Franchising | August 2011 | By Julie Knudson

Need Help Starting Your Concept? Read This.

Business incubators can help entrepreneurs establish their fledgling ideas and concepts.

Athens, Ohio, incubator ACEnet supported Village Bakery's growth.
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Most quick-serve entrepreneurs know that the early years of business are the hardest. Digging up the resources and consumer interest necessary to make an operation succeed is an increasingly difficult task in an incredibly competitive market.

But across the country, entrepreneurs are discovering that business incubators—where rents are relatively low and access to experienced mentors is high—can help their new concepts get off the ground and plant roots among the public.

Infrastructure? Check

Young quick serves face a range of challenges, from developing successful marketing campaigns to funding the space and equipment needed to prepare quality food. The cost and effort behind those activities can sometimes be prohibitive, but business incubators, experts say, can help give young startups time to nurture their businesses in a low-risk environment.

David Wible is executive director of North Market, a Columbus, Ohio–based incubator where nearly 35 small food businesses enjoy a brisk trade thanks to abundant foot traffic and frequent promotional events. He says quick-serve owners renting space at the market don’t have to worry about heating and cooling the building, tending to plumbing issues, plowing snow, picking up trash, or maintaining the restrooms. Those core infrastructure activities are taken care of so young businesses can focus all of their efforts—and most of their money—on building their clientele, developing successful menu items, and nurturing their brand.

“It’s got a very low barrier of entry,” Wible says. Startup quick serves only need to “get some ovens and some cases and off [they] go.”

Unlike traditional commercial properties, incubators often release startup ventures from the obligation of long, expensive lease terms, Wible says. For example, North Market offers tenants one-year agreements, and monthly rents average about $1,000, including utilities.

While having some relief from financial pressures would be a big help to any young operator, incubators’ provision of guidance from experienced mentors gives them an unusual offering for upstart brands.

Larry Bressler, general manager of Chefs Center of California, has more than 30 years of industry experience as a chef, owner, and operator, and his team is comprised of other seasoned veterans. Pasadena-based Chefs Center of California has helped almost 200 individuals and small businesses launch or expand in just over two years.

“As a center, we offer the ability to have real-world experience, real-world knowledge, and hands-on expertise to act as mentors and guides for all of the clients,” he says.

Joe Kim, owner and founder of Los Angeles’s Flying Pig Truck, says Bressler’s help in launching the truck was invaluable.

“When we built out the menu for the truck, he gave us a lot of feedback and direction to make things better, so we got professional advice,” he says. “That really helped out a lot.”

Appalachian Center for Economic Networks (ACEnet), based in Athens, Ohio, is an economic development organization with an incubation arm that has graduated more than 20 businesses into their own restaurant, food retail, or quick-serve operations. In addition to providing top-notch facilities to early-stage foodservice businesses, ACEnet offers retail spaces and access to a farmer’s market that attracts about 7,000 people every Saturday morning.

Leslie Schaller, ACEnet’s director of programs, says incubator businesses selling at the market “get feedback on products, branding, logo design—you name it.”

Christine Hughes, owner of Village Bakery and Café in Athens, used ACEnet’s incubator facilities to launch her business without breaking the bank.

“I got to test the market and see what people would go for and were excited about,” she says. “That was nice because there wasn’t a lot of overhead and I didn’t have to invest much up front.”

Find Fans, Build Buzz

Most operators know that snagging the first few customers can put a new quick serve on the road to success. Business incubators help streamline the process of building a customer base and drumming up buzz by putting new concepts in front of hungry folks, be it through a good location, access to events, or simply by putting several concepts in one spot.

“When we built out the menu for the truck, he gave us a lot of feedback and direction to make things better, so we got professional advice.”

An opportunity to run a small café within ACEnet’s retail space gave Hughes some free exposure and helped generate customer interest. “They had a few tables there,” she says. “Very small, only 12 seats, and it was just at lunchtime. I got my foot in the door that way by growing my customer base, and they came back because I was doing creative, fresh, local stuff that they were interested in.”

Bressler says young entrepreneurs using incubators still need to be active and create exposure for themselves, even despite the built-in help provided by the incubator. “Everything usually starts with friends and family, those people who have been encouraging you for years,” he says.

He says startups should use the early network of people they build while working with an incubator to spread the word about their business. “Nowadays the biggest avenue is through social media, and really the biggest, obviously, is going to be through Facebook and Twitter,” he says, adding that the initial goal should be to “gain excitement from people.”

As Kim was developing his menu for Flying Pig Truck, he used Chefs Center of California’s kitchens to create new dishes. The truck then allowed them to “check how people were going to like some of our menu [items], especially the pork bellies … and things like that, which are not really common on a truck.”

After introducing his fare to public praise, Kim says, “it built up our confidence that things were really working out.” Kim’s plan originally called for a storefront right away, but delays in securing a workable location prompted him to shift gears.

“I had the plan for six months for the truck, and we were hoping to open up the brick-and-mortar [location] some time last year,” he says. “It was a long delay and we ended up running the truck for almost 18 months, but it’s actually helped us a lot with the marketing.”

Media attention, including an appearance on Oprah and a flurry of local TV spots, helped ramp up customer traffic without draining the budget. “We didn’t pay anything, but we ended up getting a lot of exposure,” Kim says.

When It’s Time to Move On

Operators that gain a little traction and attract the beginnings of a customer base while working with an incubator eventually need to spread their wings and experience the industry out on their own. Bressler says some entrepreneurs are quick to jump ahead once they’ve garnered a bit of success, but that delaying growth can also cause problems.

“Sometimes people will wait much longer than they should, when they have to take slightly more aggressive steps to ensure the long-term viability of their fledgling businesses,” he says. Timing for the next steps depends on the business and what the owner feels comfortable with, he says. “This could be something that takes place in the first several months of operation, or it could be several years down the line. It really is just going to depend on the person and the marketplace at that time.”

Three months after launch, the Flying Pig Truck team kicked its social media program into overdrive.

“We really started updating our tweets and people were calling us, asking where we were going to be,” Kim says. “When we open up the brick and mortar, we should be able to do well.”

A desire to more fully embrace her company vision prompted Hughes to leave the relative safety of ACEnet and strike out on her own. “In order to grow, I needed to say, ‘This is what I am,’” she says. Renting her own space was expensive, but, “to establish my own identity, I needed a separate place.”

Most incubators offer a variety of services and resources to help their businesses grow. For example, Chefs Center of California has partnerships that allow them to offer business development classes and workshops, and Bressler works with operators on business administration, including how to leverage the Center’s microlending programs. North Market, meanwhile, employs its own marketing and graphic design staff who handle the Market’s needs, but who also help individual operators on things like social media, signs, and fliers. The team also provides tenants with access to a small onsite business suite that has computers, Internet access, printers, fax machines, and even postage.

Schaller and the team at ACEnet provide assistance with market analysis, brand development, and managing balance sheets and financial statements. They also have a loan fund for alums.

Although every budding quick serve has its own growth model and resource needs, many young business operators are finding that, especially in rough economic times, incubators can provide a supportive environment to help them find out what works for them and their business.

“What we’re looking at is trying to help people find a successful model for themselves that will actually end up as a positive payday for them at the end of the day,” Bressler says.