​ Every day I talk to people about getting started as a street food vendor and every single day I have one or more people that have already purchased a trailer or set up a LLC, but still haven’t figured out what they will sell, how much it costs them and at what price for the menu.  Then I face palm myself wondering how so many people can go about this so completely and utterly backwards.
I have said so many times, “Dave Thomas didn’t build a restaurant, equip it and then ask, ‘OK boys, what do we sell?’” Neither should you.

​ The menu dictates EVERYTHING! I mean EVERYTHING! Suppliers, space, equipment, locations, utilities, demographics all are a function of what is on your MENU! IF you don’t have a passion for your food, selling something you are proud to sell and is delicious, then just sell lemonade and kettle corn. Both are trendy right now, super easy to sell, highly profitable and an impulse buy that doesn’t depend on hunger. I know several highly successful vendors of both products and I also know a few very shady sellers of them as well. People that add powdered mix to water and call it “Fresh Squeezed” others that freeze lemons and lemon juice for future use and call that “fresh”.  
When you are hot and thirsty a nice cool cup of lemonade hits the spot and you don’t care if it hand squeezed, crushed with a fancy pneumatic juicer or just a form of Kool-Aid. Who doesn’t want some popcorn after the aroma chases them down? Both products are easy, require little ability or knowledge of food safety beyond product rotation. The hardest thing you have to do is build up speed enough to handle your guests. BUT selling those requires specialized equipment and if you already bought a cart or trailer it probably does not have what you need. That is exactly why menu has to come first.
Once you have determined what you would be proud and excited to sell, you will have to determine how much it will cost you to produce and how much to sell it for on your menu.
First step is to know EXACTLY what you are selling, how you are going to make it and how much every single ingredient will cost. Then the second step, obviously, is to find a wholesale supplier and get the best price for your ingredients.

 Let’s use the humble hot dog as our test item. On the left you can see real costs and portions.
These prices reflect Sam’s Club purchases in February 2018. I assume everyone will order every condiment I carry and price my menu accordingly. When someone says “No mayo or onions” it serves to make up for the guy that wants extra onions. I price a single glove for EVERY food item I sell, that way I don’t get wrapped up in trying to save pennies while the dollars pass me by. Likewise, I price multiple napkins for every item including chips and drinks. Extra napkin requests don’t bother me a bit. Notice I also expense seasoning. Many people forget to add in the cost of buttering a bun to toast it or salting fries. Then they wonder why their food cost is higher than it should be.

​Here is one example only a real food pro can answer: What is the absorption rate of shortening when cooking your products? How about the evaporation rate of chili held in a steam table? The chili held for hours without being reconstituted is thicker and has a more concentrated taste at the end of the day. A thicker portion means you are putting more and more on per hot dog if you are using a real portion control like a 1 or 1.5-ounce ladle. Same with liquid cheese. They must be reconstituted both for quality and cost sake.
As you can see knowing your portions is a huge part of making money as a food vendor. You have to check yourself when portioning things like ketchup by sight. You have to know the amount you expect to put on the hot dog and what it looks like when properly portioned. Practice, Practice, Practice. Use measuring spoons and practice how long and at what strength of ‘squeeze’ you need on your bottles to produce your listed portion. If you don’t think it matters, you would be wrong. It matters for guest satisfaction – every product looks like the one beside it. It matters for profitability – lack of proper portioning often leads to business failure. It matters for your own sanity. It is no fun to run out of a product knowing you over did the portions.
The third and final step is to assign a price to the product. Most new vendors stumble here in one of two ways. First is to massively over charge, thinking their product is vastly superior and people only need try it to love it because they are such an awesome chef. OR they massively undercharge thinking low price volume sales is the way to survive as a small business, because after all who can price compete with a dollar menu from the corporate chains.  As with most things reality is somewhere in the middle. A little research is required to really assign price. For example, my price of $4.00 (which is slightly higher than my competition) for a regular hot dog works for me because:

1. I am in a highly tourist driven area.
2. I have low quality competition.
3. I provide convenience which people will pay a premium price. Usually the only food vendor with my variety within comfortable walking distance.
4. I understand the value in selling well priced combos.
5. My service style is unique and themed to the area.

Other areas of the country would not be able to sell at the that price. You will have to research your competition and price with-in their range until you establish yourself as a better-quality value. 

