Slowed by immigrant crackdown, innovative home kitchens begin to serve Santa Cruz County

A daily coffee cart parked on East Cliff Drive in Santa Cruz, authentic Egyptian street food on UC Santa Cruz’s campus and weekly neighborhood supper parties at a Boulder Creek home are among ten new food and drink businesses coming to Santa Cruz County, thanks to a new ordinance that went into effect at the beginning of the year.  

On Jan. 1, a two-year pilot program for microenterprise home kitchen operations, or MEHKOs, went into effect. In its first six months, the program is off to a promising but rocky start, with fewer applicants than expected and a loss of federal funding that led organizers to redistribute available funds in order to cover the cost of home inspections by county officials. 

In September, the Santa Cruz County Board of Supervisors voted to allow residents to use their home kitchens commercially, once approved. It gives permit holders more options for types of food that can be prepared in their home than cottage food operations, which allows low-risk foods like bread or preserves. A MEHKO is allowed to cook up to 30 meals a day, with some limitation of the type of food – no raw shellfish, for instance – not just shelf stable products. Since it launched at the beginning of the year, a handful of entrepreneurs are preparing to launch a cluster of innovative food and drink businesses throughout the county, offering a variety of products, including fresh cut fruit, baked goods and tamales.

In April, the MEHKO program lost $14,400 in initial federal support that would have gone to complete the first 30 home inspections it was associated with diversity, equity and inclusion, said Olga Zuniga, a deputy director at the county’s Health Services Agency, which manages the program. The Trump administration deemed DEI programs a “public waste,” and stripped many of public funding. However, the county Environmental Health department reallocated other state funds to replace that funding. 

MEHKOs have been legal throughout the state since 2018, but require approval by each county to be allowed locally. When it was unanimously approved by the board of supervisors last year, county residents who already had cottage food businesses or pop-ups expressed excitement about being able to permit their home kitchens, saying that it would allow them to expand their products, or give them more financial and scheduling flexibility by working at home rather than having to rent space in a shared commercial kitchen.

Applicants pay $489 for an initial one-time inspection and $551 for an annual permit. 

So far, nine permits have been granted, with a tenth in the pipeline, said Zuniga. It’s a lower turnout than they anticipated based on its outreach to potential entrepreneurs at El Pajaro Community Development Corporation, an incubator for food and drink businesses in Watsonville. It focused the bulk of education about the program at that location because of its concentration of food and drink startups, and to target residents who might need a leg up with their new business. “At HSA, we have equity goals, and we were focusing on individuals that would need equity assistance,” she said. 

Inspections and processing fees for 30 permits are funded by the state for the next two years, and the county’s initial concern was that there wouldn’t be enough to go around. 

“We expected to see more applications. They’re trickling in, and we’re happy to see that, but we were expecting an outpour of interest and people participating,” said Zuniga. 

Immigration fears seem to be a factor, according to some would-be entrepreneurs. Zuniga and her colleagues discovered this barrier after people who had initially been interested in the program last fall didn’t apply. “We started calling them individually and trying to encourage them to apply. And some of them communicated that they were having this uncertainty,” said Zuniga. 

Environmental Health doesn’t collect Social Security information that would indicate a person’s legal status, she said. “It’s not something we collect on a regular basis.” 

Sean Burau, a former Google employee, is among those that have received permits. He has spent months building a commercial coffee cart from scratch in his garage. Once he receives his concessions permit from the county parks department, Cliffside Coffee Bar will be fully operational. Burau plans to park the cart near Pleasure Point and offer coffee, espresso and tea drinks. 

The coffee cart will be Burau’s main source of income, and he hopes to bring in at least $50,000 by operating seven days a week with one employee, which falls within the $100,000 annual legal income cap for MEHKOs. Cliffside Coffee Bar has been a dream of his for five years, since he left his tech job during the pandemic. “I realized how much I like being out by the water and in the sun. What if I could combine making coffee and being by the ocean?” he asked himself at the time. 

In Boulder Creek, Penny Ellis offers a menu of homemade dishes made with ingredients purchased at her local farmers market or grown in her garden, such as grilled lemon chicken with summer vegetables and chickpea salad. Her Kozy Kitchen Supper Club is available once a week for pick up at her home. 

Ellis, who helped champion bringing the MEHKO program to the county, aims to supplement her income. “This is my semi-retirement. I think it will work out well once I have more time to advertise it and get my customer base,” she said. 

In August, Maikel Masoud, a high school math teacher at a private school in San Jose, will operate Pharaoh’s Plate, a food cart three days a week to students at UCSC. Two of those days he will prep in the morning before school, then an employee will run the cart on campus, and he will operate the cart one weekend day. His brief menu includes hawawshi, a flatbread sandwich filled with minced beef or sausage cooked with Egyptian spices, custard-filled baklava topped with pistachio and coconut, and strong Turkish coffee. The recipes are inspired by his mother’s home cooking. 

Masoud originally planned to start his business as a food truck and use a commercial kitchen, when the county health inspector told him about the MEHKO program. He decided to grow more sustainably by starting small with a food cart and permitting his home kitchen to prepare the food before investing in renting commercial kitchen space. Once he tests the idea, he hopes to expand. “My plan is to build a customer base in the county, and then scale up to rent a commercial kitchen after that,” he said. 

Zuniga said the health department’s priority is outreach and education about the pilot program in order to encourage people to apply for the remaining 20 permits by the end of 2026, particularly in underserved communities. The department plans to expand its outreach with booths at farmers markets and advertising on social media. Said Zuniga: “My goal is to have all 30 permits by the end of the pilot program.”

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FOR THE RECORD: The price of home evaluations and annual permits for applicants was updated.