Great News! You can now Cook and Sell Food out of Your Home in California. But maybe not…
It’s 2019 which means that in California, you can now register as a microenterprise home kitchen operation. At first glance, this seems like a great thing however, there are some glaring issues once you dig into the details of Assembly Bill No. 626.
This has a lot of potential to become problematic for those who wish to cook and sell food from their homes and those who wish to purchase said food. The entities that it doesn’t seem to be problematic for are the tech companies and the tax man.
I should note that I do not currently cook from my home. I cook in my client’s homes. I have two weekly clients that I shop for and cook for in their home, therefore eliminating the need to use my home kitchen. I also do private dinner parties and again, prepare the food on-site.
In light of this law passing I knew I had to dig deeper so I read the entirety of Assembly Bill No. 626 and some opinion pieces. This is what I discovered.
The Money
The bill states that you can only make $50,000 in annual gross sales before extracting expenses. In the restaurant industry, most aim for their food cost to be about 20%. However, as a regular shopper without the ability to order from food service sources and in mass quantities, it is much higher. Mine runs about 40% for my weekly clients and this is not including pantry staples such as salt, oils, vinegars, etc. So let’s say your food cost is 40%. That means, your actual gross income would only be $30,000.
$30,000 is not too bad if you are a single person. But this law is being promoted as a savior to minorities. Less single people looking to make an extra buck on the side and more mothers and grandmas that are just trying to feed their kids by feeding others. Keep in mind that this is a California law where current living wage is $29,000 for a single adult, but $61,730 for 1 adult and only 1 child.
Chances are your abuelita isn’t currently paying taxes on her tamale income and you know she’s making them all herself so she’s not paying for help. With the new law in place, she’ll have to start paying those taxes and be capped at approximately $30,000 yearly income after expenses. Don’t get me wrong. I’m all for everyone paying taxes. I pay them on my income, but it’s just something to think about.
And now, she’ll have to start paying for “help”.
Money for Tech, not Minorities
So who is the law really going to help? Tech companies.
She’ll have to pay a tech company to “help” and must use their intermediary app or website in order to sell her tamales. This is a requirement noted in the bill.
I’ve already been getting soliciting messages from several companies looking to take a cut of my sales. This article explains in detail how this could turn into a situation like Uber. Which is fine, right? I mean, I embrace technology.
But it becomes a problem when one app does better than all the others and then monopolizes. They can then charge the home cook whatever fee they please and the home cook has no other option but to use their services. It will become the app that people purchasing will expect to use and that will be the only way for the driver home cook to find clients.
I can see it now! “Fuber!”
The Timing and Structure
Did you hear, the bill states that no more than 30 individual meals/day can be made.
Let’s do some more math here. Let’s say the average meal is $13 and you make the max of 30 meals/day. If you work 5 days a week, that’s $1950/week. Take away your 40% food cost that’s $1170/week. Multiplied by 52 weeks and you have $60,840/year. Well awesome! That’s super close to that 1 adult and 1 child living wage. But again, that $50,000 mark before expenses makes it so you are only allowed to make about half that. Minus whatever you are paying the tech company too, of course.
But then there is a further regulation that states no more than 60 meals/week. So, you can only work two days. Which would give you roughly, $20,000 year. Pennies in California.
Another issue is putting limits on meals when portion sizes vary so greatly. How will they regulate? Often, my meals are prepared and served family style. Take for instance, lasagna. I prepare an 8×8 dish and there is a family of 4. Will they eat the whole thing or cut smaller pieces and enjoy some more later? How many “individual meals” does that pan of lasagna equate too? How many tamales are one serving and who’s to say?
Pets
I was wrong about this initially. I thought for sure they would restrict homes that have pets, but after reading the bill carefully, I learned that if the animals do not have access to the kitchen and dining areas during preparation, they are allowed. Just a note for those of us who have pets. So, a good thing!
You Still Might Not Be Able to Cook and Sell from Your Home in California
Though it is a California law, it is still in the power of each individual county to decide whether they wish to allow it. This article goes into detail about how this is a problem.
So far, I have seen nothing about the law or signing up to be a microenterprise home kitchen on the Riverside County (my current home) Health Department’s website and I have high doubt that my original home, Orange County, will allow this. They recently outlawed even charitable operations from preparing food in-home. Remember that one time when a bunch of people fell ill and three died after eating a donated Thanksgiving dinner?
Which brings me to my last point.
