Agenda - Parks and Recreation Commission - 08/09/2018

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U.S. Kitchen Incubators Industry Overview In 2013 and 2016 Econsult Solutions Inc., American Communities Trust, and Urbane Development published reports that highlighted the food incubator industry.16,17 These studies provide an overview of the industry, its needs, and current challenges. They highlighted several major challenges for food incubators in becoming successful. For example, while a shared kitchen space is helpful, entrepreneurs may be ill-equipped to successfully run a business within the incubator space. There are additional challenges, such as design and flow of the facility, how reservations are made, ease of payments, and attracting high -quality entrepreneurs. Local food regulations related to sanitation also pose challenges to food incubators. Another challenge noted was that little data has been collected to measure the performance and economic impact of incubators. Metrics that are usually collected are related to sales volume, gross revenue, and job creation. It is also important to note that the majority of businesses that make use of incubators are run by women, ethnic/minority and/or low- income populations showing an important societal effect to consider in relation to a food incubator. Financial Viability of Incubators In the 2013 Econsult shared kitchen survey, of the 135 incubators surveyed, 41 responded with details about nonprofit or for -profit status. Table 2 shows the distribution of incubators that are making money, breaking even, or losing money. Making money Breaking even Losing money Both nonprofit and for -profit 31% 53% 16% Table 2: Profitability of Incubators in 2013. The same survey conducted in 2015 is shown in Table 3. The updated survey did not differentiate between nonprofit or for -profit status. The authors did mention that more incubators are losing money and more are making a profit in 2015 than they were in 2013. Nonprofit 15% 54% 31% For -profit 39% 57% 4% Both nonprofit. and for -profit Making money 39% Breaking even 37% Losing money 25'% Table 3: Profitability of Incubators in 2015 16 Econsult Solutions "U.S. Kitchen Incubators: An Industry Snapshot." August 2013. http://www.econsultsolutions.com/experience/our-projects/food-incubator-study/. 17Econsult Solutions "U.S. Kitchen Incubators: An Industry Update." March 2016. http://www.econsultsolutions.com/report/us-kitchen-incubators-industry-update/. 6