Last week I had the distinct privilege of being interviewed by Imanuel Gittens for his podcast show What the Truck. That interview is now posted for your enjoyment! Click the above link to be taken directly to the pod cast. Imanuel took the time to ask some really detailed questions about the mobile food vending industry. Best of all he allowed me the time to give in depth information for budding vendors. If you only listen to one pod cast about vending it needs to be this one! At least that is what my wife says!
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Once you develop your food business to the point where you are stable and profitable, what do you do now? Don’t rest on your laurels! A single location allows a certain amount of freedom and financial stability, but the income is capped by your abilities and unfortunately, the weather. How can a vendor hedge against weather, injury or sickness preventing the business from opening? Simple, increase the number of income streams. If one location produces $50,000 after tax income annually, work towards a second. I know, you are thinking, how do I staff them? I encourage you to write procedures and policies in a manual from the beginning of your food business. You then have the basis for training an employee. I am a control freak, so when I hire an employee I have a complete training guide to follow. (also, when I sell the business, I have a procedure manual which adds value) This ensures the new hire is up to speed and giving the type of quality and service, I and my guests expect. An employee requires, at minimum food safety training. Check with your health department for your local requirements for food service employees. You will need to develop some type of bonus or incentive system for the employee so that they will be invested in the success of the business. Structure the bonus program with several different areas to measure performance. I always work my new location and hire someone for my old location. This doesn’t task a new employee with trying to build sales, all they have to do is maintain what I have developed. Here is my bonus matrix I use for my employees. I have used this type of system since 2000. Originally developed by Mark Ordway (Burger King Franchisee Vice President of Operations and the most inspiring, principled leader I have ever met or worked with), this matrix system rewards varying levels of desired performance and is not the typical all or nothing bonus system most restaurant companies offer. Looking at the matrix, you will notice I reward 5 different areas of performance and offer differing levels of rewards. Across the top is the percentage of sales the employee will be given if they achieve the goal listed under that percentage. If they achieve an increase in sales over last year of 1.5% they could get a bonus of 1% of those sales. Likewise if the food cost they turn in is 30.10% they would have 1% DEDUCTED from the bonus pool. This system encourages the employee to work hard to achieve each area while penalizing areas they falter. The max total payout could be 15% of sales. Rarely will someone achieve all areas in the same bonus period, but this system does establish goals and rewards for achievement.
You could, and some people will, recommend basing the bonus paid on profits. It is your business do as you want. However, when you focus on profits as the base for payment, the employee is encouraged to skimp on portions, sell product beyond hold times or water down recipes to stretch them. Each of these things will drive away guests and hurt your business in the long run. I do all the prep work and clean up for all carts as well as inventory purchasing. My employee meets me at the commissary and gathers up the cart and food to transport to the location. They are on the clock and that is why I offer mileage reimbursement and I can verify tardiness as they must meet me at certain time. The employee must have auto insurance and you should check with your state insurance on what you need to cover the employee and your equipment while in transport. Otherwise you may need to tow the trailer yourself and have the employee meet you on site. The mystery shop could happen at any time and the form I use will fail the visit if the cart isn’t open for business on time or is closed early. (The employee must call me to close due to weather) I use friends and regular guests to mystery shop and offer additional free food as incentive as well as reimbursing the actual visit cost. Besides an unknown mystery shop the employee knows they will be inspected each day by either myself or my wife at a random time while they are open. Inventory is counted upon return to the commissary and compared to sales reports. Any discrepancy is counted as waste. (That is why waste is measured and bonus-ed) We then verify sales and reconcile cash to the reports. I use LoyversePOS which provides all the tracking I need as well as security as I can lock employees out of seeing sensitive sales reports. (Square, PayPal Here and other do the same thing and are reviewed here) My expectation is the cash matches exactly. If it does not the difference is taken out of the tips jar. You CAN NOT take cash shortages out of wages especially if the deduction potentially puts the employee under minimum wage. If the employee tips are insufficient to cover a shortage, consider termination and have a strong written cash handling policy that the employee has signed up on hiring. There are only three ways to be short on cash:
