The Bottom Line
Will Home-Cooked Food Disrupt the Restaurant Industry?
The debate between eating out and having a home-cooked meal has existed for ages, but home cooking now has a platform to rise as an even greater competitor. California recently passed a bill, AB 626, that allows people to sell food cooked from their own residential kitchens. This act opens the floodgates for thousands of home cooks to enter ‘the gig economy of food,’ and compete directly with restaurants for business.
This bill, authored by Assemblymember Ed Garcia, comes roughly five years after ‘cottage food law,’ or the ability to commercially sell numerous non-perishable food products, first went into effect. AB 626, dedicated to legalizing ‘microenterprise home kitchens,’ intends to legitimize the underground restaurant economy and empower an immigrant-heavy population with the ability to generate income through cooking.
So what does this mean for restaurants? Let’s first examine the details behind this new movement.
Requirements for home cooks to sell food commercially
While AB 626 opens the doors for home cooks, it comes with a series of regulatory requirements. Home cooks are required to obtain a permit to sell their food commercially. In order to obtain this permit, their kitchen is subject to inspections that mirror those of standard restaurants. Of course a home cook isn’t expected to have the same commercial equipment found in a restaurant, but they are expected to abide by general public health standards regarding food storage and handling.
Home cooks are required to pay an annual fee for their permits, which at this point are set to range from nearly $300 to more than $650. They must also obtain a food manager certification. Home cooks are limited to $50,000 in annual food sales, and are capped at selling 60 meals a week, or 30 meals a day.
Additionally, third-party delivery is strictly prohibited. This means that a home cook can’t partner with a platform like Door Dash or Postmates; they must deliver meals themselves, have a family member or a full-time employee do it, or require customers to pick up their meal.
AB 626 has a few restrictions on the foods that home cooks can sell—for example, no oysters or unpasteurized dairy products—but there’s no question that this is a big step up from cottage food law.
Timeline for cooks to begin selling
AB 626 was passed in January 2019, though counties across California are required to ‘opt in’ to the law before home cooks can apply for permits. At the time of this writing, no counties have voted to opt in, largely due to minor changes taking place in the law’s wording.
Counties are expected to begin voting on whether to allow microenterprise home kitchens in the coming months, with those passing the law accepting permit applications shortly thereafter.
And while AB 626 appears to target sole proprietors who would otherwise sell home-cooked food illegally—over Facebook, for example—it also opens the doors to technology companies seeking to become “the Airbnb of food” or “the Uber Eats of home cooking.” The law refers to these entities as ‘intermediaries,’ and has its own set of requirements for apps and online platforms that sell home-cooked food.
Several tech startups have already made a splash, seeing great potential in the demand for home-cooked food. DishDivvy, a fully-operational app based in Glendale, is already selling home-cooked meals on its platform. At the time of this writing, DishDivvy takes a commission from the home cook, as well as charging a service fee to customers for each transaction. Appetivo is a similar service currently in development, also based in LA. Shef made media headlines in March, and utilizes a subscription model, delivering home-cooked meals with heating instructions rather than ‘hot and ready.’
So, will AB 626 disrupt the restaurant industry? At this point, it’s too early to tell, but worth keeping on your radar as a restaurant owner. Numerous counties across California are likely to opt into the law, but the success of home cooks and any potential intermediaries is yet to be determined. Out-of-pocket permit costs and delivery restrictions definitely give restaurants the upper hand in terms of scale, but ultimately it’s customer demand that will continue to shape this movement’s impact on the restaurant industry.
*Author’s note: Benjamin Brown also works for Savorly, a home cook intermediary.