by In today’s food industry, the gap between farm and table has never been wider.
Farmers are searching for more efficient, cost-effective ways to turn their harvests into a profit, while consumers want to be more informed about where their food comes from and how it is produced.
Bridging this divide are food hubs.
Food hubs serve as the connection between food suppliers and food consumers, allowing farmers to more easily distribute their goods and buyers to access affordable, farm-fresh products. In this blog, we’ll explore why and how to start a food hub.
What Is a Food Hub?
A food hub brings food suppliers and food consumers together, smoothing out the logistics between farm and fork.
As a food hub owner, you’ll have the opportunity to connect with other farmers, support them, and ensure their harvests move efficiently from the field to a dinner table.
Food hubs are unique and innovative types of businesses, and they all have different missions, structures, and operating practices. That’s why careful planning is such a key part of your journey to start yours.
1. Research, Research, Research
Opening a food hub is a groundbreaking and exciting adventure that requires careful preparation and research.
Let’s take a look at a few key steps to take before making any solid decisions about how to open your food hub.
Visit Other Farms in Your Area
Food hub success depends on collaboration with other food producers in your neighborhood.
Before launching your hub, pay a visit to other family farms in your area to learn about what kinds of products they produce, how they’re currently selling their harvests, and any pain points in their distribution process. Tell them about your plans to start a food hub, and gauge their interest in participating.
After connecting with these local farms, you’ll be able to shape your food hub to meet their needs.
Determine Market Demand
Now that you’ve established where your food hub’s supply will come from, it’s time to assess market demand.
Take a look around your neighborhood and determine how readily available farm-fresh foods are. If you find only a few supermarkets on the outskirts of town, you have a golden opportunity to make locally farmed meats, dairy, and produce more accessible.
During your market research process, investigate your area’s demographics to learn who your customers are, how much they’d be willing to pay, and their overall grocery shopping habits.
With these insights, you’ll be able to create a food hub that caters to your community.
Learn About Food Hub Best Practices
Food hubs are unique, which makes starting one from scratch particularly challenging. Fortunately, many agricultural organizations have put together resources to help you learn about food hub best practices.
As a starting point, check out the USDA’s guide to running a food hub, which explores why food hubs close and how new ventures can learn from these closures.
If your community has an extension center, you’ll also be able to consult with them about how to start a profitable food hub that meets the needs of consumers and farmers in your area.
2. Craft a Business Plan
Once you’ve finished the research process, it’s time to turn your findings into a thorough business plan.
Crafting a comprehensive business plan is a critical step on your journey to start a food hub. This plan will be your map, guiding every decision you make about your hub’s operations and putting you on the path to success.
Establish a Structure for Your Food Hub
Your food hub’s business plan should answer two key questions: Who will supply the food, and who will buy the food?
On the supply side, you’ll need to decide what your relationship with your farm partners will look like. Will it be a steady partnership in which they send all of their harvests to your hub for distribution, or will it be more like a farmers’ market where they can bring surplus harvests to your hub?
Once you’ve ironed out the supply side, it’s time to identify your customers. Will you sell food directly to customers, acting as a grocery store, or will you become a wholesaler, distributing food to restaurants and other business buyers? Will these sales take place in-person, online, or via an omnichannel approach?
Your answers to these questions should reflect your findings during the research phase. Regardless of how you structure your food hub, it should meet your community’s needs.
Get Your Finances in Order
Financial planning is a make-or-break part of your farm hub’s business plan. Your basic steps to food hub financial security include:
- Securing funding: Since food hubs support farmers and increase access to healthy food, you may be able to apply for grants or even crowd-fund your efforts.
- Estimate your costs: Your costs will be based on your food hub’s structure and operating procedures, so take the time to estimate your startup and ongoing costs.
- Calculate projected revenue: Determine how your food hub will make money. For example, you might charge participating farms a membership fee, or absorb a percentage of their sales.
- Find your breakeven point: Once you estimate your costs and projected revenue, you can determine when your food hub will become profitable.
Setting aside time for this strategic planning will ensure the long-term financial health of your food hub.
3. Invest in the Right Tools for Your Food Hub
The right equipment is another essential ingredient for food hub success. Let’s take a look at two tools you’ll need to keep your food hub operating smoothly.
Proper Food Handling Equipment
A key aspect of learning how to start a food hub is understanding how to properly handle and store perishable products like meat, dairy, and produce.
Spoilage can put a major dent in your food hub’s profits — and it can reduce your suppliers’ and customers’ trust in your hub.
That’s why you need the right equipment to keep products as fresh as possible. Invest in reliable refrigeration and freezing equipment to protect foods from temperature fluctuations. If you’ll be preparing harvests for sale, you’ll need materials to package and label them to meet all food safety requirements.
Food Hub Management Software
Food hub management software is another must-have tool.
This software handles your day-to-day operations, ensuring smooth, efficient processes throughout the hub. Let’s look at just a few functions of this tool:
- Inventory management: Get real-time access to an accurate overview of your food hub’s stock levels.
- Sales by weight: Sell products like meat and produce with ease, and make the most of your inventory down to the last ounce.
- Advanced reporting and analytics: Understand key performance metrics like your inventory turnover rates, sales trends, and profit margins.
- E-commerce: Expand your food hub’s reach by creating a custom website.
Relying on a powerful software solution from day one will put your food hub on the path to streamlined operations and healthy profits.
4. Put Together an Expert Team
A food hub is a specialized business — which means you need a specialized team.
The path to open your food hub will be fraught with challenges, and building a team of trustworthy experts gives you the chance to collaborate and make thoughtful decisions.
When staffing your food hub, look for employees with backgrounds in agriculture, food distribution, or even the grocery industry to advise you and bring new ideas to the table.
Give Your Food Hub a Solid Start With GrazeCart
Ready to check off the first item on your food hub launch checklist? Check out GrazeCart.
GrazeCart is a specialized software solution designed with the farm industry in mind. Along with features like robust inventory management, reporting, and fulfillment options, you’ll have 24/7 access to an expert team committed to supporting your food hub.
If you want to learn more about how GrazeCart can set your food hub up for success, get started with your free trial today.