One last item on hiring employees check your state rules and regulations pertaining to reporting new hires, your responsibilities with unemployment insurance and workman’s comp. Remember to account for those costs. Below is a P&L showing the profit potential of this system. This sample is set up for a one-month sales period. Look at it this way. If you spend 90 minutes a day prepping, inventorying and cleaning your second cart/trailer you just paid yourself $137 an hour for just that location. Amazingly enough, a third location does not add the full 90 minutes to your day as you will just be prepping in bigger quantities and cleaning only a few more pans. Doubling or tripling locations absolutely does not double or triple prep and clean up time. This example is based on a beach location, working 14 days in the summer. Opening at 10:30 am and closing at 2:00 pm. Travel time, opening and closing setup plus the operational hours puts the employee working 5 hours a day. The location set up is 2 miles from the commissary. This gives the employee a base pay of $739.20 for the month. Achieving each area of the bonus matrix at the top level puts another $1291.50 in play for the employee. Thus, the total compensation package for the employee is over $2000 for 14 days of work or $29.01 an hour. Realistically hitting every level of the matrix at the top spot is difficult and it should be. The oldest question in business ownership is “How do I effectively advertise my business?” The wrong answer leads to a failing business depending on how deep your pockets are. Restaurants and food vendors must be marketing every second of every day. In America we have crossed the 1-BILLION-dollar mark for total Food Truck annual sales. Even tossing in the trailer, tent and cart vendors there are enough hungry guests to go around. The challenge is to convince a potential guest to try your food over the guy down the road. According to these guys:
As a street vendor you should follow in the B&M guys footsteps. There is no reason to re-invent the marketing wheel for your business. Here are some of the best practices used by successful street vendors. Consider marketing as your personal invitation to your street vending party once they accept your invitation and stop by for a bite it is up you to build a RELATIONSHIP via great tasting food, fast, friendly memorable service all in a clean, sanitary and safe environment. That Relationship is what will keep them coming back often. Your food, service and cleanliness must be superior to your competition before you even consider inviting guests to your business. You also need to understand a cart or truck vendor does not directly complete with a B&M restaurant. Never has. Mobile food vendors deliver taste and convenience as key points of difference from a B&M. Only very poorly ran restaurants are afraid of food trucks and carts. They are also afraid of the grocery store selling ready to eat foods and the convenience store selling pizza held under a heat lamp, cooked in an E-Z Bake Oven. Having said that a truck, trailer or cart has to be superior in flavor, speed and have a personality. People shop from memory. Associating great flavor with a fun serving experience creates a strong memory for your guests. Don’t waste money on advertising unless you are confident your food is delicious, and you deliver on fast and friendly. Start with the basics. Your signage around your cart, tent or trailer should establish what you sell and at what price in as few words as possible. It should also be easily seen from a distance. How far depends on the location. You must provide enough information to entice your potential guest to decide to eat with you without slowing down, whether driving or walking. A picture of a hot dog combo with a price starburst works, it communicates your main product with a price point. This allows the guest to decide based on food and price. If you in an area where the view is obstructed by trees, hills or buildings you must have extra signage that leads guests to you. If the speed limit or traffic is high around your location, you need even more space and signs to give people a chance to notice you and safely exit traffic long before they actually pass your business. Burma Shave style signs work well to demonstrate a little personality while guiding your guests to your business. When designing your menu board absolutely DO NOT use stock photos, even if they perfectly match your food. Today’s technology makes producing your own high-quality photos simple and easy. The cover of my book, “Putting the Cart Before the Dog”, was taken with using a Galaxy S5. I have also used many iPhone photos for print and internet ads. One of my most commented-on menu photos shows my hand holding a sandwich. As you can see nothing fancy, but it started a lot of conversations, especially since the sandwich was made and photographed exactly how to would be served to any guest. Make sure your menu board is easy to read from at least two to three people back from your order taking area, otherwise you create a bottle neck of people reading your menu when they