In fall 2018, California made it possible to turn a home kitchen into a home restaurant. At least, in theory. That initial bill, AB 626, expanded the definition of “food facility” to include home kitchens and set guidelines for a new class of retailer: the microenterprise home kitchen operation, or MEHKO for short.
In 2019, a follow-up bill, AB 377, authorized cities and counties to develop their own permitting processes in regards to MEHKOs. After opting-in to MEHKOs in 2019, Berkeley had planned to solidify their own processes in June 2020. Those initial plans were shelved on account of COVID-19, though the city did amend the Berkeley municipal code in December of last year to include MEHKOs and to set their own guidance in regards to operation, especially when it comes to addressing neighborhood concerns.
What the city has yet to finalize is the application and permitting process, something Ronald Torres, manager of Berkeley’s Division of Environmental Health, hopes can be resolved within the next few months.
“We have about 80% of the program laid out,” said Torres. “We just hope that everyone is patient. The pressure has been pretty moderate to get this done.”
At present, selling hot food from a home kitchen occupies a sort of liminal space in Berkeley. Although decriminalized at the state level, until the city creates a permitting process, it’s still not quite legal. In frustration, and out of desperation during the pandemic, some cooks have already jumped the gun.
To go back a bit further, Nosh readers may recall the saga of Josephine, a platform connecting home cooks with customers, and which launched in 2014, paused operations in 2016, then shut down in 2018, just before the passage of AB 626. Josephine was doing then essentially what MEHKOs are allowed to do now. Only when they did it, it wasn’t legal yet.
When the platform was shut down, founder Charley Wang switched tack and founded the nonprofit the COOK Alliance specifically to advocate for home cooks and educate the public on the issue of home restaurants. To make it possible for the kinds of businesses Josephine once supported to not only legally exist but thrive. The COOK Alliance was one of the primary movers behind AB 626, and continues to push the effort in other states.
“Josephine made the strategic error of trying to do something that was not then permitted,” said Peter Ruddock, the California Policy and Implementation Director of the COOK Alliance. (Ruddock was not involved with Josephine.) “They ran out of investors’ money before they could change the law.”
Now MEHKOs are possible, though strictly speaking, they are still not permitted.
So what exactly is a MEHKO? As defined by AB 626, a MEHKO is a food facility operated by the occupant of a private residence, limited to one owner and one employee, serving and selling no more than 30 meals per day, or 60 meals per week, and with gross annual revenue totaling no more than $50,000. All meals must be prepared and sold on the same day and MEHKOs may not contract with third-party delivery services. MEHKOs also may not post signage or other advertising on the property.
The restrictions are a tradeoff. MEHKOs are exempt from some of the restrictions applied to more traditional restaurants — they don’t require commercial-grade ventilation systems, for example — but because most will operate in residential areas, they have to deal with neighborhood concerns. Hence, the restrictions on outside signage. But MEHKOs can still advertise via social media, newsletter, fliers and word-of-mouth. County and city health departments are also required to post a directory of all approved MEHKOs. (For example, here’s the directory of approved MEHKOs for Riverside County.)
The provision against contracting with third-party delivery services is a safeguard against multiple concerns: it prevents congestion from delivery drivers and keeps control of the operation in the hands of the cook. Barring third-party delivery prevents customers from treating MEHKOs like short-order kitchens and also, hopefully, reduces the time and distance the food travels before it is eaten. Which means not only fresher food, but also food less likely to cause illness.
The ideal, according to the COOK Alliance, is neighbors selling food to neighbors. To that end the group offers resources in English and Spanish, a quick cheat sheet for the curious, and consulting to answer questions and workshop ideas.
Ruddock cited an example of an applicant who wanted to sell hot pretzels in their neighborhood. All good, and perfectly allowable under the law, but the COOK Alliance advised the applicant to speak with their neighbors — especially families — to see what kinds of food offerings they would want to have at hand on a daily or weekly basis. Hot pretzels did not make the cut.
