Logistics / Production

[merlicky]

I’ve read a number of threads on here about business startups and small scale production. I’m at a point now where I want to start selling some of my chocolates. I’ve got all the legal stuff in order but I’m not quite sure how to work out production.

I have to rent a kitchen by the hour, which creates a fixed cost that must be overcome before any profits can be made. After factoring in that cost with labor, ingredients, packaging, and various other costs I figure I need to make and sell at least 400 truffles each time I use the kitchen in order to sell at my target price and meet my desired profit margin. Producing that quantity is not a problem; in fact I could make quite a few more in the time blocks I would be renting. What I don’t quite understand are the logistics of this kind of business model.

The quantity of 400 truffles seems like a pretty significant amount; I’m not sure how to make it work because the shelf life prevents me from stocking up and selling them over time. Do I need to get a charter wholesale customer before I move forward? Do I just take a beating on profits, or change my selling price, at first? Can an hourly, rented kitchen work for things like farmers’ markets or internet sales or other events where individual boxes are sold? Can I sell individual boxes or should I just try to find bulk customers?

I know I could easily make this work for holidays like Christmas, but I’m just not sure what to do the rest of the year. I have a lot of people interested in my chocolate, but they would want a box or two at a time...not 400 pcs. I also have a couple places in town interested in using my chocolate for events, which would meet the 400 pcs quantity, but wouldn’t be steady work.

I will be making chocolates for a couple charity events in the next few months and I would like to pass out some business cards. However, unless I get some of these logistic questions worked out I don’t see how I can really promote myself as a chocolate business. I’d greatly appreciate any sort of advice from anyone who has worked through any of this already.

P.S. This is kind of rambley so I apologize if I’m not making any sense.

[Cocogirl]

Hi Merlicky,

I'm in a similar situation. Here's what we are planning to do, and this might be a solution for you, too. We are going to make our product and market it in small packages to coffee shops, tea shops, gourmet and gift shops, etc. Our small town alone wouldn't be enough to support the business, so we are going to market our chocolate in as many of the nearby towns as we can - especially any that get a lot of tourist traffic. I think the trick will be to package it accordingly, say, in one or two piece packages to the coffee shops so people can sit down and have it with their coffee. I think this is something some people would opt for instead of a piece of cake. It would be less profit than selling a larger box, but hopefully, you would sell a lot more of them. Also, it would have to be packaged in a clear box so people could see it - and hopefully make their mouths water! Of course you have to give a portion of the profit(split?) with the shop, but you make that up by selling in more shops. At least that's what we are hoping. And the small packaging makes sense today when people don't have as much money.

As far as production, if you approach the shops with some samples and they want to sell your product, you will work out with them how much they should buy to begin with, and in that way you will know ahead of time how much you need to make.

Good Luck,

Cocogirl

[gap]

One solution would be to freeze production. If you freeze your chocolates correctly, you wont be able to tell the difference when they come out. That way, produce as many as you can in the kitchen time you have. Freeze and defrost as you need for events, sales etc. It is usually a 24 hour process to get the chocolates into the freezer and 48 hours to get them out - so you effectively lose 3 days from your shelf life using this process, but it would overcome your problem. Freeze in small containers so you only need to remove what you actually need at a time.

[Lior]

I now freeze also. What I have recently done is prepare boxes of 4,9 and 12 bonbons. I wrap each box in a few layers of saran type wrap and then place in a vacuum sealable bag, 2-3 boxes per bag. Then if I have an order I pull out as many boxes as I need, place in a new vacuum sealable bag - if needed (perhaps only one box, so the others need to stay in the freezer in the vacuumed bag) and pop into the fridge. I usually have a few in the fridge at all times and replace as needed. This works very well for a tiny business like mine. No hassles of pulling out a few containers...making up boxes, returning containers to freezer etc.

[Cocogirl]

I'd like to apologize for the horrible pic on my post. It was from years ago when I was first practicing hand dipping and was the only picture on my computer. I thought it was going to be a tiny little thing on the side of my post-how embarrassing! Anyway, the suggestion of freezing is a great one. In the Confections book put out by the Culinary Inst. of America they talk about this and say that the clock stops when freezing begins and starts up again as soon as you pull them out of the freezer. This is great when selling a few boxes at a time. Just be careful to thaw properly so you don't get condensation.

[merlicky]

When freezing and thawing, do you have trouble with the chocolates cracking? The centers and the coating will have different ways in which they expand/contract and it seems this could be a problem. I'll have to do some testing...is the proper freezing method in the Grewling book (or some other one)?

Thanks.

[KarenDW]

Just be careful to thaw properly so you don't get condensation.

