How to Start a Hot Dog Cart: Cost and Profit Potential

These are the key elements to think about when starting your hot dog cart:

1. Location — Choose high-traffic locations with good visibility, such as busy streets, parks, tourist attractions, and event venues. Ensure you have the necessary permits to operate in these locations.
2. Hod dog cart and equipment — Purchase a high-quality, durable hot dog cart that meets local health and safety regulations. The cart should include cooking equipment, refrigeration, and storage space. Ensure you have all necessary equipment, such as hot dog grills, steamers, coolers, utensils, and cleaning supplies.
3. Licenses and permits — You will need a food vendor permit or mobile food vending license and a permit from the health department, considering you are handling edible products.
4. Define your offer — Offer a variety of high-quality hot dogs, including beef, pork, chicken, and vegetarian options. Consider offering specialty sausages or gourmet hot dogs to differentiate your business. Consider offering additional items like chips, drinks, and snacks to increase sales.
5. Suppliers — Establish relationships with reliable suppliers to ensure a consistent supply of high-quality ingredients and products.
6. Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
7. Legal business aspects — Register for taxes, open a business bank account, and get an EIN.

You May Also Wonder:

Can a hot dog cart make money?

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.

What city consumes the most hot dogs?

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.

Who is the largest hot dog chain in the world?

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.

How do I differentiate my hot dog cart business from competitors?

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. 

How do I handle and manage food safety and hygiene for my hot dog cart business?

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.

Step 1: Decide if the Business Is Right for You

Pros and cons

Starting a hot dog cart has pros and cons to consider before deciding if it’s right for you.

Hot dog cart industry trends

Industry size and growth

There are no specific hot dog cart statistics, but they fall under the food truck industry.

• Industry size and past growth – The US food truck industry was worth $1.2 billion in 2021 after 6.6% annual growth the previous five years.((https://www.ibisworld.com/united-states/market-research-reports/food-trucks-industry/))
• Growth forecast –  The US food truck industry is expected to modestly expand over the next five years. 
• Number of businesses – In 2021, 32,456 food truck businesses were operating in the US. 
• Number of people employed – In 2021, the food truck industry employed 38,064 people.

Trends and challenges

Trends in the hot dog cart industry include:

• Gourmet hot dogs are increasingly popular, with creative toppings like garlic aioli, guacamole, bleu cheese, mango salsa, and pesto.
• Hot dogs with Japanese, Vietnamese, and Korean flavors and toppings are becoming more common. 

Challenges in the hot dog cart industry include:

• The boom in food trucks means more competition for hot dog carts.
• Rising prices for hot dogs and other food items is cutting into the profits of hot dog cart owners. 

How much does it cost to start a hot dog cart business?

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: 

• Hot dog cart
• Trailer to transport your cart

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

How much can you earn from a hot dog cart business?

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.

What barriers to entry are there?

There are a few barriers to entry for a hot dog cart. Your biggest challenges will be:

• The startup costs of a cart and trailer
• Competing with popular food trucks and food vendors

Step 2: Hone Your Idea

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.

Why? Identify an opportunity

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. 

This could jumpstart your word-of-mouth marketing and attract clients right away. 

What? Determine your products and menu

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.

How much should you charge for hot dogs?

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.

Who? Identify your target market

Your target market will be broad, so you should spread out your marketing to include TikTok, Instagram, Facebook, and LinkedIn.

Where? Choose your hot dog cart location

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.

Step 3: Brainstorm a Hot Dog Business Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better 
• Name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “hot dog cart” or “gourmet hot dogs”, boosts SEO
• Name should allow for expansion, for ex: “The Rolling Wiener” over “Gourmet Dog Cart”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

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.

Step 4: Create a Hot Dog Cart Business Plan

Here are the key components of a business plan:

• Executive Summary: A concise summary highlighting the key points of the hot dog cart business plan, including its mission, goals, and potential for success.
• Business Overview: An overview of the hot dog cart business, outlining its purpose, target market, and unique selling points.
• Product and Services: Clearly defined details about the hot dog cart’s menu, pricing, and any additional services offered, emphasizing what sets it apart.
• Market Analysis: A comprehensive analysis of the target market, including demographics, trends, and potential customer needs, to justify the business’s viability.
• Competitive Analysis: An examination of competitors in the local area, evaluating strengths, weaknesses, and opportunities to position the hot dog cart effectively.
• Sales and Marketing: Strategies to promote and sell the hot dog cart’s products, encompassing advertising, promotions, and customer engagement.
• Management Team: An introduction to the individuals responsible for running the hot dog cart business, highlighting their skills and roles.
• Operations Plan: Detailed information on the day-to-day operations of the hot dog cart, covering location, equipment, supply chain, and staffing requirements.
• Financial Plan: A comprehensive overview of the hot dog cart’s financial projections, including startup costs, revenue forecasts, and break-even analysis.
• Appendix: Additional supporting documents or information that reinforces key points in the business plan, such as permits, licenses, or market research data.

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.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business! 

Choose where to register your company

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. 

Choose your business structure

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:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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.

Step 6: Register for Taxes

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.

It is important to consult an accountant or other professional to help you with your taxes to ensure you’re completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

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. 

Step 8: Apply for Hot Dog Cart Business Licenses and Permits

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.

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.

Step 9: Open a Business Bank Account

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. 

Step 10: Get Business Insurance

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:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business. 

Essential software and tools

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. 

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero. 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial. 

Develop your website

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. 

Marketing

Here are some powerful marketing strategies for your hot dog cart business:

• Professional Branding — Design a visually appealing cart with a catchy name and memorable logo to convey fun, flavor, and accessibility.
• Local SEO and Online Presence — Register your business on Google My Business and Yelp to enhance local search visibility and help customers find your location easily on Google Maps.
• Social Media Engagement — Actively use Instagram, Twitter, and Facebook to post updates about your location, share enticing images of your hot dogs, and promote daily specials. Engage with customers by responding to their feedback and featuring user-generated content.
• Content Marketing — Start a food blog or create social media content discussing the art of hot dog preparation, the story behind your business, and your experiences as a street food vendor. Use polls and interactive content to involve your audience in decisions like new toppings or menu items.
• Direct Outreach and Networking — Network with local businesses and community groups to find opportunities for setting up your cart at events, festivals, and busy areas. Collaborate with local businesses for mutual promotions.
• Experiential Marketing — Regularly participate in local events, food festivals, and markets to increase exposure, attract new customers, and integrate your business into the community.
• Partnerships and Local Sourcing — Forge partnerships with local suppliers like butchers or bakers to ensure your ingredients are high-quality and fresh, highlighting this as a selling point to customers.
• Community Engagement — Take part in community events or charity functions, offering your services to boost visibility and contribute to local causes, enhancing your community image.
• Customer Loyalty Programs — Implement a loyalty program that rewards customers with discounts or a free hot dog after a certain number of purchases. Offer special discounts to repeat customers to foster loyalty.
• Local Advertising — Advertise in local newspapers, on community bulletin boards, and in online community groups to promote your location and special events or promotions.
• Themed Promotions — Develop themed promotions tied to holidays, local events, or sports games to draw in customers and create a festive atmosphere around your cart.

Focus on USPs

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: 

• Quick, tasty lunch at an affordable price!
• Gourmet hot dogs to tempt your tastebuds
• Asian-inspired hot dogs – bite into life!

Networking

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. 

Step 12: Build Your Team

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:

• Hot Dog Cart Workers – make hot dogs, customer service
• General Manager – staff management, ordering, accounting
• Marketing Lead – SEO strategies, social media

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. 

Step 13: Run a Hot Dog Cart – Start Making Money!

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!