Welcome to my interview with Alexis Leverenz, about starting her wonderfully successful shared-use kitchen and event space, Kitchen Chicago.
Obviously I know quite a bit about Kitchen Chicago. But my dear lovely readers do not, so can you give an overview of Kitchen Chicago and what you do?
Sure. Kitchen Chicago is a commercial kitchen that we rent out hourly to people getting started in the food business, who for one reason or another don’t have their own licensed and inspected kitchen to work out of. We get a lot of farmers’ market vendors, specialty food makers, and restaurants that want to train their staff and develop recipes before they open. We provide the equipment and then people rent our kitchen to produce their products.
Can you say more about how you got started?
I was working at Merrill Lynch, and I hated my job. Well, I loved the job but I hated the environment and wanted my own business and I had no idea what that was going to be. I thought, “I like butter cream. I can make wedding cakes,” and I realized that that was silly, so I decided to call all of my friends. I don’t remember if you got this email, but you should have, where I asked everybody if I should get a master’s in computer science or go to pastry school.
100% of everybody said pastry school, so trusting my friends, I quit my job at Merrill Lynch to spend $24,000 for 6 months at the French Pastry School.
Oh my God, are you serious?
Yeah, oh yeah, I’m still paying it off. It’s more now. That was 10 or 12 years ago. I moved in with my boyfriend Jeff, went to the French Pastry School, and then worked at Bittersweet Pastry Shop for $7 an hour, for a year, until two or three AM Thursday and Friday night, and often back at 5:30 on Saturday morning, thinking, “What the hell did I just do?”
I would go to buy a sandwich for $9 and think, “That was an hour and a half of my life, right there, for a sandwich.” Jeff (now my husband) sent me out the door crying on many occasions and I was like, “I don’t know why I’m doing this. I don’t need the $7 an hour. It’s not for the money, thank God.” No, it was terrible. It was horrible, and I thought, “This is bullshit.”
I do think that culinary school is the biggest crock of shit, because you go in and you spend $20-$30,000 to go out and make $10 an hour, so it’s a terrible return on your investment. I worked at Bittersweet and I thought, “I could do this on my own,” but I knew that I couldn’t seriously spend $150,000 outfitting my own bakery and expect people to start lining up to order my stuff so that I could pay my rent and employees and whatnot.
I thought, “If I start from home and build up to that point, then that might work.” Then the first thing I found is that you can’t make anything out of your home and sell it to the public, so I spent five or six months on Craigslist and The Reader, whatever forums I could find, looking for a kitchen that I could work out of. I couldn’t find anything and I kept running into people that were asking for the same thing, so it was one of those, “Oh my God! That’s what I have to do!” moments.
I stopped looking for packaging and labels and whatever, and started looking for kitchen space, and that’s how I stumbled into it. We found a catering company that was going out of business, and the place was gross. It smelled like grease and it felt like grease. It was cheap and I didn’t know what I was doing, so I think it was only $25,000 to buy all the equipment and then take over the lease. We spent a good month just cleaning it up and repainting and trying to make it look nice.
We haven’t spent a penny on advertising, ever. We made little flyers and I posted them in coffee shops in a mile radius of our house, and one in the gym, and was like, “Okay, my job is done. Here we go.” Surprisingly, in the first month, we had 75 responses, and they were all like, “Oh my God! This is amazing! Why didn’t anybody do this before?” It me feel, “I’m all right. I don’t know what I’m doing but I’ll try it.”
February of 2005 we passed our inspection, and then March we opened our doors and broke even I think in the third month, which is crazy.
That’s awesome. I hate my job but I don’t have the guts to quit it yet. Were you just younger? Was it easier?
It was totally easier because I was younger. I don’t think I could do it today. I had the garden apartment, my rent was maybe $600, I didn’t have a car, I didn’t have any fashion sense, so my clothes weren’t worth anything. I had nothing. It was like, “Whatever.” Jeff had his job that paid our bills.
Were you married yet?
No, but we had been together for two years or so, and so moving in with him was probably the logical next step anyway, so he supported me for that entire year. I’ve watched a lot of businesses get started, and by and large the people that stick around unfortunately are the ones that have spouses that allow them to try it out.
In retrospect do you feel like the French Pastry School was a waste? Or did it give you enough connections to the food world to find clients? I mean, obviously it gave you the business idea, because you wouldn’t have known that there was that gap that you guys could fill without going to school.
It was worth it, because of what you said, that I wouldn’t even known about the need for an hourly commercial kitchen. When people ask me if they should go to pastry school, a whole lot goes into that answer. You can’t fake a restaurant job or a bakery job, a kitchen job, you just can’t. You have to love it, in my opinion. Merrill Lynch, you make a good salary, you can send a bunch of emails and call it a day. It’s not as intense as $10 an hour, standing on your feet for 12 hours, with hot oil and sharp knives. It’s a much more stressful environment.
