ASSESSING

FINANCIAL VIABILITY

Running A

FOOD HUB

VOLUME3
Service Report 77, Volume III

Issued March 2016

This report was prepared for the U.S. Department of Agriculture by Matson Consulting of Aiken, S.C.,

with the assistance of James Barham of USDA Cooperative Programs. Funding was provided by

VAFAIRS, a nonprofit cooperative and small business development office in Richmond, Va., and by

USDA’s Cooperative Research Grant Program, administered by USDA Cooperative Programs.

For questions or additional copies of this report, contact:

 James.Barham@wdc.usda.gov or call 202-690-1411.

This report and many others that may be useful to food businesses are posted on the USDA Rural

Development, Cooperative Programs website at: 

 http://www.rd.usda.gov/publications/publications-cooperatives

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USDA is an equal opportunity provider, employer, and lender.

Rural Development
Running a

Food Hub

Assessing

Financial

Viability

By James Matson, Jeremiah Thayer, and Jessica Shaw

Matson Consulting, Aiken, S.C. 

The authors thank James Barham of USDA Cooperative Programs for

his help in preparing this report. This manuscript and the financial models

it contains were reviewed by a number of peers, some of whom compared it

to their own experiences either running, or working with, food hubs. The

authors thank the following reviewers for their assistance and insights:

• Olivia Blanchflower — GrowNYC’s Greenmarket Co.

• John Fisk and Jeff Farbman — The Wallace Center at Winrock International

• Malini Ram Moraghan and Darrow Isaacman-VanWertz — Wholesome Wave

• Kathy Nyquist and Saloni Doshi — New Venture Advisors

• Jesse Rye and Hannah Mellion — Farm Fresh Rhode Island

• Haile Johnston — Common Market Philadelphia

VOLUME THREE
Contents

4 RUNNING A FOOD HUB

Introduction ..............................................................................................................7

Methods of Analysis................................................................................................8

Operational Models: Wholesale Food Hubs ...........................................12

Annual Sales by Business Operational Periods ..........................................13

Figure 1: Annual Sales Levels by Operational Periods ...............................13

Model Assumptions...............................................................................................14

Product Lines.....................................................................................................14

Table 1: Sales Distribution ...............................................................................14

Figure 2: Sales Seasonality .............................................................................14

Product Pricing..................................................................................................15

Payment to Producers......................................................................................15

Figure 3: Sales Needed To Reach Breakeven..............................................16

Certification Fees ..............................................................................................16

Location ..............................................................................................................17

Facility Operations and Delivery.....................................................................17

Table 2: Time Requirements ............................................................................19

Table 3: Hourly Labor Calculations.................................................................21

Table 4: Wholesale Labor Costs .....................................................................21

Table 5: Salaried Labor Costs..........................................................................22

Figure 4: Sales Required for Breakeven Additional Labor .........................23

General Expenses .............................................................................................24

Equity and Financing ........................................................................................25

Wholesale Food Hub Results...............................................................................26

Figure 5: Annual Sales by Operational Period..............................................26

Table 6: Wholesale Food Hub pro forma .......................................................27

Operational Models: Direct-to-Consumer Food Hubs...........................29

Annual Sales by Business Operational Periods ..........................................30

Figure 6: Annual Sales Levels by Operational Periods ...............................30

Model Assumptions...............................................................................................31

Product Line.......................................................................................................31

Location ..............................................................................................................31
RUNNING A FOOD HUB 5

Cover: Ilustration by Sharon Szegedy Graphic Design, Inc. Cover and book

design by Stephen Hall, Kota Design.

Table 7: Direct-to-Consumer Warehouse Lease..........................................31

Operations..........................................................................................................31

Table 8: Shares Sold .........................................................................................32

Table 9: Pickup Locations ................................................................................32

Table 10: Direct-to-Consumer Full-Time Employees ...................................34

Table 11: Direct-to-Consumer Labor Costs...................................................35

General Expenses .............................................................................................35

Direct-to-Consumer Food Hub Results ..............................................................36

Figure 6: Direct-to-Consumer Sales Levels and Operational Profit..........36

Table 12: Direct-to-Consumer Pro Forma......................................................37

Operational Model Comparisons..............................................................38

Table 13: Operational Model Summary Comparison...................................38

Figure 7: Prototypical Food Hub Expenses Comparison.............................39

Table 14: Breakeven Operational Period Pro Forma Comparison.............40

Table 15: Growth Operational Period Pro Forma Comparison...................41

Table 16: Viability Operational Period Pro Forma Comparison..................42

Conclusion.....................................................................................................43

Appendix........................................................................................................44

Supplemental Tables: Wholesale Model ...........................................................45

Table 17: Prototypical Wholesale Food Hub Balance Sheet .....................45

Table 18: Wholesale Expense and Revenue Summary Figures.................46

Table 19: Wholesale Labor Summary ............................................................48

Table 20: Wholesale Transportation Summary.............................................52

Table 21: Wholesale Cash Flow ......................................................................56

Supplemental Tables: Direct-to-Consumer Model ..........................................61

Table 22: Prototypical Direct-to-Consumer Food Hub Balance Sheet.....61

Table 23: Direct-to-Consumer Expense and Revenue ................................62

Table 24: Direct-to-Consumer Labor Summary............................................64

Table 25: Direct-to-Consumer Transportation summary.............................68

Table 26: Direct-to-Consumer Cash Flow......................................................72
6 RUNNING A FOOD HUB

U S D t t f A i lt h t
RUNNING A FOOD HUB 7

THIS REPORT is part of a multi-volume, technical report series

published by USDA under the over-arching title of Running a Food

Hub. This third volume in the series provides in-depth guidance on

assessing the financial viability of food hubs.

 The purpose of this report is to provide benchmarks for

established and emerging food hubs to use as a comparison for

assessing their own financial viability and for making strategic

business decisions. The financial analysis can provide valuable

insight into how changes in major costs and revenue affect the

overall operations and profitability of food hub businesses.

 There are many existing food hubs with operations that differ

from the assumptions used for this analysis. Food hubs may be more

or less efficient in key areas, such as size of operations, product cost,

transportation or other areas. For the sake of brevity, this report

attempts to focus on the most significant areas of concern that most

often affect business viability. 

 Economic analysis in this report is based on information from

industry research, discussions and interviews with key food hub

personnel from across the United States, and the knowledge of the

consultants. Sections presenting key assumptions for the analysis are

presented in narrative form to aid in understanding the logic used

during the construction of the analysis. This report has been

divided into these three major sections: 

 The “Methods of Analysis” section introduces the Operational

Model and Operational Period approach used for the construction

of the financial analysis and comparisons of the models. 

 The “Operational Models” section presents a closer look at

different components of each operational model. It provides the

details, narrative, and in-depth analysis of the assumptions that

underpin the report. Readers can find the food hub type that most

resembles their venture and compare points of similarity. 

 The “Operational Models and Periods Comparison” section

concludes the body of the document by juxtaposing some key

financial and operational results of each operational model and

operational period to compare the various types of entities. It is

here that hub operators can learn lessons, compare results, and see

the benefits and obstacles unique to the various food hub types.

Introduction

U. S. Department of Agriculture photo
Methods of Analysis

8 RUNNING A FOOD HUB

CATEGORIZING common financial issues across a variety of

food hubs is difficult because of the differences in operations. Some

food hubs may enjoy advantages or resources in certain areas of

operations, personnel, or business that enable them to perform

more successfully than others, or achieve greater sales levels in a

shorter period of time. Each food hub is unique and operates with a

distinctive combination of expenses. There are also often

environmental circumstances affecting the food hub’s ability to

remain in operation.

 Even with these variations in organization, many food hubs still

encounter common issues at similar points in their development.

This financial analysis uses a prototypical approach and provides

points of comparison to create detailed financial operation

statements. It is not intended to represent any specific food hub.

Rather, the operational income and expenses for the food hub in the

viability analysis are based on an amalgamation of several food hub

examples. This information was subsequently vetted with a USDA

review process to ensure numbers were representative of actual

revenue and expenses experienced by similarly structured food hubs. 

 Further, this analysis assumes that food hubs have access to a

variety of producers and members, and is located within 50 miles of

customers. It assumes that food hubs sell a mix of products that

primarily include produce, but also may include dairy or other

products, depending on the food hub’s operational model. 

 This analysis is based on two common food hub Operational

Models (Wholesale and Direct-to-Consumer) operating in three key

Operational Periods (Breakeven, Growth, and Viability).Where

applicable, considerations of a food hub’s Startup period is also

discussed. 

Business Operational Models

 Food hubs function under a variety of business operation models,

which differ based on how and where the food hub sells its

products. This document examines two models: a Wholesale Food

Hub and a Direct-to-Consumer Food Hub. There are different

types of the Direct-to-Consumer food hub model; we have chosen

to use the Community Supported Agriculture (CSA) type. While
RUNNING A FOOD HUB 9

there are numerous types of food hubs in existence, these two business

operational models seem to be the most widely used among food hubs.1

Wholesale food hub

 In general, wholesale food hubs often have the following characteristics: 

 • May be more focused on retailers as the main customer base.

 • Product offerings may include more of a variety of items that aid in

expanding the seasonality of sales.

 • Delivers products to end customers and does not rely on volunteer

labor, instead relying on dedicated labor to repack items and deliver

product.

 The term “wholesale food hub” is an umbrella term that can apply to

food hubs with a variety of target markets. Local restaurants, individual or

regional grocery stores, large-scale grocery chains, and institutions — such

as schools, hospitals, and corporate cafeterias — can all be considered

“wholesale” markets. 

Direct-to-Consumer Food Hub

 In general, direct-to-consumer food hubs often have the following

characteristics: 

 • Sales tend to focus on fresh produce. 

 • Distribution is made directly to end consumers, with pick-up locations

at customer residences, workplaces, or other designated sites. 

 • They are operated by a mix of staff and volunteer labor.

 • They usually charge retail prices for their products.

 The direct-to-consumer model highlights the use of an intermediary

service provider to connect farmers with community members. For the

purposes of our financial analysis, the direct-to-consumer model reflects

what is commonly known as a Community Supported Agriculture (CSA)

hub, though there are numerous ways to operate a direct-to-consumer-based

food hub. The goal of this approach is to provide the most profit to the

producers while also generating income needed for the continuation of the

business. As an operation with low overhead, the sales levels needed to

1 More information on the different types of food hub operational models can be found in Volume 2

of this series: Running a Food Hub: A business operations guide. This and other USDA reports can

be downloaded at http://www.rd.usda.gov/publications/publications-cooperatives
achieve the various operational periods are lower than those exhibited by

the wholesale food hub model.

Business Operational Periods

 Year-long snapshots, or operational periods, were chosen based on sales

level and corresponding costs and activities to provide as broad a picture of

a food hub’s typical operations as possible. While the analysis presents 1-

year pictures of a food hub’s operations, they do not necessarily represent

consecutive years. It is likely that a food hub will experience several years of

growth with neutral cash flow, then experience a loss that will cause the

food hub to only cover its operating expenses. The operational periods,

therefore, are meant as a guide and correspond to a snapshot of operations

and sales levels at a particular period in time, along with corresponding

expenses. 

 This financial analysis focuses on the core food hub commercial activity

of procuring food from producers and selling it to buyers, or food

aggregation and distribution. The analysis does not incorporate costs for

other important mission-based food hub activities. The costs of providing

additional services may increase the amount of sales necessary to achieve

specific operational periods from those presented in the financial analysis.

 Likewise, the analysis does not include any grant funds or donations. The

income from these sources would decrease the amount of sales necessary to

achieve a specific operational period presented in the financial analysis.

Breakeven

 Attaining the breakeven point represents a milestone for a food hub.

Prior to this point, the food hub loses money on every unit sold. Achieving

breakeven in this analysis indicates a hub is a workable business and is able

to satisfy the needs of its customers. It can begin to look toward future

financial stability.

 While attaining the breakeven stage is necessary for a food hub to

achieve long-term sustainability, it is by no means an endpoint. Remaining

too long at this point presents serious risks to the hub because sufficient

profits are not being generated to cover items such as interest expenses,

depreciation, and taxes. Nor will there be a return from operations to the

owners. The food hub at this stage is still under tremendous risk from

unforeseen circumstances, such as equipment or other infrastructure failure.

Growth

 Achieving the growth level means that not only are operational costs

10 RUNNING A FOOD HUB
RUNNING A FOOD HUB 11

being covered, but the entity is generating enough income to reach cashflow neutrality and to cover any additional expenses over the course of the

year (on a cash-flow basis). There is still a need for outside cash to cover

seasonal shortfalls, but, on an annual basis, the food hub would reach a level

of income generated that is sufficient to cover all expected needs. During the

growth operational period, the food hub is covering its fixed and variable

costs and is producing a profit on a net income basis. However, the focus

now shifts to covering the hub’s cash flow needs. The food hub shows a

positive net income for the first time at this point.

 The growth operational period represents a tipping point. Next to the

startup period, the growth period is often the most dangerous crossroads for

the food hub. If the hub is not managed properly from a financial point of

view, it can easily slide back and progress can be reversed. If the hub is able

to continue its success, it can move to a viable level of operations that allows

it to begin expansion for future activities rather than merely sustaining its

current level of operations. 

Viability

 This level represents the hub’s ability to be sustainable in the long term,

where the organization is making enough net income to fund possible

expansion or additional operations. The food hub is a mature business that is

able to set aside reserves for unexpected problems and is better equipped to

weather bumps in the road. For our financial models, viability is defined as

the point at which the food hub retains about 5.5 percent of sales revenue as

operating profits over a year. 

 When the food hub becomes viable, no outside cash is needed to

maintain adequate cash reserves at any point during the year. At this level,

the hub is able to generate sufficient cash through operations to fund

expenses and normal equipment replacement, as well as generate reserves for

future activities. 

