Hot Dog, Coffee Carts & Rickshaws

Hot Dog, Coffee Carts & Rickshaws

The concept is so simple, it’s overlooked by many. Yet they are, on every street corner during the day in the downtown core of larger cities. Featuring many dedicated older gentlemen and ladies. Why because they are uneducated, from another country, or just proud to be self employed. Many of these people make a very good living, would it surprise you to learn a good vender at a good location after permits, stock and expenses could make $200 – $300 per day and sometimes even more. It also needs to be said they have bad days too. It’s a business you can get into for a small investment if you are interested.

It’s actually not that bad, and just so that you know most of these carts are not privately owned which means they employ yet another sector usually much younger and working the more popular bars and events. They too will stand there all night even in the freezing cold because they know they can make $200-$300 on a busy night. Some of the carts are privately owned which is an advantage because they can control their expenses better and increase profits. Surprisingly enough, the increase in revenue seldom justifies the expense.

If you own your own cart you can employ someone to run it but even the most honest person will rape your profits sooner or later. People have tried doing a 60/40 split and many other options, none of them ever worked except that I know of. That leaves no other choice except to stand there everyday until you die. You haven’t bought a business, you bought a job! The smart money is the guy who owns a or leases a space near downtown and buys a bunch of carts, he/she has a place to store food and prep everything. He or she has someone buy or deliver all the stuff needed.

He charges per cart / rickshaw and whatever they make above that, is theirs. This makes it a good self employment opportunity for the workers. There is one other little catch, he sells them the pop chips coffee cookies right down to the ice or propane and makes a small profit of all of it. It can all be run by a manager with tight controls in place and he can be paid as little as $12 – $15 per hour. Charge for the carts by the week, in advance. Let’s say $240 per week, and you explain they are renting based on 6 – 12 hour days so if they ever loose a day/night because they are sick or because of equipment issues that’s the 7th day and there is no refund, even if they lose a few days in a row! Taxi companies pull that same crap with their drivers. The reason for the 12 hour day is because in some cases you will also be leasing them out at night.

The people doing all the work are doing better than they would working some minimum wage job. The winner is the guy renting out the carts day and night to different venders so they are out 20 hours a day. He’s making at least $480 per week off a cart that cost him about $7,000 – $8,000 and they will last years and years! For each cart he puts on a street corner the owner of the operation is paying it off 3 times a year plus making the markup on the other products. I’ve seen some companies get up to a few hundred carts. You can buy 10 -25 for the price of a food truck! Food trucks have a wide range of purchase options. Even if you only rented the carts out during the day you would be able to pay a cart off about 1.5 times in a single year!

All employees are self employed except the warehouse guy and he can be paid cash to keep things simple or paid with the staff from your other company. Easy as pie, which is something else they could be selling (pie)! By taking advantage of these people you are doing them a favor because they make more and live better than with the job they had prior in most cases. Not many people say I think I’ll quit my high paying job and become a street vender. There are extreme cases but not many.

Brand power!

Let’s talk brand power, once you get set up there will be someone else who try’s to take a piece of your pie. Trust me if a corporation sees you have a good business model, someone will try and copy that same model. The trick is get in early and dominate the market. You always want to be #1 or #2 if you can be. All these carts have umbrellas by placing your logo Mike’s dogs all over town it makes it harder to compete. It also makes it harder for one of your workers to go out on their own. Let’s take it to another level, let’s say you own a rib joint and instead of hotdogs the carts have warmers supplied with ribs from your restaurant and mid day a truck stops by to replenish the carts at least once.

With 30 carts located all over town, how much attention is that going to bring to the restaurant brand if it’s done right? Everybody will know about your brand and the restaurant too! If you had a sub shop you could setup a cart business with a small work area and a microwave. Have cold drinks and a bunch of pre-made subs to cut down on the wait time. Again 30 carts and you have gone from 1 location to 31 for a fraction of the price. Now we’ll put a twisted look on things, look as these self employed people as 30 of your best regular customers. Better yet they are paying weekly for the use of the carts! Don’t overload the carts, sell leftovers as day old or donate them to a homeless shelter. Soon you will learn based on sales how to cut waste costs and yet not run out most days.

I’m guessing but let’s say a sub shop sells 500 subs a day in a good location. 500 x $9.00 = $4,000 not bad for a simple sub shop, but that’s gross revenue! Let’s say with 30 locations selling pre-made subs, quick service, and people don’t have to go into a retail location that you could sell at least 12,000 more subs per day. Even if you sell the extra subs to the cart venders at wholesale costs and made $1 per sub, that’s an extra $12,000 (profit, PER DAY). That sub shop now can be open 24/7 busy at night making subs for the day shift. One drive thru window to serve customers pre-made subs during lunch and at night and you increase your 500 – 750 subs per day. It may seem like an over the top stupid idea but so many business owners never look at the full potential.

