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GATEWAY CULINARY INCUBATOR PHASE 1 FINDINGS

JOHN DESTEFANO, MAYOR

DECEMBER 10, 2012

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WHY FOOD?
The urban food sector is dynamic and asset-rich, representing a powerful job engine and driver of economic development
Diverse and growing population

> Cities are home to large young adult and immigrant populations, which comprise a large, diverse
and expanding market for food products

> In 2010, 82% of the US population lived in urban areas compared to just 64% in 1950

Strategic food assets

> Most American cities contain assets that give them competitive advantages in importing, storing,
processing, wholesaling and delivering food, including central locations, historic public markets, transportation infrastructure, vacant buildings, and a large workforce

> Increasing awareness among policy makers is driving changes in procurement and reporting,
instigating local food production and influencing waste policies in every market Shifting food policy and culture

> Emergence of low cost infrastructure such as shared kitchens along with increasing demand for
are looking to establish regional connections along the food chain ethnically influenced products

niche offerings like local products present food entrepreneurs with strong market-entry dynamics

> As the culture of fresh, local foods has become more prominent, institutional procurement officials > Increasing diverse and immigrant populations are shifting the demand for raw ingredients and

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OVERVIEW OF NEW HAVEN FOOD INDUSTRY


The existing food industry in New Haven spans the value chain and represents an increasingly important component of the local economy
> Although there are a few > There are ~14 food wholesale
processors in New Haven, these companies have little integration with local producers

businesses located in New Haven, representing 270 jobs


several wholesale businesses

> New Haven Food Terminal is home to

Agricultural Producers

Intermediate Processing

Grocery Manufacturing

Wholesale / Distribution

End Customer / Retail / Restaurant

> New Haven County has

~1,800 harvested acres with a strong shellfish industry as well

> New Haven is home to ~15 food


manufacturing companies, representing 506 jobs, that produce finished dessert items, packaged meats, ready-to-eat sauces, etc.

> Several of New

Havens current prominent food manufacturers (e.g., Palmieri, Chabaso) began as cafes and/or retail stores, and moved into product manufacturing
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Source: Ninigret Partners, 2007 US Census Data, Dun and Bradstreet data
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STRENGTHS OF THE NEW HAVEN FOOD SECTOR


A survey of the New Haven food industry reveals a range of strengths
Commentary
1. Growing cohort of food entrepreneurs as well as established manufacturing and restaurant sectors in New Haven

> Primary research indicates that there is a growing number of home

chefs, food trucks, and small ethnic businesses that have inquired about commercial kitchens available for rent. For example, we were able to identify over 30 food trucks located in downtown New Haven and/or Long Wharf Foods) that have proven quite successful at providing complementary services (e.g., co-packing) to growing small food businesses that produce sauces, salsas, and other canned products

> Additionally, there are several facilities in New Haven (e.g., Ultimate

2. Broad network of organizations in other parts of the food chain (e.g., distributors) that could serve as critical partners / support the food entrepreneurs

> There are a wide range of organizations (both public and private)

that we perceive have a vested interest in the success of emerging food businesses wholesale and food service distributors (e.g., Bozzutos, Thurstons, Burris), which may be interested in cultivating a pipeline of local suppliers
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> For example, the greater New Haven area is home to several large

GAPS IN THE NEW HAVEN FOOD SECTOR


Additionally, there are a series of gaps in the New Haven market that have impeded the launch and growth of food businesses
Commentary
1. Currently there is little infrastructure in the greater New Haven area to support early stage food businesses who have needs beyond co-packing

> While some food entrepreneurs have rented restaurants or other

certified food service kitchens for their production / processing needs, there are currently no shared commercial kitchen located in Connecticut that are dedicated solely to small food businesses Lexington, NY, or Providence, RI

> The nearest shared kitchen facilities are located in New York City, > The success of complementary food processing facilities in the New

Haven area (e.g., Ultimate Foods) speaks to the broader demand for food processing / manufacturing

2. Expansion options for existing food manufacturers and processors are limited due to infrastructure and regulatory constraints

> While there are other strategic food assets in the market, it is our

understanding that space for food manufacturing is at a premium due to restrictions on existing locations (e.g., Mill River)

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THE OPPORTUNITY FOR NEW HAVEN


The existing commercial kitchen, classrooms, and offices at the Gateway Long Wharf Campus represent an opportunity to address some of the gaps in the New Haven market for food entrepreneurs

Unmet Needs of New Haven Food Entrepreneurs

Gateway Culinary Incubator Food Assets in the New Haven Area Existing Infrastructure at Gateway Long Wharf Campus

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WHAT IS A CULINARY INCUBATOR?