Look at number 4 above, “well priced combos”. A well-priced combo adds value for your guests and offers a way for a savvy consumer to feel like they got a deal. List your all items a-la-cart at premium prices, then create combos at a perceived discount for your guests. They will purchase the combos more often which increases your overall sales. Something like this for your menu:
Purchased separately the guest pays $6.50 bought as a combo they will save a dollar. The best part is when they purchase a second drink or chip at the full price. Every time you can increase your sales from a guest you are are lowering the impact of the fixed costs against your P&L.
This is an advanced concept that far too many small business owners simply don’t understand and therefore don’t apply. Here is how it works. Fixed costs never ever change. Regardless of you being open or closed these bills have to be paid. They include bank account fees, phone service, site rent, possibly commissary if it is paid monthly, insurance, licenses, etc. Let’s say your monthly fixed costs are $500. You expect to control all your variable costs perfectly and that percentage is 39%. Variable costs include all the food sold or wasted, propane, gasoline, credit card fees, cleaning supplies, marketing, etc., line items that only increase as you sell or prep your food. Your break even then is $819.67 a month. Figure working 12 days a month getting 50 guests on average spending $4.75 or daily sales of $237.50. These numbers all lead to a profit of $1238.50, not bad. Now suppose you could increase your check average to $5.25 just by adding combos and suggestive selling them. Your profit jumps to $1421.50. You have given your self a $183 a month raise and not added one extra guest to your business!

Bottom line on pricing:
Know your product recipes
Price shop suppliers
Account for everything that goes into your food (seasonings, paper, gloves etc.)
Know your competitor’s prices and menus
Survey repeat guests for pricing recommendations
Use combo and special discounting ploys to increase check average
I am willing to bet a good street vendor can beat my projections on variable cost (I usually hit under 34%) and a great selling personality can up the average check more than 50 cents! 

Renting or leasing a cart, trailer or truck is a huge decision. Often folks turn to renting or leasing when savings are small, or credit is poor. Others look at food service as a way out of a desperate situation and turn to leasing or renting based on hype from cart manufacturers. You know the ones that understate the difficulties and overstate the income. We are going to look at a couple of different rental proposals and if they make good business sense.
 
The first is a strategy recommended by a cart manufacturer and self-titled “hot dog expert”. Of course, this strategy happens to encourage his customers to purchase multiple carts from him. A clear conflict of interest. His “strategy” claims to increase cash flow for the cart owner and that renting them out is child’s play. This is a win-win situation for the manufacturer and the new cart owner. Except the person with money buys carts and rents them to people with little cash or credit, thus creating a win-lose proposition between the new cart owner and the renter. 

Problems with renting a cart/trailer:

• Zero support from the cart owner
• The renter still has almost all the same costs, licensing, permitting, etc. as owning
• The past cart renters possibly impact your current sales (health inspections are attached to the cart license not the person operating it)
• The cart owner gets paid first, then you get what is left over
• At the end of the rental agreement you own nothing

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In this ad for a cart rental hopefully you notice right off the bat the picture is a beach setting while Orlando, the listing city, is an hour away from any beach. We will assume this is a real ad for a real cart as pictured. For this example and the later trailer rent to own analysis, we will assume a 33% operational cost (food, propane, paper, cleaning, gasoline etc.) and working an average of 3 days a week or 144 days a year. This number would account for bad weather throughout the year. Unless you live in a major city with 2000 plus foot traffic per hour, 3 days a week is about all you can reasonably expect decent business until you develop a following. Next you should expect some large costs with insurance ($299 annually) and getting food manager certified. Even if your state does not require it, get yourself trained and expect about $110-$150 for that. After those expenses expect other monthly costs paid as a lump sum like cell phone ($45) for credit cards, call in orders and answering questions and, of course, bank fees ($10). Finally, you may get lucky and find a commissary that will allow you to pay daily ($10 to $25 per hour) and your site rental may do the same ($20 or more daily).
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For this cart at $3,000 a month rent you could buy a really nice used cart with several accessories, extra coolers and pans. Thus $3,000 monthly rental is a sucker’s deal. However, people will have to go the route of daily rental because the lump sum is simply out of reach. So, plunk down $350 to this guy and $502 or more for everything listed above. Thus, you pay $852 out before you even buy one morsel of food to sell to anyone. Scary isn’t it?
Let’s say you are committed to this process, believe it will work, have the ability to cook and deliver delicious food in a friendly manner AND have no other issues or costs pop up for the year. After working hard for 144 days you will have a whopping $190.03 in profit. Ready to go find a cart to rent?
Notice at $630 a day for 144 days you don’t even reach that magical $100,000 mark that shady cart manufacturers indicate is possible with ease. If you were to hit that mark your profit would be a paltry $6061.00. Remember working more days doesn’t help much because your rental fee is DAILY.
The winners in this scenario are the manufacturer and the cart owner. The unfortunate loser is the poor cart operator trying to make a decent living.
At what point can a rental agreement be a win-win for everyone involved? Daily rental fees less than $150 on the sales listed will yield an annual income of nearly $29,000 before income taxes. At that income level only working 144 days sounds exciting!
 

