How to Start a Shared Kitchen, With a Projection

A shared kitchen rents a licensed commercial kitchen to food businesses by the hour, and rents them shelves in its dry storage, walk-in cooler and freezer by the month. Its members are caterers, bakers, food trucks, sauce and snack makers, and meal prep companies that need a licensed kitchen but can't build their own. The money is in keeping the kitchen booked and the shelves full; the work is in scheduling, cleaning, and keeping forty members' ingredients, finished goods and paperwork apart. In the example below, a shared kitchen in Virginia opens with members signed up in advance, loses about $24,000 in its first year on $256,300 of rentals, and makes about $4,500 a month once it's full. Below is each part of the plan, the members' rules, the first year month by month, the startup budget, and a free template.

The short version

• Rent kitchen time by the hour, and storage by the shelf a month; add classes and events.
• Sign members up before you open: an empty kitchen still pays rent.
• The kitchen holds its own health permit; members commonly hold their own licenses and insurance.
• Write the rules down: booking, cleaning, labeling, storage, what happens to forgotten food.
• Keep every member's goods apart, labeled with whose they are, and counted.
• Storage shelves earn a higher margin than kitchen hours; plan the walk-in and freezer space well.
• TaroStack keeps each member's goods as theirs, counts them, and gives each a monthly statement. More below.

Part 1: the business description

Shenandoah Commons Kitchen, a made-up shared kitchen in Harrisonburg, Virginia, I use in these examples, writes:

Shenandoah Commons Kitchen is a 4,000-square-foot licensed shared kitchen with two cooking stations, a bakery station, a walk-in cooler, a walk-in freezer and dry storage. Members book kitchen time by the hour and rent storage shelves by the month. In its first year it aims to book 700 kitchen hours and fill 90 storage shelves a month, with about 30 members.

Part 2: members and their rules

A shared kitchen holds its own health permit for the facility; members commonly hold their own food business licenses, food handler or manager certificates, and liability insurance naming the kitchen, and food trucks use it as their commissary. Rules vary by city and county, so the health department is the first call. What each member agrees to belongs in a written agreement and a set of kitchen rules: booking and cancellation, cleaning before leaving, labeling every container with the member's name and date, storage limits, allergen practices, and what happens to food left behind. What commissary members pay elsewhere is in commissary kitchen cost, and how a member starts out in how to start a cottage food business.

Part 3: what each service earns

An hour of kitchen time costs about $6 in gas, power, water, cleaning supplies and wear. In a month at full speed, the kitchen hours bring $16,800 of the $23,690 of contribution, the cooler shelves $2,250, the dry shelves $2,200, the freezer $1,440 and events $1,000. Storage earns the most per square foot and keeps members coming back; a member whose ingredients live on your shelves books your kitchen.

Part 4: keeping the kitchen booked

Seven hundred hours a month on three stations is a kitchen busy most of the day, every day. Early mornings go to bakers, middays to caterers and meal prep, evenings to food trucks prepping for the next day and makers who have day jobs. Members who pay a monthly minimum of hours fill the calendar more reliably than drop-ins. The scheduling itself, and the cleaning between members, are the kitchen manager's main jobs; a cleaning log for each station is in cleaning log template.

Part 5: the first year, month by month

Fixed costs are $19,150 every month: rent ($6,500), utilities ($1,500), insurance ($600), a part-time kitchen manager ($3,200), a cleaning crew ($1,800), the equipment loan ($2,200), maintenance and repairs ($700), software and card fees ($250), marketing ($400) and the owner's salary ($2,000). With members signed before opening, the year starts at 40% of full speed:

The year's sales are $256,310 and it loses $23,980, with the lowest cash, −$39,455, in month 7, inside the $60,000 of working cash. Full, the kitchen makes about $4,540 a month, $54,500 a year, so the second year earns back the first year's loss. Opening without members signed would start nearer 15% and need about twice the working cash.

Part 6: the startup budget

The ranges, ovens, mixers and walk-ins are financed, which is the $2,200 a month in the fixed costs.

Get the template

Download the shared kitchen business plan workbook. Four sheets: your 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

Thirty members, each with flour, sauces and frozen dumplings on your shelves, some paying for two shelves and using four, a walk-in where nobody's sure whose unlabeled tub that is, and a member who leaves owing rent with goods still in the freezer. A spreadsheet of shelves can't say what each member has on hand, or what was there when they left.

How TaroStack does it

TaroStack keeps each member's goods as theirs, counts them, and gives each a monthly statement.

Members' goods, kept as theirs. With We make or keep goods for clients turned on, each member is a client and their goods are their own: received at no cost to the kitchen, kept apart, and never in the kitchen's stock value. Nothing has to be made; the kitchen keeps, counts and releases.

Counts and releases. Counting the walk-in on a phone records each member's goods where they are, and a member taking goods out is a release to them, so what each one has on your shelves is always on record.

A statement each month. Each member's monthly statement shows their goods you hold and how each moved, by lot: opening, received, released, counted and closing, with the month's charges, typed onto their order. How a shared kitchen's own stock is counted is in inventory count sheet example.

Keeping members' goods, with releases and monthly statements, is on Standard at $99 a month. 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

Are shared kitchens profitable?

They can be once they're full. In the example, a shared kitchen loses about $24,000 in its first year and makes about $4,500 a month at full speed.

How much does it cost to start a shared kitchen?

In the example, $147,000, with the build-out and $60,000 of working cash the biggest parts, and the cooking equipment financed.

How do shared kitchens make money?

Hourly kitchen time, monthly storage shelves in dry storage, coolers and freezers, and classes or private events.

Do members of a shared kitchen need their own license?

Commonly, yes: the kitchen holds its health permit, and members hold their own food business licenses and insurance. Check with your local health department.