Friday, August 10, 2012

How to Successfully Run an Incubator Kitchen

Interview with the owners of Hesperides Kitchens & Bakeries in Hawthorne, NJ
Lisa and Albert VanDenBerg with Kathryn Gordon and Jeff Yoskowitz

Kathryn:  Hi Lisa, Hi Albert. I met you here a few months ago when I came to help with the production of one of your clients.  I’ve spoken to several of your clients who say that the two of you are completely supportive of them and what they’re trying to do.

How long have you been in the commercial incubator kitchen business?

Albert:  It’s been about 2 ½ years.  This is my grandfather’s old feed & grain mill from the 1920’s, that has been split into 4 buildings.  Originally, there was a guy who rented some space here and built himself a kitchen for dipping oils.  After he left a cookie company moved in, but they wound up selling their business.  When I was trying to rent the kitchen space, a company called, Red Ribbon Pretzel was starting out and needed a small kitchen.  I just said, “come see what I’ve got!”  They decided that this space would work for them to start their business, and that’s how it all started, and Lisa and I got into the incubator business. 

Lisa:  I run an organic farm in NY State.  We also use some of the space here ourselves for a CSA (Community Supported Agriculture) and food co-op.  It allows us to sell our product, and to feature our incubator client products as well.  For example, CSA share participants can pre-order any one of our incubator client products for pick-up when they come here on Tuesdays for their fruit/vegetables.  We also have a CSA for cheese, other dairy products and coffee.   Some of our incubator kitchen clients use the vegetables and fruits from the farm.  We are trying to help these people make money – as the owners we want them to make money and succeed. 

Lisa VanDenBerg with product showcase in the CSA pickup space at Hesperides with incubator client products

Kathryn:  I love it!  You’re facilitating farm-to-table and supporting local artisanal food producers at the same time.  That’s brilliant.

Lisa:  We attended a NEOFA (Northeast Organic Farming Association) conference on incubator kitchens. That was very helpful to help us understand more about this business and get some tips from other farmers who have supported product incubation.

Albert:  For example, I build the walk-ins myself. NEOFA participants gave us tricks like how to rig up an air conditioner for the walk in and bypass needing an overhead compressor, We’re able to cool the walk in for a fraction of the typical set-up cost.

Jeff:  I’m not sure I understand that, but it sounds really useful to know! 
Can you tell us more about your facility and the mechanics of how you set everything up here?

Albert:  We have 11 kitchen spaces here, in an 8,500 square foot facility.  2 kitchens (one bakery, one culinary) are rented by the shift, and the others by monthly clients.  In total, we currently have about 40 customers. 

Lisa:  We find people through referrals on the internet, and the Rutgers incubator facility.   We have also had a client who “outgrew” our space, wasn’t ready for their own kitchen, and transitioned to Rutgers (which can support a higher level of manufacturing).  For example, to wholesale meat-based products you have to be in a USDA facility like Rutgers.

(Editor’s note: look for our upcoming interview at the Rutger’s incubator kitchen)

Kathryn:  How do you schedule clients for the shared commercial kitchens?

Albert:  We recently started to use Google calendar, and it’s working very well for us administratively and for the clients.   Freelancers can see the available time slots on the web, but only Lisa and I can actually schedule people to use the space.  Everybody who works here knows they have to be flexible to be able to keep their production costs down, and share the space.

Jeff:  How to you approve people to use your space?  What kind of requirements do you have, and what do people get for a base price? 

Lisa:  We require $250 a month minimum.  For that, they also get a storage rack (clients have to provide a cover and a lock), and storage in the shared fridge and/or freezer walk-ins.  Each kitchen has a standard set of equipment: burner, convection oven, reach in refrigerator, 20 Qt. Hobart and speed rack.  Clients provide their own small wares and sheet pans.  Everyone shares the 3-part sink dishwashing area, break-room and bathrooms.

Albert:  Clients are required to carry one million in product liability insurance, and have a Serv Safe food handler’s license to use the bakery kitchen.  To use the culinary kitchen, they have to have the Serv Safe manager’s certification. 

Jeff:  You don’t require a security deposit or pre-payment?  What happens if someone breaks a 20 Qt. mixer or something on their shift? 

Albert:  That’s actually only happened once, and the shift worker’s boss helped to pay for the repair.   We’re trusting in that sense.

Kathryn:  Can you talk about the food handler’s licensing and how you work with the local health inspector?  If there’s an inspection, and you have 40 clients, how does that process work?

