CHICAGO — From outside of Chicago, it feels like The Hatchery is a long-established institution.
Since it was started as part of local incubator Industrial Council of Nearwest Chicago in 2015, The Hatchery has been collecting high-profile partnerships from companies including Kellogg, Conagra, PepsiCo, Ingredion and most recently Mondelez. For years, the incubator has been working with companies, facilitating networking and helping connect entrepreneurs to people and resources they need.
But traveling to the food incubator’s home in Chicago’s East Garfield Park neighborhood, it feels brand new — and bursting with possibilities. The 67,000-square-foot building went up so recently, Google Maps still shows a photo of a construction site at the address.
In mid-April, construction vehicles and maintenance workers tended to the front courtyard where a neighborhood food market will soon be set up. The inside of the building smelled like fresh paint. The shared kitchen spaces were mainly empty, and the Rick Bayless restaurant kitchen lab still lacked equipment. Chairs and tables for a shared office space were jumbled together, ready to be organized.
“Initially, the intention was: we'll build this facility, we open the facility and then we launch. But that would have been a big mistake. Just like the advice we give to our entrepreneurs, it would have been a big disservice for us and for the companies we work with if we hadn't tested the concept before officially launching."
CEO, The Hatchery
CEO Natalie Shmulik said The Hatchery’s building just opened in January, and it’s only been producing food since February. And while there was a ribbon cutting at the facility four months ago, its grand opening celebration is actually scheduled for this week.
At The Hatchery’s new facility, Shmulik told Food Dive that the incubator operated virtually for its first years, with offices in ICNC's massive complex. However, the need for the new $30 million building — designed specifically for food businesses and their needs — was quickly apparent.
“Initially, the intention was: we'll build this facility, we open the facility and then we launch. But that would have been a big mistake," Shmulik said. "Just like the advice we give to our entrepreneurs, it would have been a big disservice for us and for the companies we work with if we hadn't tested the concept before officially launching."
This helped shape The Hatchery as an institution and as a facility. While entrepreneurs clearly needed food-grade kitchen space, Shmulik found they also needed space for storage, as well as space to do administrative work. Many startups, she said, would rent out additional space in co-working office facilities for the administrative part of their businesses. And, of course, entrepreneurs working with an incubator program benefit from space to learn from peers in the business and through networking.
The Hatchery’s facility has 55 food-grade private production spaces and a large shared kitchen. There is a large warehouse in the back, which has cold storage, dry storage, loading docks and places to load up food trucks. There are several meeting rooms of various sizes, easily booked for meetings with funders or for team discussions.
There is a large area for lectures and classes, with a display kitchen on one side — eventually which may be used for pop-up lunches by catering companies working in The Hatchery, as well as professional food photography. One large kitchen area will be a classroom for chef Rick Bayless’s restaurant training center, which will educate underserved youth in culinary skills so they can work in restaurants — supporting both the community as well as Chicago’s thriving restaurant scene.
The Hatchery also shares office space with Accion, a nonprofit microlender that provides small business loans of up to $100,000. Shmulk said they have focused on minority and women-owned businesses, and have done a lot of work with food companies working with ICNC’s incubator program. She said it’s a natural partnership to have the financer right on site.
Shmulk said more than four years were spent just planning The Hatchery’s building. The construction is modular so it can easily change and adapt to future needs.
“We're always still learning, but we really had to engage a lot of industry experts and learn from others to try to make sure that we outfit everything the right way, and there will still likely be changes as the industry changes,” she said.
'Take away stigma and fear'
The Hatchery is dedicated to helping both the food business and the Chicago community grow.
Right now, Shmulk said, there are more than 200 food and beverage entrepreneurs who are members. They receive some level of access to the location’s shared kitchen and facilities, as well as classes and networking activities. Shmulk said there are one to two seminars or workshops each week, as well as a monthly class on the basics of starting a food business.
