CHAPTER 2: Current and Trends in Commissary

Learning Objective:  Discuss the overview of current and trends in commissary  Identify the trends in commissary  Assess the students at the end of the lesson

Prediction: Consumer Preferences Will Shift Following The Coronavirus Pandemic

Online grocery shopping has increased by 450% since last March, and food sales have increased by 24% in the past five years. Now with the current coronavirus pandemic & government mandates being put into place that limit dine-in options (or even prohibit them in cities like Nashville), we are seeing nearly every restaurant adjust their systems in order to offer some sort of delivery option in an attempt to combat the loss of revenue they are experiencing.

Delivery Services Continue To Rise

Uber Eats, Grub Hub, Postmates, etc. have been steadily expanding their services across America, so much so that restaurants that have traditionally offered delivery are now outsourcing their deliveries to these third-party businesses.

Along with restaurant delivery, many folks, including a new wave of elderly patrons, are now also heavily leaning on the convenience (and safety) of having their groceries delivered to their doorsteps during this time. But what happens when things settle down and start shifting back to normal?

Commissary Kitchens Become the Norm

In cities like San Francisco, restaurants are starting to open up commissary kitchens that exclusively service online delivery orders.

Post mates teamed up with an LA noodle house, Tatsu Ramen, to test out this concept and have reported it to be wildly successful. With each online order, data on restaurant popularity is collected automatically and allows delivery services to be less of a middleman and more of a business planner. Low overhead coupled with hands-off logistics makes this an easy ―yes‖ for restaurants.

Other models, like one offered by DoorDash in San Jose, calculated their rent by using a capped percentage of gross sales, so that the ir tenant

took on less risk in their venture. Due to restaurants having a historically high failure rate, this model is very attractive to restaurateurs looking to expand their operations throughout different areas to test their consumer base.

As success continues in current test markets, it is likely that the US will see commissary kitchens continue to evolve and expand into other major cities. It is possible that a local restaurant group or an entrepreneur could jump ahead of this trend and open up one of these commissary kitchens with their own in-house delivery service.

Check out our blog post on How to Open a Restaurant in Nashville Never Let A Good Crisis Go To Waste

With third-party doorstep food & grocery delivery being offered right now for a $0 fee, people are essentially receiving a free trial run for these services and can continue enjoying & supporting their favorite local restaurants with virtually no ―skin in the game.‖

It is not uncommon for web-based apps to offer free trials to attract new customers, and whether it is unintentional or not, third-party delivery services should see an influx in its customer base following the current social-distancing procedures.

Amazon has become a retail giant in recent years because people have gotten so used to the convenience of having their shopping items delivered to their doorstep.

Many people haven‘t called a cab in years because of the convenience of Uber.

Watching the growing popularity of these other web-based trends, it is hard to imagine that people would experience such convenience to later then decide that they aren‘t willing to shell out a $3 delivery fee in exchange for not having to leave the house.

Senior citizens who did not follow tech trends are now learning how to utilize their smartphones and join in the new age of technological convenience. Going to the store to buy groceries can oftentimes be a taxing activity for some elderly citizens, and after they have passed the technology barrier, it is possible that we‘ll see many of them add this convenience to their weekly routines.

study found, will account for the largest shipments from commissaries to convenience stores.

―Commissaries are a great option for c-stores and supermarkets largely because they can outsource the food preparation function to someone else,‖ said Tim Powell, director of research and consulting at Technomic. ―As these channels have explored new avenues of growth, foodservice has shown that margins can sometimes be three times as high as other in-store categories.‖

Commissary Confirmation The fourth annual Convenience Store Decisions/Balvor 2011 Foodservice Outlook Survey, released earlier this year, confirmed that c-store chains are bullish on the centralized distribution model commissaries offer.

―Commissary programs appeal to c-stores because of the ability to gain more frequent deliveries and better control shrinkage, but the retailers that are most optimistic and focused on growing that area tend to be retailers that already have well-established foodservice programs,‖ said David Bishop, managing partner of Balvor. ―These retailers have demonstrated their capabilities and commitment to consumers and that has given them a license to move into other segments that are not as well represented in a traditional c-store format like commissary driven products.‖

When broken out by quartile, top quartile retailers were much more likely to have proprietary or self-branded product in commissary packaging as opposed to bottom quartile marketers, the CSD/Balvor study found . Other notable trends include:

Top quartile retailers tend to have a strong heritage in fresh food and some even have their own commissary kitchens that allow them to self distribute those products to their own stores. They have the volume at the store to justify that investment.

