Moving from a home kitchen to commercial premises: what each step costs and how to stage it

The orders keep coming, the home oven is running at 5am and the fridge is full of someone else’s wedding cake. Growing out of the kitchen is a good problem. It is also the point where a lot of small food businesses jump straight to a shopfront lease and find out, six weeks in, how much cash a shop eats before it earns.

There is a calmer way: move in three stages and test the numbers at each one.

What is the safest way to move from a home kitchen to commercial premises?

In stages. Prove demand from home or a market stall, rent a shared commercial kitchen by the hour, then sign for a shopfront or your own kitchen only when the figures survive a worst-month test. Each stage costs more, commits you for longer and needs its own cash.

Stage	What you commit to	What it proves
1. Home kitchen or market stall	Council notification, ingredients, packaging, a stall fee	People will pay your price, repeatedly
2. Shared commercial kitchen	Hourly hire, a bond, storage	You can produce more, to a commercial standard
3. Shopfront or own kitchen	Lease, bond, fit-out, equipment, wages	Takings can carry fixed costs in a quiet month

You can skip a stage. Plenty of owners go from home to a wholesale-only kitchen, or from a stall to a shop. The point is that every jump should be backed by numbers from the stage before it.

What do the rules say about a home food business?

More than many owners expect. Food Standards Australia New Zealand says home-based businesses must meet the same food safety requirements as any other food business, whatever their size or how often they sell. That covers Standard 3.2.2 (food safety practices), Standard 3.2.3 (premises and equipment) and the labelling rules in Part 1.2. Food safety officers can inspect home businesses.

Two practical points matter when you move:

• Notify before you trade, and again when things change. FSANZ’s guidance is to notify your local council before you start, and to tell them before changing your business name, location or food activities. A new kitchen is a new location. Registration details and fees differ by state and council, and the ABLIS tool lists what applies where you are. In the Northern Territory, for example, ABLIS says to register at least 30 days before opening, so don’t leave it to the week of the lease.
• Food safety supervisor and management tools. Standard 3.2.2A applies to businesses handling unpackaged, ready-to-eat, potentially hazardous food, and the category depends on the activity, not the size of the business. Categories one and two need a certified food safety supervisor. Check with your council which category your food falls into, because a move to a commercial kitchen or shopfront can change what you sell and how.

The NSW Food Authority’s home-based business page is a useful example of how a state regulator describes it, though other states have their own pages.

Stage one: how much cash does the home or market-stall stage need?

Less than you think, which is the whole appeal. The costs are ingredients, packaging, labelling, public liability insurance, stall fees and your time. The cash risk at this stage is rarely the gap between paying suppliers and getting paid, because stall and online sales are usually paid on the spot.

What this stage is really for is gathering evidence. Keep a simple record:

• Weekly sales and the ingredients cost behind them
• Which products sell out, and which are left over
• The number of repeat customers and wholesale enquiries you had to turn down
• Hours worked, including the early starts

That last line is the most useful. When you are turning away paid work because the kitchen is full, you have a capacity problem, and a capacity problem is the best reason to take stage two.

Stage two: what does a shared commercial kitchen cost?

Shared kitchens let you rent time rather than a lease. Listings we checked in November 2026 gave an idea of the range. A Sydney provider listed $35 an hour excluding GST with a two-hour minimum, and a Brisbane provider listed $32.25 to $38 an hour for members and $45 for non-members, with a refundable bond. Across several providers the hourly range ran from roughly $25 to $60, mostly before GST. These are provider marketing figures and will change, so treat them as a guide, not a quote.

Extras to price in before you decide:

• Minimum sessions. Two to four hours is common. A short bake still costs the minimum.
• Bond or deposit. Often a few hundred dollars and refundable.
• Storage. Shelves, dry store and cold storage may be charged per week.
• Memberships. Some providers charge an annual fee for cheaper rates.
• Your own small equipment. Tins, scales, labels, packaging.
• Transport. Getting product from the kitchen to customers and markets.

