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Shoals Commercial Culinary Center: Helping Specialty Food Businesses Take Off

by Carl Hoffman

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It all began, as so many good things do, in the kitchen. Each Christmas, Alabama schoolteacher Christy Freeman coated big Red Delicious apples with caramel, dipped them in pecans, and dribbled them with milk chocolate and white chocolate until each apple looked like heaven. Her friends and colleagues loved them. Then, two years ago, she had a baby, took a leave of absence from teaching, and neglected to make any apples. Her friends were bereft. "They all begged me to make them," she says. "They even said they'd pay!"

Which is why, on a mid December morning, Freeman is standing at a large stainless steel table in the Shoals Commercial Culinary Center, in Florence, Alabama, muscling heavy ingots of caramel into industrial-sized bowls amid case after case of apples. Last year at Christmas, she and her partner, Melonie Winsett, sold 690 apples at $7 apiece to gift and specialty food sellers around the state. This December, their fledgling business, A Bushel and a Peck, produced 2,600 apples, and they'll make hundreds more at Valentine's Day, Easter, and Halloween. "We're planning on being on Oprah one day," says Freeman, transferring a tray of 15 apples to a tall drying rack. "The story of a couple of moms striking it rich!"

Unlikely, perhaps, but not impossible. Freeman's company is one of 18 rapidly growing specialty food businesses spawned by the culinary center since it opened two years ago, with the help of grants from the Appalachian Regional Commission. Those businesses employ 53 people in a region that in the last five years has averaged over 10 percent unemployment. They sell their products—everything from barbeque sauce to hard candy—to 200 stores in 18 states, including five national chains like Wal-Mart and Piggly Wiggly. An extension of the Shoals Entrepreneurial Center, a small-business incubator that has helped launch 90 businesses and create 1,100 jobs since opening in 1992, the culinary center offers entrepreneurs the use of a modern commercial kitchen for $20 an hour—plus the marketing, small-business, and regulatory savvy of the culinary center's director, Sherry Campbell. Already nearly self-sustaining, the culinary center has seen the number of hours its clients use the kitchen rise nearly 30 percent over the past year.

Overcoming Barriers

Anyone with a telephone and a computer can start an in-home consulting business. Starting a food-products company isn't as easy. Everyone has a stove, a refrigerator, and a sink at home. But state and federal laws require that food products be produced in licensed kitchens, and getting a license for your home is prohibitively difficult and expensive—not to mention that producing food items in quantity would quickly overwhelm the average residential kitchen. Commercial stoves, refrigerators, and mixers that can produce bulk quantities cost tens of thousands of dollars, in addition to the cost of pans and utensils. The U.S. Food and Drug Administration requires that, to be sold in a grocery store, even the simplest hot sauce bear a label stating its ingredients and nutritional and pH analysis. Add a UPC bar code, bottling, packaging, marketing, and distribution, and the barriers to starting a food-products business can be overwhelming. "I don't know what we would have done without the kitchen," says Freeman. "Sherry helped us with everything."

Typically, people come to Campbell with little more than an idea and a family recipe. "Most have never even heard of a business plan," says the Alabama native, whose former careers as teacher, restaurateur, and car salesperson have made her well qualified to guide clients and show them how to promote their products. "I say, 'What market have you targeted?' and most have no idea what I'm talking about," she says. "Then I tell them to go look at the grocery store and see what's for sale and how much it costs." Nine out of ten never return. But those who do come back receive help—in adjusting their recipes so they can be easily mass-produced, in learning the regulatory process, and in marketing. Campbell tells the center's clients to start small and aim for gift shops, which specialize in boutique products. "That allows you to grow slowly and get the kinks worked out," she says.

While a single hot sauce might barely be noticed, together the center's clients create a critical mass that eases their marketing and distribution woes. When a grocery store picks up one of the center's products, for instance, others can ride its coattails. At large specialty and gourmet food shows, where booth rental can be expensive, the center's businesses pool their resources and share a booth. "By definition these are microbusinesses started by people who've never run a business before," says Jerry Davis, executive director of the Shoals Entrepreneurial Center. "They know how to do the food, but nothing else. We do a lot of education on everything from pest control to accounting, and all that's important. But then we help them with distribution—and that's really key."

"Nothing but Growth"

The story of Martha Grace Foods, which produces Mook's Cheese Straws, is typical of how the center helps its clients start up. Every Christmas for years Patrick Smith's mother-in-law, affectionately known as Mook, would make cheese straws, a southern delicacy, which she gave to eager family, friends, and local clubs. "They were famous around here," Smith says, "but like a lot of genteel ladies, she never gave half a thought to selling them." When Mook died in 1999, the family pondered the idea of making a business out of her old family recipe. Smith did a little research, bought some commercially available cheese straws, and said, "Hey, ours is way better." But there was no place to make them. Then, just as the culinary center opened in 2001, Smith lost his job as chief financial officer of the local community college. "We felt we had a viable product, but we had no idea how to go about it on a commercial basis," he recalls. With Campbell's help, Smith designed a label with the all-important UPC bar code. Then Campbell walked Smith through the local licensing and regulatory laws and sent the straws to Auburn University, which produced the required nutritional analysis. "That in itself was something like four months of work that I didn't have to figure out," says Smith. With the legal and regulatory angle taken care of, Campbell next helped Smith market his product to a network of craft and gourmet stores, and pumped up the product in the local press.

The rest is cheese straw history. "It's been nothing but growth ever since," says Smith. His six employees are now turning out an average of 15,000 cheese straws a month, thanks in part to the company's recent purchase of a $38,000 extruder that produces 72 pounds of cheese straws every nine minutes. "No 'ifs' or 'buts,' " says Smith, "we never could have done this without the center. If you go to a banker and say you want to start a specialty food business, he'll look at you with a blank stare. But this allows you to start without a lot of fixed capital costs—the whole thing cost me $5,000 cash. And if I double my business this year, then I can sit down with a banker and I have a real story to tell. It's not pie in the sky, anymore."

If there is a cautionary note for food-products entrepreneurs, it's the risk of getting too big, too fast, and either spending too much money or committing to a production schedule that can't be met, a dose of realism Campbell tries to instill in her clients. "When it comes to grocery stores," says Smith, "if you can't deliver what you promise, you're dead." This is one reason the culinary center remains such an asset for small producers, even those like Smith, whose business is growing rapidly. The center gives them the flexibility to use the kitchen as much or as little as needed, without having to commit to the high overhead of their own space. "We all want to get rich quick," Smith says, "but you can get too successful too quickly. Right now I'm just trying to manage what I have and to concentrate on the back office. Maybe in 18 to 24 months it'll be time for us to move out of the nest." Still, he says, "things have been so good sometimes I have to stop and wonder: Is this a dream?"

Carl Hoffman is a freelance writer based in Washington, D.C.