Food Safety Knowledge
One of the very few things I dislike about being a “personal” chef is that anyone can go ahead and just call themselves one regardless of having any training, experience, or certification. I am classically trained, spent a year in very intense cooking competition, and maintain my Servsafe manager certification. There is nothing in the bill that requires this certification. It’s the first required course to even begin getting into the kitchen in culinary schools and for good reason. It covers foodborne illnesses, cross contamination, safe food handling temperatures, times, and more.
In fact, there is one mention of food safety in the bill. It’s about a much less extensive certification that a small child could pass called the food handlers card and it’s under the section of the things that are not required.
To Be or Not to Be a Microenterprise Home Kitchen
So, no, it’s not all great news. There are problems. Can some of them be solved? Maybe, but I imagine it will take time. The problems will have to start coming to light as they occur. It’ll probably be a learn-the-hard-way kind of thing.
Personally, I have not yet decided if I want to be able to cook out of my own home. Most of my clients enjoy the fact that I prepare the food in their kitchen. Despite the problems with the bill, I know it may work out very nicely for some. I just need some more time to see how it all plays out.
Thinking about becoming a microenterprise home kitchen yourself? Agree or Disagree with some of my thoughts? Let me know your thoughts!
*While I almost always use my own photos for my posts, this one called for some stock images. All can be found at Pexels.com.
Jillian Fae
Jillian believes her passion for cooking stems from the fact that she was born and raised in Southern California. The best climate conditions for growing the finest produce all year around and the diverse mix of cuisines have always been an inspiration to her. Her love and ability to make people happy by way of delicious food began at an early age and still grows today. She is the proud Chef and Owner of Jillian Fae Chef Services, a personal chef business specializing in private dinner parties, customized menus, and weekly meal preparation.
5 Comments
Keith Brooking
@Home Grub is a new MEHKO platform that is fee free. Meaning they do not charge the cooks anything for using their service.
Jason Martin
Early in the process of approving AB 626, it was a misconception that a micro-enterprise home kitchen operation (MEHKO) was required to use an Internet Food Service Intermediary (IFSI). This is not true. A MEHKO operator MAY choose to use an IFSI, but it is not required. The operator is free to handle Internet-based listing, promotion, marketing, and order management on their own, or they can utilize an IFSI that may provide one or more of those services.
The confusion comes from the line in the digest of the AB 262 bill that reads, “The bill would require an Internet food service intermediary…”. It seems that’s where some people stopped reading the line, it continues, “that lists or promotes a microenterprise home kitchen operation on its Internet Web site or mobile application to, among other things, be registered with the department…” The paragraph goes on to stipulate more requirements for IFSIs. The bill is simply stating that if an IFSI is used, and before that IFSI lists a MEHKO, that IFSI is required to do certain things.
Some other confusion comes from Section 5.113825, subsection (8) which states, that a MEHKO is food facility that follows certain requirements, including: “The operation only sells food directly to consumers and not to any wholesaler or retailer. For purposes of this paragraph, the sale of food prepared in a microenterprise home kitchen operation through the Internet Web site or mobile application of an Internet food service intermediary, as defined in Section 114367.6, is a direct sale to consumers.”
This section is saying that a MEHKO must sell it’s food directly to the consumer. It further clarifies that even though a IFSI may be used, that is still considered a direct sale. It’s considered a direct sale because the cook is still required to deliver the food directly to the consumer, either by having the customer pick up the food from the cook at their approved kitchen location, or by the cook delivering the food to the customer. In this case, the IFSI is recognized as a listing and management service, not a re-seller.
Steve Kramer
Thanks for that Jason. I was on C.O.O.K. Alliances Policy Committee and helped draft CA AB 626 and the technical “tune-up” of that Bill AB 377. I was a career Respiratory Therapist and Realtor who was familiar with H&S and contract law and came from outside the food industry to offer a different perspective. We tried to be as comprehensive and all encompassing as possible but as it’s the first law of its kind in the country I’m sure it will continue to evolve as we work out the bugs.I am now setting up a consulting business to help aspiring home chefs to comply with all the legal requirements wherever they may reside in the United States as well as developing and managing Incubator Kitchens in Agrihoods and urban vertical hydroponic farming in shipping containers powered by hydroelectricity.
siva
hello, i am also following the MEHKO. i have question, how do the sale tax work for the home made food sale ? do homemaker need to collect the tax or no tax apply under MEHKO.
Steve Kramer
Good question. State as well as any applicable city or locally levied taxes are the responsibility of the MEHKO operator to collect, retain, and report. A good software program can help organize and categorize expenses including taxes. Some IFSI’s include billing and accounting as a component of their services.