I do always tell people it opens up a lot of doors that you didn’t know existed. So while in my class we had a lot of career changers who today are not working in kitchens, many of them are working food jobs, whether it’s food photography or a cookbook editor. Obviously if I hadn’t gone to the French Pastry School I wouldn’t have ever thought, “Ah! I’ll open up a kitchen.” I would be probably looking for a job because Merrill Lynch is not around and it would be another finance job or office work.
I definitely think having that connection with the school helps, because a lot of the folks that come to our kitchen are people that go to the French Pastry School. So we get a lot of referrals, and having that personal connection with Chef Jacquy and knowing who I am, I think may feel better about referring people to me. I definitely think there’s some clout in being an alumni there.
Instead of putting $24,000 into advertising in the Reader, it’s almost like you spent $24,000 on word-of-mouth marketing.
Yeah, it makes sense to consider it more of a marketing expense. I wouldn’t be where I am without it, and I’m really happy with where I am, so it was definitely worth that $24,000.
Did you do a business plan? Did you run numbers like, “How much income will we make from people renting?” Did you do any of that stuff?
I did and I got a lot of compliments on it, so I think I made a good one, but I still felt like I was just pulling it out of my hat. I did a plan for the kitchen, the execution of it, describing why I thought there was a need, how much I thought it was going to cost to set up, my future plans once we were open. I think that was all in the dreamy phase, so I think I had that all laid out.
When the bank wanted to see actual numbers I remember it took me a long time, because I had no idea how many people would use the kitchen in, say, August three years later. I was just making up numbers. I remember thinking, “Is a bank really going to buy this? I have nothing to base this on.”
Did you just show this stuff to a bank, and they were like, “Okay”?
Yeah. When we first opened money was flowing much more freely than it is now, and we had a $35,000 line of credit, unsecured. They didn’t ask for anything, I just signed some forms and got it. I think when we first started that was all we needed, so we got the $35,000 line of credit, no questions asked. I showed them the business plan and they were like “Great.”
When we signed the lease on the new space, it was a week before Lehman collapsed, and I was like, “Great, now, nobody will want to give me anything.” The second time around the business plan was a lot more scaled back. I went in with, “Here, my last three years of financial statements, here are next year projections,” and that seemed to work. They didn’t need the whole flowery business plan. They just wanted to see the numbers.
But we could only get an equipment lease, so the equipment was all financed through the loan, but it was all backed by that equipment. So it all had to be brand new, which I was planning on doing anyway, but if I didn’t make the payments they could take all the equipment. If I did make the payments I could buy it at the end of the 5-year term for a dollar. The interest rate was pretty high, but I had no choice so we financed the equipment lease.
Bob our landlord was great, and so he did about $60,000 worth of build-out costs for electric and plumbing and floors and walls and whatnot, and he built that into a 5-year lease. I paid a few dollars extra per square foot for the first 5 years in order to cover the build-out, so that was a different way of getting the financing without having to lay out the $60,000 for the rehab work. That was great to have a landlord that would work with us in that way.
Did you do any small business workshops?
I went to general “starting a small business” workshops. There, you’ve got somebody starting a woodworking business, somebody starting an accounting business, and me. I think it was all such general information that I didn’t find it to be all that useful.
You go to those things and there’s those people that dominate the whole conversation and ask all of their questions that nobody else cares about. I didn’t want to be that person, I sat there and left thinking, “What?” I know how to start a woodworking business now because that happened to be the most dominant person in the room.
Some of the city stuff that it is more specific, like getting a particular license or something, I think is useful. But in general a lot of the broad, sweeping business workshops I didn’t find to be all that helpful.
I did go to SCORE and while I think I would have much preferred to be teamed up with somebody that had experience in food, it was still really valuable because it gave me that business plan outline and gave me a few cash-flow statements to see what people are looking for. So I did use that.
What is that, SCORE?
It is a group of retired business people that volunteer to one-on-one consulting. Some people might find the group thing more valuable, but because I’m so shy and introverted I would never ask any of my specific questions.
In closing, my basic premise is that people should be more honest about starting a business or starting something creative, how they pay for it, and if it’s feasible only if you have spouse or family money or savings. With that in mind, anything else that you want to say?
I feel like the whole “follow your dreams” stuff sounds great, but you need to follow it up with actual numbers. I see a lot of businesses fail because people don’t think it totally through. They think, “My family tells me I make great coffeecake, so I’m going to start a coffeecake business,” but you have to figure out how much coffeecake is out there, and how much coffeecake people can really stand.
I think of some of the people that have come through our doors, where they don’t have any money or savings, and they would use what they had to buy ingredients and make food for a farmer’s market, and then it would rain, so they wouldn’t sell anything, and they wouldn’t have any money then for the next week. It’s not ever going to work. Businesses fail all the time even when people think they know what they’re doing and have money behind it.