 If the food hub is a for-profit entity, it may consider beginning to provide

a return to investors or owners; if it is a nonprofit entity, it may begin to

expand its involvement in community activities or be able to internally fund

activities that have previously relied on outside funding sources, such as

grants or community funds. 

 Even at this level of sales, the food hub should continue to look toward

the future, as this represents only the cusp of long-term viability. The sales

level needed to reach viability may need to be higher to cover some nonrevenue-generating, mission-based activities of the food hub.
12 RUNNING A FOOD HUB

THIS ANALYSIS outlines the scope and daily operations

of a prototypical wholesale food hub. The goal of this

section is to present an analysis that is as adaptable to as

many similar ventures as possible. Every attempt was

made to be realistic while still permitting ease in

interpretation and application. A more in-depth

discussion of the numerous factors for operating a food

hub has been included in volume 2 of this series, the

Food Hub Operations Guide.

2

 This section begins by estimating annual sales by

business operational period based on the financial

modeling; it then continues by “unpacking” the model

assumptions or factors that result in the sales needed to

reach the breakeven, growth, and viability stages of

business development. 

Operational Models:

Wholesale Food Hubs

2The food hub operations guide can be downloaded at

http://www.rd.usda.gov/publications/publications-cooperatives
RUNNING A FOOD HUB 13

Annual Sales by Business Operational Periods

 To reach a breakeven level of operation, the typical wholesale food hub

would be required to generate an annual sales level of around $1.2 million.

During the time between breakeven and the food hub beginning to enter an

earnings level that leads to long-term financial viability, the venture would

need to generate around $1.75 million in sales in a year. 

 With about $2.4 million in annual sales, the food hub would begin to

earn sufficient revenue to provide longer term viability. Even at this sales

level, an unexpected expense could detrimentally affect growth and

operations. The food hub should strive to grow sales beyond this point to

reap profits that may be needed to cover unexpected costs.

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Figure 1—Annual Sales Levels by Operational Periods

Breakeven Growth Viability

$1,210,000

$1,750,000

$2,400,000
14 RUNNING A FOOD HUB

Model Assumptions

Product Lines

 Product lines for wholesale hubs vary widely, often including a broad mix

of produce, meats, dairy foods, shelf-stable foods, and other items. The

typical wholesale food hub has three sales channels: a produce line, a dairy

line and an “other” line. This other line includes items such as meats, eggs,

jellies, and other shelf-stable items not categorized as produce or dairy.

Table 1 outlines sales distribution, by percent

of sales, included in the financial analysis. 

 A wholesale hub will assist farmers in crop

planning activities, which aids in expanding

the production season of produce and helps

ensure a consistent supply of produce

throughout the growing season. Dairy and

“other” product lines are typically less

impacted by seasonality than are produce

items, the latter being mainly available during the summer. 

 Fresh produce is the largest income generator for the food hub, but sales

of dairy foods and other products allow for a steady source of year-round

income, which is especially important during the slower winter months.

Additionally, products falling under dairy and other groups can be sold at a

higher markup percentage, generating more profit per pound of product

sold than does produce. Figure 2 outlines the annual seasonality for each of

the three product lines. 

Table 1

Sales Distribution

Fresh Produce 70%

Dairy Products 10%

Other 20%

16%

14%

12%

10%

8%

6%

4%

2%

0%

Figure 2—Sales Seasonality

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Percentage of Sales

n Fresh Produce

n Dairy Products

n Other
RUNNING A FOOD HUB 15

 Though the hub strives to maintain a minimal amount of inventory at any

one time, loss of products during transport, storage, and delivery is

unavoidable. As a result, the hub will experience increased product losses for

both of these categories during the fall and winter months, as well as a

decline during the spring and summer.

Product Pricing

 To account for the variety of products sold through the food hub, as well

as the price variation exhibited with product lines (lettuce versus spinach

versus cucumbers), a weighted average value for a 25-pound box of product

was determined for each product line. These products were combined to

provide an overall average for the value of the food box. This value increases

over the life of the project as demand grows and as a larger amount of higher

valued products — such as meats and shelf-stable items — are sold through

the food hub. On average, the price of the products sold through the food

hub will increase by around 7 percent per year. 

 A wholesale food hub should expect to work with buyers who wish to

purchase items on an account and pay a monthly invoice or statement. The

food hub should also accept credit card payments, which smaller

establishments, such as restaurants or local grocery stores, are likely to

prefer, rather than paying by cash or check. For each credit card sale, it is

assumed that the food hub will incur a 2-percent fee. While food hubs

dealing with smaller clients may encounter more credit card sales, we

dedicated about 10 percent of purchases to be made via credit card in the

financial analysis. 

 Once a customer has purchased items, the food hub should expect an

average lag of 23 days (typical range is 15-30 days) to receive payment. A

5.5-percent interest rate has also been applied to this accounts receivable

timeline to capture the carrying costs a food hub will experience. This

interest expense arises from a hub using short-term loans or a credit card to

cover production costs — including labor and packaging — until the

business is able to collect sales revenue. 

Payment to Producers

 Farmers and producers will require that payments they receive from the

food hub cover the cost of producing the items as well as generate a profit.

The wholesale hub will provide a 70/30 split, with 70 percent of sales dollars

collected from customers being returned to farmers and 30 percent being

retained by the food hub. These funds cover the costs of operating the

business. 
16 RUNNING A FOOD HUB

 There can be a slight variation from this 70/30 split. But based on the

scenario results presented in the chart above, for a food hub to retain 25

percent of sales revenue to cover operations, it would need to obtain about

$1.75 million in sales to achieve similar earnings before interest, taxes,

depreciation, and amortization (EBITDA) to reach the breakeven operations

level. To increase return to farmers only by 10 percent and continue to be

financially viable, the hub would have to more than double sales. In this

model, when the return to farmers increased to above 85 percent, the food

hub could not maintain enough residual revenue to cover costs and remain

in operation. 

 Correspondingly, reducing the price paid to producers would reduce the

sales necessary to achieve breakeven, but that may not be in line with the

food hub’s mission or be acceptable to the food hub’s producers.

Certification Fees

 The wholesale hub discussed in this document will undergo a Good

Handling Practices (GHP) audit, while the farmers themselves will be

required to obtain and maintain Good Agricultural Practices (GAP)

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Figure 3—Sales Needed To Reach Breakeven

65% Baseline: 70% 75% 80%

$1,210,000

140%

Increase

$2,901,000

42%

Increase

(23%)

Decrease
RUNNING A FOOD HUB 17

certification. These requirements will provide access to customers who

prefer, or require, these certifications. Larger customers, such as hospitals

and school systems, also often require food safety and production

certifications prior to their initial purchases. Additionally, regulatory bodies

may require a food hub and its producers to receive certain certifications

before they are allowed to sell food items to the public. A portion of the

food hub’s sales will be used to pay for these necessary certifications. 

Location 

 The food hub’s location is chosen to facilitate the transportation of goods,

both from producers to the hub, as well as from the hub to end customers.

The expenses related to transportation — such as the cost of diesel fuel,

driver wages, and the monthly lease or interest loan payments on vehicles —

results in a major cost category for the food hub. 

 For the purposes of this analysis, the food hub is situated in a semi-urban

area. This setting allows the hub to be centrally located between the hub’s

farmers and customers. If the hub is located in a rural area, some costs may

be reduced, such as lease rates and employee wages.

 Using an average cost of leasing space in various semi-urban areas around

the country, we calculate an annual lease expense of around $22,000 for a

6,500-square-foot facility. While this space seems to be large initially, it

provides the food hub with space for growth as business and inventory

increases.

 The wholesale hub will operate with the least amount of “on-hand”

inventory possible by turning around products within 2 days of receiving

them from producers. Because there will not be large amounts of inventory

on hand, the food hub will not require an extensive storage area. 

Facility Operations and Delivery

 The food hub facility will operate 6 days per week and conduct deliveries

3 days per week. This allows a day of prep time between deliveries, while

still frequent enough that customers receive sufficient product in a timely

manner. While the number of delivery days included in the analysis remains

constant at 3 days per week, the number of stops per delivery will increase

over time.

 Producers are required to drop off their product appropriately packaged

and ready for sale. Prior to being sent out for delivery, products are grouped

to fulfill orders. A 5-cent packaging cost for every $25 of product is

included, covering the cost of boxes and for general handling and storage. 

 All 3 years of operations in the analysis also assume an expense for forklift
rental of about $800 per month. Leasing the forklift allows the food hub to

mitigate some risks for a more specialized piece of equipment and covers the

more specialized maintenance and upkeep that may be required. The

financial models assume that delivery trucks were purchased and in

operation at the start of the breakeven period; there is not a significant

difference between leasing and purchasing in the average costs over the

lifetimes of the vehicles.

 Truck Costs 

 We assume that the food hub will be replacing vehicles during the

breakeven period of operation. The model food hub for this study will

purchase a used 20-foot refrigerated truck for about $45,000 and a used

supplementary delivery truck for $40,000. This assumes that increased sales

will provide the funds to qualify for loans. The second truck, slightly smaller

than the first, allows the food hub to have a second vehicle on hand during

times of peak sales and to serve as a backup if the primary truck has

mechanical issues. The financing section of this document includes details

on the loan acquired to purchase these vehicles. 

 The hub has an established customer base at this point. Since

dependability is key to retaining customers, vehicles must be properly

maintained. An annual repair and maintenance contingency allotment of

$2,500 has been budgeted. During the life of the food hub, maintenance cost

will increase as higher sales levels and product volume will place additional

strain on the equipment. 

 An additional overhead charge of about 30 cents per mile driven is

included in the economic analysis to cover additional expenses — such as

insurance and wear — associated with owning a vehicle. Because of the

nearby urban setting and assumed population density, it is not anticipated

that mileage will significantly increase to accommodate additional stops as

the hub seeks to “in-fill” its delivery routes, rather than increasing the

geographic delivery area. During the peak sales season, the average miles

traveled per truck is 80 miles round trip, increasing to 100 miles during the

growth period and 120 miles by the end of the viability period.

 Fuel Costs

 Based on the average price of diesel fuel during the winter of 2014, the

food hub will pay about $3.30 per gallon. If the trucks average 10 miles per

gallon, the hub will spend between $300 and $700 monthly on fuel. The

variation in fuel prices accounts for lower sales months when the food hub

will not require the use of both trucks and will be driving slightly fewer

miles. 

18 RUNNING A FOOD HUB
RUNNING A FOOD HUB 19

 Fuel is an extremely volatile cost category, as indicated by the 60-centper-gallon decline in diesel cost from the spring to winter of 2014. If the

food hub were to pay the higher spring price, total fuel costs would grow to

$8,000 in the first year, compared to $6,800 if the cost of fuel remained at

$3.30 per gallon. The food hub should have a contingency plan in place to

counteract unexpected changes in fuel prices. 

 Driver and Delivery Costs

 Deliveries are conducted by drivers employed by the food hub who

unload and deliver the products to individual customers along established

routes. Hours often have to be limited during portions of the year when

sales and deliveries are lower, and the wholesale hub limits driver hours to

part-time during these periods. The number of hours required to deliver the

food hub’s products will increase and necessitate a second driver during peak

seasons. The driver positions are hourly and are paid $13.50 per hour during

the first year, with small pay increases each following year. 

 During the breakeven period, the food hub will employ one driver during

the first and last 2 months of the year. For the remaining 8 months, two

dedicated drivers will be required for deliveries. In total, the food hub will

spend about $22,000 on driver wages during this period. Beginning in the

growth period, the hub will employ two year-around drivers at a cost of

about $28,000, increasing to $38,000 during the viability period.

 While product delivery is constrained by the capacity and load

capabilities of the delivery vehicles, the analysis shows that the main

constraint for deliveries is the time available for drivers to deliver product,

assuming they work an 8-hour shift. The following table shows the time

requirements for transporting

product from the food hub to the

customer. 

Total truck capacity is assumed to

be about 22,500 lbs. A single driver

delivering to smaller wholesale

customers would likely not be able

to deliver this amount of product in

one day. This is an understood

inefficiency in operating a mediumscale food hub. By contrast, a larger commercial-size venture can better

maximize truck capacity for bulk deliveries. 

 Consider the example of a driver who unloads 450 lbs. (about 18 boxes of

product at 25 lbs. each) per stop and makes 3 stops in 1 hour. This would

result in an average delivery amount of 675 lbs. per half hour. After

Table 2

Transportation Time Requirements

Load Time (Hours) 0.67

Drive time (Hours) 2.29

Delivery Admin. (Hours) 0.50

General Admin./Driver (Hours) 1.00
20 RUNNING A FOOD HUB

deducting time spent driving a roundtrip of 80 miles at an average speed of

35 mph (2.29 hours) and taking care of miscellaneous activities such as

paperwork (.5 hours), the driver only has about 5.21 hours left of actual

delivery time (during an 8-hour shift). 

 Actual delivery time of 5.21 hours, multiplied by the 3 deliveries per hour,

allows for about 15 deliveries of 450 lbs. each, resulting in a total of 6,750

lbs. per day delivered by 1 driver in an 8-hour shift. For our calculations,

this was rounded to an average of 7,000 lbs. An additional cost per delivery

equal to one-half hour of pay per delivery day has been added to account for

time spent in administration (such as for paperwork and customer

interaction) during the deliveries. 

 While some inefficiency is to be expected, changes in efficiency can

directly impact a food hub’s profits, because transportation costs can account

for a significant portion of an entity’s expenses. Decreasing the efficiency of

delivery stops by reducing the number of pounds of product delivered per

half hour by just 20 percent (equal to 540 lbs. per half hour) can require

additional sales of more than $16,000 at the breakeven point, more than

$22,000 for the growth level, and more than $29,000 in the viability level to

reach similar EBITDA and net income figures.3

Labor Requirements

The wholesale hub approaches its labor requirements from a more

functional view, as opposed to dedicated employees’ positions. This analysis

considers that individual hub employees often fulfill multiple roles. While an

individual may earn a specific wage while fulfilling the responsibilities of

multiple positions, such as a general manager or sales manager, the same

individual may also aid in other activities. 