This is an ad that pops up often on several Facebook vending groups. I have not seen nor heard about the quality of construction, so for this example let’s assume Rent to Own Trailers has a great design and perfect construction with no maintenance for the rental period.  We will look at the smallest trailer with a griddle and add no additional equipment. $4500 deposit and 50 payments of $522 for a total of $30,600. Break even would be $55,631 assuming the same numbers from above and you work alone in this trailer. Best thing about this agreement is you will own the trailer after 50 payments. If you work only 3 days a week you would only need to generate $386 a day to break even. Of course, if you want to repay yourself the $4500 deposit you put down out of your personal money, it would take $430 a day. Keep in mind at the end of one year, even with this low sales amount, your business has broken even, you have recouped your personal loan to your business AND you own a business asset. Realistically, a food trailer should do a minimum of $800 a day in sales and this is easily handled by a single person.

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 Just using the same sales figures as the cart example above, you can see a profit of over $19,500 for your first year. At this point you own a trailer, and best of all have a larger profit potential for the coming year even if sales stay exactly the same.

 












A brief look at the second-year income potential gives cause for excitement. A cool 50 grand in profit! Imagine if you spend some money and time to market the trailer and increased the sales to $1000 or more daily!
 
 











Bottom Line
 
You must consider several things before getting into a rental agreement for either a daily cart/trailer or a rent to own trailer.

• Carts, trucks and trailers are weather bound. Cold, rainy days keep away guests and hot days are very difficult to work inside a trailer.
• Food service is difficult hot, tiring work with often little reward.
• Dealing with the public is no picnic.
• Speed and friendliness will make or break you.
• There are tons of local and county codes to understand and follow.
• Marketing your food business is a full-time job itself.
• Finding a great location or suitable event is difficult, sometimes impossible.
• Many people stumble when costing their menu.
• Quality of your food is difficult to maintain and still control waste.

​In any contract the numbers must work for both parties. In the cart example, absolutely not a good deal. The only person making money is the cart owner. The trailer rent to own is viable and at the end of the contract you are the owner of an asset you could resell and recoup more of your investment. Research your area, competitors and vending laws before entertaining the idea of rent to own.

​If credit issues are a problem but you have a strong food background and desire to succeed rent to own may be your best option. At least with this option you have a fighting chance to make a profit!
 
Disclaimer: The numbers listed are example numbers only based on past performance averages. Your actual sales and costs will be 100% dependent on your abilities and local suppliers. 

As a truck or trailer owner deciding on which soda (cola, pop or coke) to sell requires a little more thought than a cart vendor. You have to consider delivery method as well as event limitations and profitability. Besides cans/bottles there are 2 more delivery systems to consider for the trailer or truck owner. Pre-and Post-mix. Both of these require a fountain, ice, cups, lids, straws and CO2. 

​You can buy your own fountain and mix or match flavors across brands. For example, selling Coca-Cola and Mountain Dew together. Or you can rent your fountain from the bottler and be bound to the brand strictly. Yes, they do follow up to make sure you are taking care of the equipment and branding requirements. Of course, you may not be able to sell one brand at an event sponsored by the other brand if the contract specifies brand exclusivity. Going this route limits your participation in certain events. Either you sell no sodas or buy cans of the correct brand at a higher price. Some events even require you to only purchase product on site. 

​Space is another consideration. Inside a truck or trailer you have only so many cubic feet for storage and equipment. Not only do you need space for the fountain, the BIB rack and ice bin, you also have to store all the paper products to serve the soda. Styrofoam cups take up tons of valuable storage space! As you can see in Figure 2 the space requirement is quite large. Both these fountains require ice not only for the cups when served to the guest, but also for the fountain’s cold plate. This is an area that must remain iced at all times (even when you are closed). Otherwise the soda will become warm and flat. Coca-Cola recommends the serving temp straight out of the fountain be 34 to 36 degrees and you need a well iced cold plate to do that. Also post mix has a 30 psi water pressure requirement.

