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The Hot Dog Guy

February 23rd, 2009 · 3 Comments

I work at a 4-building office complex. One thing most of us look forward to every Wed is the hot dog stand – a guy will show up at 11:30AM and sell Hot Dog plus a soda and a bag of chip for $5.

Although there are nice restaurants and fast food places within walking distance, people love Hot Dogs – I estimate that 200-300 hot dogs are sold every Wednesday. And that’s only for two hours of work!

Since there is a little bit of amateur economist in me, I chatted with the Hot Dog guy once. His business model is simple: he goes to several office parks several times a week. He also does party catering. All of his ingredients are purchased from Costco.

I did a quick calculation:

Assuming he works 4 days a week, 4 weeks a month. And he sells 200 hot dogs each time. Let’s assume each hot dog + chips + drank costs $1 – I think his cost is much lower than $1, but let’s just assume $1.

He will make ($5-$1)*200*4*4=$12,800 per month! That’s not even including the occasional party catering he does. And remember, he only works about 2 hours per day – his hot dog stand only stays for two hours during lunch time.

Let’s assume he only works 10 months a year since it snows sometime in Winter and he won’t be able to come out. He would still make $128,000 a year – that’s a pretty good salary! Not to mention the tax saving benefits he has by having his own business.

I’m not saying that everyone should start selling hot dogs. 🙂 But, I think we could all learn a lesson or two from the hot dog guy:

  • Tough time calls for creativity and entrepreneurial spirit. When everyone is tighten up their belt, think about cheap product/services that a lot of people would be buying. $5 a time, and it adds up.
  • You won’t need to work a lot of hours to make good money – work hard, but also work smart. Come up with the right business model is as important as working your tail off.
  • There are opportunities in crowed niche market. The hot dog business is as crowed and competitive as any market niche. And the barrier to entry is extremely low. 🙂 However, this guy identified an untapped market – our office complex is a few minutes walk from nearby restaurants. But, sometime we’re so busy that we really prefer not to take the trip. Plus, going downstairs to the courtyard give everyone an opportunity to go outside and chat with one another. Finally,who said that we don’t like junk food? 🙂

Are you frustrated by your job? Concerned about job security? Depressed about your layoff? Think creatively and act entrepreneurially. I believe there is a “hot dog guy or girl” in everyone of us.

What actions can you take?

Update 6PM, 2/23: I just came across a great blog post – Take Control in Tough Times: 10 Things You Can Do Now. Great advice.

Tags: Beat Recession · Product Management · Start-up Success

3 responses so far ↓

  • 1 NJMeaty // Feb 24, 2009 at 3:14 pm

    Not sure what city you are in, but the licenses to sell hot dogs can be outrageously expensive in a place like NYC. Prime licenses near heavily trafficked areas can go for $200k or more.
    http://gothamist.com/2009/01/07/hot_dog_vendor_
    I too have done the same calculations that you have while staring out the window at the hot dog guys. But after license, it's unclear whether they are netting that much profit.

  • 2 dogman // Mar 1, 2009 at 3:04 am

    no offense, but I know a little bit about this type of business and the numbers in your hot dog example are way way off- are you in sales?
    Now 200 hot dogs divided by 2 hours means 1.6 hot dogs per minute. Assuming an orderly line that proceeds non-stop that would be almost plausible, but 200 drinks is over 8 cases which is a way too much soda which would require 2 or 3 ice chests to hold- and you'll need to keep them on ice since the stream of people is happening so fast. I'm assuming the guy has a van for all those ice chests. You'll need it for the 200 chips that you need to store.
    Price is roughly right, but more likely closer to $2 not $1 (bread, dog, chips + soda).
    I live in California where the weather is good and these types of carts can go year round. I know a couple of people that have run these types of carts at decent locations. The money ain't bad, but I think you inflated it quite a bit.
    Oh, and if you really can find 4 locations that are selling 200 dogs in 2 hours then rest assured that NJMeaty is right and you're paying some hefty license fees.

    My point is- do your homework. Going into business is a great, and the money can be good, but don't get over excited. Make realistic projections so you don't get trapped with a $2000 hot dog cart and wondering what you're going to do with a freezer full of dogs.

  • 3 dogman // Mar 1, 2009 at 8:04 am

    no offense, but I know a little bit about this type of business and the numbers in your hot dog example are way way off- are you in sales?
    Now 200 hot dogs divided by 2 hours means 1.6 hot dogs per minute. Assuming an orderly line that proceeds non-stop that would be almost plausible, but 200 drinks is over 8 cases which is a way too much soda which would require 2 or 3 ice chests to hold- and you'll need to keep them on ice since the stream of people is happening so fast. I'm assuming the guy has a van for all those ice chests. You'll need it for the 200 chips that you need to store.
    Price is roughly right, but more likely closer to $2 not $1 (bread, dog, chips + soda).
    I live in California where the weather is good and these types of carts can go year round. I know a couple of people that have run these types of carts at decent locations. The money ain't bad, but I think you inflated it quite a bit.
    Oh, and if you really can find 4 locations that are selling 200 dogs in 2 hours then rest assured that NJMeaty is right and you're paying some hefty license fees.

    My point is- do your homework. Going into business is a great, and the money can be good, but don't get over excited. Make realistic projections so you don't get trapped with a $2000 hot dog cart and wondering what you're going to do with a freezer full of dogs.

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