 The “full-time equivalent” (FTE) chart in the following table provides a

comparison point when assessing the role-based labor approach; it translates

staff-hours required to fulfill each role into a number of FTEs. To calculate

the FTE, it is assumed full-time employees work 40 hours per week.

 For example, in the table below, the general manager will become a full

time employee during the viability operation level, when the food hub

requires a full-time employee to adequately fulfill this role. Across all labor

positions in the first year, the food hub will require staff-hours equivalent to

three and two-thirds full-time employees. By the end of the viability period,

this figure will increase to around six and a quarter full-time employees. 

 The general, sales and production managers are salaried positions. The

3 A detailed table outlining transportation costs can be found in the appendix.
RUNNING A FOOD HUB 21

remaining four labor categories are hourly. Office and administrative labor is

considered fixed and does not vary directly with sales, while driver, general

labor, and line supervisor hours are directly determined by sales levels. 

Salaried labor will transition over the 3-year period from part-time to fulltime jobs. This is a result of the role-based approach. In years when

management positions are considered part time, these individuals will likely

be fulfilling other roles, such as delivering or receiving packaging. The

following table shows the annual costs for hourly and salaried labor,

including the overhead expense for salaried labor.

 For the purposes of the analysis, staff is paid on the last day of the month,

and fringe benefits and overhead is directly calculated as 30 percent. Fringe

and overhead on salaried

employees is included as

part of the fixed sales and

marketing expenses

reported in the expense

and revenue portion of

the model. Figures for

various positions were

chosen based on

information taken from

Bureau of Labor Statistics average wage figures, then adjusted when specific

positions/roles were not available. Actual food hub wage and salary rates will

vary based on a variety of factors.

 The hub employs a general manager who is responsible for organizing,

overseeing, and directing all food hub operations, as well as coordinating the

supply of products for orders that have been placed. He or she also addresses

customer service issues and, in some cases, assists in delivering product

during the slow months of operation. This role reaches a full-time basis

Table 4

Annual Wholesale Labor Costs

Breakeven Growth Viability

Hourly $60,765 $76,952 $106,324

Salary $98,475 $127,075 $180,700

Growth

Phases

Gen.

Mgr.

Sales

Mgr.

Prod.

Mgr. Driver

General

Labor

Line

Super.

BookkeeperTotal

FTE

Table 3

Hourly Labor Calculations

Full-time Equivalent (FTE) Calculator

Breakeven 0.65 0.40 0.50 0.68 0.48 0.79 0.17 3.67

Growth 0.85 0.50 0.65 0.91 0.51 0.77 0.36 4.55

Viability 1.00 1.00 0.85 1.19 0.83 0.80 0.61 6.27
22 RUNNING A FOOD HUB

during the viability period. 

 The hub also employs a sales manager to oversee the acquisition of new

customer accounts and related activities in order to grow the sales of the

food hub. A production manager coordinates farmers with each other and

the food hub to maximize their ability to meet the demand of customers and

to prevent the oversupply of products during the peak growing season and to

minimize waste during slower periods. This role is critical for interacting

with producers and establishing solid, trusting relationships. 

 General laborers will conduct daily activities, including product

reception, storage, packaging, and handling. They also assist the delivery

driver by loading the truck on designated days. A warehouse manager is

needed full-time, year-round, to oversee the daily warehouse operations.

This is a more senior role than the general labor positions and is responsible

for overseeing other laborers without the direct oversight of management.

Finally, a part-time office worker assists with any administrative and

accounting duties not handled by an outside accounting firm. 

 Salary and wage rates vary, based on the location of the food hub, the

local labor market, and labor costs. They are another major factor affecting

the food hub’s profitability. For example, a driver position (Standard

Occupational Code (SOC) 53-3031) has a national mean wage of $13.33 per

hour, while the same position in California has a mean wage of $15.27 per

hour. While overtime has not been used in the analysis, the food hub will

Table 5

Salaried Labor Costs

Salaried Labor

General Manager Salary $55,000

% Involvement Breakeven 65% $35,750

% Involvement Growth 85% $46,750

% Involvement Viability 100% $55,000

Sales Manager Salary $50,000

% Involvement Breakeven 40% $20,000

% Involvement Growth 50% $25,000

% Involvement Viability 100% $50,000

Production Manager Salary $40,000

% Involvement Breakeven 50% $20,000

% Involvement Growth 65% $26,000

% Involvement Viability 85% $34,000
RUNNING A FOOD HUB 23

likely have to address this issue at some point in its growth and expansion.

Hourly paid personnel will receive overtime equivalent to time and a half for

any pay period in which their work hours exceed 40 hours per week. 

 If the food hub is faced with higher labor costs, it will require substantial

additional sales to cover these costs. The following chart shows how adding

$40,000 in annual labor costs can affect the sales levels required for the

wholesale hub to achieve breakeven. It would require more than $180,000 in

sales to cover this cost. Doubling this annual labor figure to $80,000 would

require an additional $370,000 in sales to cover the extra costs. Adding

$120,000 of increased labor costs requires acquiring more than $560,000 in

additional sales to reach breakeven.4

$1,800,000

$1,600,000

$1,400,000

$1,200,000

$1,000,000

$800,000

$600,000

$400,000

$200,000

$0

Figure 4—Sales Required for Breakeven Additional Labor

Baseline $40,000 $80,000 $120,000

$1,210,000

$1,392,347

$1,580,748

Sales ($)

$1,773,508

4 A detailed table outlining labor costs can be found in the appendix.
24 RUNNING A FOOD HUB

General Expenses

 The following section outlines some of the other general expenses that a

food hub of this size and sales strategy may incur in the course of operation.

For simplicity in reporting, some expense categories have been grouped

together. 

 Food hubs need a promotional campaign to create awareness. But many

wholesale food hubs do not use traditional promotion and marketing

campaigns. Instead, they focus on lower cost efforts — such as word-ofmouth or social media — to build customer awareness. About $5,000 is

needed annually to cover this cost. 

 The analysis includes a fixed expense of $250 per month for business

insurance. Insurance premiums for the food hub were based on costs paid by

a food hub of similar size and scope to the typical food hub. The policy

includes occurrences, general aggregate, product liability, and combined

single-limit auto insurance coverage. 

 The reporting of non-cash expenses can vary; the analysis incorporates

some information regarding taxes but does not outline specifics, such as the

Federal income tax liabilities. 

 • Business Personal Property Tax is assumed to be expensed at a rate of

55 cents per $100 valuation. This tax rate applies to real estate and

personal property.

 • Due to variations in tax handling strategies, income taxes are not dealt

with in the analysis. Tax strategy may be quite important as the food

hub approaches viability. 

 Depreciation expenses are accounted for using the straight-line method.

The food hub will take out a $150,000 loan during its initial startup year for

operating equipment with a collective salvage value of $15,000 and a useful

life of 15 years. A second loan of $55,000 will be taken during the third year

of this analysis to fund the purchase of additional equipment with a

collective salvage value of $5,500 and a useful life of 7 years. 

 The following cost categories are included to represent the remaining

general costs that most businesses will incur over the course of operation.

This category includes allocation for items such as office supplies, software

maintenance, phones and other telecommunications equipment, legal and

accounting fees, certification fees for Good Handling practices (GHP) or

other annual food safety certifications, as well as for unforeseen and bad debt

expenses. See the appendix for more details. 
RUNNING A FOOD HUB 25

Equity and Financing

 The financial analysis includes a $150,000 carryover loan from the start of

business operations used to purchase equipment. The terms of this loan are

for 10 years at an interest rate of 6.5 percent, which is a “loaded rate” that

includes interest and fees charged by the lender. Examples of equipment are

tables, pallet jacks, cooling systems, fire extinguishers and other safety

equipment, as well as office and breakroom items. The hub continues to

make principal and interest payments on this loan over the course of all

three operational periods.

 Additional equipment, such as two refrigerated trucks, will be purchased

at the start of the breakeven phase. Equipment needs vary depending on the

type of product handled, customer and producer requirements, and services

offered by the hub. A term loan for $75,000, of which 75 percent (or

$56,000), will be financed, will be carried over 6 years at a 7-percent

financing rate. 

 In addition to the equipment loan, the food hub will also take out and

repay three short-term loans to assist in covering expenses and to provide

adequate cash reserves during the first breakeven and growth periods.

During the viability phase, sales have grown to a point where the business no

longer requires outside funding to supplement the cash generated by the

food hub itself. The following are the details of these loans; all three loans

are assumed to be for 1 year at 7-percent interest. 

 • A line of credit for $89,000 obtained in January of the breakeven phase. 

 • A second short-term loan of $15,000 in October of the breakeven phase.

 • A final $80,000 line of credit in January of the growth phase. 

 In addition to lines of credit,

the food hub will require about

$100,000 in owner equity to

cover cash flows and allow for

adequate amounts of cash on

hand. It is assumed that equity

will be provided by the owners,

although it could originate from

various sources, including

grants or third-party capital

investments.

Photo courtesy of 

Fifth Season Cooperative
26 RUNNING A FOOD HUB

Wholesale Food Hubs

RESULTS

n Sales of $1.21 million result in the food hub’s ability to reach a

breakeven level, meaning that it can cover all its variable and fixed

expenses, including management salaries. However, at this level the

food hub does not have residual money to produce a profit. Once

depreciation and interest have been subtracted from EBITDA, the

food hub will experiences net losses. 

n At the growth level – based here on annual sales of $1.75 million —

the venture is able to produce an operational profit of around $67,000,

or 3.8 percent of annual sales. 

n The food hub reaches a sales level that would indicate long-term

economic viability, with annual sales of about $2.4 million. This point

of viability is based on about 5.5 percent of sales being retained as

profits. 

$2,500,000

$2,000,000

$1,500,000

$1,000,000

$500,000

$0

Figure 5—Annual Sales by Operational Period

Breakeven Growth Viabilty

$1,750,000

$1,210,000

$2,400,000

$429 $67,220 $132,604

n Annual Sales

n Operational Profit
RUNNING A FOOD HUB 27

AS A REMINDER, the figures for each operational period represent revenue

and corresponding costs for a typical food hub at a particular point in time,

not for consecutive years of operation. Food hubs in specific regions of the

United States will experience variations in costs that are unique to their

location. In addition, operations and the types of product costs will also vary,

based on a food hub’s product line. 

 The analysis shows that the main costs influencing profitability are food

costs, labor, and transportation expenses. These expenses are highly variable,

depending on the food hub’s location and levels of service. A portion of

these costs may be mitigated through careful planning of transportation

logistics and by optimizing labor efficiency. 

 The above pro forma shows the individual components that comprise the

summary figures, presented above. Greater detail can be found in the

“Expense and Revenue” table in the Supplemental Tables section of this

report. 

 The breakeven level only generates enough revenue to cover operational

costs. But because it is operating at a negative net income basis, a food hub

at this stage would need to continue to grow to maintain viability for any

period of time. On a cash-flow basis, the hub would require outside cash of

about $70,000 to maintain positive cash flows and adequate cash reserves.

Table 6

Wholesale Food Hub pro forma

Breakeven Growth Viability

Revenue $1,210,000 $1,750,000 $2,400,000

Total Variable Operating Costs ($950,252) ($1,351,977) ($1,857,308)

Variable Margin (Loss) $259,748 $398,023 $542,692

Total Equipment Costs ($34,377) ($38,649) ($44,693)

Total Facilities Costs ($43,280) ($44,578) ($45,916)

Total Selling and Marketing Costs ($5,000) ($5,150) ($5,305)

General and Administrative Expenses ($128,263) ($172,425) ($218,175)

Unforeseen and Contingency Expenses ($48,400) ($70,000) ($96,000)

Wholesale Baseline Earnings EBITDA (Loss) $429 $67,220 $132,604

Interest Expense ($4,252) ($6,149) ($8,433)

Depreciation Expense ($9,000) ($9,000) ($16,071)

Net Income (Loss) ($12,823) $52,071 $108,099
28 RUNNING A FOOD HUB

 At the growth level of operation, a food hub is able to cover operational

as well as other costs — including depreciation and interest expenses — and

generates enough net income to provide a small return to owners.

Additionally, on a cash-flow basis, the food hub is reaching a breakeven level

of cash on hand by the end of this period. Outside cash of $50,000 is still

required for necessary cash reserves. 

 The viability level of operation is the minimum point at which a typical

food hub becomes a sustainable business. This includes generating enough

net income to make investments needed to grow the business and to provide

a significant return to the owners. Even at this stage, the food hub may well

require more funding, especially if higher costs are experienced than were

used for our analysis.

Photo courtesy of Red Tomato
RUNNING A FOOD HUB 29

THE DIRECT-TO-CONSUMER hub model involves the

use of an intermediary service provider to connect

farmers with community members. The goal of this

model hub is to provide the most profit to the producerfarmers while also generating enough income to remain

in business. As an operation with low overhead expenses,

the sales levels needed to achieve the various operational

levels are lower than those needed for wholesale food

hubs.

 This section begins by estimating annual sales for

business operational periods, then “unpacks” the model

assumptions (or factors) that impact the sales levels

needed to reach the breakeven, growth, and viability

phases of the business. 

Operational Models:

Direct-to-Consumer Food Hubs
30 RUNNING A FOOD HUB

Annual Sales by Business Operational Periods

 To reach a breakeven level, a typical direct-to-consumer food hub needs

to generate annual sales of around $314,000. In the time between breakeven

and long-term financial viability, the venture would need to generate around

$422,000 in annual sales. 

 With annual sales of about $566,000, the food hub would begin to earn

sufficient revenue to provide longer term viability. It should be noted that

even at this sales level, an unexpected expense could detrimentally affect the

business. The food hub should strive to grow beyond this point of annual

sales to achieve the higher profits that could be needed to cover unexpected

costs.