“We advise people to focus on hot meals, preferably packaged for families,” said Ruddock. “Families are the most likely to buy, to repeat their visit, and meals make more money [than individual items].”
MEHKOs vs. Cottage foods:
Cottage foods must be shelf-stable and can be sold to retailers.
MEHKOs are complete meals, made the day they are sold directly to the customer.
MEHKOs are distinct from cottage foods, which are already legal in Berkeley. Cottage foods must be shelf-stable (such as preserves, hot sauce, breads, pies) and can be sold to retailers. MEHKOs, however, are meant to operate more as restaurants in miniature, with an emphasis on complete meals, and can only be sold directly to the customer.
But the line can blur between what counts as cottage and what counts as MEHKO. For example, someone who makes granola would need a cottage permit, since granola is a shelf stable item that can be made and stored more than 24 hours in advance. But if they made the granola and served it as an individual meal, then they would register as a MEHKO, and the granola would have to be made on the day of sale.
What about a meal kit, where the home cook assembles items for the customer to prepare themself? Does the meal count as prepared when the cook assembles the kit? Or when the customer cooks it? Not to mention, the legislation doesn’t provide a legal definition of just what counts as a “meal.”
The specifics will need to be sorted out, case by case, as the program rolls out. “There are some gray areas that are going to have to be explored a little bit,” said Ruddock.
But setting the menu aside, the legislation greatly expands the types of food that cooks can prepare and sell from their own home kitchens. “The idea is hot meals,” said Ruddock. Though, of course, salads would also be fine, as long as prepared on the day of sale.
And while anyone who files the paperwork can open up a MEHKO, whether they rent or own their home, the legislation really opens up economic opportunities to three key groups of people.
The first are passionate food entrepreneurs, people who want to try an idea but who might lack the finances for a lease on a commercial space. The second are people who need to work from home on account of a disability, or because they are caring for family. The third group are people who might not have access to traditional venues of employment, such as recent immigrants.
Besides a kitchen, applicants need only apply for a food manager’s certification through the state, and then to file for a permit from their local health department. “Health departments have no reason to look at your citizenship, and don’t,” said Ruddock.
Torres of the Division of Environmental Health confirmed, “We do not check the legal status of anyone.” Anyone, he continued, can open a MEHKO “as long as they have their food safety training” from an accredited provider.
Which means that as MEHKOs expand the nightly menu, there is a real opportunity for a neighborhood’s food offerings to reflect the diversity of its residents.
Food entrepreneurs are waiting and ready for Berkeley to greenlight MEHKOs
Berkeley may not have any MEHKOs yet, but once they are up and running, Akshay Prabhu wants to be first.
Prabhu fits the type-one mold of MEHKO operators, the passionate food entrepreneur. Prabhu got a degree in neuroscience and had been working in the field, but was feeling dissatisfied and wanted to switch careers. As an undergraduate at UC Davis he had drafted plans for a pedal-powered steam bun cart. “I always wanted to be in the food industry,” he said, “but it turns out to be harder than getting into neuroscience.”
Prabhu was living in Sacramento, working at the neurosurgery department of the UC Davis medical center, and operating a pop-up restaurant out of his house when he heard about AB 626 and started lobbying for its passage.
Once the bill passed, Prabhu moved to Southern California. Riverside County was the first municipality in the state to opt-in to MEHKOs, so Prabhu moved there while he built Foodnome, an online ordering platform custom-tailored to MEHKOs.
Because MEHKOs can’t contract with third-party delivery services, and are so new that a MEHKO may not appear on a search for nearby restaurants, Prabhu wanted to create a platform for customers and cooks to more easily connect. With Foodnome, customers can browse, order and pay online. Foodnome charges customers a 7% service fee, and charges a flat 10% subscription fee to cooks, though Prabhu is considering changing that to a tiered system.
Foodnome is an ordering platform, like Toast, and not a delivery service, but it does offer delivery. A MEHKO may not be able to contract with third-party delivery like Uber or DoorDash, but a platform like Foodnome can.