And even though the paint is barely dry in some areas of the facility, it’s always pretty action-packed, Shmulk said.
“We have quite a big pipeline right now. We are at about 30% occupancy and we're expected to be at about 70% at the end of this year,” she said. “That means starting next year, we will be at capacity. And our goal is, again, to spend a lot of time vetting the companies that are coming in to make sure it's the right fit for them, but it's also the right fit for all the other companies producing onsite because these will be their neighbors, these will be their friends.”
The Hatchery receives about 100 inquiries a month, Shmulk said, so vetting and talking through plans is something that she and her staff spend a long time on. They are looking for people who are really invested in making their businesses happen, as well as individuals with an idea that is viable for the future of food. Currently, about 70% of the companies The Hatchery works with are in the CPG space. They represent several different areas of food and beverage, from snacks to bars to tonics and even CBD.
The vast majority of the companies working with The Hatchery are based in Chicago. Shmulk said there are a few that are in the greater Midwest — but they are required to have representation in Chicago since a company cannot take advantage of opportunities, networking and education if there is nobody there.
But, Shmulk stressed, The Hatchery is very much about helping the community. The website looks at the projected bigger impact of the incubator. Using statistics from ICNC, the site projects that it will create 150 jobs this year — and 900 jobs through 2023. Those jobs will create $25 million in pre-tax income.
And going beyond that, people who live in the neighborhood and start food businesses get discounted membership and priority access to kitchens, training and job placement opportunities.
Shmulk said it is important to help these budding businesses and the entrepreneurs who are so dedicated to them.
“[We want to help] take away the stigma and the fear of what it means to invest your life savings into the business or navigate regulation,” she said. “We want to make it as easy as possible for them. So that's a big initiative and part of our social mission for anyone looking to get in the space. ...Our job is to educate everybody and make them aware of what's happening ... in the industry and how best to navigate, or even if it's worth navigating.”
It’s not just entrepreneurs that are filling the kitchens of The Hatchery with ideas. Big Food has become a close partner with the incubator.
Shmulk said Kellogg, Conagra and ingredients company Griffith Foods are the program’s biggest financial backers, but they aren’t the only ones participating. And they are doing more than just contributing money. Kellogg’s RXBAR, a Chicago-based brand, will have a private kitchen. Ingredients business giants Ingredion and Synergy Flavors also will have kitchens on site. Bayless, who is also connected to Conagra through his Frontera brand, will have his restaurant academy. Cheese company Bel Brands is sponsoring an entrepreneur at The Hatchery.
Big companies that don’t necessarily have a daily presence in The Hatchery’s kitchens have sent some of their top experts to coach entrepreneurs, teach classes and help companies with one-on-one advice. Shmulk said one of the best networking events they had was headlined by Glen Pappalardo, Kellogg’s head of new ventures, and Peter Rahall, CEO and co-founder of RXBAR, about the acquisition of the clean label bar brand.
“That's so nice to get those really authentic ... views, where it's not just, ‘Hey, everything's great. We're wonderful,’ “ Shmulk said. “They really talked about, ‘Hey, this is what the process looked like. And yeah, there's elements that aren't easy, but we're learning together. And this is a partnership right now. ... I think for entrepreneurs, it's refreshing to hear that because sometimes you just get that glossy view of the industry. And sometimes you want to know it's, ‘I cried myself to sleep that night.’ “
While Chicago is certainly an epicenter for food and beverage businesses, Shmulk said she didn’t have to do anything to get Big Food’s support at The Hatchery. Their participation came on its own. And, she said, The Hatchery will turn down requests from large companies to meet specific startups. If the incubator were to set up that kind of meeting, she said, the entrepreneurs would likely be on the defensive. The larger company may also be uncomfortable with the setup.
Instead, she said, events are structured so there can be easy networking between the startups and the larger companies — creating the possibility of better connections and long-term partnerships.
“We want it to be about two-way mentorship and giving back. And it's really about sharing insights,” Shmulk said.