should be ordering. Use social media to develop a following and to find new guests. Learn each how each platform works and who the "influencers" are for your area. Set a daily goal to DM a small number of "influencers" and recent check-ins for your area, sincerely compliment something they posted you really like and invite them to stop by for a free signature item from your menu. A tiny portion will stop by and a small portion of those folks will post something about your business or a picture of your food. Everyone of those you messaged that does visit give them something for a future visit, BOGO (buy one get one) works best because it requires them to bring someone along for the next visit. Then have something for that return visit for both people (these are referred to as Bounce back coupons). Keeping up with your social media will take up some time in your workday and you must be, well, social. Meaning a conversation must take place. When you receive a review comment back to the reviewer and if you remember the interaction be specific with your comments. If you get a less than stellar review comment on it as well. Invite them back, apologize for the issue and turn the poor review into an outlier that gets ignored by other potential guests. Modern day guests are quite savvy folks and know 100% positive reviews means FAKE reviews from friends and family mixed in with some real guest comments. People understand the delete button as well. When they see the outlier poor review they feel more confident about the good reviews. If the business owner acknowledges the poor review in a professional manner a potential guest feels even better about the business an is more likely to give them a try. As well as, responding to comments and reviews, you will need to start conversations on your social media. Keep adding new photos with your logo as a water mark, show pictures of your guests eating, comment on weather, traffic, sports team success anything that could start a conversation. Add hash tags sparingly to your posts when necessary. I recommend social media twice daily. Once well before opening to remind people where are and when you will open. The second should be after you have either slowed down for the day or after you have closed. This time should include the response to all comments, all reviews and any local events or news that you think others are talking about. Search local happening and make some comments to get conversations started. You can have a Bounce back coupon promotion to use in conjunction with any special event or location you don’t normally visit. Bounce backs can be as simple as several coupons printed on an 8 ½ by 11 sheet in black ink. Make the offers profitable for you and enticing for the guest to want to keep the coupons. Remember to list your address locations and hours of operation. Loyalty programs or punch cards encourage frequent visits. There are many app addons for your POS systems that will track points, visits or purchases what ever you want to reward. Remember to account for the cost of the addon fees in your marketing budget. Punch cards are cheap and easy to use. Simply offer a free sandwich or other item in return for purchasing a certain number of the same item. You then punch or mark the card in a manner that is not easily duplicated. When the correct amount is reached by your guest, you give them the free item. Just make sure your profit margin can handle the discounts and freebies or you will market yourself out of business. Become involved in your local community. Getting your name out in your community is essential to business success. I know of one restaurant in a dying, economically depressed town of 11,000 people that took sales from bankruptcy level $7,500 a week to over $12,000 just by getting involved with school fund raising events on a near weekly basis. What ever the schools were doing they were there showing support and creating a “presence” demonstrating being a part of the community rather than just a faceless restaurant out to make a buck. Help with fund raisers, set up reading programs with elementary schools. Support high school teams, Little League sports or other civic minded groups. Run promotions where part of your profit is donated to the group during a certain time frame if that group helps to increase sales over your normal sales during the same time frame. Take inspiration from your competitors and then do their marketing programs better. Be the go to food vendor for open houses, ribbon cuttings, parades, firework shows and any other local event. Make certain you have menus, coupons and little logo items to pass out at these events. Selling food at a parade may be profitable but imagine if 10% of those people become loyal guests because you gave them a menu with a coupon inviting them back to your regular location. I could go on and on with methods to market your business, but you get the idea. You must be actively seeking new guests, working to impress current guests and rewarding loyal guests every single day you are in operation. Just like you need a marketing budget set up (minimum 4% of net sales) you need a daily time budget. I recommend a minimum of one hour each day. If you are aggressively doing things on this page as well as looking for new ideas, monitoring results of your marketing