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0

Figure 6—Annual Sales Levels by Operational Periods

Breakeven Growth Viability

$314,400

$422,710

$566,604
RUNNING A FOOD HUB 31

Product Line

 One primary factor that allows a direct-to-consumer food hub to operate

at a smaller volume level is that produce is the only “product line” carried.

Many small food hubs grow past the startup phase, but have not begun to

sell other product lines that require significant capital investment in items

such as coolers and delivery trucks. 

 For the direct-to-consumer hub used for our model, the produce growing

period falls into a median “seasonality range,” rather than the longer or

shorter growing seasons of some regions of the country. 

 As a result of this median growing season, sales will occur from March

through October, with the majority of sales taking place in June. A direct-toconsumer hub will usually cease operations from November through

February, resuming sales in March. The exception to this is during the

viability phase, when growth in sales necessitates a longer season to pay for

additional products available outside of the typical spring and summer

seasons.

Location

 Unlike the wholesale

model, the direct-toconsumer model hub needs

a minimal amount of

warehouse space. The

facility used for our analysis

is a 1,000-square-foot

warehouse, located in a suburban area and leased for $2.20 per square foot

annually. The warehouse will simply serve as the central point where

produce is received and repacked into boxes for delivery to consumer pickup

points. The business employs a just-in-time method for inventory, so it will

only hold product long enough to aggregate and repack for delivery.

Operations

The direct-to-consumer hub operates by sourcing product from a group of

farmers who agree to provide a variety of produce during a certain period of

the year. Their shipments to the food hub are scheduled by the farm

coordinator, who assists with production planning and logistics. 

 The direct-to-consumer hub collects subscription orders from individuals

who pay an upfront fee to receive produce during a set period. Consumers

Model Assumptions

Table 7

Direct-to-Consumer Warehouse Lease

Expected Rent (per square foot) $2.20

Estimated Size of Warehouse (sq. feet) 1,000

Rent (per month) $183

Rent (per year) $2,200
32 RUNNING A FOOD HUB

have the option of purchasing a full share for $420 in the spring, or $540 in

the summer. The price of shares will grow in later years as the summer

season expands to include additional weeks. Individuals may also buy smaller

half shares, which contain less produce and may be more suitable for

individuals or smaller families. These half shares cost $210 for the spring

season and $270 for summer. 

 Securing an adequate number of subscriptions is, of course, vital. Because

customers pay an upfront fee, the hub needs to pay special attention to

managing this “up-front” revenue. It must ensure that the funds are not

exhausted before services are complete. 

 Over time and from season to season, the hub may find that it must work

harder to maintain a steady level of subscribing customers; previous

members may not renew. New subscribers may only replace those who have

dropped out, requiring even more effort to actually increase total

subscriptions. 

 This analysis assumes that 60 percent of subscribers will pay for full

shares, the other 40 percent for half shares. In rural areas, a higher

percentage of subscriptions will typically be for a full share, while half shares

may be more common in urban and suburban areas. 

 The balance of full versus half shares greatly affects the food hub’s

profitability. Reversing the percentages used above (so that 40 percent buy

full shares and 60 percent half shares) will reduce revenue by nearly $40,000

during the breakeven phase. This would require an additional 70 spring and

70 summer customers to generate

the same profits as are predicted the

original model. 

 For our projection, the food hub

maintains a healthy member base,

selling slightly more summer shares

each season than spring shares. The

table below provides the numbers

of subscribers assumed at each

operations period. 

 Pickup locations are operated

mostly by volunteer labor, with hub

employees handling some of the

more heavily trafficked sites. The

food hub will partner with local

organizations, such as churches and

schools, to use their facilities for the

Table 8

Number of Shares Sold

Breakeven — Spring 370

Breakeven — Summer 440

Growth — Spring 510

Growth — Summer 565

Viability — Spring 605

Viability — Summer 685

Table 9

Number of Pickup Locations

Breakeven 10

Growth 15

Viability 25
RUNNING A FOOD HUB 33

pickup sites. These partners will be compensated through donations from

the food hub, which are calculated as 3 percent of sales.

 Because the direct-to-consumer food hub relies on pickup locations to

distribute boxes of produce, establishing reliable, convenient locations is

critical. Fostering good-will within the community and forging a long-term

relationship with the pickup site hosts can help a food hub gain a solid

reputation in the community and contribute to the hub’s long-term success. 

 To progress to the growth period, sales need to increase, requiring a

corresponding increase in pickup locations. At this point, the hub will likely

begin to exhaust initial market advantages for its core customer base.

Greater creativity in attracting and retaining customers will be necessary

during this important period. The viability stage will require significantly

greater number of pickup locations, increasing to 25, and the number of

delivery days will increase to 4 times per week. The hub’s unique

circumstances and the size of the community served will determine if this

goal is achievable.

Labor Requirements

 Similar to the wholesale food hub, the direct-to-consumer hub’s human

resource needs are based upon functional roles, with individual employees

often fulfilling multiple roles. Each employee is assigned tasks, but will also

likely aid in other activities. 

 Our direct-to-consumer food hub model incorporates the use of

volunteer labor as well as paid staff. Volunteers primarily help with general

(less skilled) labor and typically can help reduce labor costs. Because

volunteers can lack consistency and may not be available when needed, they

are not always a reliable source of help and can often lead to greater costs in

other areas of operation. A volunteer coordinator is generally required to

oversee these individuals and coordinate training activities and schedules. 

 Though this study primarily focuses on the cost factors, there are

multiple reasons a food hub may decide to use volunteer labor. These may

include finding individuals with a specific skill set that would not be available

for hire. Volunteer labor also gives the food hub a stronger tie to

community.

 Finding a qualified general manager and farm coordinator is key to the

success of a food hub. The general manager oversees the overall operation,

while the farm coordinator deals with the producers. All non-driver

employees should be available to assist the part-time driver in making

deliveries, as needed. 

 A volunteer-driven workforce has obvious advantages in terms of cost
savings, but it may create disadvantages, especially in the area of

organizational challenges. These issues may become more apparent during

the growth stage as the scale of operations increases. Without community

support and proper management of volunteers, a food hub will struggle to

succeed. 

 With enough reliable volunteers, a direct-to-consumer hub can rely on

part-time, as opposed to full-time, paid staff. The table above presents the

FTEs required for the various operational levels. The general manager will

come closest to a full-time job, reaching 60 percent of full-time work during

the business viability phase. 

 Because the direct-to-consumer food hub is a substantially smaller

business, compared to the wholesale model, the amount of FTEs for the

former will be lower. At viability, the direct-to-consumer hub will need the

equivalent of 1.81 full-time equivalent workers. This results in each FTE

earning around $33,000 annually. 

 The managers and volunteer coordinator are salaried positions, all others

are hourly. Driver, general labor, pick-up point labor, and volunteer labor

hours are all directly based upon sales levels. The pick-up point laborers are

employees of the hub, while volunteers are unpaid community members

who want to aid the food hub.

 Volunteer labor is especially helpful in reducing labor costs during the

startup period. Volunteer programs can help food hubs gain community

involvement and be a source for permanent staff. However, volunteer

laborers can be less reliable than paid staff. There are indirect costs in using

volunteers that should not be overlooked. As the food hub grows, the

availability of volunteer labor becomes less important to overall profitability. 

 The following table shows the annual costs for hourly and salaried labor,

including the overhead expense for salaried labor. Drivers working for our

34 RUNNING A FOOD HUB

Year

Gen.

Mgr.

Farm

Cord.

Prod.

Mgr.

Retail

Labor

General

Labor

Drive

Labor

Total

FTE

Table 10

Direct-to-Consumer Full-time Employees

FTE Calculator

Breakeven 0.40 0.00 0.25 0.19 0.10 0.10 1.04

Growth 0.50 0.15 0.30 0.19 0.21 0.16 1.52

Viability 0.60 0.20 0.40 0.20 0.21 0.20 1.81
model food hub will use their personal vehicles to move product; they will

be compensated at the standard mileage rates, as set by the U.S. Internal

Revenue Service. The number of miles driven will increase over time as the

food hub adds new pick-up

locations. The number of

delivery days also increases

from 2 days in the

breakeven period to 4 days

during the viability phase. 

General Expenses

 Our direct-to-consumer hub model will operate on as lean a basis as

possible, meaning that many of the costs included in the wholesale food hub

model have been reduced or eliminated. For example, this hub will require

substantially less sales to reach the three profit phases of business

development. The promotional budget has thus been reduced to $4,000 per

year, versus $5,000 for the wholesale hub model.

 The direct-to-consumer food hub strives to provide returns to farmers,

allowing them to receive dividend income or patronage (in the case of a coop) above wholesale prices for their crops. For each full share sold, which is

produced over about an 18-week time span, the hub pays the farmer $360. A

half share is purchased from the farmer for $180, or half the cost of a full

share, and the farmer provides product for 14 weeks. Each year, the business

spends around 67 percent of its sales revenue to purchase produce from

farmers, making this the hub’s single largest expense.

Table 11

Annual Wholesale Labor Costs

Breakeven Growth Viability

Hourly $13,171 $17,640 $18,021

Salary $23,725 $33,150 $41,600

Photo courtesy of Common Market Philadelphia
36 RUNNING A FOOD HUB

Direct-to-Consumer Food Hub

RESULTS

n In order to reach the breakeven stage — when the food hub is able

to cover its variable and fixed expenses — the hub must generate

about $314,000 from sales. Even then, it will report a net loss (as will

the wholesale hub).

n In the growth phase, the hub’s sales grow to about $423,000, yielding

an operational profit of just under $7,800, or around 1.8 percent of

sales. The food hub also produces a small net income of $2,900. At

this point, the business reaches cash-flow neutrality. 

n When the venture is able to reach viability, it is generating more than

$566,000 per year in sales and producing an operational profit

(EBITDA) of more than $24,000, or 4.4 percent of sales. The venture

also generates a positive net income of nearly $19,000. 

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0

Figure 7—Direct-to-Consumer Sales Levels and Operational Profit

Breakeven Growth Viabilty

$422,710

$314,400

$566,604

$627 $7,780 $24,742

n Annual Sales

n Operational Profit
 OUR DIRECT-TO-CONSUMER MODEL hub will not require farmers to

become members in order to sell to the venture, which reduces the amount

of equity flowing to the business. However, because this is a low-cost

business for which funds are obtained at the beginning of the season,

additional equity from outside sources is not required to maintain positive

cash flows. Business growth in the growth and viability phases provides

enough cash to maintain adequate reserves without the use of additional

equity. 

 This business has substantially smaller sales than does the wholesale hub

model examined earlier. Thus, less sales revenue is required to achieve the

breakeven, growth, and viability business stages. The hub is able to cover

operational costs during the breakeven phase with annual sales of $314,000,

about $896,000 less than required for the wholesale hub to reach the same

point. 

 To generate about $8,000 of operational profit during the growth phase,

the food hub would need annual sales of about $423,000. At the viability

stage, the business is generating a profit of more than $24,000, equivalent to

4.4 percent of sales of $566,000. At the viability stage, sales are about $1.8

million less than for the wholesale hub model. 

RUNNING A FOOD HUB 37

Table 12

Direct-to-Consumer pro forma

Breakeven Growth Viability

Revenue $314,400 $422,710 $566,604 

Total Variable Operating Costs ($255,524) ($341,005) ($451,705)

Variable Margin (Loss) $58,876 $81,705 $114,899

Total Equipment Costs ($6,957) ($9,902) ($14,033)

Total Facilities Costs ($12,420) ($12,793) ($13,176)

Total Selling and Marketing Costs ($4,000) ($4,120) ($4,244)

General and Administrative Expenses ($28,585) ($38,656) ($47,372)

Unforeseen and Contingency Expenses ($6,288) ($8,454) ($11,332)

EBITDA* (Loss) $627 $7,780 $24,742

Interest Expense ($1,707) ($2,296) ($3,077)

Depreciation Expense ($2,549) ($2,549) ($2,549)

Net Income (Loss) ($3,630) $2,935 $19,116

* Earnings before interest, taxes, 

depreciation, and amortization
38 RUNNING A FOOD HUB

TABLE 13 SUMMARIZES the major differences between the

wholesale and direct-to-consumer food hub models.

 This analysis shows that the wholesale food hub provides the

most return — as a percent of sales dollars — to farmers. But the

wholesale operation also requires the highest sales levels to reach

the breakeven or long-term viability stages. It also requires the most

resources to achieve these sales levels, including the need to lease a

larger warehouse and procure two delivery trucks.

 While the direct-to-consumer model provides lower returns to

farmers than does the wholesale model, it also requires lower annual

sales to attain long-term viability and does not require owner equity

during the breakeven stage to prevent negative cash flows. The use

of volunteer labor helps offset the lower sales.

Operational Models Comparisons

Table 13

Operational Model Summary Comparison

Wholesale Direct-to-Consumer

Products Produce, Dairy & Other Produce

Facility (Ft.2

) 6,500 1,000

Delivery Vehicles Pruchase Two Trucks Personal Vehicles

with Mileage

Reimbursement

Staff Levels at Viability (FTE*) 6.3 1.8

Breakeven Sales $1.21 Million $314,000

Viability Sales $2.4 Million $567,000

*Fulltime Equivalent

 As the single largest expense for both hub operational models,

payments to producers will have the greatest impact on whether a

food hub can progress through the operational phases used in this

analysis. Figure 7 compares the product-cost variable to other

typical expenses.
RUNNING A FOOD HUB 39

Operational Models at “Breakeven”

 Increasing sales to achieve the

breakeven business stage will often

require an accompanying increase in

equipment, human resources, or

other resources. While some food

hubs may be able to bear the cost of

addressing these needs

simultaneously, acquiring these

resources will create a cash-flow or

financing constraint for other hubs,

which will instead have to prioritize

the needs. 

 While an increase in subscribers

is necessary for the direct-toconsumer hub to achieve breakeven,

far less revenue will be needed than

for the wholesale hub. The

wholesale hub requires a substantial

amount of additional staff hours

compared to the smaller direct-toconsumer hub.

