From infamous to famous amos.
January 3, 2012 3:53 PM   Subscribe

I am unexpectedly attempting to turn my cookies into a small business. Professional bakers and restauranteurs - hope me?

So I make cookies... Just as a fun hobby.

For the new year, a local lunch spot I frequent would like to start selling desserts. After a few beers and some smack talk from me (plus a few samples) the shop has offered to start selling my cookies. HOORAY! Only I'm not a baker and have no idea what I'm doing. I'm an IT weenie. I don't know about pricing food based on per-unit costs, or food regulations, or even adapting a single batch recipe to anything professional quality. I feel like I need a FAQ..

The staff and manager are great people and serious about the offer. Since this caught me by surprise they have offered to let me use their kitchen facilities to make up the initial batches and assist with the packaging. Nothing fancy, just bagged up and for sale at the register with lunch/dinner.

Sure I'd like my cookies to be the next 'big thing', but back on earth I'd like to supply this one store, plus any requests that come from supplying this one store.

The questions:

How do you adapt a small recipe to something that can be made in bulk on serious equipment? Will massive batches act differently than small?

Do I need to have some business plan? Would it matter some of my recipes are based on publicly available recipes? Do I really need trademarks and patents and whatever?

What's the 'normal' markup in food service? Is it as simple as (sale price - cost = profit)

Anything you think I should be aware of or avoid would be really helpful.
posted by anti social order to Food & Drink (10 answers total) 29 users marked this as a favorite
 
I hate to be a broken record, but I encourage you to read The E Myth

You're going to want to contact your county health department for Food Safety regulations.
posted by humboldt32 at 4:50 PM on January 3, 2012


IANABaker, but here's my thoughts:

It's great that they have offered to let you use their kitchen! That takes a HUGE chunk of the procedural plans and costs out of the picture.

Depending on your state/county, you may have to have your food handler's permit. They are usually available for a nominal fee from your county's health department. You can probably google it ("name of county/state health department food handling"). Even if it's not required, it might help you if someone were to, say, try to take you to small claims court cause they think they got sick off your cookies. (Just thinking of something crazy that could happen.)

Don't forget to include the cost of your packaging in your costs.

Realize that the restaurant is in this to benefit themselves, too. You get to sell your stuff and make some bucks and hopefully a name for yourself, but, have you negotiated their percentage of profits? Since they are letting you use their equipment and using the shelf space in their store, they are going to want *something.* Make sure to factor that into the costs.

When would you have access to their kitchen? Is it only 2am-6am when the kitchen is closed? Make sure that you would be able to access the kitchen at convenient hours to the rest of your life and schedule.

Also, I know *nothing* about huge giant batches of cookies. But, I would suggest taking a couple days to experiment with different batch ratios based on just multiplying everything by X and making adjustments as necessary. You'll need to see how many times X the restaurant's mixer can hold, and how many cookies at a time you can bake. If they are regularly closed one day a week, suggest experimenting for a month (one day per week they are closed, giving you four days access to experiment, if they were closed one day/month). In the meantime, register for your food handler's permit!

After you get your recipe down (or, um, sized up) you'll want to get an idea of your time spent. How long does it take to mix a batch of dough? How long does it take to bake a batch of cookies? Include your travel time to and from the kitchen if you want to. This will make you more confident that you aren't overlooking involvement in time spent, and will help you negotiate the price/percentage with the restaurant owners more confidently. (You can say, "It takes X amount of time to make one batch of cookies, which I expect to retail for X based on the prices of your menu. Baking ingredients cost Y. Given the costs and time involved, I think a fair price for me to ask for each package of cookies sold is Z, leaving you with a profit of XYZ.)

Also, who is going to purchase the cookie ingredients? Since they are a restaurant, they may have access to wholesale suppliers at a much cheaper rate than you would on a small scale. BUT, they may not want to invest the up-front cost of materials until they know how the cookies will sell. If they don't want to pay for the ingredients, at least initially or for a trial period, be ready or willing to shell out maybe $100-200 dollars in ingredients to let yourself experiment and get your perfect batch on the market.