Having an overwrap layer on the packages helps to prevent condensation on product; if condensation develops, it stays on the overwrap.

[KarenDW]

How does freezer storage factor into the kitchen rental rate? Are you able to keep a (locked) fridge and/or freezer at the rental facility?

[prairiegirl]

http://www.youtube.com/watch?v=Lw01nzTWivE

We are fair;y new and are working thru all the logistics. Marketing is extremely important.

[Lior]

great!! I loved watching it!! I wish you tons of success!!!

[Kerry Beal]

Excellent Deb!

[Cocogirl]

Greweling says that freezing Confections at 0 degreesF (-18C) can be done for up to four months without loss of quality. Never had a problem with cracking. That usually happens if you dip a center that is cold. Then the set chocolate will rupture and ooz out.

Loved the video, Epiphanie!

[Cocogirl]

I forgot to add that the proper technique for freezing is on p.42 of Chocolate Confections by Peter P.Greweling -- Great Book! If you don't have it already, it is a great asset.

[gap]

When freezing and thawing, do you have trouble with the chocolates cracking? The centers and the coating will have different ways in which they expand/contract and it seems this could be a problem. I'll have to do some testing...is the proper freezing method in the Grewling book (or some other one)?

Thanks.

I've never had a problem with cracking or loss of shine. I put the chocolates in a flat plastic box (so there is not much air between the chocolates and the lid) and then wrap in gladwrap thoroughly. 24 hours in fridge then into freezer. When you need the chocolates, out the freezer and into the fridge for 24 hours. The out the fridge and (still wrapped in gladwrap) 24 hours at room temperature. Then unwrap and they are ready to go.

[Edward J]

Hi Merlicky,

Wow...big subject

For now, may I suggest grabbing whatever you can--farmer's markets, internet, small cafes etc., perhaps even school fundraisers?....

Distributers are a double edged sword. They require their mark up, and then the customer(retailer) requires THIER mark-up... Figure on each one wanting to make at least 35%. When it gets to this stage, you have a good product but the packaging doesn't reflect the sales price. And you also feel somewhat cheated, watching your product go out and only earning pennies...

Retail is all about packaging, product is only secondary. Packaging is an industry unto itself. There are N.American mnfctrs of packaging, but they are very expensive, and there are many importers and retailers of imported packaging in N.America, and they too, are expensive and inflexible. Most of the packaging material is produced in China, and when you get to a stage where you are comfortable to start importing shipments of $10 and $15,000, it makes great financial sense to do so.

The large/bulk retailer is interested in: Brand recognition, shelf life,and of course, consigment only. Matter of fact if he can make a buck "selling you" shelf space, he'll probably do it too. Don't want to scare you off of the "big boys", but the old adage of "giants play best with giants is true here. Even if you get your foot in the door, with a large chain, you have to constantly check uyp on ethem (evry day or every other day) to make sure they haven't torn down your display and shoved it all back in the warehouse, or shunted it off to the women's hosiery/undergarment dept. D.A.M.H.I.K.T........

The smaller retailers are a better bet, but they too, need some education. Most won't display your products in cases because they don't have the right display cases--they either put it into a refrigerated display case, and then call you up in a week to complain that they've gone all "mouldy", or they put your wares in front of the store window, exposed to "Mr Sun". The easy fix for this--for a "good customer", is to trott off to Home Despot or the like, and get a $200 wine cooler, and place it out of direct sunlight. The usual wine cooler is about the size of a mini-bar with a glass front door and keeps the right temperature for your wares. Product shelf life is very important, and if you tell them that you have a 3 week shelf life, they get very worried and either cancel everything or insist on consignment only. Start looking into longer shelf lives and items like bars and novelties.

Cafes, hotels and clubs are a good place to look too, but they are very price conscious--there is no brand loyalty--and if someone more aggresive than you or someone cheaper than you comes along, they'll go for it.

I don't want to dissapoint you, but I must be realistic. If you rent the kitcchen space, you might as well make the most of it and strt to offer things like choc. dipped cookies, brownies, choc dipped novelites, etc.

Hope this helps......

[merlicky]

Thanks everyone for the information on freezing truffles. I have some experimenting to do, and some more questions to ask them at the kitchen. But, this does seem like a workable option.

Edward, great advice! My mind has been so wrapped up in how I am going to make the truffles work that I wasn’t even considering other product. There are so many other chocolates that have longer shelf life than truffles (caramels, gianduja, fondant centers, butter ganaches, chocolate coated items, molded chocolate, etc…). I could definitely supplement the truffle production with some of these to help pay for the time.