Uber for food

This week marked an important milestone for aspiring chefs looking to build a home-based food business: the Homemade Food Operations Act (AB 626) was unanimously passed by the California state senate on Wednesday and will become law barring an unlikely objection by California governor Jerry Brown.

The new law will legalize the sale of home cooked food in California. It’s an important step forward in making home cooked food the potentially next big sharing-economy opportunity following the rise of ridesharing and short term home stay marketplaces over the past decade.

As I wrote in June:

The reason this is interesting to me is a) California often leads the country when it comes to forward-leaning legislation and if AB 626 passes it could open the door for nationwide legalization and give a framework for home food entrepreneurs (also known as the ‘cottage food’ industry), and b) I think home cooking is the next big micro-entrepreneur space to open up, much like home sharing and ride sharing did over the past decade.

Just as with craft brewers, aspiring food entrepreneurs often get started in their own kitchens. With the passage of AB 626 in influential California, it’s easy to see how the cottage food business could act as a catalyst for bigger food businesses in the future. As we learned this week from Eric Rivera, home cooking businesses can be a gateway for future restaurant innovators and operators.

The passing of AB 626 is also a big win for the folks behind COOK Alliance, the organization formed by a cofounder of the now-defunct cottage food sharing platform Josephine. Former Josephine co-CEO and COOK Alliance founder Matt Jorgensen has made it his mission to advocate for the legalization of cottage food industry, in large part because he sees it as a significant economic opportunity for low-income populations without any startup capital other than a home kitchen and cooking know-how.

From Jorgensen’s own blog post in July:

We believe home cooking helps build healthy, resilient communities and create economic opportunities for the people that need them most. Outdated food codes criminalize informal homemade food sellers, resulting in fines and misdemeanors for entrepreneurs who are most typically low-income women, immigrants, and people of color.

From here the bill goes to the desk of Governor Jerry Brown and once passed, home cooks with permits can start selling food to their hungry neighbors.

Most fresh food made at home (outside of canned and baked goods) is illegal to sell commercially in many states, including California. Because of this, some in California have been working on creating momentum for a bill called the 2018 Homemade Food Operations Act (AB 626) in hopes that it will pass through the California legislature this year and become law.

While you’d think most would be on board, not everyone is. As can be seen from this excerpt from a guest column in the LA Times by Christina Oatfield, policy director of the Sustainable Economies Law Center in Oakland, some see a darker side to AB 626:

If AB 626 becomes law, the homemade food market would likely become dominated by big companies like Airbnb and Uber. The trajectory of these businesses is rapid growth fueled by venture capital and aimed at disrupting and then monopolizing a market. They disregard important public safety laws and worker protections by treating the workers as independent contractors. They could easily overwhelm the homemade food economy just as they have ride hailing, delivery services and vacation rentals.

Oatfield, who once operated an underground kitchen out of her apartment, seems to believe that once big platform players like Airbnb or Uber get involved in the market, they will inevitably treat home food workers as commodities and take outsized commissions from home cooks when listing their goods on their marketplaces.

While I think it’s good to be suspicious of any large platform player, I’d suggest Oatfield’s suspicion is overblown. Not only are the public safety concerns she lists specifically addressed by a compliance framework for home cooks within the proposed legislation, but I also wonder where her suspicions about the shadowy forces behind AB 626 come from. As far as I can tell, the primary advocates for AB 626 and legalization of cottage food businesses have been the C.O.O.K Alliance, a group founded by the same people who started Josephine, a now-defunct startup lauded universally for the way they treated the cooks on their platform.

And even if Uber or Airbnb did eventually swoop into the home meal sharing market with a platform and charge 15% fees, I would say this: so what? As long as legislation requires that food safety is the paramount concern, I do not doubt that an online marketplace like an “Airbnb for home cooks” would likely open up much more market opportunity than many small food entrepreneurs would otherwise have.

I’ll never forget when I met a woman named Majda, a former Josephine home cook, who told me about her dream of opening a home-based food business so she could retire from her day job at a casino. You see, Majda had trouble standing all day at her casino job and with Josephine, she had the beginnings of what seemed to be a flourishing home food business that would give her greater control over her time and allow her to stay at home. Or at least she did until Washington State forced Josephine to shut down.

While Majda probably would have liked to not pay any transaction fees to Josephine, my guess is that she probably had a much better shot at building a home food business with a platform that matched buyers of home food with home cooks like herself. Now she doesn’t have any way to reach her consumers other than through underground sales of her food.

So, does the cottage food industry need to guard against aggressive tactics by platform providers? Yes, of course. But just as with ride sharing, home sharing, and creator marketplaces, opportunities like this need platforms to match the sellers with the buyers. These platforms need to be built by companies with resources and experience building communities and marketplaces. Without them, the opportunities will never arrive and, as a result, the Madjas of the world will never have a chance to chase their dreams.

Bottom line: the home cook market will have the best chance of flourishing with the combination of a strong legal framework that ensures both the consumer and entrepreneur’s interests are protected and a platform that brings together buyers with sellers. We’ve all seen the market building power of platforms – whether it’s those made for digital creators like Patreon, artisanal crafters like Etsy or, yes, gig economy workers like Uber – and the lesson learned is these platforms help to create markets that would otherwise stay dormant without them.

Uber for food

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