After writing this, I thought of this question: What happens when the price of ingredients changes or fluctuates? Who eats the costs?

Last but not least, get things in writing. Make sure the purchaser of the ingredients, your use of kitchen, possible hours of use of the kitchen, and the restaurant's percent or amount of profit is in writing.

I am also not a lawyer, so I'm not sure about trademarks or patents or a business plan. The above comments were just random things you would want to think about pretty common-sense-wise.

What an exciting way to start the new year! Best of luck to you.
posted by shortyJBot at 4:54 PM on January 3, 2012


Okay. Wow. There are so many moving parts here, which is probably why you're feeling a bit at sea. First of all, you'll probably want to check out the equipment the lunch spot has--do they have a Sunbeam hand mixer? A Kitchenaid professional stand mixer? or a mighty Hobart floor model? What is the oven capacity? Standard or convection? or Both? Refrigerated/frozen storage space? Counter/workspace? Baking sheets? Other utensils? How long are these folks going to be willing to lend you this space? Can you work out a rental agreement with them to use it in their downtime?

Other people have covered the food handlers licensing, etc.

As far as scaling up recipes, well, sometimes a recipes multiplies easily and works up/tastes the same as the small batch. Not all recipes will do this, though, and you will probably want to start by doubling the batch. At first, that might be as big a batch as you want to deal with anyway until you get the hang of the equipment. It's also important not to make a HUGE batch of cookies to start out with--until you get well-known, you're likely to end up with lots of stale gross cookies if you start out with too many; I mean, you can always make more, right?

That brings up another question: are you selling these cookies outright to the shop, or are you selling them through the shop, if you see the difference. If the latter, you will probably be expected to take back the old unsold cookies and replace them with new. The owner of the restaurant I used to manage went through more outside bakers than I care to remember because of disagreements arising over handling day-old/stale.

As far as what you should charge, you need to figure out your actual cost of ingredients. There is usually a multiplier you use for perishables which I don't remember what is anymore--something like three times cost I think, but you can jigger that multiplier to take into account extra time spent on something fiddly or high levels of waste. So for instance, imagine I am making my mom's oatmeal chocolate chip cookies. A single recipe makes 12 dozen, so 144 cookies. The ingredients (including packaging), let's imagine, cost $24. Multiply by 3=72, divide by 144=.5, so I tentatively price my cookies at 50 cents apiece. However, I find that after breakage, there are often only 124 cookies left to sell from each batch; that boots the price up to about 58 cents each. Or maybe I've decided each of these cookies needs a little flourish of lemon frosting as my trademark (yeah, it sounds gross to me too; just play along with me here), and although the ingredients for the icing only add maybe 50 cents to the whole batch, it now takes me an hour extra to sploot that flourish on all those cookies; how much is my time worth? I'ma say $15/hour because I'm a professional! That brings our total to $87/batch, and with breakage figured in, that's now 70 cents a cookie; are my mom's chocolate chip cookies worth that much? That's where you start looking at what the market will bear.

Well, that's kind of a book, and there are tons of things it doesn't cover, but here's the thing: if you really are interested in this project, start small, don't sink your whole life savings into the thing, make sure you're clear on what any agreement you come to with this shop entails, and learn as you go along. you've gotten a lot of good advice above and I hope this bit helps too. If you make it big, I expect a cookie!

Good luck!
posted by miss patrish at 5:28 PM on January 3, 2012


(ms. Vegetable)
When you bake in large batches, it is Much More Important to bake by weight than volume.
posted by a robot made out of meat at 6:33 PM on January 3, 2012 [1 favorite]


There are 2 markets in the food business: food service, where you sell to restaurants, hotels, colleges...., and retail business, where you sell to grocery stores. I suggest that you take your cookies to a few good brokers in your city and get their opinion about your product.

Look up food service brokers in your city (use google or yellow pages) and call every single one of them for an appointment. Pick their brains and write down all information they can give you. Do this before everything else because it is free advice. Don't worry about business plan because the brokers will show you the right market and customers to approach. If they take in your product line, you pay them a commission for all the sales and they will do most of everything for you.

