Kitchen Incubators Get Food Businesses Cooking

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Friedman is right. Kathrine Gregory's consultancy, Mi Kitchen Es Su Kitchen, has helped start four kitchen incubation programs at existing kitchens around New York City. Two have since closed, and one exists as a shared kitchen space but no longer offers real incubator-style services for startups.

Gauging Demand is Difficult

Gregory says the remaining incubator—Artisan Baking Center Kitchen Innovations, a program of the Consortium for Worker Education in Queens, N.Y.—is not only breaking even after two and half years but is turning a small profit, thanks to 45 active clients at the 5,000-square-foot kitchen. (The secret, Gregory says, is the same advice edict she gives to the startups using the kitchen: Keep overhead low.) But Gregory admits such successes are the exception rather than the rule. She estimates that at least 10 similar facilities across the country have closed their doors within the past year or so, having failed to make their numbers.

Cameron Wold, a consultant who has done kitchen-incubator feasibility studies for about 25 nonprofits and municipalities over the past 10 years, says part of the problem is that gauging demand is difficult to do. "Many communities have people without any business or [food industry] experience, saying, 'Everyone loves my Grandma's cookie recipe. I'm going to use the incubator 40 hours a week' without having any basis for understanding what that meant," says Wold.

At the same time, most incubators say it's exactly those inexperienced people who stand to gain the most from their services. Rebecca Soon, director of economic development for Pacific Gateway Center (PGC) in Honolulu, says for social services organizations such as PGC, even businesses that fizzle aren't complete failures. "A lot of people want to get into the food business, and it's really not for them," she says. "If they find that out here, it's a lot easier for them to get back on their feet. They haven't invested thousands of dollars and aren't now struggling to meet their loans."

Wold says as the cost of starting a commercial kitchen has risen (in part because of rising steel prices), communities today seem to be taking a more cautious approach toward incubator investment than they were during the late-'90s bubble. Still, he says: "Someone always feels they have a bigger, better mousetrap."

Click here for a slide show of kitchen incubators across the country.

Miller is a reporter with BusinessWeek.com in New York .