How to Start a Frozen Food Business: Steps and Costs

To start a frozen food business, choose a product and find out who regulates it (FDA for most foods, USDA if it contains meat or poultry), then make it in a licensed kitchen, because frozen foods generally can't be sold under cottage food laws. Work out how much freezer space you need before you buy freezers, keep the product frozen all the way to the customer, give every batch a lot code and a best-by date, and price each box from its full cost, including freezer space and cold delivery. Plenty of small frozen brands start at farmers markets or local stores and add a distributor later. Below is each step, a box costed with real numbers, and an example startup budget.

The short version

1. Pick a product and check who regulates it: FDA, or USDA for meat and poultry.
2. Make it in a licensed kitchen; home kitchens rarely qualify for frozen food.
3. Work out your freezer space from your box size and weeks of stock.
4. Keep the cold chain: freezer, transport and the store's freezer, with temperatures logged.
5. Lot code and best-by date on every box.
6. Cost each box with freezer space and cold delivery included.
7. Sell locally first, then to stores, then through a distributor.
8. TaroStack tracks frozen stock by lot, date and freezer. More below.

Step 1: the product, and who regulates it

Most frozen foods, like dumplings, soups, pastries and veggie patties, are FDA's. Products made with meat or poultry can fall under USDA inspection instead, which brings its own facility and label approval, so check before you settle on a recipe. Cottage food laws mostly cover foods that are safe at room temperature, so anything that has to stay frozen usually needs a licensed kitchen from the first sale.

If your kitchen makes food mainly for stores or distributors rather than selling it directly to the public, it generally registers with FDA: facilities that manufacture, process, pack or hold food register unless an exemption applies (21 CFR 1.225 and 1.226). Your state and county have their own licenses on top. This is general information, not legal advice; your inspector has the last word.

Step 2: a licensed kitchen, and how fast you can freeze

A shared commercial kitchen rented by the hour is the usual start, and the questions that matter for frozen food are about cold: how much freezer space comes with it, whether you can rent more, and how fast you can freeze. Food frozen slowly in a crowded chest freezer forms larger ice crystals and loses texture, so a blast freezer, or at least freezing on trays in a single layer before boxing, makes a better product.

Step 3: how much freezer space you need

Work it out from the box, not the freezer's sticker. Windward Roots, the made-up taro business I use in these examples, makes frozen taro patties in boxes of four, 7.5 by 5 by 2 inches.

One box          7.5 × 5 × 2 = 75 cubic inches = 0.043 cubic feet
Reach-in freezer 49 cubic feet, about 70% usable = 34.3 cubic feet
Holds            34.3 ÷ 0.043 ≈ 790 boxes
Selling          200 boxes a week  →  about 4 weeks of stock

And that's before raw materials. Frozen ingredients, the next run's packaging if it has to be kept cold, and a shelf for anything on hold all want space too. Plan for the stock you'll carry at your busiest, not your average.

Step 4: the cold chain

Frozen food has to stay frozen from your freezer to the store's: insulated bins or a refrigerated vehicle for delivery, a temperature log for each freezer, and a check at handover. Most frozen food is stored at 0 °F or colder; agree the temperature with each buyer and write it down.

FDA's sanitary transportation rule sets duties for shippers, loaders, receivers and carriers moving food (21 CFR 1.900), but a business with less than $500,000 in average annual revenue, adjusted for inflation, is a non-covered business (21 CFR 1.904). Even so, a store's receiving dock will reject a thawed delivery, so log temperatures anyway.

Step 5: lots and dates

A frozen best-by date is about quality, not safety: freezer burn, texture and flavor. Pick one you've tested, and print it with a lot code on every box. Stores and distributors often require a minimum shelf life left at delivery, explained in minimum remaining shelf life, which matters more for frozen food than you'd think, because cases sit in distributor freezers for weeks. How to build the lot code is in how to create lot numbers.

Step 6: what a box costs

At $5.50 wholesale to a local store, that leaves $1.78 a box, a 32% margin, and the store sells it for around $9. Freezer space and cold delivery are the two lines new frozen brands forget, and together they're 85 cents here. Through a distributor, their share comes out of that margin too, which is covered in requirements for selling food to grocery stores.

An example startup budget

These are example numbers; replace each with your own quotes. Printed packaging is the line that ties up the most cash for the longest, because printers have minimums. If the kitchen ever runs out of hours, a co-packer is the next step, covered in what is a co-packer.

Where this stops working

Frozen stock hides. It's in the kitchen's reach-in, a chest freezer in the garage, a rented pallet at a cold storage warehouse, and the van. Boxes from three batches share a shelf, frosted over, and nobody can read the dates without pulling them out. A spreadsheet says 790 boxes; the freezers hold some other number. The store wants six months of shelf life left and you're not sure which batch you can send. And when a supplier recalls an ingredient, finding which boxes it went into means unloading every freezer.

How TaroStack does it

TaroStack keeps track of frozen stock the way it really sits: by lot, by date, by freezer and by site.

Every freezer is a place. Stock is kept per site and per shelf, so the kitchen's reach-in, the garage chest freezer and a rented cold storage warehouse each show what's in them, lot by lot. Moving boxes to cold storage or to the market is a transfer, with stock in transit until it lands. Counting runs on a phone, in a freezer with no signal, and sends itself when you're back, showing what a difference is worth before you post it.

Every batch has its lots and its dates. Record a batch and TaroStack takes the ingredients from the lots you used, notes which went in automatically, and puts the boxes into a lot with its own code and best-by date. Batch record forms print with your own checklist fields (the core temperature going into the freezer, the line check, initials and sign-off), so the paperwork is the same every time. TaroStack doesn't read your freezer's thermometer; keep a logger for that, and record the reading on the form.

The right boxes go out. Oldest best-by goes first everywhere stock is picked, and each customer carries its own shelf-life rule, so a store wanting six months left gets boxes with six months left. Planning, shelf-life aware, says what to make and when, and flags a batch made too early for a customer's minimum before it's made. TaroStack forecasts what will expire before it's sold and what it'll cost, while there's still time to sell it.

And a recall is one report. Which supplier lots went into which batches, which stores got which boxes, and what's still in each of your freezers, with contact details. Lot labels print with a barcode, and stores and distributors are customers with their own orders, picking lists and delivery notes.

Lots, best-by dates, recalls and counts are on every plan, from $49 a month; recipes, batches, planning and more than one site (a kitchen, a cold storage warehouse and a market stall) are 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.

Questions people also ask

Can I start a frozen food business from home?

Usually not for selling. Cottage food laws mostly cover foods that are safe at room temperature, so frozen foods generally need a licensed kitchen. A shared commercial kitchen rented by the hour is the common start.

How much does it cost to start a frozen food business?

In the example budget, about $12,900, including used freezers, packing equipment, a kitchen deposit, licenses, insurance, the first printed boxes and working cash. Your own quotes will differ, and a blast freezer or your own facility raises it.

What license do I need to sell frozen food?

A food manufacturing license from your state or county, and FDA registration if your facility is required to register. Products with meat or poultry may need USDA inspection instead. Check with your state's health or agriculture department.

How do you sell frozen food to grocery stores?

Start with local stores that have a frozen buyer, with a full label, a lot code and best-by date on every box, liability insurance, and a way to deliver frozen. Larger chains usually buy through a frozen food distributor.