Bottom quartile retailers, on the other hand, tend to be predominately driven by manufacturer-branded commissary programs. They may partner with a recognized regional or national-branded manufacturer, and deliver via a third party commissary.

A third model is fresh food programs marketed as a wholesale control brand, such as those offered by McLane and Core-Mark. ―It‘s not a national brand in terms of the way consumers see it, but it‘s a brand that may afford the retailer a little more margin just not as much consumer recognition,‖ Bishop said. ―But these brands offer strong opportunities to grow that business in a way that smaller retailers can manage it effectively.‖

The CSD/Balvor study noted that among top quartile performers who sold sandwiches—the largest segment of the commissary category—83% had proprietary or self-branded products with the same name as the store or a proprietary name associated with the c-store. On average 60% of retailers had a self-branded or proprietary strategy, one-third had a manufacturer brand, and the balance used the wholesale model. In the bottom quartile, less than 40% would have a proprietary or self-branded program, and about 40% would have manufacturer branded product.

Many avenues of success in commissary products exist, but it‘s important for operators to set their sights on a solution that fits their level of current operation. ―I think it‘s fair to say that foodservice will continue to grow in importance and having that range of options is critical for the industry overall to raise the bar so consumers can come to expect quality and execution regardless of foodservice model employed,‖ Bishop said.

It no longer seems accurate to say healthy eating is a ―trend.‖ For a large part of the shopping population, there‘s a strong understanding that what we put into our bodies directly impacts our overall health and well being, not to mention our weight and every day performance. For these consumers, there is a very conscious decision about what goes into their shopping cart each and every shopping trip.

For the active duty military community especially, eating well takes on added significance as failure to meet weight and fitness requirements is the leading reason for involuntary separation from military service. Keeping our troops and their families healthy plays a vital role in service member retention and our overall national defense.

Starting nearly a decade ago, the resale agencies made an important decision to bring healthy eating options and messaging into the forefront of their retailing activities. DeCA set out to become the military‘s nutritional leader. It hired its first registered dietitian to assist the agency in bringing nutritional information to customers about healthier meal choices and continued expanding and refining the dietitian‘s role over the years. DeCA continues to expand their offering of organics, sharpen their fresh produce marketing and expand their ―better for your‖ options. In some stores, a Living Well Corner has been set aside boasting more than 1,500 items. And DeCA‘s Healthy Lifestyle Festival, now in its fourth year, has been a big hit with customers. DeCA has also carved

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more to sparkling flavored water. While not new, the introduction of new flavors and flavor combinations has helped make this category hot! Companies like LaCroix offer Cran-Rasberry, Pamplemousse (Grapefruit), and Passion Fruit while Polar Beverages brings Black Cherry, Orange Vanilla and Pomegranate.

Latest Super Foods: Moringa and Sorghum—Moringa, which is made from the leaves of the moringa tree, grows in the Northwest region of India, as well as the Philippines, Thailand, Malaysia, Burma and parts of Africa. Its bright green leaves are dried and then ground to make a powder that has an earthy flavor, not unlike that of matcha, but with more of a veggie-forward taste. The entire plant can be used and moringa has been touted for its potent nutrition profile. Look for moringa in smoothies, bowls, bars, and yes, lattes, in the coming year. It‘s also readily available in powder-form, protein bars and energy shots from companies like Kuli Kuli.

There‘s also a new popped snack in town—sorghum. Imagine popcorn for tiny hands and you‘ve got popped sorghum. It‘s an ancient whole grain that‘s rich in fiber and is naturally gluten-free so it makes a great healthy snack any time of day or night. Sorgham also uses half the water of corn and is drought-resistant, making this new superfood super sustainable as well.

Gut Healthy Foods—With a new awareness about the important role of the human microbiome in overall health, gut healthy foods are getting a lot of attention. Look for a sales bump in products like organic kombucha, organic apple cider vinegar, Greek yogurt and probiotic low-fat milk.

Sugar Alternative—The new popularity of diets like Paleo, Keto, and Whole30, it‘s not surprising that people are looking for healthier sugar-alternatives across the board. Date syrup fills the bill. It‘s a naturally sweet vegan alternative to honey, and super high in potassium and iron. Date syrup is used for drizzling on pancakes, yogurt, or oatmeal and in baking for a rich flavor.

