A Randolph woman jumps into food packing business

In this week's Creative Collision I talk with Cathy Bacon of Freedom Foods in Randolph. Cathy recently launched a new, state-of-the-art food manufacturing and co-packing facility. Her operation is going full-steam creating goods for national and specialty food brands.

RICH NADWORNY: How and why did you make the shift from producing your own food to producing and co-packing other companies' food?

CATHY BACON: I started commercially producing my own food products when I found that no co-packing company would work with me. I was too small! I didn't fit into their manufacturing capability; their minimum run was more food than I made in a year.

Ultimately, I was managing five food brands at the time and the production facilities we were using in Fairfax and Waitsfield shut down. I needed to figure out a way to keep making our food. So, in 2008 I launched Freedom Foods. I was trying not to buy a lot of expensive equipment, a lot of what I got was from places that went out of business. And as soon as I opened Freedom Foods and had the capacity to make more food, the phone started ringing and the co-packing business took off. We are even busier in our new facility that just opened this year. What makes it come together is that we work with national brands that are large, reliable customers. That gives us the room to work with smaller food brands and to help some new food entrepreneurs.

All of us who work here like working with new clients and helping them develop and manufacture new products. I try to make sure everyone here is involved in the products, and that we keep everyone engaged and creative. Having that variety of clients is a big advantage of co-packing.

RN: What are some of the biggest challenges new food entrepreneurs in Vermont and beyond face in growing a commercial food business?

CB: They face a lot of the same challenges I faced when I launched my Hillside Lane products. When you take a food brand to the next level you run into a lot of logistical and cost model challenges. For instance, most food entrepreneurs don't really know the labor cost of making their food product because they've never counted their own labor hours! So, the business doesn't take into account what it's going to cost to have someone else make your food. When you make bigger batches of your product, you need both proper cash flow to support it and a market to take it. Both of those things are a lot different than selling your products at local farmers markets. Don't get me wrong, I know a lot of people who are doing very well at farmers markets and craft shows selling their food products. But moving into a regional or national market takes a lot more planning and business savvy, not to mention the necessity of building a brand that is not dependent on people meeting you in person.

I always tell new food entrepreneurs, "Don't quit your day job, yet."

RN: You have a state of the art facility in Randolph in what was formerly an agricultural field. Your investment in the facility has been a windfall for Randolph's infrastructure. Why Randolph? Do national brands care?

CB: Well, I live in Randolph, for one. When I started Freedom Foods I realized I was going to be working 24/7, which meant one of my top priorities, was "no driving." So, I opened the first facility in downtown Randolph. Most of my employees live here too and many of them could walk to work.

When I needed to expand, I was looking for a location to renovate and move into. Even when I expanded my search up to the Barre area, I couldn't find what I was looking for. I decided to build the new, state of the art facility in Randolph. I was able to secure funding for the town to expand its water and sewer services out to the new location, which should help future development.

My big clients don't care that I'm in Randolph. Logistically it's important to them that we're close to both the highway and the airports. They love it actually; they think Randolph is very cute; it fits into their quintessential picture of a New England village. I think it adds value to our brand.

RN: There aren't a lot of co-packing places in Vermont, but there are a few food incubators operating around the state. What do they need to become more successful?

CB: I started out in one, in the Food Venture Center in Fairfax. It was a great experience for me. I realized I didn't want to produce food in my own kitchen and that was the only co-production facility in the state. I learned a lot, about ingredients, food safety, compliance among others. It was a great food production education.

The challenge with incubators is that you need a steady stream of food production to make it economically viable. The Food Venture Center had one big client and that allowed all of us little ones to take advantage of the equipment. If you only have a bunch of small food start-ups using an incubator, the production is infrequent and at lower volumes. There's not a continual utilization of the facility. Yet, they have a lot of costs sunk into the incubator, including equipment and staff.

The challenge of food incubators is having a steady stream of clients of different sizes. And you have to keep new ones coming because once the successful ones get bigger; they're going to leave for bigger co-packing facilities.

Rich Nadworny is principal at Empatico firm in Burlington. Connect him at www.empatico.us