Kennesaw nonprofit says it wants to amend contract: The Edge Connection looks to end $75K grant-backed kitchen incubator program
KENNESAW — A nonprofit the city of Kennesaw gave a $75,000 grant to is asking the City Council to amend its contract with the city and allow it to shut down the program the grant helped start.
The Edge Connection is a Kennesaw-based organization developed to help entrepreneurs through education and training, and in 2011, the nonprofit entered into an agreement with Kennesaw to set up a kitchen incubator to provide a space to cook for those who want to start a culinary business.
For instance, someone who wanted to start a restaurant could take classes to help with the business side and use the commercial-grade kitchen to work on recipes and cooking. These services are offered for a fee, but because the program is geared toward low-income entrepreneurs, the fees vary based on income levels.
The incubator was set up on Jiles Road, just off Cobb Parkway, and Edge Connection used the city’s grant to purchase equipment for the kitchen. However, Edge Connection CEO Terri Elhaddaoui told the council Monday evening that the demand for the kitchen incubator is not what was anticipated.
“Our last fiscal year, we ran about a $4,000 deficit, and this year, we’re expecting to end the year, should we finish the year, at over an $80,000 deficit,” Elhaddaoui said. “That strains our core nonprofit, which appeals to a broader scope of entrepreneurs.”
Elhaddaoui said her organization, which operates out of Kennesaw State University’s Coles College of Business, will continue to work with the city’s businesses. Entrepreneurs who go through the city’s economic development office can be vetted and referred to the nonprofit, which will then provide other services Edge Connection offers, including help with a business plan and financial consulting, for free.
“I believe we can better service that particular market, as well as the broader market of entrepreneurs, by engaging the city on the side of our greater nonprofit,” Elhaddaoui said.
The City Council took no action Monday, but only heard a presentation from Elhaddaoui. Robert Fox, director of economic development for Kennesaw, said after the meeting that he could have an amended contract for the council to consider in two to four weeks.
Mayor Mark Mathews, who approved the original agreement in 2011, said offering these services for free to all Kennesaw businesses that qualify may actually be better for the city than the kitchen incubator.
“Obviously, we’re heartbroken it’s not working out, but I think what they’ve proposed is actually going to be a larger service to our community than what we even had before,” Mathews said. “We were very specialized before in what we thought was going to be a very niche business that could benefit the city. What we’re being provided now as an alternative is actually much broader and goes to a broader base.”
Despite the lower than anticipated returns from the Edge Kitchen investment, Mathews sees a silver lining.
“It’s very unfortunate that the model we started with wasn’t really successful, but we all learn and we grow from our failures, and I think this is a great opportunity, not just for the Edge Connection to grow further … but for us to learn and be able to expand the services and the opportunities that we offer,” Mathews said. “It gives us more tools in our toolbox from an economic development standpoint. It gives us an advantage that other communities do not have.”
Mathews said he would not characterize the investment as a loss.
“I wouldn’t say that it’s a failure,” he said. “The city bought into a proposal of the Edge Connection in expanding their service offerings that did not work to the advantage that they anticipated working towards. … That didn’t happen, and what we’re left with now is something much better.”
Additionally, Elhaddaoui said the Edge Connection will try to find commercial kitchens in the metro Atlanta area to continue providing kitchen space for culinary entrepreneurs. The value of these services vary because the nonprofit has a sliding scale based on each entrepreneur’s income, Elhaddaoui said, but the core program costs $3,000 and includes a series of classes. It does not include other additional workshops offered by Edge Connection, she added.
Elhaddaoui said the Edge Kitchen’s lack of success is a nationwide trend, saying kitchen incubator programs are not succeeding in non-urban areas and the kitchen could have fared better if it were inside the Atlanta perimeter.
According to a report Edge Connection provided to the city, a total of 26 entrepreneurs participated in the Edge Kitchen program in 2014. The report also states 21 business licenses were issued for start-ups coming out of the incubator in 2014. Of those, 19 businesses were responsible for 52 jobs being created, 40 of which were sustained.
Elhaddaoui told the council she would like to cease operations at the kitchen and try to get out of the lease it has on the kitchen space, but the nonprofit has to have the 2011 agreement amended to do so because it stipulated the kitchen must remain open for five years.
The equipment purchased using the grant would be sold or left with the property owner, Elhaddaoui said.
During Monday’s work session, Councilwoman Cris Eaton-Welsh said she has liquidated a kitchen before and told Elhaddaoui she would likely get back only 10 percent of the money spent on equipment if it is sold.