What you provide is the money/resources, and the product. After you select your broker, they might even show you where you can get your cookies manufactured. Try to contact mass bakers/cookies companies that have big machines that can make these cookies for you. Start small, and build it based on sales and demand. Good luck.
posted by bossanova at 7:52 PM on January 3, 2012


Miss Patrish's number crunching is pretty good guide. Now add on a whole bunch more overhead for packaging, marketing, sampling, delivery fuel, etc...

Not trying to crumble your plan, but you need a business plan BEFORE you do one more thing. A business plan is truly the key to success because it's going to tell you before you go into debt whether you have a snowball's chance of making it AND it's going to be your budgeting guide the first year before you have actual numbers to forecast and budget by. There's lots of great business plan resources on the web for free that are of high quality.

And what meat robot said. The term you want to google is "bakery's percentage."
posted by webhund at 8:25 PM on January 3, 2012


I'm a (sort-of-former) pastry chef. Technically, I agree with everything above. If you want to be completely legit there are a million legal and professional hoops you should jump through.

However.

One of my past jobs was working with a small wholesale bakery. The owner was in her late 20s and literally started the business out of her mom's kitchen. She went to some local coffee shops, dropped off a big box of samples, and sweet-talked her way into their display case. She literally baked out of a home kitchen her first year. She had her bulk ingredients delivered from Cisco in their giant semi on her mom's residential street. It wasn't legal (since she wasn't preparing the food in a commercial kitchen) but it did allow her to get her feet wet, and decide that this was what she wanted to pursue full-time. A year later she was renting commercial kitchen space, a year after that she had bought a wholesale kitchen, and now she's selling her stuff to the Patina Group.

So, you know, it can all work out.

Regarding your recipe, cookies are thankfully less fiddly than many other pastries and many recipes are flexible enough to be sized up or down with minimal tweaking. It's fine if they're based on recipes you find on the internet (or whatever) as long as you're not publishing them and claiming them as your own. Agree with above that you should transfer your recipes to weight (not volume) for consistency and speed. Also make sure you use a disher so that every cookie is exactly the same size--both for aesthetic reasons as well as cost control.
posted by Bella Sebastian at 8:43 PM on January 3, 2012 [1 favorite]


Sometimes AskMe is about the big picture and sometimes it's about the small details. Here you've gotten a lot of good advice on both, but I'd particularly highlight Bella's suggestion about the disher for serving and the many recommendations on going by mass rather than volume as keys to the success of your endeavor.
posted by Aizkolari at 9:06 PM on January 3, 2012


Former bakery owner here. Congrats on the opportunity. There's some great advice above. Some things that I don't think have been mentioned are:
* Cookie dough can be refrigerated, and many cookies (brownies leap to mind) can be frozen. This is good from a production standpoint, but in your case you'll need to know how this will work. Can you store your doughs and/or excess cookies at the store?
* Will your baking products have your name/brand on them? Something to consider if you envision moving on to your own business.
* You'll likely need to get some commercial ingredients from wholesalers. Will you set up your own account for this or can you use theirs? What about accounts with new vendors (likely if you need special chocolate, etc)?
* Whatever your agreement is with the shop, GET IT IN WRITING. Be clear about who's responsible for what (can you use their spatulas? Do you get a key to the store? Where can you store your vanilla extract, etc?) and what's expected of you.

You can also dial this way back down. We had what was essentially a freelancer who came in two nights a week, used our ingredients and baked like a fiend. He brought in a toolbox (literally) of his favorite utensils and took them home with him at night. He locked up and cleaned up the place before he left. We paid him twice what we paid our other employees but he was well worth it.
You could do it that way. Say "you pay for the butter, flour and sugar, etc" and pay me $x/hr. I'll come in on these days and these times and bake cookies." They get all the cookie proceeds, but you can learn the logistics of commercial baking with a lot less stress around it.
posted by Atom12 at 8:11 AM on January 4, 2012 [1 favorite]


Wow great stuff here. Thank you all for your help and advice!
posted by anti social order at 10:41 AM on January 4, 2012


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