Figure 8—Typical Food Hub Expenses Comparison

Payments to Producers

76%

All Other

Payments

24%

General and

Administrative

37.4%

Other 

Variable

Costs

30.4%

Unforseen

and

Bad Debt

16.3%

Infrastructure

Costs

14.9%

Marketing Costs

1.2%

ALL OTHER PAYMENTS
40 RUNNING A FOOD HUB

Operational Models at “Growth”

 At this stage, the food hub will likely be faced with “trade-off” issues.

Many will need to increase personnel. But because of sales and production

seasonality, it is difficult to decide whether to retain employees year-round

or continue with seasonal or part-time help. 

 Because they have achieved significant sales at this point, the hubs will

need to formalize operational procedures and processes. Activities that were

improvised during startup and breakeven, or cost-cutting measures in areas

such as marketing and branding, will need to be re-examined and more

strategic plans implemented. Supply or sales arrangements that were

previously conducted “on a handshake” basis will need to transition to legal

contracts. 

 The increase in sales and need for reliability and consistency at this stage

will likely require additional investment for technology or training for the

hub’s employees or producers. At this point, the hub will also likely need to

institute business systems and fix some operational concerns that were

improvised during startup or breakeven. Such steps will be necessary to

progress to the business viability phase. 

 Because of the need to diversify and attract new customers, wholesale

food hubs are attracted to the higher gross margins of direct-to-consumer

sales. These hubs then begin to engage in activities that move them closer to

a hybrid operational model. In general, hybrid food hubs incorporate some

Table 14

Breakeven Operational Period Pro Forma Comparison

Wholesale Direct-to-Consumer

Revenues $1,210,000 $314,400

Total Variable Operating Costs ($950,252) ($255,524)

Variable Margin (Loss) $259,748 $58,876

Total Equipment Costs ($34,377) ($6,957)

Total Facilities Costs ($43,280) ($12,420)

Total Selling and Marketing Costs ($5,000) ($4,000)

General and Administrative Expenses ($128,263) ($28,585)

Unforeseen and Contingency Expenses ($48,400) ($6,288)

Baseline EBITDA* (Loss) $429 $627

Interest Expense ($4,252) ($1,707)

Depreciation Expense ($9,000) ($2,549)

Net Income (Loss) ($12,823) ($3,630)

*Earnings before interest, taxes, depreciation, and amortization
RUNNING A FOOD HUB 41

of the characteristics of both wholesale and direct-to-consumer hubs.

Direct-to-consumer operations often achieve a scale and capability that

makes them attractive to wholesale customers, and they too may evolve into

a hybrid hub operation. 

 A direct-to-consumer food hub usually serves a smaller area or region, so

it does not necessarily require the use of large trucks nor (if only selling

produce) a refrigerated truck; a wholesale hub likely would need such

equipment. 

 Though this financial analysis does not consider income from grants and

donations, hubs that have previously benefited from donations or other

outside funding may begin to experience “donor fatigue.” The hub will

appear to be of sufficient size and scale that it does not appear to need

further community support, or supporters simply move on to other projects. 

 It is also important to note that many nonprofit and mission-driven food

hubs purposely remain at a smaller operational stage. A hub that chooses to

remain at the growth phase of operation may need continued donor support. 

 At the growth stage, the wholesale hub may have an advantage, because

its customers are more likely to remain loyal. Direct-to-consumer hubs

often experience customer loss from season to season, and must strive just to

replace these losses, rather than actually grow the customer base. Though

they may be harder to attract at first, wholesale customers, with their

increased focus on price and reliability, often stay with their suppliers longer. 

 Each of the food hubs will see increases in human resources, either in

Table 15

Growth Operational Period Pro Forma Comparison

Wholesale Direct-to-Consumer

Revenues $1,750,000 $422,710

Total Variable Operating Costs ($1,351,977) ($341,005)

Variable Margin (Loss) $398,023 $81,705

Total Equipment Costs ($38,649) ($9,902)

Total Facilities Costs ($44,578) ($12,793)

Total Selling and Marketing Costs ($5,150) ($4,120)

General and Administrative Expenses ($172,425) ($38,656)

Unforeseen and Contingency Expenses ($70,000) ($8,454)

Baseline EBITDA* (Loss) $67,220 $7,780

Interest Expense ($6,149) ($2,296)

Depreciation Expense ($9,000) ($2,549)

Net Income (Loss) $52,071 $2,935

*Earnings before interest, taxes, depreciation, and amortization
42 RUNNING A FOOD HUB

number of employees or in wage rates. This is especially true of salaried

employees.

 Even during the growth stage, additional delivery equipment will likely

not be needed by direct-to-consumer hubs, and their paid staff will continue

to be minimal, with most labor performed by volunteers.

Operational Models at “Viability”

 With higher gross margins and a focus on lean operations and use of lowcost resources, direct-to-consumer hubs can achieve viability at a much

lower sales level than the wholesale model. 

 The hub models also differ in their ability to acquire and maintain

customers, especially at the viability level. While a concern during any

operational phase, this is a major concern for direct-to-consumer hubs at the

viability stage, which is often a period of high customer turnover. The hub

will need to find a way to keep current customers engaged and returning,

while simultaneously attracting new customers. Because of the nature of

wholesale operations, these hubs are much more likely to have an easier time

maintaining customers, providing that the hub’s commitment to quality and

customer service remains high. 

Table 16

Viability Operational Period Pro Forma Comparison

Wholesale Direct-to-Consumer

Revenues $2,400,000 $566,604

Total Variable Operating Costs ($1,873,858) ($451,705)

Variable Margin (Loss) $526,142 $114,899

Total Equipment Costs ($44,693) ($14,033)

Total Facilities Costs ($29,366) ($13,176)

Total Selling and Marketing Costs ($5,305) ($4,244)

General and Administrative Expenses ($218,175) ($47,372)

Unforeseen and Contingency Expenses ($96,000) ($11,332)

Baseline EBITDA* (Loss) $132,604 $24,742

Interest Expense ($8,433) ($3,077)

Depreciation Expense ($16,071) ($2,549)

Net Income (Loss) $108,099 $19,116

*Earnings before interest, taxes, depreciation, and amortization
RUNNING A FOOD HUB 43

Conclusion

IT IS CLEAR from the analysis conducted in this report that various

operational model food hubs can be viable businesses. Sufficient

sales can be achieved at reasonable levels to provide enough revenue

to cover the costs of supporting activities, personnel, and

infrastructure. 

 Regardless of the operational model, each venture must carefully

consider the details of its operations. Small changes in costs can

have a large impact on the finances of a food hub, due to the

relatively low operating margins inherent in such ventures. 

 Product expenses are the largest single cost category. Changes in

prices paid to producers can significantly affect profitability and, in

some cases, even impact the hub’s ability to remain in operation.

Based on scenarios presented in this analysis, labor costs can also

impact the sales levels required to achieve the various operational

phases outlined in this report. 

 Outside financial support (e.g., grants, low-interest loans,

community funds) can be critical to helping food hubs achieve

success. Such outside funding can greatly reduce the sales revenue

required to achieve financial stability. 

 Increasing the amount of money financed for purchasing

equipment or investing in infrastructure produces little effect on the

entity’s overall finances. Food hubs often find it difficult to qualify

for loans and financing, particularly when they are just beginning. 

 Each food hub will face different circumstances and goals, based

on its unique mission. From a financial viewpoint, there is no “best”

hub operational model. As food hubs grow, they typically begin to

expand activities that more closely resemble other operational

models, including hybrid operations which engage in both

wholesale and direct-to-consumer sales. Regardless the evolution of

the model, food hubs should seek to organize — including their

operational and financial activities — around their core mission, and

then strive to make sound financial choices.
44 RUNNING A FOOD HUB

Appendix

Supplemental Tables: Wholesale Model ...................................................................45

Table 17: Prototypical Wholesale Food Hub Balance Sheet....................................45

Table 18: Wholesale Expense and Revenue Summary Figures ...............................46

Table 19: Wholesale Labor Summary...........................................................................48

Table 20: Wholesale Transportation Summary...........................................................52

Table 21: Wholesale Cash Flow.....................................................................................56

Supplemental Tables: Direct-to-Consumer Model ...................................................61

Table 22: Prototypical Direct-to-Consumer Food Hub Balance Sheet ...................61

Table 23: Direct-to-Consumer Expense and Revenue...............................................62

Table 24: Direct-to-Consumer Labor Summary ..........................................................64

Table 25: Direct-to-Consumer Transportation summary ...........................................68

Table 26: Direct-to-Consumer Cash Flow ....................................................................72

Photo courtesy of New North Florida Cooperative
RUNNING A FOOD HUB 45

Table 17

Prototypical Wholesale Food Hub Balance Sheet

Breakeven (B/E) Growth (GR) Viability (VI)

Assets

Cash and Equivalents ($9,818) ($7,039) $100,007 

Accounts Receivables $77,306 $111,806 $153,333 

Total Current Assets $67,487 $104,766 $253,341 

Buildings And Equipment, Net $141,000 $132,000 $123,000 

Total Assets $208,487 $236,766 $376,341 

Liabilities and Members’ Equity

Current Liabilities

Accounts Payable and Accrued Expenses ($11,999) ($24,568) ($33,693)

Accrued Interest $4,252 ($6,149) ($8,433)

Current Maturities of Long-Term Debt ($4,463) ($3,939) ($3,382)

Total Current Liabilities ($12,210) ($34,657) ($45,508)

Long-term Debt

Senior Debt $60,607 $52,027 $42,889 

Less Current Maturities of Long-Term Debt ($4,463) ($3,939) ($3,382)

Members’ Equity

Member Equity and Equity Equivalents $327,377 $171,265 $274,243 

Retained Earnings (Losses) ($162,823) $52,071 $108,099 

Total Liabilities & Members’ Equity $208,487 $236,766 $376,341 

n Supplemental Tables

Wholesale Model
46 RUNNING A FOOD HUB

n Supplemental Tables: Wholesale Model

Table 18 

Wholesale Expense and Revenue Summary Figures

Percent 

Annual Total of Revenue 

Wholesale Baseline Breakeven Breakeven

Income

Fresh Produce ($) 847,000 70.00%

Dairy Products ($) 121,000 10.00%

Other ($) 242,000 20.00%

Grant Funds ($) 0 0.00%

Total Sales All Types 1,210,000 100.00%

Variable Costs

Product Lost in Transport/Handling & Returns (38,557) (3.2%)

Revenue to Farms (0.7) (844,600) (69.8%)

Credit Card Processing (2,420) (0.2%)

Packaging Material Expense (2,881) (0.2%)

Variable Labor & Delivery Expense (61,794) (5.1%)

Total Variable Costs (950,252) (78.5%)

Variable Margin 259,748 21.5%

Fixed Costs

Equipment Loan Interest Pmnts (8,401) (0.7%)

Business Personal Property Tax (554) (0.0%)

Tools, Dies, Fixtures, Maint/Repairs (10,100) (0.8%)

Fixed Vehicle Expenses and Forklift Rental (15,322) (1.3%)

Total Equipment Costs (34,377) (2.8%)

Facilities

Rent Expense (22,100) (1.8%)

Facility Expenses and Insurance (5,580) (0.5%)

Utilities (15,600) (1.3%)

Total Facility Costs (43,280) (3.6%)

Fixed Sales and Marketing

Promotional Costs (5,000) (0.4%)

Total Selling and Marketing Costs (5,000) (0.4%)

General/Administrative

Mgmt./Admin. Support/Fringe and Ovhd. (105,963) (8.8%)

General Expenses & Fees 

(Software, Legal, Phone, OFC Supplies etc.) (22,300) (1.8%)

Total General/Administrative Costs (128,263) (10.6%)

Unforeseen/Contingency

Unforeseen Expenses and Bad Debt (48,400) (4.0%)

Total Fixed Costs (259,320) (21.4%)

Wholesale Baseline EBITDA* 429 0.0%

Equipment Depreciation (9,000) (0.7%)

Receivables Interest (23 days @ 0.085) (4,252) (0.4%)

Net Wholesale Baseline Income (12,823) (1.1%)

* Earnings before interest, taxes, depreciation, and amortization
RUNNING A FOOD HUB 47

Percent Percent 

Annual Total of Revenue Annual Total of Revenue 

Growth Growth Viability Viability

1,225,000 70.00% 1,680,000 70.00%

175,000 10.00% 240,000 10.00%

350,000 20.00% 480,000 20.00%

0 0.00% 0 0.00%

1,750,000 100.00% 2,400,000 100.00%

(56,913) (3.3%) (78,052) (3.3%)

(1,212,431) (69.3%) (1,670,875) (69.6%)

(3,500) (0.2%) (4,800) (0.2%)

(4,167) (0.2%) (5,714) (0.2%)

(74,966) (4.3%) (97,867) (4.1%)

(1,351,977) (77.3%) (1,857,308) (77.4%)

398,023 22.7% 542,692 22.6%

(7,326) (0.4%) (6,180) (0.3%)

(765) 0.0%) (1,020) (0.0%)

(18,128) (1.0%) (22,792) (0.9%)

(12,430) (0.7%) (14,701) (0.6%)

(38,649) (2.2%) (44,693) (1.9%)

(22,763) (1.3%) (23,446) (1.0%)

(5,747) (0.3%) (5,920) (0.2%)

(16,068) (0.9%) (16,550) (0.7%)

(44,578) (2.5%) (45,916) (1.9%)

(5,150) (0.3%) (5,305) (0.2%)

(5,150) (0.3%) (5,305) (0.2%)

(143,291) (8.2%) (187,662) (7.8%)

(29,134) (1.7%) (30,513) (1.3%)

(172,425) (9.9%) (218,175) (9.1%)

(70,000) (4.0%) (96,000) (4.0%)

(330,803) (18.9%) (410,088) (17.1%)

