The Paterson Restoration Corporation (PRC) is establishing a food business incubation program in the City of Paterson, New Jersey, and has acquired a building to be utilized for this purpose located at 163-177 Pennsylvania Avenue. The PRC has also gained funding towards equipment purchase and building renovation, enabling this project to go from its feasibility stage to its implementation strategy quite quickly. The Rutgers Food Innovation Center (FIG) was selected to perform a feasibility analysis that assesses global best practices in business incubation, and to determine the business model that will best maximize economic impacts and sustain such an incubation facility in the City of Paterson. In addition, the FIG staff redesigned the entire layout of the current facility, and identified specifications for all major pieces of equipment.
Paterson was a center for manufacturing until the mid-20th century, but has become economically challenged in recent decades. The per capita income for residents in Paterson is one of the lowest in New Jersey (at $16,259), and about 28.4% of the population is considered to be in poverty and only 11% of the population has completed college. The City of Paterson is home to about 52 different ethnic groups, and therefore represents an extremely diverse population.
Business incubation is a globally recognized tool for regional economic growth. Business incubators create public-private partnerships and nurture the development of entrepreneurial companies and provide them with the expertise, networks and tools they need to make their ventures successful. The sustainability and continued success of a food business incubator in the City of Paterson, or albeit any US location, relies on operators going beyond simply providing shared space by also offering a more diverse set of resources such as mentoring, access to resources, and access to capital.
To address this need we are highly recommending a clustering strategy for the City of Paterson, and have proposed naming the incubator the "Paterson Food Hub". A clustering strategy creates concentrations of interconnected companies, suppliers, service providers and associated institutions. The Paterson food incubator can facilitate a regional food industry cluster, where the entire food industry value chain is aggregated and where a network of resources connect and co-exist to meet the diverse needs of the clientele. Upon forming a resource hub or cluster, it helps all members succeed. Through the very nature of a business incubator, increased interaction between producers and suppliers is forged, knowledge is shared and opportunity awareness increased.
The Paterson food incubator, in accomplishing its mission, can aggregate the entire food industry value chain in Passaic County and the surrounding region, which will include the following six groups: Startup Food Company Entrepreneurs desiring to create new prepared food business ventures; Established Small and Mid-sized Food Companies seeking to expand operations or enter new markets; Retail and Foodservice Markets, including farm market operations, specialty food stores, and restaurants, seeking to market locally-produced products or introduce their own prooducts into new channels of distribution that will diversify their operations; State, County and Community Agencies seeking to provide healthy meals for local residents; Students that can gain experiential learning opportunities with food industry clients and work in a team-consulting environment, and create opportunities for future employment; and Community residents interested in learning about opportunities in the food industry, obtaining industry-recognized certifications, and obtaining employment.
These linkages will result in enhanced impacts and a needed multi-disciplinary approach to clients. In this cluster model, the Paterson Food Hub provides resources that "surround" its clients, and include: universities and community colleges; food industry trade associations; industry service providers; venture capital firms and investor groups; economic development agencies and partners; and business mentors and network of consultants that will need to be developed.
Primary market research conducted with food entrepreneurs and service providers in the City of Paterson, complemented by the expertise of the staff at the Rutgers Food Innovation Center, strongly supports the establishment of a food business incubator and processing facility in the City of Paterson. Interest is very strong for a facility that will support new companies, as well as established businesses in the local community.
It has been suggested that the long-term leadership for the Paterson Food Hub consist of three components:
- The Paterson Food Hub Team, which will include a dedicated but lean organization that has broad food industry and entrepreneurial experiences, and will manage all day-to-day operations. It is recommended that this team be contracted and managed by a third-party organization. A list of possible companies that can provide this management are provided in this report.
- A Resource team from the Rutgers Food Innovation Center (RFIC) that will provide food industry subject matter expertise. The RFIC can be contracted by the PRC to provide ongoing one-on-one business and technical mentoring to Paterson Food Hub clients, and manage a number of other functions of the Paterson Food Hub going forward.
- An External Resource Network composed of federal, state, and community agencies, venture capital associations and investor groups, commodity and trade associations, service providers, industry consultants, etc. from Passaic County and the surrounding region. Examples of these key organizations are identified in this report
Next steps have been incorporated in this report, and include: immediately developing an RFP for the third party organization that will manage the day-to-day operations; determine a potential ongoing role of the Rutgers FIC for continuing with the development and implementation of the strategy for the Paterson Food Hub, and for providing ongoing subject mater expertise to clients in the region. If these actions occur relatively quickly, and the equipment purchases and building renovations occur within the next few months, it is reasonable that the Paterson Food Hub can open for its initial operations during 2017.
For the full report, please click here.