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Starting a private label food product

Question:

How can I get started producing a private label food product like a sauce or spice rub?

– Emi Shindo, Robata of Tokyo, Allentown, PA

Answer:

Having a private label product for sale like a signature sauce, spice blend, or confection is a great way to introduce another revenue stream into your restaurant. These items work especially well if you are a destination restaurant (commemorate the occasion), in a shopping district (guests already in a shopping mindset), or tourism destination (easy souvenirs and good promotion for the restaurant).

There are a few possible ways to go about introducing these packaged foods:

  1. Make your own product in your kitchen and package and sell it on and off premises.
  2. Give your formula (recipe) to a copacker or private label manufacturer and have them produce and package the product to your specifications.
  3. Taste something from a private label manufacturer’s library of products that you like or co-develop something with the packer and label it as your own.

There are advantages and disadvantages to each. Producing a packaged good in your kitchen may require specialized equipment, will add to your labor cost, and may or may not be legal, depending on your state. Often you will need to get approval and a kitchen inspection from the state department of agriculture for a packaged good in addition to your existing permit from your municipal health department. It is best to avoid packaged meat products, which require additional oversight from the USDA.

Using a copacker or private label manufacturer can be more cost effective in the long run (they have the expertise, permits, and equipment to do the job), but often requires a sizable initial batch and set-up costs. Lindsay Howerton, Vice President of Marketing at Original Juan Specialty Foods in Kansas City, KS, says a first run at her firm is about fifty cases and recommends that restaurants budget about three thousand dollars minimum to get started.

Using an existing product is usually the most cost effective option since the copacker has already developed the formulas. However, only go that route if you find a product to which you’d be proud to attach your name.

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