events and looking for ways to improve your operations to the satisfaction of your guests you will grow your business. “Pride is pride not because it hates being wrong, but because it loves being wrong: To hate being wrong is to change your opinion when you are proven wrong; whereas pride, even when proven wrong, decides to go on being wrong.” I am a part of many vending related Facebook groups. Some I just read and rarely comment. Others I comment often trying to clarify answers and actually help people learn and better their business. I even had one group ban me when I asked in a private message why they allowed illegal information encouraging tax fraud to remain unchallenged. They claim to be an “academy” for food vendors but if you won’t delete or correct illegal information , the only thing you are an “academy” for is failure. This weekend I got into a debate over whether a food certification is required in certain states. Some states like Florida actually ask for the certification on their inspection form, making it clear the certification is required. Other states are very ambiguous as to whether the certification is required. One person quoted me an email from her inspector stating the certification is not required. Leaving that statement as absolute proof you need not be certified. EXCEPT while the certification is not required the very first thing on the inspection sheet for that state asks: “Person in charge present, demonstrates knowledge, and performs duties”. How do you “demonstrate knowledge”? According to every FDA Code starting in 1997 (find them all here) and every code year including 2017 is a passage containing this:
And then it lists 17 different ways to demonstrate knowledge. This is the 1997 version. In 2017 that passage is worded:
And it goes on to list 17 areas for the questions. The inspector can ask as many as they want until satisfied the person in charge possesses enough knowledge to safely sell food. Understand 48 out of 50 states base their code on the FDA model code(link). The only difference is which year they use. NY and CT are the outliers using their own codes. CT does require what they call a Qualified Food Operator and NY code says this:
Demonstrating knowledge is done by one of 3 ways as noted in the FDA Codes:
Asking your sanitarian “Does our state require Serv-Safe?” could get you an incomplete answer of “No, we do not require Serv-Safe”. Making you think “Oh yeah! No test for me!”, when the actual question should have been “Where do I get the training needed to meet knowledge demonstration requirement in our state’s food code?” That answer would be: “Take one of the courses and tests approved by our state and you can find those on our website.” The point here is asking the correct question gets you the right information. Understand Serv-Safe is generically used to refer to training, testing and certification for becoming a Certified Food Manager. Your state may only accept a certification they offer, or they may accept several different companies that offer training and testing. However, rest assured you need training or your food vendor career will be a short one. A single cart or trailer allows a certain amount of freedom and financial stability if ran properly, but the income is capped by the owner’s abilities and unfortunately, the weather. How can a vendor hedge against weather, injury or sickness preventing them from opening? Increase the number of income streams! If one location produces $50,000 after tax income annually, work towards a second doing the same sales volume. Then a third and so on. I know what you are thinking, “how do I staff them?” That’s why I encourage everyone to write procedures and policies in a manual. Now you have the basis for training an employee. I have mentioned a time or two that I am a control freak, so now when I hire an employee I have a complete training guide to follow. This ensures the new hire is up to speed and giving the type of quality and service, my guests expect. An employee requires, at minimum food safety training, (check with your health department for training required for food service employees) as well as training specific to your food recipes and handling guests. Hiring can be difficult for some people. Knowing what to legally ask, how to judge ability from questions or friendliness after the interview, even judging honesty are all difficult and for some folks impossible. As a small business looking to expand that first new hire can literally make or break the expansion dream. If you have never interviewed someone take a class or two on hiring and interviewing practices for your area. Just like the health department rules vary widely from state to state so do employment laws, unemployment taxes, payroll taxes, workers comp insurance and income taxes. Also, you have to pay the employer match for FICA. There are pre-employment tests you can administer as a part of the application process and there are several services offering these tests. Burger King, for example, uses a couple of different test to determine integrity. In practice these tests disqualify more applicants than they approve, but they do show results, so you can decide on whether to interview them or not. Once you have decided on a new hire you will of course have to spend time training them to your