Albert:  I also have a food handler’s license.  Everyone has to follow my procedure manual.  I have to be the leader because if the health inspector comes in, whatever they find could shut me (and the entire Hesperides incubator facility) completely down.

Lisa:  We walk through the kitchens daily.  One of us, or our son, is here every day.  We throw away any ingredients that have expired.  We throw out any food that’s not covered.  If someone left dirty dishes in the shared 3-part sink, we just throw them away.  We have to – it’s our liability.

View within Hesperides from Shelly Goldenberg’s Chelique chocolate production area 

Jeff:  When you build out a new kitchen, how do you get your equipment?  And is it both gas and electric here?

Albert:  I buy used equipment on Craig’s list, and it works out well because I can work on the maintenance.  I try to buy new convection ovens.   The ovens are gas, and the 6-burner stove in the commercial kitchen is gas – everything else runs on electric.   Our total utility bill is 5% gas.  In the summer, the air conditioning to keep the kitchens cool is the highest cost. 

Kathryn:  And how does it work if a particular monthly client needs a special piece of equipment?  For example, you have people here making ice cream.

Lisa:  We used our electrician who knows the building to run the lines, and the client who needs that equipment pays the electrical installation cost. 

Kathryn:  And you’ll charge them a higher electric fee too?

Albert:  Yes but it isn’t on a separate meter, so I work with each individual client on their pricing.  For monthly clients, each pricing arrangement differs anyway, based on their kitchen size.

Jeff:  What’s the turnover like of clients?  How are you marketing to find clients for the kitchen spaces? 

Lisa:  At this point, we get 10-15 inquiries per week.  Everyone thinks they can do this! So the spaces pretty much fill themselves.  We have a majority on a monthly plan, which requires us to train people less (we train new people on how to use the equipment, and we have to “watch” new people more in terms of the cleanliness standards, etc.)

Albert:  We have less turnover than you’d think.  Some clients have been with us from the beginning.

It’s a co-operative here so everyone has to get along.  I will turn people away if the product doesn’t really fit in.   We have gotten rid of people if they don’t clean up, or play the radio too loud.

Jeff:  You’ve seen a tremendous volume of new start-up food businesses walk through these doors.  What are the most common mistakes people make?

Albert:  Everyone thinks they want to rent their “own space,” not realizing that at least 50% of what’s required is outside, selling and working on websites/marketing etc.    Baking is not 100% of your time, so a shared space can be a perfectly viable option.  Sales and marketing needs as much attention as baking. 

Lisa:  People who were formerly home cooks do not realize the amount of production that they can make in 2 hours in a convection oven with a large mixer.
Albert:  I’ve seen people really not know what they’re doing in terms of pretty standard kitchen equipment, even ones who have graduated from culinary schools.  I read the manuals (for the Hobart and the convection ovens).  I know how time and temperature is affected by convection cooking – and I never worked in a kitchen!

On the positive side, the most amazing thing is that the clients help each other:  how to work a piece of equipment, where to source ingredients, or how to package a product.

Lisa:  We want our clients to be able to just focus on their cooking.  There are no hidden costs from working here – each client knows ahead of time exactly what each month’s production will cost in terms of rent/overhead/utilities.   We even take care of scheduling for the pest control, dumpster pickups and cleaning grease traps.  Clients clean their own kitchen spaces daily, but we also have a weekly cleaning service for the floors. 

Jeff:  Is there anything you’ve learned over the years that you wish you hadn’t had to deal with?

Albert:   It was a learning curve about certification and the “black market” demand.  One of our clients would need a copy of their certificate to be able to sell at a farmer’s market, but then it would somehow get copied and be given to their friends (who were not legal clients and not producing their products in an authorized, commercial kitchen).  Those people would unfortunately represent themselves as working here, and that created a liability issue for us. 

Now we have changed the certification copying policy so that we will only fax directly to whoever officially needs it at the farmers market, etc. and the certificate for our approved clients is only for a specific business name, and for a specific length of time.

Kathryn:  Thanks Albert and Lisa!  It’s been very informative talking with you.   And the next time I come over here, I’m going to bring a cooler and buy some of the local artisan cheeses you offer!

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  1. This was JUST what I needed! I am interested I. Starting one..only thing missing was what were their start up costs and did they take out a loan?

  2. This is great! I'm doing my research on how to setup and run a commercial kitchen. I want to service entrepreneurs,but I don't know if I need to set up for a specific type of cooking/baking. I also want a smaller commercial space for classes and workshops. Do you have any advice for that?

  3. This is great! I'm researching commercial kitchens. I want a full size commercial kitchen and a smaller one for teaching and workshops. Thanks.

  4. Great information.