A micro food business is also called a cottage food operation. Cottage foods are low-risk food products produced in the home kitchen for sale to the consumer. The definition of low-risk is a bit trickier. A food is low-risk if it is less-likely to cause food poisoning because it has a high acid content (pH 4.5 or lower), or low water content. Low-risk foods spoil due to their chemical composition and have a ‘best before’ date. A best before date is not a cottage food rule in all states, but it is a ‘best practice’.
What are low-risk cottage foods?
Low-risk foods are shelf-stable such as; bread, biscuits, cereals, cookies, and cakes (not cream or cheesecakes). Such foods are unlikely to be implicated in food poisoning and include:
- foods that have been preserved, for example; jams, jellies, fruit preserves
- dry goods, those that contain minimal amounts of moisture, such as; bread, flour, biscuits, dried spice blends,
- acidic foods, for example; pickled foods, vinegar, fruit (Acidified Food Manufacturing School, NC)
- foods with high sugar/fat content for example; candies and chocolates
If you’re more interested in selling high-risk products (we’ll discuss this in another blog) your production location needs to be a commercial kitchen i.e. incubator/shared-use.
Cottage food products with a short shelf-life sometimes have a higher price tag because of the value they bring. Remember, a short shelf-life can mean the customer is getting immediate gratification.
For example, if you make and sell wedding cakes costing $5 to $12 per slice for a minimum of 75 servings; you’re looking at $375 to $900 to serve those 75 guests.
- The more servings per slice the more money you make.
- Selling 2-3 wedding cakes per month will gross $1125 to $2700. (Could you handle more than 3 weddings per month?)
Let’s say your selling pound cakes that serve 12. Your price per cake is $40. How many pound cakes would you need to sell to gross $1125 to $2700? You need to make 28 to 67 cakes per month. Yes, there are several variables that go into making this a realistic goal. Is it realistic?
When you start to think about starting a cottage food business, get honest with yourself. Is this something that will yield the money you need to make a profit? Make a living? I use wedding cakes as an example because they’re high end, labor intense products and yield a hefty profit.
Example of Micro Food Business Cottage Foods
Hot pepper jelly is a cottage food product with a longer shelf-life. It’s usually good for 6 to 12 month past the best before or best by date. You also have to consider the storage method, and the amount of sugar contained in the product.
Hot pepper jelly will sell at a lower price because the of the lower value (usefulness) it brings. This product is in competition with other jams and jellies int he marketplace. Plus, when the shelf-life is longer (you’re not making the product daily) you have an opportunity to sell in a variety of locations. The price is lower but the opportunity for sales is higher. Again, this is not etched in stone since several variables will determine success. Do you see the difference? Yes, we’re talking apples and bananas, but when CFOs first start out they’re often not thinking along these lines.
Micro Food Business Foods with high value, and a long shelf-life.
Sauces, but only those that can be produced in the home kitchen. (Some states do not allow the production of sauces, check your cottage food law.)
Hot sauce, barbecue sauce, mustard, vinegar, cooked salsa, ketchup, relish. Do you see a theme here? Condiments
. Products that complement and bring flavor and zing to the mundane. Everybody’s looking for flavor!
Baked goods top the cottage food list for sales in high traffic locations. Here are a few more popular cottage food selections.
- Candy, such as brittle, toffee and exotic chocolates.
- Chocolate-covered nonperishable foods, such as nuts and dried fruits.
- Dried fruit.
- Dried pasta.
- Dry baking mixes.
- Granola, cereals, and trail mixes.
- Jams, jellies, preserves, and fruit butter that comply with cottage food standards.
- Vinegar and mustard.
- Roasted coffee and dried tea.
- Dried or Dehydrated vegetables.
- Dried vegetarian-based soup mixes.
- Ground chocolate, or chocolate blends used in cooking and baking.
Take a look at the Learn Before You Leap video to gather insight into cottage food operations.
No one can tell you the best micro food business to start. There are too many moving pieces for that to occur. Make what you love and what you have a passion for. If you don’t know what you want to do, visit a few farmers markets and see what others are making. You might walk the International or condiment aisle at the grocery or gourmet shop. You may even want to purchase a few products.
Could you may them better? Maybe you don’t want to make a food product. If you’re creative and you want to make something, try it! You don’t have to produce on a large scale. What can you make in your home kitchen? Soap, lotion, dog treats, candles, scented oils the list is endless. You will never know what you like however until you go in the kitchen and try.
If you have questions about starting a micro food business, join us over on Facebook.