Say you want to start a company to start selling your granola, vegan burgers or world-famous kombucha. How do you make the leap into a bona-fide business?
It’s definitely not easy. Budding food companies have to find an industrial kitchen space, funding, co-packing facilities and distribution partners. It can be really, really expensive.
That’s where The Hatchery, the Chicago-based food business incubator comes into play. “Company owners would normally have to spend 80-100K to build out their own kitchen,” Natalie Shmulik, CEO of The Hatchery, told me as I toured the facilities this week — a huge financial risk when you don’t even know if your product is going to be successful. With The Hatchery, however, nascent food entrepreneurs can rent out kitchen space, coolers, storage space, and other necessary pieces to run their own business, without investing a massive amount of capital up-front.
The Hatchery was founded three years ago when ICNC, a small business incubator, suddenly started receiving a massive influx in applications from food and beverage companies. It didn’t have a suitable kitchen space for these startups so it teamed up with Accion, which provides small business loans, to create a non-profit that would foster food businesses and provide them with a startup space and the potential for investment.
In addition to physical space, members also get free access to The Hatchery’s series of events on topics like restaurant technology, accounting, and branding. The public can attend the events for a fee. Hatchery members also get connections to some of the incubator’s partners, including large food corporations like Mondelez, Kellogg, and others. For example, ingredient provider Ingredion has a permanent chef on-site to help entrepreneurs figure out how to make their products shelf-stable, etc.
The majority of The Hatchery’s entrepreneurs work in the CPG space, but the incubator also has companies in food tech and catering (both Tovala and Farmer’s Fridge are members). According to Shmulik, a few top trends they are currently seeing are ghost kitchens, healthy snack food, plant-forward foods, and even CBD products. (Though CBD food and drink is technically illegal, Shmulk told me that the state of Illinois had approved it for food use.)
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- The Hatchery’s entryway.
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- A coworking space for members.
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- Large coolers and storage area.
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- A commercial kitchen, shared by 4-5 businesses.
Pricing varies, but Shmulik gave me a number of $2400 per month for an entrepreneur, which covers storage, coworking space, kitchen use and member coaching. The incubator currently has about 200 members and 20 businesses operating out of its space.
Lately food business incubators have become quite en vogue. Notable players besides The Hatchery are the Chobani Incubator program, D.C.’s Union Kitchen, and The Kitchen in Israel. However, The Hatchery is different in that it doesn’t take any equity, offer any funding, or limit membership to any sort of timeline. In that way they’re almost more akin to straight-up shared industrial kitchen spaces, like Boston’s Commonwealth Kitchen or Pilotworks, which offered commercial kitchen space for budding food entrepreneurs.
Of course, Pilotworks ended up having to shut down after failing to raise enough capital to continue. This doesn’t seem as much of a risk for The Hatchery, as it’s backed by companies with pretty deep pockets.
That’s a relief for aspiring food entrepreneurs in Chicago. Shmulik told me that there are only two shared kitchen spaces in the city, so it can be very difficult for entrepreneurs to secure a spot. As demand for local food rises and more entrepreneurs step up to fill that need, all-inclusive food incubators like The Hatchery will become even more of a hot commodity.
Natalie Shmulik will be speaking about the food tech startup ecosystem at SKS 2019 this October! Early Bird tickets are on sale now.
