The Price was Right

Years ago, a group of friends and I went out for pizza every Friday night after work to the same restaurant. We were regulars and became favorites of the manager, Price. He was a good manager, skilled in his craft. One night he told us about food service managers he had no use for: the mom-and-pop shops. These were people who had no experience in food service management: didn't know proper operating margins, organization, training, supplies, regulations, etc. Often these mom-and-pop operations start with a lot of their friends saying "You make such wonderful XYZ, you should open a restaurant." Where I live, XYZ seems to be mosty BBQ. What are the most common where you live?

The vast majority of these mom-and-pop shops fail quickly.

BBQ to Gone

My wife and I went to one such nearby mom-and-pop BBQ place a couple of years ago. The food was good, but there were some rough edges. I went to their Facebook page and listed how they could improve their customer experience. They liked my post, then implemented none of my suggestions. They reorganized their service model from table service to ordering at the counter, which introduced even more rough edges. They were gone inside a year.

Another new local BBQ place sprouted on the other side of town recently. The food was, again, pretty good. But you could tell that nobody behind the counter had ever had any commercial food service experience. There was a new teenage boy on staff, probably his first day. He was being trained by the "watch what I do" method. There were no stations or duties. Everybody just pitched in and did that they perceived needed to be done. I doubt they'll make it till next summer.

I grieve for these families and the amount of effort, time, money and frustration they expend on a failed enterprise.

Welcome to the Cottage

But there is arising a new mode that doesn't put as much of a family's resources at risk: The cottage foods movement. This is a carve-out of most states' food service licensing regulations that allow people to cook certain types of foods at home and sell direct to the consumer. There is of course some regulation, commonly: completing a food handling online course, labeling requirements, can't cross state lines, etc. The requirements vary from state to state, but the regulations are only a fraction those for traditional food service. Here's a typical one. Their fare would be fresh sourdough bread, apple cider donuts, kettle corn balls, etc. It's often seasonal, as the kitchen owner will rent a table at a local Fall festival and sell to the hungry fair-goers.

Supporting this cottage industry are a number of Facebook groups, generally organized by state due to the regulatory landscape.

It seems to me that there may be a business opportunity here. If someone with food service experience could partner with those adept at developing and supporting online vertical software, they could have thousands of easily-reachable prospects. Such an online offering might include:

  • State compliance checklists
  • Label templates
  • Simple bookkeeping
  • Social media management
  • Order tracking / point-of-sale
  • Inventory management
  • Safety and management training
  • Scheduling

There are a number of apps that do most of the things on the list. Perhaps this is an opportunity to launch a minimum viable product using the current raft of no-code utilities that stitch together online services.

Ghost Cottages?

Another major trend that came out of the COVID-19 pandemic was the rise of Ghost Kitchens. These are food preparation services that have no on-premises seating. Everything is delivered. It would seem at first glance that a Cottage Kitchen could become a Ghost Kitchen. I'm not so sure. One of the common restrictions of Cottage Kitchens is that they make only "safe" food. i.e. food whose temperature doesn't have to be monitored and maintained. Alas, this leaves BBQ off the menu. I think it might be difficult to prepare an entire meal via Cottage Kitchen. There are specialty food delivery services that make cookies for college students away from home, but this is a very narrow market. Maybe I have a blind spot. Let me know if you can think of a full meal bill of fare that would work.

Streams in the Dessert

Many small businesses thrive on multiple revenue streams. Successful Cottage Kitchens will probably be the same. For example, restaurants have both dine-in service and provide catering. My favorite doughnut place not only sells donuts but cookbooks so you can make your own. Ghost kitchens could do delivery, catering, mail-order of non-perishable items, online classes, affiliate links to cooking utensils and supplies, co-marketing, and other revenue sources I'm probably not thinking of. Let me know your ideas. For the truly successful Cottage Kitchen, I believe there's an opportunity for business process syndication to help others in non-competing geographic areas to start their own Cottage Kitchen.

You out there, Price? Your wisdom is needed.

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