If you’re looking for a great business for a hungry entrepreneur, it’s hard to beat the great American hot dog. According to the National Hot Dog and Sausage Council, Americans consume 20 billion hot dogs a year, and fifteen percent of those are purchased from street vendors. There are a lot of factors to consider, but with the high markup on hot dogs and associated products, a busy hot dog vendor can earn six figures annually. So how much of that is profit? It’s hard to say, but here are some considerations.
To get started, you’re obviously going to need a vendor cart. Hot dog carts typically start around four thousand dollars. A larger hot dog trailer that a couple employees can cook can cost as much $20,000 or more. It all depends on how busy you think you’ll be, but starting small is probably a good idea. Then there are the food costs. A hot dog with bun and condiments costs a vendor between 45 and 80 cents to prepare, depending on the supplier and the quality of the meat. Paper products like napkins and such add a minor cost, and then there are things like soda and chips. Costs for these can be minimal but they come with a nice markup, so those can drive your profits. Depending on your location and other criteria, your cost for a couple of dogs with condiments and paper products–plus chips and a soda–will be between $1.50 and $2.00. Sell it for $5.00 and you’ve got 150% profit. Easy-peasy, right? Well, hang on.
The Hidden Costs
It’s easy to get excited about the potential profit involved, but there are more costs than just the product. To open for business, you’ll need to pay for a business license, plus any number of Health Department sign-offs. There may be a location fee, which can run into thousands for high-traffic spots. You’ll need insurance, advertising, probably a website, and signage. Initially, you may need to pay for things like a cash register, uniforms, and kitchen equipment, not to mention your bulk food purchases (and possibly rental on a place to store them). In addition to start-up expenses, you’ll have ongoing monthly bills beyond food costs. Cart payments (unless you buy outright)), fuel, phone/internet, labor, maintenance–all these and more will take a chunk out of your revenue every month. Finally, there are the more esoteric costs: if you’re buying into a franchise, there will be franchise fees. If you intend to take credit cards, there’re additional bank/processing fees, plus the threat of chargebacks (merchants’ chargeback-related expenses were expected to double between 2016 and 2017).
Is It Worth It?
We’re not trying to discourage anyone; we’re merely helping present a realistic situation. Operating a hot dog cart can be lucrative, but it isn’t a get-rich-quick scheme. It will require a lot of time, energy, and money, especially in the beginning. But if you’re willing to make the investment, you’ve got business sense combined with an outgoing personality, and–perhaps most importantly–you love hot dogs … being a cart vendor can be a great way to make a living.
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