​How do these stack up profit wise? Pre-mix cost per ounce is so close to the cost per ounce of cans that once you factor in CO2, cup, lid and straw it is more expensive. Post-mix has two prices. A national account receives a discount/rebate making the cost for a 5-gallon BIB {Bag In Box} $73.95 (Pepsi is slightly cheaper at $72.65) or pay the non-national account price at Sam’s Club of $81.69. Coke syrup is mixed 5 parts of water to 1-part syrup. That 5-gallon box yields 30 total gallons of product which costs $0.0192 per ounce (national account) or $0.0212 at Sam’s. Add in the cost of cup, lid and straw of $0.0574 brings the cost of a 12-oz. no ice drink to $0.2878, compared to a 12-oz. can of soda at Sam’s Club of $0.285. Prices listed are as of fall 2017.

Other things to consider:

• Slow selling BIB sodas probably will expire before you can sell out. You can get 2.5-gallon BIBs, but I have had Fanta Orange and Mug Root Beer expire in my million dollar a year Burger King restaurant.
• A 5-gallon BIB of Coke weighs 65ish pounds while a 5-gallon BIB of Diet weighs 38ish. (Sugar apparently is very heavy) Making loading and unloading a factor.
• You will need much more ice for cups than just simply icing coolers containing cans.
• You will have the additional drainage of melting ice from the ice bins. How will that impact your waste water storage?
• You will need to carry more water to supply the post-mix fountain.
• Coca-Cola is pushing the Coke Freestyle machines that use a flavor cartridge combined with sugar and diet BIBs. I expect that will be the future of soda fountains in the coming years.

Deciding on which brand to sell can be nerve racking. Your personal favorite may not be the best seller in your market. Will it be Coca-Cola or Pepsi? Rarely will you lose a sale over brand unless you pick a generic store label. Selling generic labels will not build repeat sales and really crushes your image in your guest’s mind. Profitable per can? Yes. Smart long term? Absolutely not. I once set up near a newbie vendor that went the cheap route buying Sam’s Cola. (I drink it at home because I am cheap and don’t see a significant taste difference from Coke) After a couple of hours I noticed the occasional person leave his cart without buying anything. One guy came to my cart and I asked why he left. He grumbled “He’s selling that cheap crappy soda, so I figure he is selling Dollar Tree hot dogs too.”

Determining what is popular in your area is fairly simple. Go to a local grocery store (as opposed to regional or national chains) and look at shelf space allotted to each brand. A small grocer cannot afford shelf space to a product that doesn’t sell. Look at convenience stores, corner markets and drug stores. Also look at the signage. If the store has a Coca-Cola or Pepsi branded sign with the store’s name, chances are they are required to feature that brand with more space and premium location. Strike up conversations with owners and managers. Ask which sales rep they see more often or if the manager is the one to order the soda. A five-minute conversation and you will have your answer.

Looking nationally go to this site. Coca-Cola by far is most popular with Diet Coke and Pepsi trading 2nd and 3rd places between themselves depending on the month. Next most popular are Mountain Dew, Dr. Pepper and Sprite.

If you are still tossed up run a test on your cart for a month. Put Coke and Pepsi together and see which one your guests choose. You will be able to sell out the slower moving one, so it’s not like you will be stuck with it. And if they both sell equally well, keep them both. It is after all your business and you are the boss!

​Key points on soda choice:

1. Chose what your guests want not your personal favorite.
2. Think about your event venues and if there will be brand restrictions.
3. Consider space, storage and product turnover.
4. Remember fountains require more ice, more water, more storage space and more cash tied up in inventory for a longer period of time.
5. Purchasing your own fountain automatically makes you responsible for repair/replacement costs.
6. Cans/bottles are readily found anywhere, BIB is not.
7. Guests expect choice in soda you will need at minimum of 4: cola, diet, no caffeine and odd flavor (Dr Pepper, Mr Pibb, Root Beer, Mountain Dew, Orange etc.)
8. A full line up of BIB soda and water adds significant towing weight to your trailer.
9. Liquid shifts in transport making it easy to topple storage racks and open your trailer to an expensive sticky mess.  

 
In case you are wondering about my drink selections:

• Coke
• Diet Coke
• Sprite
• Dr. Pepper
• Mountain Dew
• Zephyrhills Spring Water
• Raspberry-Strawberry-Lemonade
• Coffee & Iced Coffee (depending on venue)

All in cans or bottles on my carts and trailers. My B&M restaurants all use BIBs or a mix of fountain and specialty bottled drinks. I have used both Pepsi and Coke fountains as well as Coke Free Style. I have found local Pepsi Bottlers more willing to help a small business with banners, signs and other marketing material. On the flip side, I have also had Coca-Cola go out of its way to install equipment to meet some very tight deadlines.