Tuesday, April 23, 2013

Want to Get Started with Low Start-Up Money? You need an Incubator Kitchen

Interview with Michasel Hu
Pastry Chef/Owner Hana Enterprises

With Jessie Riley, Jeff Yoskowitz and Alan Someck

(Editor’s note: Michael Hu, acclaimed Pastry Chef, is owner of a wholesale pastry business and an incubator kitchen)

Jessie:  Hi Michael; since I worked with you here about 6 years ago, you’ve really expanded your space here in Sunset Park, Brooklyn.

Michael:  We now have 12,000 square feet total space.  I actually expanded after the economic downturn because my own wholesale clients weren’t ordering as much product.  People who had lost their jobs wanted to start their own food businesses.  But not all entrepreneurs have the business financing they hope for to fulfill their dream.

My open commercial kitchens were the perfect match for entrepreneurs to rent.   We’re open 24 hours a day for 3 production shifts a day. It’s fully equipped, offers office space, laundry and cold storage. Parking is possible and it is near the subway. 

Jeff:  How do clients find you?

Michael:  We have an open house the first Saturday of each month (10 am – 2 pm).  Everyone is welcome!

Section of Hana Enterprises Checklist for Incubator Clients

Alan:  How many kitchens do you operate?

Michael:  Currently we have 10 kitchens here.  Not all are operated for pastry – it ranges from candy to BBQ, mac and cheese to macarons, sausages to granola, and organic dog food to ice cream. 

Jeff:  So you have USDA oversight?

Michael:  Yes. We email the production schedule to the USDA inspector, so they can choose whether to be onsite or not. 

Chef Michael with the production schedule

Jessie:  Are you still doing some of your own production here?

Michael:  Yes, I am still producing and selling kosher pastries.

Jessie:  How do you juggle your own production and that of all your clients?

Michael:  We have a central scheduling system.  In fact, I have staff that runs all the centralized machinery for everyone, and it is also inspected after each use.  For example, we have direct wired the Hobart mixers so they have to be turned on by my staff – not people renting the kitchen. That ensures it is all fully operational and maintained for everyone.  

Some of Hana's Hobart Mixers

Alan:  Kathryn knows you from 1995 and we know you were the Executive Pastry Chef at the Waldorf-Astoria, have competed internationally and you have been named Top Ten Pastry Chef of the year.  Having that experience for an entrepreneur to draw on, what else distinguishes Hana from other incubator kitchens?

Michael:  Our management staff is quite experienced in the food field and are valuable resources for anyone starting or growing a food business.  We are also an approved vendor for Birch Street, which makes it possible for you to sell your product to all Hyatt and Marriott hotels. 

 Birch Street vendor

Jessie:  How do you decide what products you will back up for distribution through Birch Street?

Michael:  It has to be made with really great ingredients and it has to taste really good, and I have to believe it will be sustainable at a higher production level.

Jeff:  You have supported some very successful start-ups here; what do you see as the key signs if a food entrepreneur will succeed, or not?

Michael:  Assuming they have a good product, it is hard to find the right sales margins.  Then when they are able to optimize that, they need to streamline their production.  Some just increase production of product without optimization – and eventually that stunts growth.

Alan:  What outlets do your clients sell through?

Michael:  80% of my tenants sell in farm markets, and/or wholesale to stores.  Direct sales have a higher profit margin than going through distributors.  Incubator clients typically do not have the funds for building a brick and mortar location.
 Edible Brooklyn's picture of a production kitchen at Hana

Alan:  Is the incubator commercial kitchen here to stay? 

Michael:  We have good tenancy here now; I believe there is strong demand for incubator resources now, given the number of people who want to be entrepreneurs.  I’ve actually been looking at opening another location in the Bronx. 

Alan:  What’s next for you with Hana Enterprises?

Michael:  I want to attract bread bakers.  I see a need for a “central oven,” like when people years ago made their own dough and brought it to the baker to bake.  Except this could be for multiple artisan bread manufacturers, not just individuals. I would like that to be a center point where one day I can open my facilities to also become markets where the incubator clients can easily sell their products.

Alan: That sounds great Michael We’re really impressed with what you’ve done here.

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