Commissary & Small Vendor Delivery Procedures

While our large broad line distributors are required to be in compliance with applicable regulatory requirements and conform to our strict standards, deliveries from commissary's and other small vendors and subcontractors also requires our due diligence.

The following is Campus Dining's strict adherence and clear guidelines as it relates to prepared foods being delivered from a commissary or any food product being delivered from location to location at Stony Brook:

 No deliveries of any food products from a commissary will be allowed to enter any Stony Brook facility without a Campus dining manager on site checking it in first.

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 A campus dining manager must be called ahead within 20 minutes of arrival as to allow for a proper validation and inspection of the product.  A delivery/temperature log must be filled out from the commissary listing the time of departure, the temperature of the food product upon departure and the signature of the commissary manager verifying the temperature.  When the food product arrives, the Campus Dining Manager will conduct a full inspection , recording the arrival time, condition of the product, temperature upon arriving, and will sign the receiving log.  The delivery truck must be refrigerated and have the necessary temperature gauges to allow a campus dining manager to inspect the temperature inside the truck.  The delivery truck must be packed appropriately as to not be over filled or stacked as the temperature of the product must be maintained and refrigeration must be allowed to surround the products.  Only "pre-approved pack out vessels" or containers can be used to deliver any food products. Approval will not be granted of any product if it is not sealed properly or in the proper pre-approved containers.  We expect all staff handling any product, both at the commissary and at the restaurant that the food is being delivered to, be properly trained in all HACCP processes and procedures.

Commissary Kitchen – What It Is And How It Can Help Your New Food Business

 November 5, 2019 Food trucks are growing in popularity – and so are commissary kitchens. This is because they are the cheapest and easiest way for people to open up a food business without investing in a restaurant building or even renting one.

Renting out a restaurant space or building gets expensive because of the interior decoration costs, setting the ambiance of the place, and maintenance and utility costs.

Food trucks seem like a great option if you have a limited budget and want effective restaurant management.

However, there are still a lot of drawbacks when it comes to owning and running a food truck. For starters, you will not have as much space as you require for food storage and food preparation. It‘s hard enough taking orders and serving from a cramped up food truck. There‘s very little space for you to organize your

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It Works Out To Be Cheaper Not only will you be saving up by not buying your own restaurant space, but you will also be saving on expensive equipment that you would have not had the chance to buy right at the start of your food business. Commissary kitchens are equipped with all the essential kitchen appliances and equipment that is shared by everyone who uses the kitchen.

It Is Safe, Hygienic, And Legal Preparing food in a food truck is generally not legal. Food truck owners, therefore, need to rent out commissary kitchen to prepare their food. These kitchens are also clean, hygienic and up to food standards.

It also helps you plan your menu better and reduce restaurant food waste.

Do You Need a Commissary Kitchen?

When you are starting out, it can be really confusing to decide whether you really need a commissary kitchen or not. It can be helpful to first stop and consider how much food you will be preparing in the commissary kitchen every day, and how much food you will be selling.

If it makes sense for you financially to rent out a space to prepare your dishes, then you can look around for a clean and affordable commissary kitchen to rent.

Instead of looking to rent a kitchen by the hour, calculate how many times in a week or in a month you will have to rent the kitchen space. This will work out best for you financially and in the long term.

When you run a business you always have to think about the most cost-effective ways to rent out a commissary kitchen.

Next, figure out how much profit you will be able to make by making an average estimate of your monthly sales. The minute you feel you are outgrowing your rented space, it may be time to invest in a restaurant kitchen of your own.

Another reason you need to use a commissary kitchen is to comply with local laws. Most places do have laws concerning how and where the food you serve your customers is prepared, so it pays to be careful with those laws. If the laws in your area are not clear (after all, the food truck business is relatively new), then it would be better to check in with your local government for guidance on the issue. It is always better to be careful about these laws than to be caught in problems later.

Are There Different Types of Commissary Kitchens?

There definitely are different types of commissary kitchens that get rented out to food trucks. This is good for you since you have a wide range of options to choose from depending upon your budget and the type of food you want to prepare for your customers.

Here are some of the most common types of commissary kitchens:

These businesses share the space and equipment in the commissary kitchen and could be assigned specific storage spaces and working counters depending on the type of agreement they have with the kitchen owner.