An illustration of the numbers

Here is a worked example. It is an illustration, not a real business. Say a home baker moves production to a shared kitchen three days a week, six hours a day, at $40 an hour. That is $720 a week for the kitchen, or about $3,100 a month, plus a little for storage. If the baker’s ingredients, packaging and labour in the same week come to $1,800 and weekly sales are $3,200, the kitchen is affordable but it is now the biggest fixed cost. If sales dip by a third in a quiet fortnight, the margin shrinks quickly.

That is why the shared kitchen is a good place to learn your real cost per unit. If you haven’t already, work out your working-capital gap at this stage, using the Dough gap calculator at /tools/dough-gap-calculator/.

When does a shopfront make sense, and what does it really cost?

A shopfront turns most of your variable costs into fixed ones. The rent and wages are due whether or not the front door opens, and the cash goes out before takings build. Our guide on what it costs to open a bakery in Australia breaks down the full list, so this guide won’t repeat it. The short version for someone arriving from stage two:

• Lease bond and first rent. Check your state’s rules and your lease for the bond and any rent in advance.
• Fit-out. Counters, shelving, sinks, flooring, signage. See shop fit-out funding.
• Equipment. Ovens, mixers, refrigeration. Many owners finance these. See equipment funding.
• Opening stock and packaging. Suppliers may want payment on order until you have a record.
• Wages and super before the takings build. Staff are paid on schedule even in the slow first month.
• Approvals and fees. Council registration, signage permits and insurance.

What is the worst-month test before you sign?

It is a quick calculation that tells you whether the move is safe, and it only takes five numbers:

1. Your quietest recent month of takings from the stage you’re in, not your best.
2. The gross margin on those takings, meaning sales minus ingredients and packaging.
3. The new fixed costs: rent, wages, utilities, insurance, equipment repayments.
4. The gap: new fixed costs minus margin from step two.
5. Your cash on hand divided by that gap, which gives weeks of runway.

If the quietest month leaves a gap and your runway is only a few weeks, the lease is too early or the footprint is too big. A smaller kitchen, a market day alongside the shop, or a few more months in stage two usually fixes the maths better than borrowing to cover it.

A good lender will run something like this test too. They look at recent bank statements for steady deposits, sensible outgoings and a request sized to the business. Our guide on what lenders see in your bank statements explains how to tidy that picture before you apply.

How do owners usually fund each stage?

Stage one is typically funded from savings and takings. Stage two often comes from the same place, with some owners using a small unsecured facility to bridge the gap between buying ingredients and getting paid by wholesale customers. Stage three is where outside funding tends to enter, and it is normally split by purpose:

• Equipment is often financed against the equipment itself.
• Fit-out may be funded through a new business loan or a property-backed option if you own property.
• Working capital for the first weeks of trading can come from unsecured or cash-flow funding, typically $5,000 to $500,000 and sized on turnover and bank statements.

Property-secured options run from $20,000 to $5,000,000 if you have equity to offer. Whichever route fits, the useful habit is to size each ask to a measured gap and to keep the home and shared-kitchen trading records clean, because those records are your track record. There is more on the food-business side on our bakeries and food producers page.

If you’re partway through this move and want to know what funding might be possible for the next step, you can check your options in about a minute.

Common mistakes when moving out of the home kitchen

• Taking the lease before testing a shared kitchen. The lease is the hardest commitment to undo.
• Forgetting to notify council about the new location. A home registration does not automatically carry across.
• Pricing from home costs. Rent, wages and insurance weren’t in your price list. Re-cost every product.
• Counting best-month takings. Quiet months are when the rent still falls due.
• Borrowing the whole gap. Fund the measured gap and stage the rest.

Ready to take the next step out of the kitchen?

Growing out of the home kitchen is a good sign, and the next step doesn’t need to be a leap in the dark. If you’ve done your worst-month test and the move holds up, or you want a second opinion on the numbers, we’re happy to look at your situation.

Here’s what to expect:

• It takes about 60 seconds, and there’s no credit check when you enquire. Asking won’t touch your credit file.
• We don’t send your details to a pile of lenders. Your phone won’t light up with strangers.
• A real person reads your situation and calls you. They look at what you actually need, not a template.
• Please fill the form in accurately. Honest figures help us match the right option first time.

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