standards of quality, service and cleanliness. The more time you spend with an employee the better they will perform when left alone. I encourage you to develop some type of bonus or incentive for the employee so that they will be invested in the success of the cart. Structure the bonus program with several different areas to measure performance. I always work my new location and hire someone for my older locations. This doesn’t task a new employee with trying to build sales all they have to do is maintain what I have developed. Here is my bonus matrix I use when hire employees. A matrix system rewards varying levels of desired performance and is not the typical all or nothing bonus system most restaurant companies offer. Looking at the matrix pictured above, you will notice I reward 5 different areas of performance and offer differing levels of rewards. This cart is open from 11 AM to 2 PM on a beach location. The employee meets me at the commissary at 10 AM, clocks in verifies the inventory and cash with me, and then tows the cart to the beach and is open for business by 11 AM. At 2 PM tear down begins, and the cart is returned to the commissary. We count cash and inventory and the employee clocks out by 3 PM. The wages earned at this point are 5 hours times $10 for a total of $50. Mileage from commissary to beach for me is 6-mile round trip and I pay $0.55 per mile. Making the total compensation per day $53.30. Our goal is to open Thursday to Sunday each week depending on weather, for a total of 16 days average each month. For this example, the employee ran cart turned in these numbers:
I limit my labor costs by doing all the prep work and clean up for all carts as well as inventory purchasing. My employee meets me at the commissary and gathers up the cart and food to transport to the location. They are on the clock and that is why I offer mileage reimbursement (which is based on Google maps listed mileage) and I can verify tardiness as they must meet me at certain time. The mystery shop could happen at any time and the form I use will fail the visit if the cart isn’t open for business on time or is closed early. (The employee must call me to close due to weather) I use friends and regular guests to mystery shop and offer them free food as incentive as well as reimbursing the actual visit cost. You could replace this section with social media reviews. Just come up with a system that could not easily tricked by your employees. Inventory is counted upon return to the commissary and compared to sales reports. Any discrepancy is counted as waste. We then verify sales and reconcile cash to the reports. I use LoyversePOS which provides all the tracking I need as well as security as I can lock employees out of seeing sensitive sales reports. My expectation is the cash matches exactly. If it does not the difference is taken out of the tips jar. We then review sales, food cost and waste. The employee knows where he stands bonus wise and what to do to improve. This entire process takes 15 to 20 minutes and the employee is finished for the day. This system has worked well for me. I don’t do this all year long as my area is very tourist driven. Spring is college kids and I track what college goes on break and when. I know what schools come here and who passes us by. Summer is family time vacation. Once school starts mid-August the prime time is lost, and my additional carts are closed. Fall is slow, and winter is dead between weather and a lack of interest in outdoor activities I may only open 7 to 10 days, if that, each month till March. When I do open it is usually at fairs and flea markets, so I get guaranteed business. When you increase your income your state and federal tax brackets will change. Remember to account for the increased tax liability and make those payments on time! As always seek profession advice concerning your taxes. Below is a P&L showing the profit potential of this system. This sample is set up for a one-month sales period. Look at it this way. If you spend 90 minutes a day prepping, inventorying and cleaning your second cart you just paid yourself over $150 an hour for just that cart. Amazingly enough, a third cart does not add the full 90 minutes to your day as you will just be prepping in bigger quantities and cleaning only a few more pans. Doubling or tripling carts absolutely does not double or triple prep and clean up time. Of course, you can pay minimum wage or slightly better and keep more profits for yourself. BUT minimum wage only attracts inexperienced or otherwise unskilled applicants. When wages and bonus packages are tied to improving operations and sales the employee has a vested interest in improvement. Remember any bonus system must be attainable and measurable, as well as, reviewed often with the employee. Otherwise they lower their productivity to match their perception of your hourly wage. |
Bill MI have had a passion for helping people since an early age back in rural Kentucky. That passion grew into teaching and training managers and owners how to grow sales, increase profits, and retain guests. You’ll find a ton of information here about improving restaurant and food cart/trailer operations and profits. Got questions? Email me at Bill_Moore@live.com Archives
January 2023
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