Although the rent gets split up between the different businesses, there is always the issue of coordination between the cooks and chefs and not having the kitchen fully booked at a particular time.

Since in a private kitchen you will be paying the whole lease amount yourself, you will not be sharing it with anyone else. This would be especially suitable for those food businesses that have multiple food trucks or locations as you can use it as a central kitchen for your business.

In this central kitchen, you will be able to prepare all your food and send it out to your various locations. This ensures that your business keeps good quality and standard, and all your outlets serve the same quality and taste of food.

What You Need to Know About Owning a Central Kitchen

A central kitchen is a commercial kitchen space owned by multi-location restaurants or hospitality groups. These spaces are used to create meal components or entire dishes that are then distributed to their different locations. This is usually done to save on staff costs, as well as food costs.

According to the Hospitality Review, as much as 10 percent can be saved in mass purchasing for a central kitchen compared to buying for each individual restaurant. If you‘re curious about the benefits of a central kitchen and what it takes to open and operate one, we‘ve broken down the basics.

What is a Central Kitchen?

A central kitchen – also known as a commissary kitchen – is an internal facility that supplies restaurant branches under a single business with ingredients or items that will be used or sold at each location. Owners of central kitchens can also rent out their space to emerging businesses, food trucks, mobile food carts, and smaller restaurants that don‘t have space to store and prep large quantities of food.

Since more and more restaurant groups are choosing to make more of their components in-house, such as breads or sauces, central kitchens have become popular. The model allows restaurant groups to produce products in-house at one facility, then distribute them to their locations. They are also beneficial for the simple storage of produce and supplies and for food processing which may involve cooking, freezing, and delivering foods to several locations over a large geographic area.

How much money could your restaurant be saving? Find out with our tech stack calculator. Benefits of Owning a Central Kitchen

Business expansion While you‘ll use your central kitchen to provide items for your restaurants, it also gives your business the opportunity to expand to new markets such as the food retail and wholesale business. Do customers rave about your tomato sauce and often ask for the recipe? You can use the space and resources of a central kitchen to jar and sell it at local markets.

Consistency Since everything is produced in the same place, at the same time, using the same equipment, businesses can guarantee a more consistent and taste and

quality across their locations. The more you make in-house, the less you risk receiving items that don‘t meet your standards.

Brand development While your chefs are busy in your restaurant, you can work on menu development off-site. Central kitchens allow you to create a signature brand and flavor that is unique to your restaurants.

Efficiency Central kitchens are more efficient because they allow you to automate your production process, human resource procedures, and delivery operations. Since many of the dishes‘ essential components are prepared in the central kitchen, your restaurant staff can focus on precision and better customer service.

Extra Income If you find that you‘re not using your central kitchen for big chunks of the day, you can rent it out to food trucks, other restaurants, or food entrepreneurs. How to Start a Central Kitchen

There are two ways to start your own central kitchen:

Opening a central kitchen will require involvement from all areas of your staff:

bakers, caterers, food trucks, and other culinary professionals. These makers typically pay for a membership, or by the hour, in order to rent out cooking space alongside other food entrepreneurs. They also get to share otherwise expensive resources like cold storage, equipment, and cleaning supplies. A shared kitchen is an emerging food system trend that plays well with another economic trend: access. Increasing access to infrastructure lowers the overhead cost it takes to start a business. Some of the top shared kitchen concepts in the for-profit category are:  Food truck commissaries, like Food Truck Central in Kansas City, that provide parking with power, grey water dump station, potable water source, grease dumpster, and convenient access to the interstates and downtown.  Ghost kitchens or delivery-only commissaries, like Kitchen United, that provide restaurant operators a turnkey way to expand their delivery services by providing commercial kitchen space, business intelligence, and resources to build optimal food delivery programs.  Culinary flex spaces, like Crafted Kitchen in Los Angeles, that offer state-of-the-art test kitchens, shared use kitchens, and private kitchens to support culinary entrepreneurs at any stage of their business.  Incubator kitchens, like Kitchentown in San Mateo, California, that use strategic partnerships to connect emerging brands with food industry consultation, growth capital, and access to technology, manufacturing, and a community of like-minded founders. Non-profits and social benefit organizations are also leading innovators in the shared kitchen industry. We love seeing incubator kitchens with unique programs focused on underrepresented or underserved populations — another food system trend. Many partner with economic development agencies, family foundations, and social service departments aimed at building and sustaining vibrant communities through food. Here are some of our favorites:  Detroit Kitchen Connect – Detroit Kitchen Connect, an Eastern Market Corporation program, supports a diverse group of entrepreneurs doing what they love and contributing to Detroit‘s growing good-food system. In collaboration with local partners, they are connecting food entrepreneurs with a network of neighborhood commercial kitchens they can use to launch their business.  La Cocina – Touted as one of the most important food organizations in San Francisco, La Cocina incubated 39 businesses in 2017, creating jobs primarily for women from communities of color and immigrant communities. Their vision is that entrepreneurs gain financial security by doing what they love to do, creating an innovative, vibrant and inclusive economic landscape.  Hot Bread Kitchen – On the east coast, Hot Bread Kitchen in East Harlem is a commercial bakery that takes a 4-pronged approach to support emerging food businesses: 1. commercial kitchen access; 2. business development support; 3. culinary community; and 4. market access. Their Bakers in Training Program is an intensive, paid on-the-job program for women seeking economic mobility.

