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Starting A Food Business
By Steve Seideman, University of Arkansas; Pam Brady, Food Specialist; Mike Heilman and Justin Morris, Institute of Food Science & Engineering
Introduction
The University of Arkansas Institute of Food Science and Engineering and the Cooperative Extension Service get many inquires from Arkansans interested in establishing a small food processing business. Some of these people may be restaurant owners with a special product their customers have urged them to offer to a wider market. Some are people with a favorite family recipe they think would be a marketable product. And some are people with an interesting idea they think has a niche in the retail food market.
Persons interested in starting a food processing business can spend a great deal of time looking for information on such topics as regulations, safety, labeling, ingredients and packaging. In addition, information is generally needed on financial aspects of starting a business and marketing products.
This publication is an introduction to these topics and should be a starting point for establishing a new business. While this publication will not answer all your questions, it will be useful in helping you determine the feasibility of starting a food processing business.
Getting Started
So you have an idea for a food product…
Every year there are about 15,000 new food products developed. Only about 10% of them ever last more than 1 year and even less return the investment made to introduce them to the marketplace. To increase the possibility of success for a product you have developed, consider several important factors. First, people are creatures of habit. They tend to eat what they are accustomed to. The average retail store in the United States has literally hundreds of food items and the competition is fierce. You may have a great tasting product but how do you get someone to pick it up and try it?
During the past decade, interest in the production of "value-added" products from agricultural commodities has increased. Value-added products result when raw commodities are further processed to produce a benefit to the consumer. Examples are precooked meats, processed entrees etc where all the consumer needs to do is "heat and serve". The food service segment (restaurants, fast food establishments -food served away from home) is the most fertile area for value-added foods. Due to the rising cost of labor and the concern over food safety, restaurant operators are looking for precooked, proportioned, etc products so that all the kitchen staff needs to do is "heat and serve".
Developing Formulations and Preparation Schedule
Once you have an idea for a food product which you believe will appeal to consumers in the market place, you need to develop a detailed description of your product. This description should include what the product is, where you will obtain all your ingredients, a formula (recipe), a method of preparation, processing procedures and packaging.
If you are uncertain about any of the details needed in this plan, help is available. Contact your county Extension office about your interest in starting a food processing business. They can arrange a meeting for you with the staff of the Institute of Food Science and Engineering (IFSE) who can help you in the initial product development stages.
Bring to this meeting as many of the details about your product as you have, including a sample of the product. The product will be evaluated and classified by the IFSE staff regarding the type of processing needed.
Transferring recipes for food products made in small batches or in a home kitchen to commercial size formulas that can be manufactured in large batches using commercial equipment is not an easy task. Frequently, simply multiplying ingredient amounts to get larger batches does not result in a product comparable to that made with smaller recipes. Plan on contracting with a state approved facility to manufacture a fairly large quantity of your best formulation(s). This will give you the opportunity to revise and adjust your formula so that your final product is exactly the way you want it. The county Health Department may be able to help you with information about facilities located in your county.
Locate Equipment and Ingredient Suppliers
Reliable suppliers for equipment, ingredients and supplies are critical to the operation of a successful food processing business. Identification of reliable suppliers is an important step prior to beginning operation of your business. The Arkansas Department of Economic Development can provide you with a list of companies in Arkansas. You may find that almost all of your needs can be met by Arkansas companies thereby reducing time and cost for transporting supplies long distances. If you have any problems with this, the IFSE can also be of help.
Arkansas Department of Economic Development
1 State Capital Mall
Little Rock, AR 72201
501/682-2301
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