We recently sat down to chat with Eric Diamond, Partner and COO of Central Kitchen in Cleveland. Eric is using his twenty years of banking, lending and community development experience to turn Cleveland and Central Kitchen (formerly Cleveland Culinary Launch Kitchen) into the region’s premier craft food cluster, one entrepreneur at a time. Central Kitchen and Honeycomb Credit partnered earlier this year to bring crowdfinancing to the Northeast Ohio market!
Eric introduced the Honeycomb team to Clark Pope, the owner of Pope’s Kitchen—an artisanal sauce and cocktail mix business based in Cleveland. Pope’s Kitchen ran a Honeycomb campaign and raised $50,010 from 28 community investors to refinance high-interest debt and fund their national expansion.
Let's hear from Eric about Central Kitchen and how they provide entrepreneurs like Clark the tools they need to scale their businesses and improve their communities!
Tell me about the mission of the Central Kitchen and what the organization does.
The mission of the Central Kitchen is to be the center for craft food creation in the Northeast Ohio region. We help food businesses from startup to scale-up to create sustainable businesses and inclusive economic development in our community.
We do that by providing shared-use kitchen and commercial space that’s open 24 hours a day, 7 days a week. That's our incubator. In conjunction with the Incubator, we provide training and resources to help new startup companies get into the farmer's markets and then into retail. To continue that mission we have the Central Kitchen Food Hub, which is a facility that is 157,000 square feet all dedicated to processing, packaging, and distributing craft food.
Why do you think the Central Kitchen is so important for a city like Cleveland?
We looked back six years ago before we started the Central Kitchen in 2013 and there was no shared use facility in the area and so we kind of hit this untapped need. There were a lot of food entrepreneurs that wanted to start a product but just couldn't do it because there was nowhere to do it.
In our six years of operation, we've created over 40 sustainable businesses and created over 300 jobs. A lot of the time in Cleveland and cities like Cleveland, economic development focuses a lot on tech, IT, and the biomedical industry. Those are definitely industries that create jobs. But two things there. One, they're high paying jobs but not everybody can get into those jobs. And two, when venture capitalists invest in those companies and they get to a certain scale, the venture capital funds pull them out of Cleveland and put them on the coasts.
When we look at the Central Kitchen, all of the jobs that we've created are still in Cleveland- and about 90 to 95 percent of those positions are living wage positions. The Kitchen is so important for Cleveland because we’re serving as a catalyst for truly accessible economic development.
Let’s dive into the story of a Central Kitchen business. Clark Pope, the owner of Pope’s Kitchen, was one of your first entrepreneurs. Can you tell us a little bit about his trajectory from the beginning to the present?
Clark was the third person in the Kitchen. He started out by going to the first incubator course that we ever had. Clark had been a school teacher for many years, teaching history. He took that incubator course that summer and he started producing his bloody mary mix, his hot sauces and a few other spreads that he had. By the time the school year came around, he was selling.
He quickly developed a loyal following at the farmer's markets and had gotten into Market District. Once he saw the traction he was getting, Clark never looked back. Over the past 6 years, we've been able to watch Clark in the Kitchen. We watched him steadily grow, getting into more stores, getting into more states. Now he’s at this point where, thanks to the Food Hub, he can focus on sales and not being in the kitchen producing. And that helps him, this year he got into England's London market with a line of cocktail syrups.
You actually referred Clark Pope to Honeycomb Credit as the first referred company in our partnership. What made you realize that Pope's Kitchen was a good candidate for Honeycomb?
Clark was in this position where it's really been only in the last 18 months that his products have taken off dramatically. Unfortunately, people in Clark’s position are still at a point where banks are not interested. Banks are looking for 3 years of operating history and years of profitability. And on top of that, they’re very hesitant to lend to the food industry.
Since there was no capital option like yours out there, Clark had financed his initial growth just like many other entrepreneurs do - a lot of it was on credit cards. And so he got to the point where he needed capital to consolidate his debt as well as for funding future growth. Traditionally, that's money that’s really really hard to find. So when you came to see us, we at the Kitchen were very excited about Honeycomb coming into the market because entrepreneurs like Clark now have an avenue to raise that much-needed capital.
For example, we've got 20 new companies coming into the Central Kitchen this year that are gearing up for the summer market season. Some of them will need capital and without you guys, they might do what Clark did which is put it on high-interest rate credit cards. Now they don't have to do that, they can start the right way, getting a loan for their business through Honeycomb.
The Central Kitchen is one of the largest food incubators in the country. Now, it seems that they are becoming a trend and food incubators are popping up in every city. Why do you think that is?
You’re right. There’s over 200 food incubators or shared kitchen spaces throughout the country nowadays.
It’s for two reasons, I think. They're starting because people want to know where their food came from. If you look at the Nestles of the world and the Krafts of the world, they'll all tell you, “We're losing market share to these small craft producers.” And the reason is that people don't want to pick up a package and have to hire a food scientist to figure out what they're putting in their body. They want all natural fresh ingredients. The other side is that food unites people too. People are looking to feel closer to their community through food. There’s a massive shift in the way we're consuming food and these communities are tapping into that.
Any last remarks for our readers?
Food is shifting, craft food is now an opportunity to encourage entrepreneurship. I’d encourage people to take a strong look at building their local food economy. As we've proven, and others throughout the country have proven, it really can spur economic development in your community.
For more information about the Central Kitchen and their impact in Cleveland, visit their website here.
Interested in bringing crowdfinancing to your local community? Email us at firstname.lastname@example.org.