For small food entrepreneurs, the multitude of barriers they face during a startup phase can be discouraging.

Many have found that using shared kitchens and food hubs can help eliminate or mitigate some of these challenges, which can also be expensive.

To fully take advantage of these small business lifesavers, governments need to harmonize rules across jurisdictions, a new report from the Competition Bureau states.

“The idea here is lowering the startup cost and improving access to infrastructure for small food producers, so it can make it easier for new businesses to enter the market,” Youssef Zine, spokesperson for the Competition Bureau, told FoodNX.

The report, A recipe for competition: How shared kitchens and food hubs can strengthen competition and small business growth in Canada’s food sector, was produced after talks with approximately 15 stakeholder organizations that included food-hub operators, regulators, experts and other participants, over several months.

The report offered recommendations on how shared kitchens and food hubs might be improved.

“What we heard was that high-cost regulatory processes and complex regulatory frameworks make it very difficult to compete in the food and beverage processing space,” Zine said. “These shared infrastructure models seem to offer new solutions to these issues.”

The role for central coworking hubs

Shared kitchens offer a professional kitchen space, along with storage and equipment, that might otherwise be cost prohibitive for startups. “They allow small businesses – whether they are caterers, food-truck operators or small food producers – to access professional kitchens and meet food safety requirements at a lower cost,” he said.

As well, food hubs can assist young businesses early on.

“Whether we’re looking at specialized processing equipment, cold storage, packaging, tools or business support and so together, these shared facilities help small food businesses test products; they can help you launch more quickly or scale your operation.”

While these operations can offer a lifeline for entrepreneurs struggling to launch a new business, different food safety regulations in different regions and provinces can also pose significant barriers, according to Zine.

“What we are advocating for is really clearer, more consistent regulation; fewer unnecessary barriers, especially across provinces, to better the conditions for businesses to scale, because while the business can operate within its own local regional health authority, the rules may change within the province,” he said.

Calls to action to help food producers

The report proposed three main recommendations: a call for governments to “harmonize food safety and licensing rules across jurisdictions;" “clarify compliance expectations and standardize inspection procedures for shared food production facilities;” and to deploy the various food hubs as “testbeds for regulatory innovation.”

“If you allow more small businesses to enter and compete, then the markets do become more dynamic; it will lead over time, to more innovation, more choices for consumer and eventually better outcomes for Canadians,” Zine said.

While this may seem a formidable task for governments, the report highlighted the experience of Lloydminster, a city that straddles the border between Alberta and Saskatchewan.

Before 2024, food businesses were unable to produce their products in one part of the city and sell to another part of the city as it was also in another province. However, an amendment to the federal Safe Food for Canadians Regulations (SFCR) was passed that now eliminates this one barrier.

“We’ve seen regulatory change to address that situation, so we know it’s possible.”

Shared models common in other industries

The sector is important, according to Zine, so its imperative changes are made to boost new entrants.

“It is Canada’s largest manufacturer industry and shared infrastructure models are common in a lot of other industries, whether we’re thinking about accommodation, warehousing, transportation and they seem to be gaining momentum.”

The food and beverage sector is worth $173.4 billion per year, and accounts for 20.3 per cent of total manufacturing sales as well as 1.6 per cent of the GDP, according to 2024 figures from Agriculture and Agri-Food Canada.

Food, alcohol not part of multi-government talks

Talks around eliminating interprovincial trade barriers have received recent traction, with the November Canadian Mutual Recognition Agreement on the Sale of Goods (CMRA) after tariffs measures taken by the U.S. However those discussions didn’t include all industries.

“While governments generally have agreed in principle to recognize goods approved in one province in another, food and alcohol are often excluded due to the link to public health and safety. Public health issues are very important but there are things that could be either clarified or that could be streamlined in terms of expectations and oversight,” he said.

An outreach is next on the agenda for the Competition Bureau, according to Zine.

“Once we have a report out, we reach out to regulators and have conversations around our recommendation and trying to figure out where our recommendation lay with their priorities. Our goal as the bureau, really, is to promote competition.

“When it comes down to food, there’s also local health authorities and so to that effect we try to knock on as many doors as possible to have a chat and that’s what we hope to do in the next upcoming weeks and months,” Zine said.