 Spice Kitchen Incubator – run by the International Refugee Committee in Salt Lake City, Spice Kitchen Incubator is a food business incubator focused on creating opportunities for refugees and disadvantaged individuals. Their model begins with an application and enrollment period, a pre-incubation phase (4-6 months) to learn business foundations, an incubation period (6 months – 4 years) where enrollees retain access to the commercial kitchen as well as access to capital and resources to grow, and graduation (ongoing). All graduates become part of the alumni community and many continue to rent space and access resources. Their catering and food truck programs give direct market access to entrepreneurs while providing SLC access to the best ethnic food you can find.  The Hatchery – newly launched, The Hatchery in Chicago is a non-profit food and beverage incubator. The 67,000 square foot facility is one of the largest incubation spaces in the U. with 56 private production-ready kitchens and a large shared kitchen. The facility is a partnership between Accion and the Industrial Council of Near west Chicago. In addition to supporting entrepreneurs grow their businesses, The Hatchery will also train and place job applicants in the food and beverage industry, creating a new pipeline of talent for food companies looking for employees. 2. Food halls, courts, and rallies Let‘s face it, the suburban mall food court used to be the place to be! You could grab an Orange Julius, Hot Dog on a Stick from a woman in a silly hat, and a slice of pizza from Sbarro. Something for everyone. The concept of communal eating is not a new phenomenon, but with suburban malls going the way of MC Hammer pants, we have seen a rise in new food hall and food court concepts. We predict this food system trend is 2 legit 2 quit in 2019. Food halls in cities have seen a resurgence – many started in the early 1900s and harken back to the street markets of yesteryear. Many are still a place to grab grocery staples like freshly caught seafood, gourmet cheeses, loaves of bread, fresh fruits and veggies, and cut flowers. Modern versions host an array of food trends from hip purveyors and restauranteurs, delicatessens, and authentic cuisine, alongside cold brew, kombucha, fresh pressed coffee and juice, craft beer, and wine, and plenty of seating to meet up with friends and colleagues after work or to grab lunch during the work week. Entertainment like cooking demos, musical acts, comedy troupes, and other seasonal events aim to bring foot traffic in on the weekends. The Travel Channel put together a great list of 10 of the Most Delicious Food Halls in America – which aptly includes the Findlay Market in Cincinnati which is the oldest public market in Ohio (160 years!). We love Findlay because they also have a shared use kitchen and allow their clients to sell in the market. Some unique versions and trends we see are:  Food truck rallies – also known as festivals, rodeos, or gatherings, a food truck rally is an event where multiple operating trucks gather in one location to provide lunch break options to workers or dining service to events and festivals. Essentially a pop up food court.

New York City. They are empowering brands to connect directly to their network of smaller-scale retailers without traditional slotting or listing fees, potentially leading to better unit economics for the brands. Connect to a food-centric drop shipping platform or alternative distributor, and the need for a large distributor may be a thing of the past.

The increased ability to sell online may be the biggest cause for disruption in distribution. The shift towards e-commerce, referred to as Amazonification, is providing (or perhaps is forcing) an opening for workarounds in distribution and the creation of collaborative digital environments. For example, NatchCom is an ̳un-conference‘ based in Boulder, Colorado that is helping the natural and organic product industry master e-commerce in the age of Amazon. Timely, right? Evidently so, since their last gathering in October 2018 sold out. We see this conference selling out again in 2019.

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