67,220 3.8% 132,604 5.5%

(9,000) (0.5%) (16,071) (0.7%)

(6,149) (0.4%) (8,433) (0.4%)

52,071 3.0% 108,099 4.5%
n Supplemental Tables: Wholesale Model

48 RUNNING A FOOD HUB

Table 19 

Wholesale Labor Summary

Breakeven (B/E)

Jan Feb Mar Apr May

Driver # Emp. 1 1 2 2 2

Rate/Hr. Total Hrs. 62 75 103 142 168

$13.50 Cost $830 $1,015 $1,388 $1,922 $2,270

Admin Cost $174 $174 $347 $347 $347

Total Cost $22,469

General 

Labor # Emp. 1 1 1 1 1

Rate/Hr. Total Hrs. 42 77 79 101 101

$10.50 Cost $441 $809 $833 $1,058 $1,058

Total Cost $10,433

Warehouse

Manager # Emp. 1 1 1 1 1

Rate/Hr. Total Hrs. 86 86 171 171 171

$15.50 Cost $1,329 $1,329 $2,657 $2,657 $2,657

Overtime 

Hours – – – – –

Cost $0 $0 $0 $0 $0

Total Cost $25,575

Total Cost Production $2,600 $3,153 $4,878 $5,638 $5,985

Office/

Admin. # Emp. 1 1 1 1 1

Rate/Hr. Total Hrs. 30 30 30 30 30

$16.00 Cost $480 $480 $480 $480 $480

Total Cost $5,760

Total Labor Cost B/E $55,005
RUNNING A FOOD HUB 49

Jun Jul Aug Sep Oct Nov Dec

2 22 22 1 1

174 151 141 120 117 86 69

$2,347 $2,039 $1,899 $1,614 $1,575 $1,159 $938

$347 $347 $347 $347 $347 $174 $174

1 11 11 1 1

101 101 101 101 79 56 56

$1,058 $1,058 $1,058 $1,058 $833 $584 $584

1 11 11 1 1

171 171 171 171 107 86 86

$2,657 $2,657 $2,657 $2,657 $1,661 $1,329 $1,329

– –– –– – –

$0 $0 $0 $0 $0 $0 $0

$6,062 $5,754 $5,614 $5,329 $4,069 $3,072 $2,851

1 11 11 1 1

30 30 30 30 30 30 30

$480 $480 $480 $480 $480 $480 $480
50 RUNNING A FOOD HUB

Business

Per

n Supplemental Tables: Wholesale Model

Growth (GR)

Table 19 (Continued) Wholesale Labor Summary

Q1 Q2 Q3 Q4

Driver # Emp. 2 2 2 2

Rate/Hr. Total Hrs. 311 661 556 362

$14.00 Cost $4,359 $9,257 $7,777 $5,073

Admin Cost $360 $360 $360 $360

Total Cost $27,907

General Labor # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 220 302 302 236

$11.00 Cost $2,417 $3,325 $3,325 $2,593

Total Cost $12,720

Warehouse Manager # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 321 450 514 321

$15.50 Cost $4,982 $6,975 $7,971 $4,982

Overtime

Hours - - - -

Cost $0 $0 $0 $0

Total Cost $24,911

Total Cost Production $12,118 $19,917 $19,433 $13,009

Office/Administrative # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 126 252 252 126

$16.50 Cost $2,079 $4,158 $4,158 $2,079

Total Cost $12,474

Total Labor Cost GR $64,478
RUNNING A FOOD HUB 51

Viability (VI)

Wholesale Labor Summary

Q1 Q2 Q3 Q4

Driver # Emp. 2 2 2 2

Rate/Hr. Total Hrs. 398 874 729 470

$14.75 Cost $5,874 $12,893 $10,754 $6,937

Admin Cost $379 $379 $379 $379

Total Cost $37,975

General Labor # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 425 431 495 367

$11.75 Cost $4,999 $5,062 $5,818 $4,307

Total Cost $21,904

Warehouse Manager # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 321 386 514 450

$16.00 Cost $5,143 $6,171 $8,229 $7,200

Overtime

Hours - - - -

Cost $0 $0 $0 $0

Total Cost $26,743

Total Cost Production $16,395 $24,506 $25,180 $18,823

Office/Administrative # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 252 378 378 252

$17.00 Cost $4,284 $6,426 $6,426 $4,284

Total Costs $21,420

Total Labor Cost VI $106,324
Business

Per

n Supplemental Tables: Wholesale Model

52 RUNNING A FOOD HUB

Table 20 

Wholesale Transportation Summary

Transportation Expense for Breakeven (B/E) ($)

Jan Feb Mar Apr May

Number of Delivery Days per Week 3 3 3 3 3

Number of Delivery Days per Month 12.9 12.9 12.9 12.9 12.9

$ Value of Produce Per Delivery Day $1,976 $2,635 $4,282 $7,247 $9,223

$ Value of Dairy Per Delivery Day $471 $565 $706 $894 $894

$ Value of Other Per Delivery Day $941 $1,318 $1,506 $1,694 $1,976

Lbs. of Product Per Delivery Day 3990 5274 7710 11867 14573

Total Truckload Capacity 22500 22500 22500 22500 22500

% of Total Truck Capacity Utilized Per Load 18% 23% 34% 53% 65%

Number of Trucks Required 1.0 1.0 2.0 2.0 2.0

Total Average Miles Traveled per Delivery-All Trucks 80 80 160 160 160

Variable Vehicle Expenses

Diesel Expense/Month $339 $339 $679 $679 $679 

Mileage Expense Per Mile Driven $0 $0 $0 $0 $0

Reefer Unit Expense $0 $0 $0 $0 $0

Total Variable Vehicle Expense $339 $339 $679 $679 $679 

Fixed Vehicle Expense

Overhead Expense $298 $298 $597 $597 $597 

Total Fixed Vehicle Expense $298 $298 $597 $597 $597 

Personnel Expense

Load Time (hr.) (Gen Labor) 6.9 7.3 8.6 8.6 8.6

Drive Time (hr.) (Driver) 23.5 25.0 29.4 29.4 29.4

Unload Time (hr.) (Driver) 38.0 50.2 73.4 113.0 138.8

Delivery Admin (hr.) (Gen Labor) 5.1 5.5 6.4 6.4 6.4

Total Time (hr.) 73.5 88.0 117.9 157.4 183.2

Driver Pay $993 $1,188 $1,591 $2,126 $2,473

Driver Overtime Pay $0 $0 $0 $0 $0 

Loader Pay $120 $128 $150 $150 $150 

Total Personnel Expense $1,113 $1,316 $1,742 $2,276 $2,624 

Total Delivery Expense $1,751 $1,954 $3,017 $3,551 $3,899 
RUNNING A FOOD HUB 53

Jun Jul Aug Sep Oct Nov Dec Total

33 33 333

12.9 12.9 12.9 12.9 12.9 12.9 12.9

$9,882 $7,905 $6,917 $5,270 $5,270 $3,294 $1,976

$847 $847 $941 $941 $847 $753 $706

$1,788 $1,882 $1,882 $1,694 $1,506 $1,318 $1,318

15166 12774 11685 9470 9166 6392 4671

22500 22500 22500 22500 22500 22500 22500

67% 57% 52% 42% 41% 28% 21%

2.0 2.0 2.0 2.0 2.0 1.0 1.0

160 160 160 160 160 80 80

$679 $679 $679 $679 $679 $339 $339 

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0

$679 $679 $679 $679 $679 $339 $339 $6,789 

$597 $597 $597 $597 $597 $298 $298 

$597 $597 $597 $597 $597 $298 $298 $5,966 

8.6 8.6 8.6 8.6 8.6 7.3 7.3

29.4 29.4 29.4 29.4 29.4 25.0 25.0

144.4 121.7 111.3 90.2 87.3 60.9 44.5

6.4 6.4 6.4 6.4 6.4 5.5 5.5

188.9 166.1 155.7 134.6 131.7 98.6 82.3

$2,550 $2,242 $2,102 $1,817 $1,778 $1,332 $1,110

$0 $0 $0 $0 $0 $0 $0

$150 $150 $150 $150 $150 $128 $128 

$2,700 $2,393 $2,253 $1,968 $1,929 $1,459 $1,238 $23,010 

$3,976 $3,668 $3,528 $3,243 $3,204 $2,097 $1,876 $35,764 
Business

Per

n Supplemental Tables: Wholesale Model

54 RUNNING A FOOD HUB

Table 20 (Continued) 

Wholesale Transportation Summary

Trasnportation Expense for Growth (GR) ($)

GR Q1 GR Q2 GR Q3 GR Q4

Number of Delivery Days per Week 3 3 3 3

Number of Delivery Days per Quarter 39 39 39 39

$ Value of Produce Per Delivery Day $4,288 $12,704 $9,687 $5,081 

$ Value of Dairy Per Delivery Day $839 $1,270 $1,316 $1,112 

$ Value of Other Per Delivery Day $1,815 $2,631 $2,631 $1,996 

Lbs of Product Per Delivery Day 8,183 20,057 16,357 9,752

Truckload Capacity 22,500 22,500 22,500 22,500

% of Truck space Utilized Per Load 36% 89% 73% 43%

Number of Trucks Required 2.0 2.0 2.0 2.0

Total Average Miles Traveled per Delivery—All Trucks 200 200 200 200

Variable Vehicle Expense

Diesel Expense/Quarter $2,622 $2,622 $2,622 $2,622 

Mileage Expense Per Mile Driven $0 $0 $0 $0

Reefer Unit Expense $0 $0 $0 $0

Total Variable Vehicle Expense $2,622 $2,622 $2,622 $2,622 

Fixed Vehicle Expense

Overhead Expense $2,304 $2,304 $2,304 $2,304 

Total Fixed Vehicle Expense $2,304 $2,304 $2,304 $2,304 

Personnel Expense

Load Time (hr) 22.7 25.8 25.8 24.6

Drive Time (hr) 78 88 88 84

Unload Time (hr) 233.8 573.1 467.3 278.6

Delivery Admin (hr) 17.0 19.3 19.3 18.3

Total Time (hr) 351.1 706.4 600.6 405.3

Driver Pay $1,638 $9,889 $8,409 $1,891

Driver Overtime Pay $0 $0 $0 $0

Loader Pay $407 $463 $463 $439 

Total Personnel Expense $2,046 $10,352 $8,871 $2,331 

Total Delivery Expense $6,972 $15,278 $13,798 $7,257 
RUNNING A FOOD HUB 55

Trasnportation Expense for Vitality (VI) ($)

VI Q1 VI Q2 VI Q3 VI Q4

Number of Deliveries per Week 3 3 3 3

Number of Deliveries per Quarter 39 39 39 39

$ Value of Produce Per Delivery Day $5,880 $17,422 $13,284 $6,969 

$ Value of Dairy Per Delivery Day $1,151 $1,742 $1,804 $1,524 

$ Value of Other Per Delivery Day $2,489 $3,609 $3,609 $2,738 

Lbs of Product Per Delivery Day 11,223 27,507 22,432 13,375

Truckload Capacity 22,500 22,500 22500 22500

% of Truck space Utilized Per Load 50% 122% 100% 59%

Number of Trucks Required 2.0 2.0 2.0 2.0

Total Average Miles Traveled per Delivery—All Trucks 240 240 240 240

Variable Vehicle Expense

Diesel Expense/Quarter $3,241 $3,241 $3,241 $3,241

Mileage Expense Per Mile Driven $0 $0 $0 $0 

Reefer Unit Expense $0 $0 $0 $0

Total Variable Vehicle Expense $3,241 $3,241 $3,241 $3,241

Fixed Vehicle Expense

Overhead Expense $2,848 $2,848 $2,848 $2,848

Total Fixed Vehicle Expense $2,848 $2,848 $2,848 $2,848 

Personnel Expense

Load Time (hr) 22.7 25.8 25.8 25.8

Drive Time (hr) 78 88 88 88

Unload Time (hr) 320.6 785.9 640.9 382.1

Delivery Admin (hr) 17.0 19.3 19.3 19.3

Total Time (hr) 437.9 919.2 774.2 515.4

Driver Pay $2,153 $13,558 $11,420 $2,534

Driver Overtime Pay $0 $0 $0 $0 

Loader Pay $417 $474 $474 $474 

Total Personnel Expense $2,570 $14,032 $11,894 $3,008 

Total Delivery Expense $8,659 $20,121 $17,983 $9,097 
n Supplemental Tables: Wholesale Model

Table 21 

Wholesale Cash flow

Ongoing Jan Feb Mar Apr

Operating Activities

Net Income (loss) (11,349) (11,987) (10,906) 1,327 15,249 

Non cash charges to net income (loss) 0 0 0 0 0 

Depreciation 750 750 750 750 750 

Tax Credit 0 0 0 0 0 

(Increase) Decrease in current assets 0 0 0 0 0 

Accounts receivable 10,761 (1,855) (11,132) (19,481) (32,932)

Inventories 0 0 0 0 0 

Increase (decrease) in current liabilities 0 0 0 0 0 

Accounts payable and accrued expenses 0 0 0 0 0 

Accrued interest 145 153 204 293 444 

Net Cash Provided by (Used in) 

Operating Activities $306 ($12,940) ($21,084) ($17,110) ($16,489)

Investing Activities

Purchases of property and equipment (75,000) 0 0 0 0 

Financing Activities

Member contributions (distributions) 18,750 0 0 0 0 

Other contributions 0 153 204 293 444 

Grants 0 0 0 0 0 

Net borrowings (payments) 

on short-term loans or notes 0 0 0 0 0 

Principal payments on long-term loans 0 (1,327) (1,327) (1,327) (1,327)

Proceeds from long-term debt borrowings 56,250 0 0 0 0 

Net Cash Provided by (Used in) 

Financing Activities 0 (1,174) (1,123) (1,033) (882)

Net Increase in Cash $306 ($14,113) ($22,207) ($18,144) ($17,371)

