How much money can you make on a hot dog cart? This is the most important first question on operating a hot dog cart because if it’s not going to generate enough income to meet your needs there’s no reason to pursue the business at all.
In today’s podcast episode we get to the bottom of the “how much can a hot dog cart make” question with Matt Gladfelter of Bow Ties and Hot Dogs in Knoxville, Tenn. Matt has been operating his business for over a year now and understands the different between hype and reality with income numbers and how much work actually goes into hitting certain sales thresholds.
We begin our conversation with low-ball sales estimates. According to Gladfelter if you aren’t able to go out and generate at least $100 in sales within 2 – 3 hours you’ve got the worst location in the world or something is wrong with your presentation or image and you’re turning people away. You need to either move on to a better location or reevaluate your presentation if that happens.
On the high-end, you can generate a few thousand dollars in sales in a few hours by working at large events or offering catering. Just a couple big events per month like this can really help explode your overall profitability. Some events that Gladfelter has found to be extremely profitable include charity events and park events that are sponsored by the city.
Regional Income Factors
There are two very simple ways you can increase the profitability of a hot dog cart over the course of a year. Some of these are dependent on where you plan to operate.
Live in a warm climate like California or Arizona? In the southern United States you may be able to operate as frequently as you want year round. The more times you’re able to go out and operate over the course of a year, the more money you can make. If you happen to live in Minnesota where the winters are too cold to get outside and vend you will have fewer opportunities to go out and make money.
Live in a higher cost city? You can increases your overall profits simply by raising prices. Gladfelter operates his hot dog carts in Tennessee and typically charges $4 for a Nathan’s Quarter Pound All-Beef Hot Dog. If you happened to live in a coastal or tourist type community, you may be able to charge $5 – $7 for the same product. By understanding these regional factors, you can more accurately estimate the profitability of your cart.
Creating Higher Value Offerings
You’ll need to sell 100 hot dogs at $4 a piece to reach $400 per day in sales. But, if you’re able to move the average sale price to $6 – $8 you’ll need a lot less customers over the course of a shift to be profitable. One way to increase your average customer value is to offer value meals or boxes where you bundle menu items and drinks together. For example, if you sell at hot dog at $4 a piece you could offer a drink and a side of coleslaw for a total of $6. Fast food restaurant chains are famous for doing the same thing in their industry and has help these businesses attain longterm profitability. There’s a reason McDonald’s asks if you would like fries and a drink with that for only $2 more. They are increasing the average income per customer by doing so.
There are a variety of menu items that Gladfelter has used to offer additional products beyond that hot dog. These items include giant pickles, baked beans, corn on the cob, and an assortment of different drinks like fresh squeezed lemonade.
Gross Income Versus Net Income
Gross versus net income is a key concept to remember when operating a hot dog business when hearing about income potential. When someone sales, I made $500 operating a hot dog cart today, they are usually referring to their gross sales numbers. This is the amount of income the business generated BEFORE product costs and taxes. You can think of this like a when you get a regular paycheck from your employer. You might get paid $20 an hour (this is your gross income), but after state and federal taxes you may only see about $15 an hour in your wallet (this is net income).
When operating a hot dog business, here are the costs you can expect:
- Product / Operation Costs – This should be at around 1/3 of your gross income. This includes hot dog buns, propane to fill your tank, napkins, and other products you sell. For this lesson, we are assuming that you do not have any employee expenses and you are operating the cart yourself.
- Taxes – Just like any other business you are responsible for paying taxes.
- Net Income – This is what you get to keep after the all your expenses, including taxes, are paid.
The Tip Jar
Attaching a tip jar to your cart is another great way to boost the overall income of your cart without incurring any additional expenses or creating extra work on your end. As any waiter or bar tender will tell you as well, you can make pretty decent extra money just from a few tips per day. As Gladfelter also explains in the interview, tips are an income source that’s worth mentioning. From his experience you can generate an extra $20 – $30 per shift pretty easily by placing a tip jar on the cart.
Quotes From The Show
You’re going to get a lot of varied answers from different vendors. And I hate to say this but motivation has a lot to do with those answers. – Matt Gladfelter on estimating a food carts income.
Your goal is 50 – 100 people (customers) per day. So your location is obviously going to dictate that completely. – Matt Gladfelter on the importance of identifying profitable vending locations.
Not a lot of cars are going to stop for a hot dog cart, unless they know who you are. – Matt Gladfelter on the importance of building a brand.
To me I’ve found that events are where it’s at because literally in 5 hours you can make thousands of dollars. And that’s not smoke and mirrors. – Matt Gladfelter on the types of locations that drive the most revenue.
It’s a process. Gradually you want to move out and replace your slowest locations. – Gladfelter on the process of identifying better and more profitable vending locations over time.
Mentioned in the Show
O’Doggy’s – This is a hot dog cart that has grown into a restaurant located in Rolla, Missouri. Gladfelter cites O’Doggy’s as an inspiration as to how many creative types of hot dogs can be developed.
Hot Dog Business Market Research – Like this interview? You’re going to love our previous conversation with Gladfelter about how to conduct market research and write a business plan for a hot dog cart.