Cheap franchise model:

There was a fantastic sub shop in the city where I used to live they were doing great and hands down they had the best subs. They had franchised and were doing well. Move a big brand sub shop into the area and a 2nd big brand, then a nasty divorce where the franchise is split between husband and wife. Half of the smaller sub shops, (The great ones) started losing more and more money until one location after another started to close. If they had 30 sub carts on the street corners and controlled the market very few of the big brand sub shops would have come in and they wouldn’t have found it so easy to take over the market.

The answer to the problem in this case is… if there is a cheap way to expand and make more money or to increase your brand power, you should even though you don’t need more headaches and may not even need the money. Street vending carts could be a great way of providing an affordable franchise option to a successful business model. Sell the carts to the vendors, set the standards and sell them all your food too! Later you can look at brick and mortar franchises.

Final thoughts:

Did you ever think anyone who never ran a hot dog cart would have so much to say about them? In my defense I did spend most of the 80’s working in restaurants and nightclubs. I had given the idea a little bit of thought, not every employee could afford to open their own establishment. I remember driving cab in the old days and I’d park just beside the hotdog cart because people would grab a dog and the nearest cab. Drunks would get in the car dripping condiments all over the floor and say these are the best hotdogs ever! Really, because what you’re enjoying is an hour of my exhaust fumes all over your food. I never said it, but I sure as hell thought it. When your drunk and hungry you just want something in your stomach no matter the quality of the food. Yet because of that revolting experience they will refer many friend to give it a try. The result was the carts did as well and maybe even better at night than during the day. 

I know I didn’t say much about the rickshaw business. It’s pretty easy to get (people) to pull them when you first start, run a few ads and visit the local gyms. The fitness buffs will have no problem going out to try and impress the ladies without it costing them money, and even more because they can make a few extra bucks. Believe it or not most of the people leasing Rickshaws will be there to impress the ladies and try to collect phone numbers. From my experience it was mostly a summer time fad and not a huge money maker.

UNLESS one was smart enough to sell the advertising on the back of the cart! Then it would be worth it. I can see how having limited Rickshaws would be of benefit but I probably wouldn’t invest in more then 10 or 15 just because people like the service and you can place a advertisement on the back. Place your ads for free or someone else’s because they are paying you! You can also place a logo near the top of the front and back of the canopy and on both sides as well. Let the public who is providing this great service!

I will admit I haven’t seen the bicycle model rickshaw in any of the cities where I have been, but I’d also be willing to admit it would be a lot easier to find and keep drivers for the bicycle model. The man pulled models are easier to store taking up less room and a lot smaller investment. I’d be willing to bet the bike model would be leased out for most of the spring, summer and fall. Giving this some serious thought I’d likely decide on 10 bike and 5 man powered units. Regardless of the size of a city big or small I wouldn’t personally expand beyond 15 units when it comes to rickshaws. In a small town or city I would likely limit them to a total of 5. They are very popular when they first show up and disappear after a season or two usually because finding good operators can be a problem.

That’s why I really like the bike idea, many people will start off with the other model waiting to get the bike powered rickshaw. I’m not providing where you can buy these units but if all else fails, check China they build everything these days, also look at the USA I know they too have many builders and plenty of different options both for vending and rickshaws, my research gave me plenty of advertising ideas too.

Let’s say you were going advertising value and that weren’t so much buying rickshaws for the profit. You could forget about charging the lease and just do it for the brand awareness. If the operators got to keep 100% of the money or even 80% of the money I’m sure employees would be lined up outside the door or even on a waiting list to get started. The man powered models are usually $1000 or less and the bike models range from $4000 – $6000 per unit. That can be a little pricy unless you have a plan to make it work for several years in a row. You could also just charge a lower lease.

The advantage is… A bike usually doesn’t require much upkeep if it’s taken care of, stored inside and never left unattended. In fact a bike unit taken care of with those conditions might last 10 or 15 years with minimum repairs. Even at low rental rates, this could bring a huge return if you are also advertising another business as well as collecting the 10% or 20 %. The percentage would pay most or all of the startup costs back over time. Think of it as 15 years of free advertising and a small investment in the future outcome of your company. It wouldn’t be like your not getting paid or making any money. A $5,000 investment amortized over 15 years would only require an $8.61 lease per week to break even, and I’m sure you could charge much more. That was based on 9 months rental per year! Meantime you are saving on advertising costs and increased revenue of the main business that you advertise. You have to consider that into the equations. If you have a profitable business, and a shop to operate from it could be a wise investment.

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