Foodnome does brisk business in Riverside County, but isn’t operating yet in the Bay Area. The one Oakland listing is a placeholder until Alameda County finalizes its own MEHKO permitting process. (Berkeley has a separate and independent health department from Alameda County)
Foodnome would not be the first ordering service to work uniquely with home cooks. It wouldn’t even be the first in the Bay Area. San Francisco based Shef already connects home cooks with customers. Though, “home cook” is a bit of a misnomer since cooks with Shef prepare meals in commercial kitchens. It’s part of the workaround necessary until MEHKOs are approved.
As with Foodnome, cooks contract with Shef for customer support and marketing of their product in exchange for 15% of each transaction. The tactic means that Shef can also offer delivery, with fees varying based on distance traveled. Though it isn’t clear at all just how far food travels between kitchen and customer. For example, a zipcode search for offerings in or near 94704 — the zipcode for downtown Berkeley — shows an impressive diversity of offerings, but it’s unclear how many, if any, are even located in Berkeley.
Frustration at the slow roll-out
Shef co-founder and co-CEO Alvin Salehi expressed frustration at the slow roll-out of MEHKOs, not just in the Bay Area but statewide.
“Two years and a global pandemic later, we still have several counties that haven’t opted into AB 626 yet,” he wrote in a statement to Nosh. Salehi frames his concerns as economic, that the sooner MEHKOs are possible, the sooner the economy can recover, and the sooner people who need money most can get it.
“We have loved ones who are unable to make their rent payments. Parents are unable to buy new clothes for their kids. Homelessness is rising at an alarming rate. We need to come together to ease hardship in our community. If we don’t come together now, then when?”
The intention of AB 626 was to create a robust statewide micro-economy by making it easier to open a home business. Many of the bill’s restrictions – such as a prohibition against contracting with third party delivery services – are intended as controls to keep business in the hands of home cooks. What the bill did not create is a centralized marketplace for MEHKOs and customers to connect. At least two services have now figured one out.
While cities and counties are required to create and post an online directory, a list of MEHKOs is not quite as showy and user friendly as an app that shares photos, reviews, and gives the option to order with a single click. How many first time business owners, as they develop production, build a customer base, strategize advertising and weigh whether or not to offer delivery — while balancing a business against a private life — will go ahead with each of those steps themselves when there are already services that will do it for them? For a fee to both customers and cooks. Would a cook’s choice to go it alone without a platform and its commissions make up for a potential loss in sales?
This too may be a gray area yet to be explored.
So why aren’t MEHKOs legal in Berkeley yet?
To sum, MEHKOs were made legal at the state level in 2018, and left up to cities and counties to regulate since 2019, and the city of Berkeley amended the municipal codes to allow for MEHKOs in December 2020. So what’s the hold-up to getting MEHKOs going? In a word, fees.
“There’s been management turnover and one of the directors I’ve been working with, the last director responsible to revise the fee schedule, has retired,” said Torres, explaining the delay.
Specifically, the city of Berkeley and its health department have yet to agree on how much MEHKO applicants should pay in operating fees. That is, in addition to the other startup costs an applicant will have to pay. First up, the city is considering a one-time fee of $182 — the same as for retail establishments — for an initial plan review and processing fee. Then there is a fee for a business license application. Then, once approved, an annual operating fee, which can be prorated. Operating fees will cover the costs of administering MEHKOs in Berkeley
“We propose $400 to $500,” said Torres. “We’re trying to keep our fees in that ballpark, and then to try to anticipate the staffing resources that it will take. This is still in talks.”
Peter Ruddock of the COOK Alliance echoed the sentiment.
“The thing I emphasize with people is patience. We’re told Berkeley is getting close, but things happen. And as close as we seem to be, are we really going to see the first permit issued in April?” he said. “We’re in this for the long haul, but it is not an endeavor for the impatient.”