We got a bit of great news — we finally have our building permit! It’s been a long, hard road getting permits from the city, so we were thrilled when we got the okay to pick it up. This was the last step before we could start building the interior of our space.

George, our construction project manager, and I headed down to the building department to grab it in person. Of course, when we got there, it was missing a stamp and had been taken back into the system. We spent a good chunk of time scurrying between floors searching for the lost signatures. Finally they decided we were all good and let us stamp the plans! (That’s George above stamping each page).

As we’ve been waiting for this to happen, the construction crew was all ready to go, measuring and planning all of the plumbing:

And no groundbreaking would be complete without a photo of me holding a shovel looking like I just dug up a giant pile of rocks!

One of the most common questions we get at farmer’s markets is “When will the space be ready??” We had originally thought our Valencia Street factory and cafe would be open over a year ago, but the city had other plans. In fact, the lease had been signed in October 2010 and the architectural plans done around the same time, but there were a series of permits we needed before we could begin any work.

Ron, our landlord, originally had an auto repair garage in the space and had to go through the process of converting the building. There are a couple steps in this process: 1) Change of Use permit, 2) Landlord’s work, 3) Our building permit, and 4) Our construction. The first step in this process took over 18 months — basically the Change of Use permit had to wend its way through the city’s process. Then Ron had to add the storefront, put up walls, sprinklers, pipes, and finish the shell of our space. Ron is now done with all of his work and permits. Cam and I stopped by to drop off the signed forms which means we are now at “delivery” and the space is finally ours!

We still have a long road ahead though; our building permit is still waiting on two departments: PUC and health. Once we get those approvals, we can actually start building the interior and hopefully get open in a few months. Thanks everyone for being patient on this journey with us!

Ron, our landlord, has finally gotten the necessary approvals to complete his construction and move ahead with the build-out for our space. That means it’s time for us to start getting our plans in order and submit for building permits. Since it’s been a year since we designed the space — and we’ve learned a lot since then — we are now going through the plans outlet by outlet, duct by duct, in one final pass. It’s a lot of work, 62 pages in all, but we’re excited for this next step!

We’re out on Bartlett every Thursday night at the Mission Community Market. It’s been a fantastic way to meet customers in the factory’s neighborhood. We’re really looking forward to the day when we have our doors open in the Mission! Every Thursday night we get a few of the same questions. I thought I’d take a minute to give you all an update.

The most common question, and the one we’re most eager to answer ourselves: when will the factory be open? You may remember, we put our 312 notice up in the window of 740 Valencia Street a few months ago. Thankfully, that process is complete, and we’re working on the next series of permits we need to open our space. We found out a week or so ago that we’ve received the Change of Use permit for the building. Now our landlord’s waiting on some building permits before he can start the initial construction. A short time after that, we should be able to start our construction. Fingers crossed!

We also have exciting news about our packaging. A few months ago, we hired two incredibly talented graphic designers, and we’re working toward a new iteration of our packaging. We get a lot of compliments on our current version, but we think we can take it up a notch. There are things we love about what we have now, especially the overall aesthetic and the color scheme. But, the first designs we’ve seen from our graphic designers have blown us away. As soon as we have things ready, we’ll give you a peek.

Things are also busy on the wholesale front and we’re keeping extremely busy making chocolate. We always say that it’s a great problem to have, but we can’t seem to make bars fast enough these days. You can pick up or try a bar at Chocolate Covered, Fog City News, Mission Cheese, The Chocolate Garage, and Serendipity. We’ve heard that our Madagascar bars seem to be the most popular in lots of these shops.

Also, we’re making great headway on sourcing our next set of beans. As I write, I’m sitting in front of a roaster testing out some new Ecuadorian beans. It smells a little like chocolate poptarts in the room as the beans roast, and I’m excited to taste our first batch from this sample! In the next few months, we should have a few new bars to add to our lineup.

Finally, like most summers, we’ve all been busy traveling. Cam just got back from the muggy east coast. In a few days, Todd and Cam are both taking heading off to Vermont and then Hawaii for friends’ weddings, and I’ll be in Texas later this month. While Todd and Cam are in Hawaii they’re hoping to meet Seneca of Koka Chocolate. Seneca is one of the founders of Bittersweet Cafe in San Francisco and Oakland. Now he’s growing cacao and making chocolate on Oahu. While they’re gone, I get to take care of Cam’s very snuggly dog, Tatsu.

