If you have a taste for the delicious and an entrepreneurial mind, why not consider starting a hot sauce business? Hot sauce is one of the nation’s favorite condiments and has taken on a special status in our culture. Hot sauce is a delicious way to give practically any dish a nice kick of heat and spice.
The hot sauce industry is also rapidly growing. Thanks to cost-savings in distribution chains, more people have been starting their own businesses, including hot sauce businesses. The hot sauce business has grown by 150% in the past 20 years and the industry is expected to bring in approximately $3.6 billion by 2026.
So if you have ever considered making hot sauce, now is as good a time as any to get started. To help you out, we put together this comprehensive guide on how to start a hot sauce business, from scratch, with no prior experience.
Steps to Start a Hot Sauce Business
Step 1. Create a Unique Recipe
The first step to any business is that you need to create and refine your product first. After all, the entire appeal of hot sauce is the unique recipe and flavor that each brand uses. So, you need a killer recipe to grab customer’s attention.
Many people get family recipes that have been passed down for generations or a special family recipe they used as kids. You might need to buy a bunch of different sauces to experiment and get some creative juices flowing. Common ingredients that are found in hot sauces include
- Mexican peppers
- Cajun peppers
- Curry sauce
- Scotch bonnet sauce
Those are just the basic ingredients. You can make a unique hot sauce by adding unconventional ingredients.
For example, Purple Hippo hot sauce is made with a kind of prickly pear cactus fruit, and Chocolate Lightning is made with, you guessed it, chocolate. So don’t be afraid to get creative when perfecting your recipe. Hot sauce is pretty versatile.
One important thing to remember is to document everything about your hot sauce recipe whether it’s on a Word document, PDF, or Notepad file.
Recipes can be documented trade secrets and your claim will stand up in court only if you have records. If you have a safe document of your recipe, then it can hold up in court if there is a legal problem. If you don’t want to create your own, you may decide to join a franchise.
Step 2. Create a Business Plan
The next logical step is to put together a business plan. A business plan is basically an outline of the important aspects of your business; things like:
- Startup Expenses
- Projected Revenues
- Expected Profits
- Market Research
- Business Structure
- Development Timeline
If you plan to bring your sauce to investors, then you will need to have a competent business plan in place, complete with a detailed analysis of your costs, expected returns, marketing strategy, and working timeline.
Your business plan is also a good place to define your brand and image. Branding and imagery are important in any business, especially those related to food and cooking.
One way to help flesh out your business plan is to take some cues from competitors. You can search for similar companies and research their marketing strategies, pricing structures, customer interaction, and any other relevant features. Competition research is an integral part of understanding your market.
Step 3. Find a Place to Make Your Sauce
Before you can start cooking for commercial purposes, you will have to make sure your kitchen passes federal laws and regulations, whether it’s in your home or commercial space.
It is important to understand the exact regulations and standards for your state and county. We would recommend starting in your home kitchen but some states will not allow that.
If you can’t use your home, then you need to rent or share a commercial kitchen space. These spaces need to be regulated so a lot of the legal responsibility is on your shoulders. In some states, you can get what is called a Home Processor Exemption that will let you sell your wares at a handful of places.
Contact your local health department and set up an inspection. Once you pass your inspection, you will be able to start producing.
Some kitchens are pre-inspected so you can rent and start cooking. If you use a shared kitchen, also known as an “incubator kitchen,” Then you can get around a lot of the legal responsibilities of owning your own kitchen.
There are a lot of sources to help you rent commercial kitchen space. Services like The Kitchen Door can help find rentable space for competitive rates.
In general, it costs around $15-$30 per hour to rent commercial kitchen space, so these costs need to be incorporated into your budget. You might also have to work around other renter’s schedules so you all do not overlap.
Step 4. Find Suppliers for Ingredients
Obviously, if you are going to be making commercial quantities of hot sauce, then you will need to nail down your supply chains for ingredients.
Hot sauce is relatively simple to make and none of the individual ingredients are that expensive, but you are going to need a lot of ingredients to make any quantities of hot sauce that will make you money.
When it comes to food and sauces, there are a ton of places that you can look to source ingredients, such as:
- Wholesale distributors
- Regional supplies
- Local suppliers
- Greenmarkets and farmers markets
There are a ton of places to source the basic ingredients for hot sauce. Make sure that you factor wholesale and ingredients cost into your monthly expenses and revenue projections.
The ingredients for hot sauce are available in large quantities year-round, you should have a fairly consistent expense sheet for ingredient orders.
Step 5. Production
The next two steps are the last big hurdles to go over before your business is fully functioning. Obviously, if you want to sell hot sauce commercially, you will need to make a lot of hot sauce.
The vast majority of people doing this business probably start off just by themselves, making as much as they can as a 1-man crew before hiring extra hands to help with production. Most people just starting out do not have the funds to pay for regular help either way.
Actually making the sauce in the kitchen is just the first step. You also need to consider packaging and distribution.
The good thing is that there are several options to help with both. Let’s start with packaging first. Most small business owners do not have the time to package individual products themselves, so they outsource the job to a co-packing company.
These companies help small businesses manufacture and package their products, so you can focus on actually running things. Having a co-packer will greatly help you in the future when you decide to scale operations.
With hot sauce, you have two choices of packaging: jars or bottles. Packaging might not seem important at first, but it is a crucial part of defining your brand.
Thinking about how Tabasco brand hot sauce comes in the classic mini bottle that you would recognize anywhere. Labels and markings are also important branding aspects of packaging. You can either pay someone to handle graphic design for your packaging, or you could download some graphic design software and try making your own designs.
Step 6: Launch and Sales
Everything you have done before has been leading up to this. You have the products ready to go, so now it’s time to sell.
Strictly speaking, you do not have to wait until you have all packaging and labeling ready to go. You can start drumming up business and attention before an official launch by giving out samples of your hot sauce or selling it at small local outlets, like a farmers market.
When it comes to selling hot sauce, you have two major options: sell on a website or sell in stores. Both methods have pros and cons, and there is nothing that says you cannot do both, though it will be more difficult for a small business to manage both retail and online sales.
We would recommend starting with website sales first, with supplemental sales in nearby physical chains. This combination of product sales gives you good flexibility and coverage for minimal costs.
There are hundreds of options you have for making a product website that can accept orders. Some of our favorites include Shopify, WooCommerce, or BigCommerce. These kinds of platforms give the tools so you can make product pages, process digital payments, schedule shipments, keep track of sales numbers, and more.
The last step is marketing your product. Simply put, if you don’t market, then you don’t have a viable business.
Your hot sauce could objectively be the best tasting in the world and you can still fail if you do not have a solid plan to reach out to your intended audience.
Thankfully, the internet makes it easier than ever to market things like hot sauce. Social media, websites, and email lists are all viable ways of building a rapport with your customers and spreading brand awareness.
Hot sauce is a lucrative industry, especially in a country that loves food like the US. So if you have ever considered an unconventional career and like to cook, then maybe starting a hot sauce business would be a good idea.
The low overhead costs and simple business model make it relatively cheap to start, and the growing state of the hot sauce market indicates there is a piece of the pie to be had.
Ruben has been doing online marketing for the last 4 years. Prior to that, he spent 15 years managing different brick-and-mortar businesses, in the home improvement and logistics industries. Overall, he has 20 years of business experience under his belt. Recently, he added SEO, affiliate marketing, and link building to his business skills.