A Recipe for Ownership Culture: The Kitchen Network

Morrison Road is a mile-and-a-half-long business corridor that cuts through the residential grid of the Westwood Neighborhood in West Denver. In this historically Latino neighborhood, The Kitchen Network is helping its employees take greater ownership of the business and their community.

This area of Denver is home to a burgeoning food scene—traditional restaurants thrive alongside nightclubs and the soon-to-open Westwood Food Coop. None the least of these, however, is the Kitchen Network. A subsidiary of community development corporation BuCu West, The Kitchen Network has two parts: a commissary and a USDA-certified bottling company. Their commercial kitchen, open 24-hours a day, regularly serves over 150 specialty food entrepreneurs, including many of Denver’s favorite food trucks and catering companies. Meanwhile, their bottling operation produces 32,000+ bottles each month for 44 businesses around the country.

RMEOC sat down with BuCu West director José Esparza to learn how The Kitchen Network is using profit sharing and education to gradually become employee owned.

What is BuCu Bottling Company’s work?

Our company provides our clients with the know-how to make low-acid, heat-sealed products, like a marinara sauce you would find at a big box grocery store. We are USDA certified which allows us to also can meat containing products and still a year to two year shelf life.

Essentially, we can take someone’s family recipe—a small farmer’s market type client—and with under $5,000, we can help them do everything they need  to sell at a Whole Foods or King Soopers.

What are some examples of products that you make?

One of our current products is Fat Works, a company who innovatively developed many products, such as lard and tallow, from various animal fats.  They sell their wide variety of fats online and you can also find them at Whole Foods. They are a great example of a USDA product that is also distributed nationally out of our small local facility.  We also manufacture some products for Tony’s Market. We do their Bolognese, marinara, and vodka sauce, along with a few other sauces. Our facility was also the birth place of Denver-based Real Dill Pickles  which now has their own manufacturing plant.

What steps are you taking to become employee owned?

Originally, The Kitchen Network was family owned. When we purchased it from Dennis and Elaine McFerrin in 2016, they had been subcontracting the majority of the labor and only had one full-time employee. Based on BuCu West’s growth projections, we hired six employees, which brought us up to seven.

We’ve started moving towards employee ownership. At the same time, we are still helping our team understand what it means to be an owner. Recently, we distributed 10% of our profits to our employees, which was a big step in showing our commitment to all of our current employees. It is a delicate balance between building a company that will be able to withstand the ebbs and flows of business while also providing additional benefits to each employee. That is why we have communicated with the team the need to build a reserve for the company in order to safely grow.

While our structure is neither an ESOP or a co-op, we have structured profit-sharing as a C-corp. We are currently committed to our employee’s education and to actually sharing profits.

Can you tell us more about The Kitchen Network’s employees?

Today we are up to eight employees—three women and five men. Our longest employee has been with the company for seven years, more or less since the company started. We took on a new employee last year, and we’re projecting to grow 1-2 per year. All of our employees live within a two mile radius, and all come from different training and education backgrounds, however, owning a share of this company is unlike any opportunity in their careers thus far.

ownership culture food production industrial food B2B

A diagram of the Kitchen Network’s operations.

How have you challenged employees to think like owners?

One of the things we have done is invest in employee education. At this point, we’ve done a branding strategy session. We’re also working with RMEOC and Halisi to get a grant from the Office of Economic Development. That grant would help us withstand the costs to the business to take the time and educate our employees about what employee ownership looks like for our company. In this industry, each employee must have food safety and process authority certifications, and we’ve invested in each of our employees to obtain those. We have invested in training on the accounting and management side of the business as well.

Another way we have helped them think like owners is being very open with our financials, showing them what we make and don’t make. Employees often have a misconception about how much the company they work for is actually making. We shared finances right away, so that our employees knew that we’re already investing as much as we can, while maintaining a financially conservative atmosphere.

We also look for learning moments in our work with clients. For example, one client wasn’t happy with how labels were printing out on their jar. We spoke with our staff about it and discussed the wider financial repercussions. All of that has helped to build ownership culture.

At the same time, we run into obstacles in employee expectations. When employees are paid hourly it is difficult to see the work as more than just another hourly job and, therefore, difficult to incentivize accountability. We constantly struggle with maintaining a chain of command while also having a culture of accountability. For example, when they do everything they’re asked, but, at the same time, aren’t prepared to go beyond that, the business sees problems arise that could have been identified and addressed earlier in the process. We are working to overcome that mindset through incentives, education, and being open about the business.

How does The Kitchen Network fit into the larger vision of BuCu West?

The Kitchen Network itself is an anchor institution. It’s one of the most highly productive businesses on Morrison Road, both in revenue and volume. We’ve always seen southwest Denver as a food hub, even though it’s rarely been promoted as such. With us and with Re:Vision International’s gardens and cooperative grocery store, there’s potential for us to build out Morrison Road in a very unique corridor full of local food and creative businesses.

What are the barriers to employee-owned business emerging in West Denver?

Employee culture is a barrier. In West Denver, we have communities used to hourly wages, trying to do multiple jobs but not necessarily being owners of business. It requires a culture shift to see that your owner is caring for you, wants the best for you, and wants to share their profits.

The more community members we have talking about what employee-owned businesses are and how it has impacted their lives, the more momentum this movement will gain in this unique area of Denver.

This interview has been edited and condensed for length.

 

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