That’s all for now, back to making chocolate!

You may have seen the news recently that the SF Underground Market was shut down by the city and might not happen again. Iso and team are working hard to bring it back, but it may be resurrected in a very different form — if it comes back at all. We feel particularly sad because the underground market had a special meaning to us: it was one of the few places we were able to sell our chocolate — and get early feedback from real customers — before going through the red tape to launch a company.

Just like tech, launching a new product (whether it’s food or software) takes a lot of energy and the earlier you can get your product in front of real people, the better. It’s very expensive and time consuming to become legal to sell at farmer’s markets and retail shops, so the underground market circumvented this by creating a members-only club. Members signed a waiver and paid a small fee, allowing their stomachs access to all sorts of new baked goods and food treats all in one spot.

It was a great event and attracted all sorts of new foodie vendors, created a community around the local food scene, and launched many new businesses. Eventually the health department noticed that thousands of people were showing up to these events (generating a lot of attention) and shut it down. To give you a sense of why the market worked, here’s what we needed to do to become legal:

• Incorporation ($500-$1000)
• Business license (~$300)
• County health permit (~$300 + 1-2 month wait time + food safety class)
• State health permit (~$300 + 1-2 month wait time)
• State board of equalization letter
• Commercial kitchen rental ($500-$1000 / month)
• Farmer’s market permit (~$300)
• Farmer’s market fees ($200-$400 application fee + $50/market)

This alone can easily add up to a few thousand dollars. On top of that, California law requires food processing machinery to be NSF certified, but there is no such thing as NSF certified chocolate-making equipment. There are a tiny number of manufacturers at this scale, and not one has gone through the hassle of getting their machinery approved for use in California. For us to become fully legal, this process took three to six months of back-and-forth, hiring consultants (from Canada of all places), and $3,000 – $5,000 per machine. No reasonable person is going to pay these costs until they know they are on the right track.

Some will rightly argue that these food safety practices are important — and we agree. We are happy that there is a system in place that protects the public and provides each vendor with a baseline education in proper food-handling. However, because each state has different food safety laws, the chocolate I can buy in my local shop could have been made outside of California, in a small maker’s home kitchen, as this is legal in many other states. This means that the local consumer is not protected by these laws, while at the same time, small, local vendors are put at a major disadvantage to the benefit of other businesses outside of California.

What might make more sense is to have some exclusions for smaller vendors and let the underground market operate as a food incubator. Let new vendors try out new ideas, ensure a base level of food safety knowledge, make sure people coming to the market are informed, and help the successful ideas graduate to real businesses. This is the de facto role the underground market was fulfilling, and the success of the market only confirmed that this is a very acute need.

In the tech start-up world, if you create something so valuable and interesting that it explodes in popularity and demand, people literally line up to give you start-up funding to help you grow. The underground market was clearly on to something good — it found a huge amount of latent demand, created excitement and community around food, and launched a number of new businesses — including ours. Rather than shutting down this great thing, I hope the city can find a way to make this work while keeping everyone safe.

We’re inching along in the construction process. Last week, our 312 notice went up in the window of 740 Valencia. Assuming no one in the neighborhood objects to the change of use of our space, we can submit for our next round of permits next month. This means we’re one step closer to build out!

We stopped by the space today to see how everything is coming along. Ron, our awesome landlord, and his team have been hard at work for the last few months getting everything ready for us. He’s still waiting on some permits to complete his part of the buildout, but once those come through we should be able to start our construction. It’s amazing how long permits, design, and construction take, but we’re excited that we can now see glimmers of what we have planned!

Yay! This may not look like much, but it’s a pretty big deal to us. We’ve been working for the last few months to get our health permit to become fully legal to sell at farmer’s markets, retail stores, etc. We’ve started moving some of our larger machines to a commercial kitchen in San Jose, passed the food safety exams, and gotten high marks on our actual inspection. However, California has special food service rules called CalCode that require all machines to be NSF approved. Since chocolate-making equipment doesn’t generally exist on a super small scale, or when it does, it never has this certification, we had to hire third-party certification agencies and make some modifications before the machines could be approved. We’re excited and hopefully you will be seeing us at some new markets soon.