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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on April 7, 2022
Investment range
$8,000 - $21,000
Revenue potential
$55,000 - $182,000 p.a.
Time to build
1 – 3 months
Profit potential
$38,000 - $127,000 p.a.
Industry trend
Growing
Commitment
Flexible
These are the key elements to think about when starting your hot dog cart:
Starting a hot dog cart has pros and cons to consider before deciding if it’s right for you.
There are no specific hot dog cart statistics, but they fall under the food truck industry.
Trends in the hot dog cart industry include:
Challenges in the hot dog cart industry include:
Startup costs for a hot dog cart range from $8,000 to $21,000. The largest expenses are for the cart and the trailer.
You’ll need a handful of items to successfully launch your hot dog cart business, including:
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $150 - $200 | $175 |
| Business licenses and permits | $100 - $300 | $200 |
| Insurance | $100-$300 | $200 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Hot dog cart | $4,000 - $12,000 | $8,000 |
| Trailer | $2,000 - $4000 | $3,000 |
| Ingredients inventory | $500 - $1,000 | $750 |
| Total | $8,050 - $21,100 | $14,575 |
Prices range from $2 to $3 for a standard hot dog to maybe $10 for a gourmet dog. You can also sell beverages and side items like chips. These calculations will assume that your average sale per person will be $5. Your profit margin after food costs should be about 70%.
In your first year or two, you could have 30 customers a day, bringing in nearly $55,000 in annual revenue. This would mean $38,000 in profit, assuming that 70% margin. As your business gains traction, you could have 100 customers a day. With annual revenue of $182,000, you’d make a tidy profit of $127,000.
There are a few barriers to entry for a hot dog cart. Your biggest challenges will be:
Now that you know what’s involved in starting a hot dog cart, it’s a good idea to hone your concept in preparation to enter a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Research hot dog carts in your area to examine their products, price points, and what sells best. You’re looking for a market gap to fill. For instance, maybe the local market is missing a gourmet hot dog cart or a cart that offers vegan and vegetarian dogs.
You might consider targeting a niche market by specializing in a certain aspect of your industry, such as adding sausages or jumbo hot dogs.
This could jumpstart your word-of-mouth marketing and attract clients right away.
You’ll need to make a menu for your food truck. If you start a gourmet hot dog cart, you’ll need to come up with some unique recipes. You can also offer side dishes and beverages.
You should check prices in your area to make sure you’re competitive, but a basic hot dog sells for an average of $2.50 while a gourmet hot dog sells for $8 to $10. You should aim for a profit margin of about 70%.
Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will be broad, so you should spread out your marketing to include TikTok, Instagram, Facebook, and LinkedIn.
The location of your hot dog cart can make or break your business. Look for a spot in a high-traffic area with good foot traffic, such as a busy sidewalk, popular event venue, or commercial district. Consider accessibility and convenience, ensuring that the location is easily reachable by foot or public transportation.
Additionally, assess the competition in the area and aim to differentiate your hot dog cart by offering unique toppings, sauces, or seasonal specials. By strategically choosing the right location, you can establish a profitable and popular hot dog cart that offers delicious and memorable food options and stands out in the competitive street food industry.
Here are some ideas for brainstorming your business name:
Discover over 240 unique hot dog cart name ideas here. If you want your business name to include specific keywords, you can also use our business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that sets your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you’re planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to hot dog carts.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your hot dog cart will shape your taxes, personal liability, and business registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a hot dog cart business. You might also try crowdfunding if you have an innovative concept.
Starting a hot dog cart business requires obtaining a number of licenses and permits from local, state, and federal governments.
Your local governments will probably require a food service license and a food handler’s permit. Check with your local governments for requirements.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you start making money, you’ll need a place to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your hot dog cart business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.
Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.
Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software, such as Talech, tripleseat, or SpotOn, to manage your locations, inventory, and payments.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your hot dog cart business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your hot dog cart meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your hot dog cart business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a hot dog cart business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in food trucks for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in food carts. You’ll probably generate new customers or find companies with which you could establish a partnership.
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a hot dog cart business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Does a hot dog cart business sound like fun? It can be, and it can also make good money. You just need to make an initial investment in the cart and trailer, and you’re in business. Find good locations for your cart and deliver quality service and a good product, and you’ll soon have customers lining up around the block.
You’ve done your homework now, so go ahead and find that hot dog cart and start grilling up some profits!
Yes, your overhead will be fairly low, so you’ll keep a large percentage of what you bring in. You’ll just need a high-traffic location, quality service and good products, and you can succeed.
It is difficult to determine which city consumes the most hot dogs, as data on hot dog consumption is not regularly tracked. However, some cities that are known for their love of hot dogs include Chicago, New York, and Los Angeles.
The largest hot dog chain in the world is likely 7-Eleven, which operates more than 60,000 convenience stores in 17 countries and sells millions of hot dogs each year. Other large hot dog chains include Sonic, Nathan’s Famous, and Wienerschnitzel.
To differentiate your hot dog cart business from competitors, you can focus on offering unique and high-quality products that stand out from standard hot dog carts. This can include using high-quality ingredients and locally sourced products, offering a variety of toppings and sauces, or creating signature menu items that reflect your brand and style.
To ensure the safety and quality of your products, it is important to follow all local health and safety regulations for food handling, preparation, and storage. This may include obtaining any necessary permits or licenses, conducting regular inspections of your equipment and workspace, and ensuring that all food is cooked and stored at safe temperatures.
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