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The Kitchen Coop gives natural food entrepreneurs a chance to grow

The Kitchen Coop gives natural food entrepreneurs a chance to grow

One startup is on a quest to help fledgling natural food companies take production to the next level. Is the model poised to shift how new food entrepreneurs do business?

Jeff Greenberg intimately knows the challenges of starting a natural business because, well, he's starting one. But what makes his business unique is that he's looking to alleviate those same challenges for others.

Located in Broomfield, Colo., The Kitchen Coop (a play on chicken coop) bills itself as a co-working business incubator for the natural foods industry. The 22,000 square-foot facility will function as a shared manufacturing center with perks like office space and storage, as well as a gluten-free bakery and more, for natural entrepreneurs looking to take their production to the next level.

The company fills a huge need in the natural industry for natural food startups looking to grow, economically and efficiently, into large-scale businesses. How does the model work? Greenberg shares his vision with newhope360 here first.

newhope360: What inspired you to form The Kitchen Coop and what experience do you bring to the business?

Jeff Greenberg, The Kitchen CoopJeff Greenberg: I've been a management consultant working with different manufacturing companies, generally small and niche size. About five years ago, I started working for a mid-size food company that made both natural, organic and conventional products and tons of different SKUs from spices to frozen prepared dinners. I got to understand what the food industry is about and it lined up with my interests in lean manufacturing.

Fast forward a few years when I wanted to leave the consulting gig and go back into manufacturing.  I decided I wanted to go into the food biz. I was introduced to a small local company about to start its second year of production, a seasonal canning business, and they needed someone to help with their operations. Manufacturing facilities weren't easy to find and once we found them they were inadequately equipped, not very efficiently run and didn't have a lot of space for what we were trying to do.

We eventually found a facility, and it was also a shared facility with a bunch of small food companies. I realized it was a common theme that the facility itself stood in the way of their success because they constantly had to deal with material handling, receiving of goods, moving them around and storing them. The processing facilities were small scale, cobbled together. They were spending so much time in production that the companies were stagnating.

After that experience I thought, hey, why can't we take a mid-size manufacturing facility, but instead of being owned by one company, it was shared with a whole bunch of different companies with the same centralized resource management structure that a large company has in terms of scheduling, labor, HR, payment processing and accounting?

If you take those staff functions and share them amongst different product managers you could create a virtual mid-size food manufacturer and enable the companies to be a lot more successful. It would free up the companies to focus on product development, brand development and sales.

newhope360: Besides the space, what are the other services that you offer clients?

JG: I call it a cooperative manufacturing center, as opposed to a commissary, because it's more than simply producing and shipping. The Kitchen Coop is a base of operations for small food companies.  We have production kitchens, an R&D facility, test kitchens, a full-size industrial-scale warehouse and office space and more. It's all time shared.

We estimate we can have somewhere between 40 to 70 companies in The Kitchen Coop.  At any given time we could have eight or nine companies working at once. We plan to scale up to being a 24/7 operation. Right now we're just getting started.

newhope360: Is this business model being done anywhere else?

JG: I never found an exact duplicate.I had some entrepreneurs in Los Angeles contact me and say they haven't found anything like it anywhere else. Are there other cooperative manufacturing centers out there? Yes. But they don't have all the aspects of The Kitchen Coop.

The Kitchen Coop intends to be an incubator for small food companies. In the local community, there are all these professionals around the food industry—branding consultants, designers, food scientists—that also are working out of coffee shops and home offices.  We want to get everybody in the same location to have a water cooler conversation about, say, how they'll pitch to Whole Foods Market. We want to build an affiliate network of professionals and help our clients connecting with mentors, etc.

And the bridge between the manufacturing center and the incubator is we provide professional services, which I did not find anywhere else. We will help our clients do their book keeping and accounting, staffing and payroll processing, and purchasing of raw materials and packaging as. By us aggregating across our multiple clients we can use that leverage to negotiate better purchasing power.

newhope360: Do you envision this model in other cities across the U.S.?

JG: Absolutely. There is something very special about Boulder which makes it a great place to build our first unit. To me, it has the ideal blend of foodies and the venture capital spirit—the startup mentality—and lots of very intelligent service providers. The key to all of that is the food entrepreneurs are driven by a unique food conscientious consumer base. I think this does exist in other cities, but it might not be as well-formed in such a small geographic space as it is here.

newhope360: What has been the greatest challenge in launching this model?

JG: Whenever you have a lot of property plant equipment, which is what's needed in manufacturing, you have a chicken and egg problem. You have to have the assets in order to attract the clients, and you have to have the clients in order to attract the financing to acquire the assets.

How I overcame that was, over the course of time, starting June 2011, I did market research for nine to 12 months. From that research I formulated the three-part design of The Kitchen Coop. Once I had the design, I went back to the customer base and presented it to them with my financial and pricing model. I started accumulating letters of intent, and then I took that to the bank and was able to present that to a building owner.

newhope360: What one piece of advice do you have for startup natural food entrepreneurs?

JG: I think the most important thing is to focus on what the market wants more than on what it is you think you are capable of producing.

It's analogous to The Kitchen Coop. When I started out it was just going to be a better-run commissary kitchen. But when I listened to what all the small companies were saying, I heard them say we'd like a newer, bigger, cleaner facility but we really need help with accounting, purchasing, with documenting our procedures that require we pass a third-party audit.

The market came up with all these requests and demands that I didn't initially know about. It's all of those things that will really differentiate us and make them loyal to us as a service provider.

You have to listen to what the market dictates even if it takes you beyond your comfort zone. You have to be absorbed in what you're hearing so that you can safely leave your comfort zone, because if it was easy it would have been done before.

Another piece of advice is, I adopted a philosophy when I first started this business which I'll give credit to Mike Tannenbaum the general manager of my favorite football team, the New York Jets. He says, "We will look under every stone every day." You never know where your solution is going to come from. I talk to everybody. It doesn't matter, small producer or large producer, I branch out as wide as I can.

newhope360: What types of companies will be in the space?

JG: Baked goods companies, pastries and breads; candies and confections; canned or preserved goods (acidified or low acid foods or jams); soups, salsas and sauces; and then a lot of dry snack foods, such as chips and dehydrated foods.

None of them are pure startups, in part because we offer a premium service at a premium price for companies who can leverage our scale. They already have a product in the marketplace but they're not able to scale up because of their operations. Generally, they will already be in a handful of grocery stores.

newhope360: The companies in The Kitchen Coop might be competitors. How do you protect their trade secrets, such as recipes?

JG: This question was asked of me by the first client I talked with. People's recipes are their own and they're responsible for them. Our employees sign a confidentiality agreement and it's impressed upon them that they are not allowed to share what they learn with any other company nor with anyone else.

But beyond that, my response to the question of competition is this: If we have two companies that both make granola, their competitor is not the small company also working here at The Kitchen Coop. Their competitor is Udi's, General Mills or the private label brand at Whole Foods.

What I tell people is, hey, you're small right now. You don't have the ability to become a standalone food company. Cooperate with the people you might think of as your competitors to develop a better way to make your product. Your recipe is a small part. You're selling your passion, your brand, your idea, your packaging and everything else that goes in it. That's more important to develop and protect. 

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