Starting a Hot Dog Cart Business: the Do’s, the Don’ts and a Business Plan Template
A hot dog cart business is one of the most lucrative enterprises to undertake since it’s based on retailing a basic human necessity: food. Fairly simple to start from the ground up, flexible and not too cost demanding, this type of business also comes with the advantage of being mobile, allowing you to move between locations and target the best areas in terms of competition and demand.
As easy as it may sound, you should also know that there are no shortcuts to success. Enthusiasm is vital when starting a new business but so is planning. So the first thing you should do to ensure your venture will succeed, even before making a financial commitment, is to research the basics.
The Basics of a Hot Dog Cart Business
1. Legal Requirements
As with any type of business, hot dog vending has its specific legal requirements and constraints. These often vary by city, county and state, and you can learn about the ones that apply in your area by contacting your local Health Department or the Department of Environmental Services.
At this stage, you’ll address issues such as:
- The street food vending regulations in your city;
- The types of food you’ll be selling and how they’re handled, stored, thawed, and cooked;
- Commissary requirements (the requirement to operate from a licensed commercial kitchen)*;
- The size, make and the equipment of the hot dog vending cart;
- The cart’s fresh water and waste water holding capacity;
- Safe food handling course requirement;
- Hygiene policies;
- Pre-approval inspection of the equipment.
* Most municipalities don’t allow hot dog vendors to operate a food service business from a residential kitchen and they require the use of a commissary – a licensed and inspected commercial kitchen. Vendors have to report to the commissary each day of operation to prepare the food that will be served from the cart and to clean the cart’s equipment at the end of the day.
After learning about the health and safety requirements, you should contact the Business License Department, since you’ll most likely need a business license to operate your hot dog cart.
You may also have to check the signage regulations in your area and see if there’s a limit on the maximum amount of signage you are allowed to use.
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2. Research Target Market and Locations
The food industry gathers, by default, a wide range of available customers. So your target market can’t be restricted to just a group of people, since it potentially includes all those eating out or in search of a quick bite.
You could sell your hot dogs to:
- Office Workers;
- Business People;
- Concert goers;
- Everyone who resides in your target locations (see below).
Speaking of locations, just like with real estate, selling hot dogs is all about location. A mobile hot dog stand can make big profits as long as it’s parked in a spot that attracts a lot of exposure and pedestrian traffic.
Some possible locations are:
- University campuses;
- Business districts;
- Industrial parks;
- Touristic locations;
- Stadiums and sport centers;
- Farmers markets;
- Construction sites;
- Parking lots;
- Outside bars.
3. Research Your Competition
Most people are not patient enough to research all the aspects of their future business. But sizing up the competition is the research step that separates those that are truly serious about their goals from the others. As such, you should take the time to make a list with the street food and hot dog vendors from your area and then visit as many as possible. This will give you the opportunity to see how your competition is operating and to find those things you’ll want to implement or to avoid in your future business.
For example, you could learn about:
- Vendor’s attitude;
- What kinds of ingredients, condiments and toppings they’re using;
- Food preparation and handling;
- Unique recipes;
- Marketing and branding.
4. Write Your Hot Dog Business Plan
The next step is to write a business plan that covers your company’s structure, your product, your the target market, your personnel (if any), the marketing plan, competitive analysis, cash flow analysis (initial investment and start-up costs), and financial projections. Obviously, the more accurate the better, your success depends on it (no pressure!).
Your business plan should look something like this:
- Legal expenses for obtaining licenses and permits;
- Hot Dog Vending Cart price;
- Insurance (general liability, workers’ compensation if applicable);
- Operational cost for the first 1-2 months (salaries of employees if any, bills & fees);
- Initial stock costs ( 1-2 months);
- Incidental costs (napkins, foil, sanitizer, ice, propane, etc);
- Marketing promotion expenses.
Marketing Strategy and Sales Strategy
- Throw an opening party to let locals know you’re open for business;
- Engage in community events to sell your products;
- Advertise your products in community based newspapers, local TV and radio stations;
- List your business on local and directories;
- Leverage the power of internet and social media;
- Engage in direct marketing and sales;
- Encourage the use of Word-of-Mouth marketing (referrals);
Sales Forecast Template
50 hot dogs a day (approx. 30 people)
50 x $… = $… hot dogs
50 x $… = $… soda or water
20 x $… = $… chips or snacks
Gross daily income = $…
To calculate the approximate net profit, deduct a 30-35% cost ratio from gross sales.
5. Find Your Differentiators
The exciting part of starting your own hot dog cart business is in defining your concept and designing your menu. Although you’ll want to stand out, you should keep your menu simple, especially in the beginning. This way, you’ll have more time to prepare your products, less inventory to manage, and less waste of goods that aren’t selling.
Choose the buns and the hot dogs/sausages you’ll sell carefully: they are the foundation of your business and the ones that will make or break your success. Before deciding, you should ask your family and friends to help you with a blind taste test.
Remember, if you want to be the best, you have to sell the best.
Quality is a great differentiator, but so is uniqueness. Since hot dogs are easy to customize, with the right toppings and condiments, finding a combination that’s both delicious and unique to you shouldn’t be difficult. You may also consider offering vegetarian and gluten-free options, to ensure you’re covering as many options as possible.
The bottom line is, the tastier your hot dogs are, the more customers you’ll attract.
Don’t forget to offer drinks and sides as well. Pair your hot dogs with crispy chips, tasty fries and refreshing beverages. Since these products have higher profit margins than hot dogs, find a way to encourage customers to order them, such as daily deals or combos discounts.
Our Final Words of Advice
- Always endeavor to upsell your customers on additional items. If they demand for a hot dog, you can also ask them if they would like a beverage also.
- Maintain a strict standard in personal hygiene. Customers don’t joke with their health and cleanliness is one thing they will watch out for.
- Immediately you have secured a location or geographical area you intend to cover, start spreading the word about your business and a good way to go about this is to hand out some free sample of your hot dogs to key people like managers or foremen and hope that they will inform their staff concerning you.
- You can always use the aroma of your hot dog as a strategy to attract customers to your stand. So ensure that you always have hot dogs cooking and their aroma will grab people’s attention and encourage them to buy.
- Build and maintain good relationship with your customers. Get to know their names and reward the loyal customers with freebies.
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