If you’re looking for a business opportunity with low startup costs that you can potentially grow into a large, sustainable business, then consider the hot dog cart industry. It’s easy to get started in this field, and unlike businesses where you need to purchase large amounts of inventory and equipment, your initial purchases for a cart business will be minimal. While there’s plenty of competition, if you’re creative, you can help to set your cart apart from others and build your venture into a profitable business.
Hot dog cart businesses provide convenient food on the go. These carts are often found on the sidewalks in cities, in parks, in business districts, at construction sites and parking lots, and at festivals and events, too. These carts offer the advantage of being easily portable, so owners can seek out the highest-traffic areas where they stand the chance of making the best sales each day.
Most carts offer hot dogs with a variety of toppings, as well as an assortment of drinks. Some also offer chips and other sides. Cart setups can range from the basic cart small enough to be pulled behind a bicycle, to more elaborate carts that are towed behind vehicles.
According to IBIS World, the street vendor industry experienced a substantial 5% growth from 2015 to 2020. That growth was partially due to a renewed interest in unique and gourmet foods and changing consumer tastes. Many people increased the amount of money that they spent eating out, choosing lower-priced foods that were convenient to access and consume. The growth of the food truck industry also drove some of these industry profits. While the food truck fad is expected to slow down, business owners can still enjoy the industry’s popularity by differentiating their businesses from others.
In 2020, the market is expected to bring in $4 billion in revenue. The 71,992 businesses in existence employ 84,679 people.
Multiple trends have shaped the hot dog industry. According to Smart Meetings, one of those trends is an increase in hot dog localization. Different types of hot dogs and different toppings have developed identities associated with different cities, like the New York Style dog and the Michigan Coney Island dog. These regional associations give vendors a chance to offer variety and unique options in their menus to appeal to both tourists and locals.
Vendors can also embrace the growing trend of the toppings bar. Rather than present hot dogs prepared with particular topping combinations, a toppings bar lets consumers go wild and create their dogs to their personal preferences. Unique toppings, like lettuce, guacamole, Fritos, mushrooms, and sour cream can give customers a chance to get creative, getting them excited about hot dogs. This variety also encourages repeat customers, since they can create a different hot dog during every visit.
While hot dog carts offer convenient eat-on-the-street options, they’re increasingly exploring the catering world, too. Some hot dog cart owners have created catering packages, where they bring orders to offices, parties, and other locations.
Men’s Journal reports that innovation is all the rage in today’s hot dog industry. Elevated hot dogs, whether they feature unparalleled taste or innovative toppings – have become highly popular and offer a way for a hot dog cart to differentiate itself from the traditional competition. These gourmet dogs feature everything from sriracha mayonnaise to pretzel buns to smoked ketchup to tomato jam.
Who is the target market for your hot dog cart?
Hot dog carts target consumers who are looking for food that offers a combination of great value and convenience. Carts with different specialties and locations may target slightly different audiences – for instance, a cart located outside of a sports venue will market to sports fans, while a gourmet cart in a business district will target professionals who want to have a quick lunch.
Skills, experience, and education useful in running a hot dog cart business
Starting a hot dog cart service doesn’t require a business degree. Certain skills and experiences can increase the chances that your business will be a success.
Food preparation and handling experience. A cart owner who has previous food preparation and handling experience will be better prepared to implement safe food handling procedures. Cart owners may also be required to earn a food safety certification through an accredited program as approved by their state’s regulations.
Interpersonal skills. Vendors who are animated and who can easily strike up a conversation with customers deliver a superior buying experience. These interactions are an important part of earning customer loyalty.
Physical health. Manning a hot dog cart is physically demanding, especially when these carts are operating for long hours in the hot sun. Cart owners will benefit from physical health and fitness.
Management experience. If a cart owner decides to expand the business and hire employees, then previous hiring, training, and management experience will be valuable.
Costs to Start a Hot Dog Cart
When starting a hot dog cart business, the cart purchase is one of the largest expenses. While a brand-new cart can cost between $1,000 and $3,000, used carts go for much less, often closer to $500. Plan to spend approximately $1,000 on initial startup costs, plus the cost of the cart.
Common startup costs for a hot dog cart business include:
- Hot dog cart
- Supplies like napkins, ice, and propane
Steps to Starting a Hot Dog Cart
Step 1. Write your Business Plan
After coming up with the idea, the next step in starting your business should be to write a business plan. Not only will a bank require you to have a business plan, but multiple studies have shown that a business plan helps increase the odds of starting a successful business.
