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4. Staff Report-Kitchen Rental Request from Jeff Schneider of Fine Time Products � � � � i r'��� i� '�� SCANDIA srar�RepoT: Date of Meeting: November 6, 2013 To: City Council From: Brenda Eklund, Deputy Clerk Re: Kitchen Rental Request from Jeff Schneider of Fine Time Products Bacicground: Last December,the Council approved a Kitchen Rental Agreement with LA Schackmann and Jeff Schneider, Marine on St. Croix residents,to make and package candies under the business name of Fine Time Products. Per the agreement,they pay a non-resident rate of$18 per hour for use of the kitchen. Mr. Jeff Schneider has contacted the City about a reduction to $12 per hour(resident rate) for use of the Community Center kitchen. A copy of Mr. Schneider's letter is included in your packet. Jeff Schneider and Lorie Schackmann will be at the Council meeting to answer any questions you may have. Issue: Should Mr. Schneider's current rental of$18 per hour(non-resident rate)be reduced to $12 per hour(resident rate)? Proposal Details: As Mr. Schneider explains in his letter, lowering their operating costs would be advantageous to the company's profitability and could result in more rental hours for use of the kitchen. He also explained that the time in the kitchen to dry and package the candies is considered idle time with no use of the appliances. So far this year, they have paid for 30 hours of kitchen time at a cost of $540. Fiscal Impact: Unknown. It would be dependent on the projected additional hours for which the kitchen could be rented. Options: 1) Amend the Kitchen Rental Agreement with LA Schackmann and Jeff Schneider to a rental rate of$12 per hour. 2) Do not approve a rate reduction. Fine Time Products LLC respectfully requests an hourly rate-reduction for the Scandia Kitchen Rental. This request will attempt to explain why a$12.00 per hour Scandia Kitchen Rental fee could be more advantageous for Scandia and Fine Time Products LLC in the future. The present rental fee of$18.0�per hour is prohibitive because of its negative effects on our product profit-margins(members may already recognize that confections&food items in general are wholesaled with relatively"thin"margins in a highly"competitive" marketplace). We would like to point out that a large chunk of our kitchen time must go to"passive"{no energy being used except for lights}chores like product drying and bagging. As an example,our Mayan Meringues must be left for one hour in a cooling oven-after they've been baked. This idle time is necessary to dissipate moisture content prior to packaging. The Cane&Cacao Brittle we produce needs to dry and harden for 50-70 minutes before it can be packed or transported. Chocolate wafers need to"rest"for 60-90 minutes before packaging and transport. A year's worth of production in the Scandia Kitchen has provided the hands-on experience necessary for us to gather&digest this information. During the past 12 months, Lorie and I have endeavored to become as efficient as possible. Our product sales/tests during 2013 have been modestly successful. A dozen retail stores scattered throughout Minnesota have supported our efforts and helped introduce our products to their customers. Our projected hourly use of the Scandia Kitchen could increase significantly during the upcoming 14 months. But,we'll need to maintain viable ope�ating costs for overhead-equilibrium as well as profitability. Lorie and I appreciate the ongoing consideration we receive from everybody involved in our project and we will strive to insure profitability for all parties involved. Jeff Schneider and Lorie Schackmann Fine Time Products via e-mail