A food hub buys produce, eggs, meat and dairy from dozens of small farms, stores it, packs it, and sells it to buyers too big to buy from each farm one at a time: restaurants, schools, hospitals and grocers. It earns a thin margin on the food and better margins on the services around it, cold storage, washing and cutting, delivery, so the plan is a volume plan: enough cases moving every week to cover a warehouse, a cold room, a truck and staff. In the example below, a food hub in Minnesota working with about 40 farms sells $844,700 in its first year, loses about $31,200, makes a profit from month 9, and runs at about $3,100 every month once it's full. Below is each part of the plan, the first year month by month, the startup budget, and a free template.
The short version
- Buy from farms at a set share of the selling price, and sell to buyers who want volume and steady supply.
- The produce margin is thin, around 15% here; storage, processing and delivery earn more.
- Volume pays the fixed costs: a cold room, a truck, staff, the warehouse.
- Traceability matters: buyers ask which farm a case came from, and recalls need the answer fast.
- Ask whether your hub counts as a farm or a food facility; it changes which rules apply.
- Some hubs are nonprofits or co-ops with grants; this plan has to pay its own way.
- TaroStack keeps each farm's lot on every case, from receiving to the buyer. More below.
Part 1: the business description
Two Rivers Food Hub, a made-up food hub in Mankato, Minnesota, I use in these examples, writes:
Two Rivers Food Hub buys vegetables, fruit, eggs and frozen meat from about 40 farms within 80 miles, stores them in its cold room, washes and cuts vegetables for school kitchens, and delivers to restaurants, schools and grocers twice a week. It also rents cold storage to farms. In its first year it aims to sell 2,800 cases a month.
Part 2: the rules
Farms selling through a hub follow their own produce safety rules; the hub follows whatever applies to it, which depends on what it does. A hub that only stores and packs farms' raw produce may be treated differently from one that washes and cuts vegetables, which is processing; ask FDA and your state agriculture department how they classify your hub before you build the wash line. Meat and eggs bring their own rules: meat from inspected plants, eggs graded or handled under state rules. Buyers, schools especially, will ask for each farm's food safety records. This is general information, not legal advice. How traceability works for fresh produce is in how does food traceability work.
Part 3: what each part earns
| Service | Price | Variable cost | Contribution | Margin | A month at full speed |
|---|---|---|---|---|---|
| Produce sold to restaurants, schools and grocers, per case | $30.00 | $25.50 | $4.50 | 15.0% | 2,800 |
| Cold storage, per pallet a month | $120.00 | $35.00 | $85.00 | 70.8% | 40 |
| Washing and cutting for schools, per case | $8.00 | $4.50 | $3.50 | 43.8% | 600 |
| Delivery, per stop | $15.00 | $8.00 | $7.00 | 46.7% | 300 |
A $30 case pays the farm about $23.40, 78% of the price, plus boxes, labels and card fees. In a month at full speed the produce brings $12,600 of the $20,200 of contribution, cold storage $3,400, washing and cutting $2,100 and delivery $2,100. Storage and delivery are more than a quarter of the contribution from a small share of the work; without anything but produce, the hub would need about 3,800 cases a month to cover its fixed costs.
Part 4: farms and buyers
Forty farms means forty sets of availability lists every week, and buyers who want the same thing every week regardless of the weather. The hub's work is matching them: taking standing orders from buyers, telling farms what to pick, and filling gaps from another farm when one comes up short. A farm that sells on its own as well needs to be told how much the hub will take. How a market garden plans what it grows and sells is in market garden business plan.
Part 5: the first year, month by month
Fixed costs are $17,100 every month: warehouse rent ($4,500), base power for the cold room ($800), insurance ($700), a manager and warehouse staff ($9,000), the truck lease ($1,500), software and card fees ($300) and marketing ($300). The year starts at 35% of full speed:
| Month | Produce cases | Pallets stored | Cases cut | Delivery stops | Sales | Profit | Cash, year to date |
|---|---|---|---|---|---|---|---|
| 1 | 980 | 14 | 210 | 105 | $34,335 | −$10,030 | −$10,030 |
| 2 | 1,176 | 17 | 252 | 126 | $41,226 | −$8,599 | −$18,629 |
| 3 | 1,372 | 20 | 294 | 147 | $48,117 | −$7,168 | −$25,797 |
| 4 | 1,568 | 22 | 336 | 168 | $54,888 | −$5,822 | −$31,619 |
| 5 | 1,764 | 25 | 378 | 189 | $61,779 | −$4,391 | −$36,010 |
| 6 | 1,960 | 28 | 420 | 210 | $68,670 | −$2,960 | −$38,970 |
| 7 | 2,156 | 31 | 462 | 231 | $75,561 | −$1,529 | −$40,499 |
| 8 | 2,352 | 34 | 504 | 252 | $82,452 | −$98 | −$40,597 |
| 9 | 2,520 | 36 | 540 | 270 | $88,290 | $1,080 | −$39,517 |
| 10 | 2,660 | 38 | 570 | 285 | $93,195 | $2,090 | −$37,427 |
| 11 | 2,800 | 40 | 600 | 300 | $98,100 | $3,100 | −$34,327 |
| 12 | 2,800 | 40 | 600 | 300 | $98,100 | $3,100 | −$31,227 |
The year's sales are $844,713, most of it money passing through to farms, and it loses $31,227, with the lowest cash, −$40,597, in month 8, inside the $45,000 of working cash. At full speed the hub makes about $3,100 every month; a year in Minnesota also has a slow winter the plan doesn't show, which is when storage and frozen meat carry the hub.
Part 6: the startup budget
| Item | Example |
|---|---|
| Cold room build-out | $45,000 |
| Racking, pallet jack, scales | $8,000 |
| Boxes, liners and labels, first stock | $2,000 |
| Online ordering setup and website | $3,000 |
| Working cash | $45,000 |
| Total to start | $103,000 |
Get the template
Download the food hub business plan workbook. Four sheets: your products and services with price, variable cost and a month at full speed; the first year, month by month, with sales, profit and cash; your fixed costs; and your startup budget with working cash. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.
Where this stops working
Forty farms' cases arriving twice a week, each with its harvest date, cases split and repacked for schools, farms' own pallets in the cold room, and buyers who want to know which farm grew the lettuce. A spreadsheet can't keep each farm's lot on every case through the cold room, or say which schools got lettuce from a farm whose well tested bad.
How TaroStack does it
TaroStack keeps each farm's lot on every case, from receiving to the buyer.
Receiving by farm and lot. Each farm's delivery is received with the farm as supplier, its lot and harvest date, and fields of your own such as the temperature on arrival. Cases go out earliest dates first.
Cutting as batches. Washing and cutting is a batch that takes the farm's lettuce off stock and records its lot, so the school's cut lettuce leads back to the field.
Recalls and farms' pallets. The lots each buyer got are recorded as they ship, so one recall report shows which schools got a farm's lettuce. A farm's own pallets in your cold room can be kept as that farm's goods, apart from yours, on Standard. How produce traceability is exempted or not is in food traceability list exemptions.
| The job | Spreadsheet | In TaroStack |
|---|---|---|
| Which farm grew this case | A note on the box | Supplier and lot on receipt |
| Cut lettuce for schools | Untraced | A batch recording the farm's lot |
| Which schools got a lot | Search the invoices | One recall report |
| Farms' own pallets | A list on the cold room door | Their goods, kept apart |
Receiving, lots, batches and recalls are on every plan, from $49 a month; keeping farms' own goods is on Standard at $99. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.