to them -- they realized that they needed a real estate lawyer, to help with the lease process.  Steve Zagor, Christina’s management instructor, helped with that. They wound up with a ten-year lease with three months free, one of which was thrown in as a wedding gift!

Simon and Christina discovered there’s a stop-work-order from a ten year old excavation at the building, which is supposed to be inspected and cleared tomorrow (as of this writing). Christina knew an architect from when she helped open the Brooklyn cafĂ©, and asked her to work for them because she liked her style.  Right now, they’re in the permit process with the city and hope to be able to begin construction soon. The duo are obtaining bids now and are using an expeditor through the architect. They are also receiving help from the New Business Acceleration Team (NYC NBAT) (for food businesses and grocery stores).   Unlike other city departments, NBAT actually answers the phone! 

Christina is currently focusing on the menu and understands from the Brooklyn experience that the neighborhood vibe dictates what will sell.  The shop’s hours will also be determined by their East Village location, meaning opening later and closing later than originally planned.   The couple is gearing up to start again at Hester Street and the upcoming Madison Square Eats before they try to open their retail location this summer. By finally opening their retail shop, Christina and Simon believe Macaron Parlour will receive the legitimacy a retail operation can bring to a company. 

Want to Learn More About Our Services?  Our primary website is

Monday, April 9, 2012

What Is Food Start Up?

Jeff Yoskowitz, Kathryn Gordon and Jessie Riley are bakers and chef instructors at The Institute of Culinary Education (Jeff and Kathryn) and Rustico Cooking (Jessie).  They have joined together to provide a support network to aspiring entrepreneurs who want to open a full scale retail or wholesale bakery operation, website-based business, or specialty operation (chocolate, macarons, etc.).

Sharing the A, B, C's of Success in the Pastry Industry.   

The Blog 
In this informative bi-weekly blog, we will post the stories of people who are "in it," and willing to share their stories of success, what to do/what not to do.  We hope an in-depth conversation about their experiences will help inspire you -- and help guide you to be successful with your goals.

The Services of Food Start Up
Chef Jeff, Kathryn and Jessie work with you to regarding:

- Viable space (including co-producers vs. incubators vs. home kitchens, if legal)
- Profitable product line                                                                  
- Recipe development and testing                                                    
- Financing                                                                                      
- Permits, licenses and insurance                                                    
- Equipment                                                                             
- Business support systems (point-of-sale, accounting, payroll)      
- Food styling for marketing materials                                          
- Vendors
- Staffing and Training
- High volume production
- Health inspections
- Packaging
- Website development
- Custom classes
- Arranging financial and operational partnerships

Want to Learn More?  Our primary website is