Call the police! Someone is opening a new business in Chicago!

June 7, 2010

By Beth Milnikel

Too often, government bureaucrats are terrified of anything that does not fit neatly into their lists. They treat an innovative business idea as a nuisance or—worse—a threat.

Case in point: During the past few years, several Chicago entrepreneurs noticed that some folks who prepared food for a living needed to use a commercial kitchen but could not afford a kitchen of their own. These creative entrepreneurs came up with a solution. They built big, shiny commercial kitchens with room for several enterprises to work at once. They followed all the legal requirements for construction and sanitation and passed inspections with flying colors. Then they rented out space in the kitchens by the hour.

The owners of the community kitchens profited by providing a needed resource. Small businesses grew without the risk of illegally selling food they cooked at home. The whole city enjoyed the benefits of new businesses starting up: new jobs, new wealth and new, yummy food products.

But not so fast.

When Flora Lazar—an IJ Clinic client who owns “Flora Confections”—and others applied for a license to run a food service business out of Kitchen Chicago, a rental kitchen, a city representative said he could not give more than one license to operate at one address. Unwilling to believe that the city would outlaw their meticulously run businesses simply because they shared a mailing address, the kitchen owners and renters proceeded to make their meals.

No sooner had they started than all the businesses renting from the kitchen got letters from the city ordering them to stop operating immediately. Flora contacted the city again seeking a license. She was told she could not get one. Speaking to a supervisor, she insisted that he accept her application. Finally, after Flora’s alderman called the Department of Business Affairs and Consumer Protection and insisted that they review her application, the city sent health inspectors to Kitchen Chicago.

The health inspectors did not ask Flora how she prepared the pureed fresh fruit she bought from local farms and stored in the Kitchen Chicago freezer. They did not ask her whether she operated after the cease-and-desist letter was issued—which she had not. They did not ask her about her impeccable knowledge of food safety or her culinary training. They instead opened her bags of fruit, dumped them in a trash can and poured bleach all over them. Amazingly, a Chicago Tribune reporter was there at the time planning to write a story about how open the city has been to new culinary ideas, and she caught this outrage on video. Flora got her license the day after the inspection. Nonetheless, after losing her irreplaceable fruit, she had to pay a fine of $500.

When government assumes the power to destroy new businesses, inspectors can be frightening, destructive bullies. Moreover, when the government codifies lots of rules describing what an acceptable business must look like, it stifles innovation. Complex laws written to govern a traditional business model—a restaurant with a single operator in a particular space—often outlaw future innovations as an unintended consequence. Government needs to give entrepreneurship space to grow and bear fruit, rather than poisoning it with senseless rules, red tape and bleach.

Beth Milnikel directs the IJ Clinic on Entrepreneurship and the University of Chicago Law School.

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