Step 2. Form a Business Entity
A business entity refers to how a business is legally organized to operate. There are four primary business entities to choose from which include the sole proprietorship, partnership, corporation and LLC. Each type of entity has its own pros and cons such as liability exposure, costs and administrative requirements.
Related: Comparison of Business Entities
Step 3. Select your Location
Since hot dog carts are mobile they will need to negotiate a lease in order to set up their cart. Having a high-volume location to capitalize on lunchtime traffic is essential to getting customers.
While food prep is generally at a minimum for a hot dog cart, a licensed kitchen will be needed for prep and cold storage. It’s usually cost prohibitive for the owner to set up themselves, so an agreement is usually made with a shared kitchen or a restaurant’s kitchen during their off-times.
Related: Choosing a business location
Step 4. Apply for Business Licenses and Permits
A hot dog cart business will need to obtain certain business licenses and permits. These permits and licenses can vary based on the state and town where the business is located.
Before you start a hot dog cart business, do some research into the cost of permits in your area. Depending on your location, these fees can be surprisingly high. Delish reports that hot dog vendors in New York City pay more than $100,000, and sometimes closer to $200,000 per year for their permits. If you’re in a location that carries such steep permit fees, you’ll need to structure your business plan to account for those fees.
In addition to cart vendor permits, cart owners are may also be required to earn a food safety certification and obtain food service licensing as determined by the state.
Step 5. Find Financing
Coming up with a good business idea and having the skills to run it are one thing, but getting the funding to start a hot dog cart is another. Funding to start a hot dog cart business can be difficult, but fortunately the costs to start are low. In order to get a loan, the borrower(s) will need to have good credit and be able invest 15-25% of their money towards the total start-up costs.
Step 6. Get your Marketing Plan in Place
Careful selection of an ideal location can help to drive sales, but marketing still plays an important part in running a hot dog cart business. Marketing efforts can include creating a website, getting active on social media, and even using online advertising to help raise awareness of the cart’s location and drive customers to visit the cart. Marketing costs will vary depending on the type and volume of the activity performed.
Step 7. Get Insurance
A hot dog cart business needs several types of insurance for full coverage:
- General liability insurance protects the business if a customer is ever injured while buying from the cart, or as a result of the cart’s food. General liability policies can help to cover expenses like legal fees and medical bills and is generally required by the owner of the space the cart will operate from.
- Commercial property insurance can help to protect the business against expenses like the loss or damage of its equipment.
- Workmans comp insurance helps to cover expenses like lost wages and medical bills that can occur if an employee is ever injured while on the job.
Insurance policy costs vary depending on factors like the business’ location, number of employees on staff, and the value of the business’ equipment. It’s best to request quotes from multiple insurance providers to get a sense of just what insurance will cost. When comparing the quotes, consider factors like coverage limits, exclusions, and deductibles in addition to premiums.
Step 8. Hiring Employees
It’s possible for a business owner to manage their business and staff their hot dog cart entirely on their own. However, business owners may want to grow the business and bring in additional carts and vendors. Indeed reports that hot dog vendors earn an average of $13.56 per hour.
When a business hires employees, its budget needs to cover not only salaries, but also expenses like paid time off, health insurance contributions, and workmans comp insurance.
Related: Hiring your first employee
Every state has specific requirements and regulations when starting a business. Select your state below to find the guide to starting a business in your state.
How much can you potentially make owning a hot dog cart?
The profits from a hot dog cart can vary wildly depending on the cart’s location, marketing techniques, product offerings, and more. Hot Dog Profits surveyed vendors and found that vendors who worked full-time made an average of $67,400 per year. Vendors who worked part-time averaged profits of $19,700 per year.
These figures may be low; Simply Hired reports that hot dog cart vendor salaries average $81,712. The reported salaries range from $40,685 to $164,110.
Things to consider before starting a hot dog cart business
Hot dog carts can face significant competition, both from other hot dog carts and other food carts, in general. One of the best ways that business owners can set their carts up for success is to find a way to differentiate the cart from others. While it may be tempting to source cheaper hot dogs and buns, it’s important to deliver quality, good-tasting food. The quality of the food is what will keep customers returning, and they may help to spread the word about the good food that a cart offers.
Cart owners should also look for ways to do things differently than competitors. In addition to sourcing quality food, they can try new recipes and offerings. Providing gluten-free and vegetarian hot dogs is one way to stand out. Offering unique toppings or gourmet hot dogs and sausages can also help the cart to appeal to a variety of customers.