There are a wide range of culinary incubator models in the market; however, most incubators are designed to provided food entrepreneurs with the tools and support required to successfully launch their business
Core Components

Services Provided to Businesses

> Key services include subsidized rent for a shared kitchen that includes access to
equipment, hot and cold storage space, staff members expertise, and office space

> Incubators are increasingly providing technical assistance (e.g., business training,

mentoring, etc.) to tenants to increase their likelihood of success following graduation

> Typically a fee-based model that charges tenants on an hourly and/or monthly basis
Economic Model for Operators
for use of the kitchen, equipment, and other shared spaces

> Many incubators are run as non-profits by universities, quasi-public organizations, etc. > Accelerators, which are run by experienced business owners and/or investors, may
take an equity stake in tenants

> Incubator graduates have the potential to create jobs in the local community,
Benefits to the Community serving as a driver of economic growth

> Creates an opportunity to connect to and strengthen other food assets in the
market (e.g., local agriculture, distributers, etc.)

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CHARACTERISTICS OF SUCCESSFUL INCUBATORS


Leveraging our experience in the incubator space and secondary research, we have identified several common themes among successful incubators
1. Gain support early from local public and private stakeholders, as well as regulators 2. Leverage local food assets and connect to local agriculture as potential sources for raw
ingredients / produce

3. Identify value-added services and alternative revenue streams (e.g., technical assistance,
business education, product development, etc.)

4. Thoughtfully develop a detailed operational and financial plan both for the incubators
launch and for ongoing operations

5. Tightly manage overhead costs (e.g., rent, utilities, incubator staff / management, etc.), while
focusing on quality investments

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PROFILED INCUBATOR: LA COCINA


San Francisco-based culinary incubator La Cocina works primarily with women food entrepreneurs from low income communities

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PROFILED INCUBATOR: CARBONDALE CENTER


The business below - Babunyas is a start-up that successfully launched out of the Carbondale, PA Kitchen Incubator

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GATEWAY TECHNICAL BUILDING AT LONG WHARF


Gateway Colleges move to downtown presents a unique opportunity to reuse the former site on Long Wharf for education and technical training
Context

> Gateway Community College and the

Board of Education, along with Economic Development partners, are working on a reuse plan to include:

Hyde Foundation School: Focus


on health sciences and sports medicine

Gateway Automotive: Relocate

from North Haven and build state-ofthe-art training center at Long Wharf

Gateway Technical Institute:

STEM focused learning environment focused on New Havens growing economic sectors
entrepreneurs in the New Haven area

Culinary Incubator: Support food

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GATEWAY CULINARY INCUBATOR CONTEXT

Support small business growth and entrepreneurs, particularly in the food sector, and to generate job creation in New Haven and, more broadly, Connecticut Vision / Rationale Create opportunities for Gateway students and the broader community to gain hands-on experience working in a commercial kitchen and the necessary training to launch their own business

Home to a commercial kitchen, which already has much of the infrastructure and equipment required to launch an incubator Strategic Assets Located along major transportation corridors (e.g., I-95) with access to many distribution channels Buy-in from key government stakeholders who have also convened key stakeholders across the food chain

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GATEWAY PHASE 1 FINDINGS


Phase I of the Gateway Food Incubator Project assessed the feasibility of establishing a culinary incubator in the Gateway Long Wharf commercial kitchen
Summary of Key Findings from Phase 1

1. Demand for Incubator: Research and conversations with experts highlighted demand for a

shared commercial kitchen from a range of individuals and companies (e.g., home chefs, caterers, food trucks, larger operating companies)