Cash — beginning of period $20,000 $20,306 $6,193 ($16,014) ($34,157)

Cash — end of period $20,306 $6,193 ($16,014) ($34,157) ($51,529)

56 RUNNING A FOOD HUB
May Jun Jul Aug Sep Oct Nov Dec B/E

Annual

18,158 13,864 626 52 (7,526) (3,774) (13,720) (14,187) (12,823)

0 0 0 0 0 0 0 0 0 

750 750 750 750 750 750 750 750 9,000 

0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 

(22,264) (4,175) 18,553 8,813 18,090 2,783 22,264 13,451 (7,885)

0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 

546 565 480 440 357 344 242 181 4,252 

($2,809) $11,005 $20,410 $10,055 $11,671 $103 $9,537 $195 ($7,457)

0 

0 0 0 0 0 0 0 0 (75,000)

0 0 0 0 0 0 0 0 0 

546 565 480 440 357 344 242 181 4,252 

0 0 0 0 0 0 0 0 0 

0 (2,000) 0 0 (1,000) 0 (11,000) 3,000 (11,000)

(1,327) (1,327) (1,327) (1,327) (1,327) (1,327) (1,327) (1,327) (15,920)

0 0 0 0 0 0 0 0 56,250 

(780) (2,761) (846) (887) (1,970) (982) (12,084) 1,854 (22,668)

($3,590) $8,244 $19,563 $9,168 $9,701 ($879) ($2,548) $2,049 ($30,125)

($51,529) ($55,118) ($46,874) ($27,311) ($18,143) ($8,441) ($9,320) ($11,868) $20,306 

($55,118) ($46,874) ($27,311) ($18,143) ($8,441) ($9,320) ($11,868) ($9,818) ($9,818)

RUNNING A FOOD HUB 57
n Supplemental Tables: Wholesale Model

Table 21 (Continued)

Wholesale Cash flow

GR Q1 GR Q2 GR Q3

Operating Activities

Net Income (loss) (19,994) 87,520 16,982

Non cash charges to net income (loss) 0 0 0 

Depreciation 2,250 2,250 2,250

Tax Credit 0 0 0 

(Increase) Decrease in current assets 0 0 0 

Accounts receivable (28,999) (95,258) 29,293

Inventories 0 0 0 

Increase (decrease) in current liabilities 0 0 0 

Accounts payable and accrued expenses 0 0 0 

Accrued interest (941) (2,251) (1,848)

Net Cash Provided by (Used in ) Operating Activities ($47,684) (7,739) $46,678

Investing Activities

Purchases of property and equipment 0 0 0

Financing Activities

Member contributions (distributions) 0 0 0 

Other contributions 941 2,251 1,848

Grants 0 0 0

Net borrowings (payments) on short-term loans or notes 0 0 0 

Principal payments on long-term loans (4,248) (4,248) (4,248)

Proceeds from long-term debt borrowings 0 0 0 

Net Cash Provided by (Used in ) Financing Activities (3,308) (1,998) (2,401)

Net Increase in Cash ($50,991) ($9,736) $44,277

Cash — beginning of period ($9,818) ($60,810) ($70,546)

Cash — end of period ($60,810) ($70,546) ($26,269)

58 RUNNING A FOOD HUB
Annual Annual 

GR Q4 VI Q1 VI Q2 VI Q3 VI Q4 Total GR Total VI

(32,438) (24,883) 133,914 36,612 (37,544) 52,071 108,099

0 0 0 0 0 0 0 

2,250 4,018 4,018 4,018 4,018 9,000 16,071

0 0 0 0 0 0 0 

0 0 0 0 0 0 0 

53,667 (13,116) (130,640) 40,173 73,600 (41,298) (29,983)

0 0 0 0 0 0 0 

0 0 0 0 0 0 0 

0 0 0 0 0 0 0 

(1,110) (1,290) (3,087) (2,534) (1,522) (6,149) (8,433)

$22,368 ($35,272) $4,205 $78,269 $38,551 $13,624 $85,754

0000000

0 31,000 0 0 0 0 31,000

1,110 1,290 3,087 2,534 1,522 6,149 8,433

0000000

0 0 0 0 0 0 0 

(4,248) (4,535) (4,535) (4,535) (4,535) (16,994) (18,141)

0 0 0 0 0 0 0 

(3,139) 27,755 (1,449) (2,001) (3,013) (10,845) 21,293

$19,230 ($7,517) $2,756 $76,268 $35,539 $2,779 $107,047

($26,269) ($7,039) ($14,556) ($11,799) $64,469 ($9,818) ($7,039)

($7,039) ($14,556) ($11,799) $64,469 $100,007 ($7,039) $100,007

RUNNING A FOOD HUB 59
Appendix (Continued)

Supplemental Tables: Direct-to-Consumer Model ..................................................61

Table 22: Prototypical Direct-to-Consumer Food Hub Balance Sheet ..................61

Table 23: Direct-to-Consumer Expense and Revenue..............................................62

Table 24: Direct-to-Consumer Labor Summary .........................................................64

Table 25: Direct-to-Consumer Transportation summary ..........................................68

Table 26: Direct-to-Consumer Cash Flow ...................................................................72

60 RUNNING A FOOD HUB

Photo courtesy of The Agriculture and Land-Based Training Association
Table 22

Prototypical Direct-to-Consumer Food Hub Balance Sheet

Breakeven (B/E) Growth (GR) Viability (VI)

Assets

Cash and Equivalents 16,836 19,890 38,967 

Accounts Receivables 20,087 27,006 36,200 

Inventories 0 0 0 

Total Current Assets 36,923 46,897 75,167 

Buildings and Equipment, Net of Depreciation 39,941 37,391 34,842 

Other Assets, Net of Amortization 0 0 0 

Total Assets $76,864 $84,288 $110,009 

Liabilities and Members’ Equity

Current Liabilities

Accounts Payable and Accrued Expenses 0 0 0 

Accrued Interest 1,707 (2,296) (3,077)

Current Maturities of Long-Term Debt (1,264) (1,116) (958)

Total Current Liabilities $443 ($3,411) ($4,035)

Long-term Debt

Senior Debt 17,168 14,737 12,149 

Less Current Maturities of Long-Term Debt (1,264) (1,116) (958)

Members’ Equity

Member Equity and Equity Equivalents 214,147 71,143 83,737 

Dispersed Member Equity 0 0 0 

Retained Earnings (Losses) (153,630) 2,935 19,116 

Total Liabilities and Members’ Equity $76,864 $84,288 $110,009

n Supplemental Tables

Direct-to-Consumer Model

RUNNING A FOOD HUB 61
n Supplemental Tables: Direct-to-Consumer Model

62 RUNNING A FOOD HUB

Table 23 

Direct-to-Consumer Expense and Revenue

Percent 

Annual Total of Revenue 

Direct-to-Consumer Baseline Breakeven Breakeven

Income

Fresh Produce ($) 314,400 100.00%

Grant Funds ($) 0 0.00%

Total Sales All Types 314,400 100.00%

Variable Costs

Product Lost in Transport/Handling & Returns (7,531) (2.4%)

COGS Produce ($) (209,600) (66.7%)

Donations To Pickup Sites (9,432) (3.0%)

Credit Card Processing (2,830) (0.9%)

Packaging Material Expense (12,960) (4.1%)

Variable Labor & Delivery Expense (13,171) (4.2%)

Total Variable Costs (255,524) (81.3%)

Variable Margin 58,876 18.7%

Fixed Costs

Equipment Loan Interest Pmnts (1,264) (0.4%)

Business Personal Property Tax (233) (0.1%)

Tools, Dies, Fixtures, Maint/Repairs (2,600) (0.8%)

Fixed Vehicle Expenses and Forklift Rental (2,859) (0.9%)

Total Equipment Costs (6,957) (2.2%)

Facilities

Rent Expense (2,200) (0.7%)

Facility Expenses and Insurance (6,020) (1.9%)

Utilities (4,200) (1.3%)

Total Facility Costs (12,420) (4.0%)

Fixed Sales and Marketing

Promotional Costs (4,000) (1.3%)

Total Selling and Marketing Costs (4,000) (1.3%)

General/Administrative

Mgmt./Admin. Support/Fringe and Ovhd. (23,725) (7.5%)

General Expenses & Fees (Software, Legal, Supplies etc.) (4,860) (1.5%)

Total General/Administrative Costs (28,585) (9.1%)

Unforeseen/Contingency

Unforeseen Expenses and Bad Debt (6,288) (2.0%)

Total Fixed Costs (58,250) (18.5%)

Direct-to-Consumer Baseline EBITDA* 627 0.2%

Equipment Depreciation (2,549) (0.8%)

Receivables Interest (23 days @ 0.085) (1,707) (0.5%)

Net Direct-to-Consumer Baseline Income (3,630) (1.2%)

*Earnings before interest, taxes, depreciation, and amortization
RUNNING A FOOD HUB 63

Percent Percent 

Annual Total of Revenue Annual Total of Revenue 

Growth Growth Viability Viability

422,710 100.00% 566,604 100.00%

0 0.00% 0 0.00%

422,710 100.00% 566,604 100.00%

(7,873) (1.9%) (10,630) (1.9%)

(281,807) (66.7%) (377,736) (66.7%)

(12,681) (3.0%) (16,998) (3.0%)

(3,804) (0.9%) (5,099) (0.9%)

(17,200) (4.1%) (23,220) (4.1%)

(17,640) (4.2%) (18,021) (3.2%)

(341,005) (80.7%) (451,705) (79.7%)

81,705 19.3% (451,705) (79.7%)

(1,116) (0.3%) (958) (0.2%)

(218) (0.1%) (204) (0.0%)

(2,678) (0.6%) (2,758) (0.5%)

(5,890) (1.4%) (10,112) (1.8%)

(9,902) (2.4%) (14,033) (2.5%)

(2,266) (0.5%) (2,334) (0.4%)

(6,201) (1.5%) (6,387) (1.1%)

(4,326) (1.0%) (4,456) (0.8%)

(12,793) (3.0%) (13,176) (2.3%)

(4,120) (1.0%) (4,244) (0.7%)

(4,120) (1.0%) (4,244) (0.7%)

(33,150) (7.8%) (41,600) (7.3%)

(5,506) (1.3%) (5,772) (1.0%)

(38,656) (9.1%) (47,372) (8.4%)

(8,454) (2.0%) (11,332) (2.0%)

(73,925) (17.5%) (90,157) (15.9%)

7,780 1.8% 24,742 4.4%

(2,549) (0.6%) (2,549) (0.5%)

(2,293) (0.5%) (3,077) (0.5%)

2,935 0.7% 19,116 3.4%
Business

Per

n Supplemental Tables: Direct-to-Consumer Model

64 RUNNING A FOOD HUB

Table 24 

Direct-to-Consumer Labor Summary

Breakeven (B/E)

Jan Feb Mar Apr

Volunteer Labor # Emp. 0 0 8 8

Rate/Hr. Total Hrs. 0 0 47 47

$0.00 Cost $0 $0 $0 $0

Total Cost $0

Driver # Emp. 0 0 1 1

Rate/Hr. Total Hrs. 0 0 20 31

$13.00 Cost $0 $0 $265 $397

Total Cost $2,646

General Warehouse Labor # Emp. 0 0 1 1

Rate/Hr. Total Hrs. 0 0 17 34

$10.00 Cost $0 $0 $171 $343

Total Cost $2,057

Pickup Point Labor # Emp. 0 0 2 2

Rate/Hr. Total Hrs. 0 0 42 59

$10.50 Cost $0 $0 $882 $1,235

Total Cost $8,467

Total Cost Production: $0 $0 $1,318 $1,975

Total Labor Cost B/E $13,171
RUNNING A FOOD HUB 65

May Jun Jul Aug Sep Oct Nov Dec

88 8 8 8 8 0 0

47 47 47 47 47 47 0 0

$0 $0 $0 $0 $0 $0 $0 $0

11 1 1 1 1 0 0

31 31 31 20 20 20 0 0

$397 $397 $397 $265 $265 $265 $0 $0

11 1 1 1 1 0 0

34 34 34 17 17 17 0 0

$343 $343 $343 $171 $171 $171 $0 $0

22 2 2 2 2 0 0

59 59 59 42 42 42 0 0

$1,235 $1,235 $1,235 $882 $882 $882 $0 $0

$1,975 $1,975 $1,975 $1,318 $1,318 $1,318 $0 $0
Business

Per

n Supplemental Tables: Direct-to-Consumer Model

Growth (GR)

Table 24 (Continued) Direct-to-Consumer Labor Summary

GR Q1 GR Q2 GR Q3 GR Q4

Volunteer Labor # Emp. 13 13 13 13

Rate/Hr. Total Hrs. 373 142 142 111

$0.00 Cost $0 $0 $0 $0

Total Cost $0

Driver # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 38 129 129 41

$13.25 Cost $500 $1,704 $1,704 $539

Total Cost $4,446

General Labor # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 34 167 206 34

$10.25 Cost $351 $1,713 $2,109 $351

Total Cost $4,966

Pickup Point Labor # Emp. 2 2 2 2

Rate/Hr. Total Hrs. 67 126 126 84

$10.75 Cost $1,445 $2,709 $2,709 $1,806

Total Cost $9,072

Total Cost Production: $2,296 $6,126 $6,521 $2,697

Total Labor Cost GR $17,640

66 RUNNING A FOOD HUB
Viability (VI)

Direct-to-Consumer Labor Summary

VI Q1 VI Q2 VI Q3 VI Q4

Volunteer Labor # Emp. 20 20 20 20

Rate/Hr. Total Hrs. 70 175 175 70

$0.00 Cost $0 $0 $0 $0

Total Cost $0

Driver # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 36 122 122 41

$13.50 Cost $484 $1,649 $1,649 $550

Total Cost $4,331

General Labor # Emp. 1 1 1 1

Rate/Hr. Total Hrs. 34 167 206 34

$10.50 Cost $360 $1,755 $2,160 $360

Total Cost $5,076

Pickup Point Labor # Emp. 2 2 2 2

Rate/Hr. Total Hrs. 76 126 126 84

$11.00 Cost $1,663 $2,772 $2,772 $1,848

Total Cost $9,467

Total Cost Production: $2,507 $6,176 $6,581 $2,758

Total Labor Cost VI $18,021

RUNNING A FOOD HUB 67
n Supplemental Tables: Direct-to-Consumer Model

68 RUNNING A FOOD HUB

Table 25 

Direct-to-Consumer Transportation Summary

Trasnportation Expense for Breakeven (B/E) ($)

