Hitting Critical Mass
U-Gas shows the possibilities of a small-scale foodservice commissary.
Commissary Best Practices
According to Deborah Holand, president of Food Sense Inc. and a consultant for b2b Solutions LLC, Lake Forest, Ill., retailers large and small should consider the following when setting up a new commissary.
- Shorten the EFR. An efficient foodservice response (EFR) cycle—or the timeline from food conception through production to point of sale—is essential. “For those who operate in-house and run a fresh distribution program, if the menu is right, the price is right and the product looks good, the only other thing that has them failing is because the EFR cycle is not working,” says Holand. “They will lose shelf life, profit, [gain] excess waste, and the program will not make any money and will lose money.”
- Chill out. From an equipment perspective, be sure to equip the commissary with sufficient refrigeration and freezer space, which can trip up even the biggest operators. “It’s very important whether you’re buying or building a commissary from scratch to take a good look at the menu and type of food you want to offer, how it will come in and understand the market trends of manufacturers and new products coming out,” says Holand. Most facilities need to be remodeled within four to five years, she says.
- Keep it simple. Any production item that takes more than five steps to execute should be re-evaluated to simplify the process. Often qualifying are wraps, which require workers to keep the wraps pliable, spread with condiments, filled, cut and displayed. Another complex item? Anything involving multiple components in one container, such as a meal—an entrée and two sides—or a lunchbox.
“That kind of packaged item with components or too many steps to produce it and get into packaging—that’s a problem,” says Holand. “It’s not that you don’t do it, but it requires real thought into how to execute it and transform it into something that moves through the line four times faster.”
Costing Out a Commissary
Because every situation is different, it’s tough to come up with an average cost of building your own commissary, says Deborah Holand, president of Food Sense Inc. and a consultant for b2b Solutions LLC, Lake Forest, Ill.
“Someone who’s just getting into it might be buying an existing facility and just making changes to it,” she says. “Another might be building a facility on the side of their home office and calling it their test kitchen, and creating a little commissary.” An operator could choose to buy used equipment or only focus on a certain product, which also factor into the final cost.
There is a helpful restaurant industry benchmark, however, for how much you can afford to spend, says Holand: 25% return on invested capital. “If it’s 20%, you might be considering it,” she says. “If it’s supporting a bunch of stores, then there’s an offsetting benefit. If it’s 30%—green light, go, run, quickly, do it.”
Of course, it all goes back to how much sales the existing foodservice program pulls in. If a retailer thinks it will do $1 million in annual foodservice sales, after factoring in a 10% bottom line minus depreciation, “then I can come up with an ROI fee, and that’s my budget for the commissary,” says Holand.