2. Valuable Preexisting Assets: The facilitys underlying assets (e.g., existing commercial kitchen,
equipment) will enable the project to manage many of the economic risks typically associated with culinary incubators

3. Opportunities for Expansion: Additionally, the incubator may have the opportunity to expand
into adjacent rooms (e.g., cafeteria kitchen, classrooms) as the incubator grows

4. No Insurmountable Roadblocks: While identified several risks / key questions for additional
vetting, we believe that the Gateway culinary incubator has met the burden of proof from economic, regulatory, and demand dimensions to be given the green light to proceed

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ASSESSMENT OF EXISTING FACILITY


When evaluating Gateways space, we considered both what can be done with relatively little investment to the current kitchen as well as how the concept could expand after the model is proven
Gateway Commercial Kitchen Cafeteria Kitchen Adjacent Rooms

> Suitable for basic cooking education, food


Capabilities

preparation, dining / meals production, and baking with some basic office and storage space

> Quick cooking and


prep space

> Office and / or class


space for tenants and additional dry storage

> 3 stoves, 2 deck ovens, 2 standalone


Equipment

refrigerators, 1standalone freezer, 2 Hobart mixers, 1 proofer, and 1 grill > Shared dishwasher and ice machine with cafeteria

> Small walk-in freezer,


grill, deep fryer, and deck oven

> TBD

Possible Challenges

> > > >

Limited number of hot stations Minimal dry and cold storage Poor heat / humidity control Loading and transport of goods to kitchen

> Transportation of

goods / prep to commercial kitchen

> Coding requirements


if used for storage and / or prep

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TENANT PROFILE
We have identified a preliminary profile of Gateways target tenant based on our understanding of market demand and limiting factors resulting from the facilitys existing infrastructure

> Based on Gateways existing infrastructure, there are

some limitations on the types of businesses that could be supported in the incubator (without significant fit-out) located in New Haven area, the incubator should not focus on high-volume production of sauces and salsa relied upon to use the facility consistently

Profile of Possible Tenants

Limiting Factors

> As there are several successful co-packing facilities

> Catering companies > Low-volume bakeries


(e.g., cookies, pies, cupcakes) prep space

> It is important to identify anchor tenants that can be

> Food trucks who need > Larger companies in need


of test kitchens for product development

> The facility should focus on attracting entrepreneurs


Geographic Breadth

from both New Haven proper and its surrounding counties, including Fairfield and Hartford, which jointly have a population of over 2.6 million

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SERVICE OFFERING
The incubators service offering would be based on a core membership model that includes training and a baseline number of kitchen hours with additional a la carte kitchen hours and technical assistance available to members and non-members
Service Offering Core Components

Membership

> Receive 15-20 hours of kitchen use a month, but not inclusive of storage > With membership, tenants receive select business and kitchen training; additional >

training / technical assistance purchased separately If adjacent classroom(s) are utilized, could offer businesses shared work / office space

Hours a la carte

> Members and non-members can purchase additional hours to use hot and prep space > Accurately assessing how many hours members and other users will require will be a >
critical part of tenant intake Consider allocating a select percentage of prep space hours for food trucks

Storage

> Dry: Sell shelf space, lockable cages (small and large) and pallets > Cold: Offer shelf space and lockable cages within the standalone refrigerators and
freezer for members and non-members

Technical assistance (e.g., business education, kitchen training) for members and non-members
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TECHNICAL ASSISTANCE OFFERING


Discussions with stakeholders have highlighted the importance of incorporating technical assistance e.g., business education and kitchen training as part of the culinary incubators service offering
Examples of Potential Education / Training
Business plan development Finance and accounting basics (e.g., QuickBooks) Marketing and branding expertise Assistance navigating licensing / food regulations Technology training Food safety training (e.g., ServSafe) Equipment use and training Product testing Nutritional analysis Storage training for raw / finished products

Business Training

Kitchen Training

Business Development

Peer mentoring and networking Connections to financing assistance / capital resources Internship opportunities Industry workshops

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QUESTIONS AND COMMENTS: WAYS TO GET ENGAGED

> Sector round table meetings (sign-ups available) > Comment cards > Personal tours of Gateway available (ask EDC staff)

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