Jan Feb Mar Apr May

Number of Delivery Days per Week 2 2 2 2 2

Number of Delivery Days per Month 9 9 9 9 9

$ Value of Produce Per Delivery Day $0 $0 $2,934 $4,402 $5,502

$ Value of Dairy Per Delivery Day $0 $0 $0 $0 $0

$ Value of Misc. Per Delivery Day $0 $0 $0 $0 $0

$ Value of Other Per Delivery Day $0 $0 $0 $0 $0

Lbs. of Product Per Delivery Day $0 $0 $0 $0 $0

Total Truckload Capacity 11250 11250 11250 11250 11250

% of Total Truck Capacity Utilized Per Load 0% 0% 0% 0% 0%

Number of Drop Off Points Per Delivery 10 10 10 10 10

Amount of Product Left at Each Point (Lbs) 0 0 0 0 0

# of 25 Lb Boxes Per Point (Units) 0 0 0 0 0

Number of Trucks Required 0.0 1.0 1.0 1.0 1.0

Total Average Miles Traveled per Delivery 0 75 75 75 75

Fixed Vehicle Expense

Vehicle Reimbursement Expense $0 $0 $357 $357 $357 

Total Fixed Vehicle Expense $0 $0 $357 $357 $357 

Personnel Expense

Load Time (hr) (Gen Labor) 0.0 4.9 5.7 5.7 5.7

Drive Time (hr) (Driver) 0.0 31.0 36.4 36.4 36.4

Unload Time (hr) (Driver) 0.0 0.0 0.0 0.0 0.0

Delivery Admin (hr) (Gen Labor) 0.0 3.6 4.3 4.3 4.3

Total Time (hr) 0.0 39.5 46.5 46.5 46.5

Driver Pay $0 $0 $604 $604 $604

Driver Overtime Pay $0 $0 $0 $0 $0 

Loader Pay $0 $0 $100 $100 $100 

Total Personnel Expense $0 $0 $704 $704 $704 

Total Delivery Expense $0 $0 $1,062 $1,062 $1,062 
RUNNING A FOOD HUB 69

Jun Jul Aug Sep Oct Nov Dec Total

22 22 222

99 99 999

$6,602 $5,869 $5,135 $4,035 $2,201 $0 $0

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0

$0 $0 $0 $0 $0 $0 $0

11250 11250 11250 11250 11250 11250 11250

0% 0% 0% 0% 0% 0% 0%

10 10 10 10 10 10 10

00 00 000

00 00 000

1.0 1.0 1.0 1.0 1.0 0.0 0.0

75 75 75 75 75 0 0

$357 $357 $357 $357 $357 $0 $0 

$357 $357 $357 $357 $357 $0 $0 $2,859 

5.7 5.7 5.7 5.7 5.7 0.0 0.0

36.4 36.4 36.4 36.4 36.4 0.0 0.0

0.0 0.0 0.0 0.0 0.0 0.0 0.0

4.3 4.3 4.3 4.3 4.3 0.0 0.0

46.5 46.5 46.5 46.5 46.5 0.0 0.0

$604 $604 $604 $604 $604 $0 $0

$0 $0 $0 $0 $0 $0 $0 

$100 $100 $100 $100 $100 $0 $0 

$704 $704 $704 $704 $704 $0 $0 $5,634 

$1,062 $1,062 $1,062 $1,062 $1,062 $0 $0 $8,493 
Business

Per

n Supplemental Tables: Direct-to-Consumer Model

Table 25 (Continued) 

Direct-to-Consumer Transportation Summary

Trasnportation Expense for Growth (GR) ($)

GR Q1 GR Q2 GR Q3 GR Q4

Number of Delivery Days per Week 3 3 3 3

Number of Delivery Days per Quarter 13 39 39 13

$ Value of Produce Per Delivery Day $13,495 $6,407 $0 $0 

$ Value of Dairy Per Delivery Day $0 $0 $0 $0 

$ Value of Misc. Per Delivery Day $0 $0 $0 $0 

$ Value of Other Per Delivery Day $0 $0 $0 $0 

Lbs of Product Per Delivery Day 0 0 0 0

Truckload Capacity 11250 11250 11250 11250

% of Truck space Utilized Per Load 0% 0% 0% 0%

Number of Drop Off Points Per Delivery 15 15 15 15

Amount of Product Left at Each Point (Lbs) 0 0 0 0

# of 25 Lb Boxes Per Point (Units) 0 0 0 0

Number of Trucks Required 1.0 1.0 1.0 1.0

Total Average Miles Traveled per Delivery 100 100 100 100

Fixed Vehicle Expense

Vehicle Reimbursement Expense $736 $2,209 $2,209 $736 

Total Fixed Vehicle Expense $736 $2,209 $2,209 $736 

Personnel Expense

Load Time (hr) 7.6 25.8 25.8 8.2

Drive Time (hr) 70 238 238 75

Unload Time (hr) 0.0 0.0 0.0 0.0

Delivery Admin (hr) 5.7 19.3 19.3 6.1

Total Time (hr) 83.0 283.0 283.0 89.6

Driver Pay $367 $3,750 $3,750 $396

Driver Overtime Pay $0 $0 $0 $0 

Loader Pay $136 $463 $463 $146 

Total Personnel Expense $502 $4,212 $4,212 $542 

Total Delivery Expense $1,239 $6,421 $6,421 $1,279 

70 RUNNING A FOOD HUB
Trasnportation Expense for Vitality (VI) ($)

VI Q1 VI Q2 VI Q3 VI Q4

Number of Deliveries per Week 4 4 4 4

Number of Deliveries per Quarter 17 51 51 17

$ Value of Produce Per Delivery Day $12,162 $6,860 $0 $0 

$ Value of Dairy Per Delivery Day $0 $0 $0 $0 

$ Value of Misc. Per Delivery Day $0 $0 $0 $0 

$ Value of Other Per Delivery Day $0 $0 $0 $0 

Lbs of Product Per Delivery Day 0 0 0 0

Truckload Capacity 11250 11250 11250 11250

% of Truck space Utilized Per Load 0% 0% 0% 0%

Number of Drop Off Points Per Delivery 25 25 25 25

Amount of Product Left at Each Point (Lbs) 0 0 0 0

# of 25 Lb Boxes Per Point (Units) 0 0 0 0

Number of Trucks Required 1.0 1.0 1.0 1.0

Total Average Miles Traveled per Delivery-All Trucks 125 125 125 125

Fixed Vehicle Expens

Vehicle Reimbursement Expense $1,264 $3,792 $3,792 $1,264 

Total Fixed Vehicle Expense $1,264 $3,792 $3,792 $1,264 

Personnel Expense

Load Time (hr) 10.1 34.5 34.5 11.5

Drive Time (hr) 64 219 219 73

Unload Time (hr) 0.0 0.0 0.0 0.0

Delivery Admin (hr) 7.5 25.7 25.7 8.6

Total Time (hr) 81.8 278.7 278.7 92.9

Driver Pay $368 $3,763 $3,763 $418

Driver Overtime Pay $0 $0 $0 $0 

Loader Pay $185 $632 $632 $211 

Total Personnel Expense $553 $4,395 $4,395 $629 

Total Delivery Expense $1,817 $8,187 $8,187 $1,893 

RUNNING A FOOD HUB 71
n Supplemental Tables: Direct-to-Consumer Model

Table 26 

Direct-to-Consumer Cash flow

Ongoing Jan Feb Mar Apr

Operating Activities

Net Income (Loss) (3,428) (4,518) (4,285) 88,815 (33,324)

Non cash charges to net income (loss) 

Depreciation 212 212 212 212 212 

Tax Credit 0 0 0 0 0 

(Increase) Decrease in current assets

Accounts receivable 0 0 0 (95,312) 95,312 

Inventories

Increase (decrease) in current liabilities

Accounts payable and accrued expenses

Accrued interest 0 0 0 675 0 

Net Cash Provided by (Used in) 

Operating Activities ($3,215) ($4,306) ($4,072) ($5,609) $62,200 

Investing Activities

Purchases of property and equipment 0 

Financing Activities

Member contributions (distributions) 0 0 0 0 0 

Other contributions 0 0 675 0 

Grants 0 0 0 0 

Net borrowings (payments) on short-term 

loans or notes 0 0 0 0 

Principal payments on long-term loans (190) (190) (190) (190)

Proceeds from long-term debt borrowings 0 

Net Cash Provided by (Used in) 

Financing

Activities 0 (190) (190) 485 (190)

Net Increase in Cash ($3,215) ($4,496) ($4,263) ($5,124) $62,010 

Cash — beginning of period $20,000 $16,785 $12,289 $8,026 $2,902 

Cash — end of period $16,785 $12,289 $8,026 $2,902 $64,912 

72 RUNNING A FOOD HUB
May Jun Jul Aug Sep Oct Nov Dec B/E

Annual

(40,001) 127,354 (42,227) (37,119) (30,442) (19,314) (4,285) (4,285) (3,630)

212 212 212 212 212 212 212 212 2,549 

0 0 0 0 0 0 0 0 0 

0 

0 (145,728) 145,728 0 0 0 0 0 0 

0 

0 

0 1,032 0 0 0 0 0 0 1,707 

($39,788) ($17,130) $103,714 ($36,906) ($30,230) ($19,102) ($4,072) ($4,072) $627 

0 

0 

0 

0 0 0 0 0 0 0 0 0 

0 1,032 0 0 0 0 0 0 1,707 

0 0 0 0 0 0 0 0 0 

0 0 0 0 0 0 0 0 0 

(190) (190) (190) (190) (190) (190) (190) (190) (2,282)

0 

(190) 842 (190) (190) (190) (190) (190) (190) (575) 

($39,979) ($16,288) $103,524 ($37,097) ($30,420) ($19,292) ($4,263) ($4,263) $52 

$64,912 $24,933 $8,646 $112,170 $75,073 $44,653 $25,362 $21,099 $16,785 

$24,933 $8,646 $112,170 $75,073 $44,653 $25,362 $21,099 $16,836 $16,836 

RUNNING A FOOD HUB 73
n Supplemental Tables: Direct-to-Consumer Model

Table 26 (Continued)

Direct-to-Consumer Cash flow

GR Q1 GR Q2 GR Q3

Operating Activities

Net Income (Loss) 117,195 69,142 (146,676)

Non cash charges to net income (loss) 

Depreciation 637 637 637 

Tax Credit – – –

(Increase) decrease in current assets

Accounts receivable (44,558) (18,909) 63,468 

Inventories

Increase (decrease) in current liabilities

Accounts payable and accrued expenses

Accrued interest (947) (1,349) –

Net Cash Provided by (Used in) Operating Activities $72,327 49,522 ($82,571)

Investing Activities

Purchases of property and equipment –

Sale of Property and Equipment

Financing Activities

Member contributions (distributions) – – –

Other contributions 947 1,349 –

Grants – – –

Net borrowings (payments) on short-term loans or notes – – –

Principal payments on long-term loans (608) (608) (608)

Proceeds from long-term debt borrowings –

Net Cash Provided by (Used in ) Financing Activities 339 741 (608)

Net Increase in Cash $72,666 $50,263 ($83,178)

Cash — beginning of period $16,836 $89,503 $139,766 

Cash — end of period $89,503 $139,766 $56,587 

74 RUNNING A FOOD HUB
Annual Annual 

GR Q4 VI Q1 VI Q2 VI Q3 VI Q4 Total GR Total VI

(36,727) 139,399 117,859 (192,414) (45,728) 2,935 19,116 

– –

637 637 637 637 637 2,549 2,549 

– –– ––––

– –

– (53,831) (37,136) 90,967 – – –

– –

– –

– (1,144) (1,933) – – (2,296) (3,077)

($36,089) $85,061 $79,427 ($100,809) ($45,091) $3,189 $18,589 

– ––

– ––

– –– ––––

– 1,144 1,933 – – 2,296 3,077 

– –– ––––

– –– – ––

(608) (647) (647) (647) (647) (2,430) (2,588)

– –

339 485 1,269 (647) (647) (135) 489 

$72,666 $85,558 $80,713 ($101,456) ($45,738) $3,054 $19,077 

$56,587 $19,890 $105,448 $186,161 $84,705 $16,836 $19,890 

$19,890 $105,448 $186,161 $84,705 $38,967 $19,890 $38,967 

RUNNING A FOOD HUB 75
76 RUNNING A FOOD HUB
Photo courtesy of Common Market Philadelphia
Running a Food Hub: Lessons Learned From the Field, Vol. 1, SR 77

Running a Food Hub: A Business Operations Guide, Vol. 2, SR 77

These reports are part of multi-volume, technical report series: Running

a Food Hub. The first volume compiles a number of best business

practices for starting or expanding a food hub enterprise. It includes

operational profiles of the food hubs profiled in the report.

Volume 2 focuses on operational issues faced by food hubs, including

organization, infrastructure, and logistics, among others.

For hard copies (please indicate title, publication number, and

quantity needed), e-mail: coopinfo@wdc.usda.gov, or call: (202) 720-

7395. Or write: USDA Co-op Info., Stop 0705, 1400 Independence Ave.,

SW, Washington DC 20250. To download from the Web, visit:

www.rurdev.usda.gov/rbs/newpub.htm.

NE W TECHNICAL REPORT SERIES

Running A

FOOD HUB

VOLUME ONE

VOLUME TWO