From the August 2003 issue of Entrepreneur

You have seen all those nifty kiosks in your local malls--they sell everything from hair products to cooking utensils to candy and cookies. Customers crowd around these carts and pony up big money for their wares. But can entrepreneurs really make serious money in these smaller venues? And what makes certain kiosk entrepreneurs ultra-successful?

Most kiosk success stories start with a good location, says Heather Davis, president of Specialty Retail Stores Inc. , a corporate kiosk-concept seller in Salt Lake City. Her turnkey kiosk concepts include HairDiamond, Halloween F/X and Waikiki Crab Co. Not only do you have to pick the right mall, with the right demographics that fit your product, she says, but your specific location within that mall is also crucial. "If you have the choice between two spots in the mall, and one of them has a premium rent tacked on to it, there's usually a reason for that," she says. "I would [choose] the best and negotiate for a better fee." If possible, she adds, check out the "50-yard line" section of a mall: "It's usually a wide, straight line in the very center of the mall, with the best tenants located on each side." But you'll want to stay away from a crowd of carts--if you're one in a long line of kiosks, you could get lost in the crowd.

The location decision can even come down to which stores are around you. Davis notes that her HairDiamond kiosks, for instance, tend to do well when they're located next to high-end women's apparel stores. When you find the right location and you're ready to sign the lease, Davis suggests enlisting the help of a kiosk leasing expert. Your franchisor or distributorship may help with this process. "When you get to the leasing point," says Davis, "try to find out what revenues the best cart operators [in your locale] are earning."

Though kiosks are most often associated with malls, you'll also find carts in places like amusement parks and corporate office complexes. David Mansfield, president of Corsair Carts and Kiosks in Canandaigua, New York, a kiosk and cart manufacturer, notes that entrepreneurs need to research each location to find out state and county regulations as well as the mall's own guidelines. Research everything, from food-safety requirements for food-related kiosks to the limits on how high kiosk walls can be if you're located in a mall. "They're all different," he says.

Once you establish your locations and meet all the requirements, you'll have to focus on one of the keys to kiosk success: customer service. Since your business is mostly one-on-one contact with your customers, you have to be stellar in serving their needs, says Noah Aychental, vice president of marketing and promotions at Gateway Newstands , a Canadian-based franchise in Richmond Hill, Ontario. In a kiosk environment, especially, "It's all about being friendly," Aychental notes. "Whether we're in an office tower or a shopping mall, a large percentage of our business is the same customer every day, so a service-oriented atmosphere is key."

And while you, the entrepreneur, may be gung-ho for customer service, you'll have to train the employees who man your stores in your absence to be equally as enthusiastic about your wares. Take the time to interview and train employees before you open your kiosk, cautions Davis. "If you want to grow and expand [your kiosk], you'll need a manager," she says. "Many people think they can open their carts themselves and hire employees later. But if you're working the cart, when are you going to interview employees? When are you going to train and develop them? Invest in hiring people and setting systems in place ahead of time."

To really make your kiosk go from good business to amazing business, says Davis, you need to take the time to plan your next steps. "Dedicate time to plan and set goals," she says. "Ask yourself: What sales volume do I want to do next month? How am I going to ensure that happens?" Don't get caught up in a month-to-month survival mentality--look for ways to excel and expand. Though they may be small in stature, kiosks can be big business.

We found four entrepreneurs who can attest to that--limited square footage isn't stopping them from earning sales in the six- to seven-figure range.

It's News to Him

He has one of the best newsstands in town. Just ask Sikander Pirani--or his customers, for that matter. During our interview, he was working one of his kiosks, and a customer came by and agreed that, yes, this is indeed one of the best around. High praise for Pirani, 39, who owns four Gateway Newstands in the Dallas area to the tune of about $1.2 million in yearly sales.

No stranger to the franchise business, Pirani's family had owned both a doughnut franchise and a fried chicken franchise when he was younger. Then Pirani and his brother-in-law purchased a gas station--and lost their shirts in the venture when a competitor moved in next door. Looking for a more profitable situation, Pirani moved from Chicago to Dallas. And at the recommendation of his brother, who owned a Gateway Newstands in Chicago, he opened his first kiosk in January 2001. He opened two more within a year and a fourth in 2002.

The Gateway Newstands system has everything Pirani was looking for in a franchise--he says it's easy to run, and he works normal 8-to-5 hours on weekdays and has weekends and holidays off, as all his kiosks are located in office buildings. And because the franchisor secured leases for him, Pirani feels he has the best possible locations in the area. His basic key to success, he says, is his fierce devotion to customer service--especially since most of his customers come to his kiosks every day before work. It's all about knowing people on a first-name basis, he explains.

Like many kiosk owners, Pirani says his biggest challenge is finding the right employees. "They have to smile, be outgoing, talk to customers," he says. "I really believe it's not hard--it's just customer service." With plans to open a fifth kiosk as soon as his franchisor secures another good location, Pirani is set to serve more customers than he ever imagined.

Hair Apparent

Carrie McAbee had never owned a business before--in fact, she'd been a cosmetologist before she opened her HairDiamond kiosk in August 2002. But this 20-year-old mom wanted something a bit more flexible that would let her spend more time with her family and still make a good living. When she discovered a HairDiamond kiosk on a shopping trip with her mother, Jeannie Kuhns, they both thought it was a great idea--hairpieces that attach to a person's own hair like a ponytail to give the illusion of a full, lustrous head of hair. Whether to hide thinning hair or simply to cover up a bad hair day, this product, McAbee believed, would be a godsend to women in her Bakersfield, California, community. "When I would [do people's hair], I had to travel all the way to Los Angeles to get extensions," she says. She asked the kiosk owner how to get into the business and was referred to Specialty Retail Stores Inc. (SRS).

As partners, McAbee and Kuhns set up shop in their local mall. SRS arranged the leasing and secured a prime location--right near a Macy's and other women-focused stores in the mall. Consequently, says McAbee, "The product sells itself." A good thing, since she confesses their biggest challenge has been hiring employees--people who are knowledgeable and trustworthy enough to mind the store and give good customer service. "I didn't expect it to be this hard to manage employees," she says. "Especially in a kiosk, your business [depends] on your employees. [Some people] think it's OK to sit down and not help the customers . . . they think it's not really a big business."

Fortunately, McAbee and Kuhns, 46, have each other to lean on when employee difficulties occur and are able to work the store themselves when necessary. Next on their agenda: possibly growing their concept with a kiosk in Santa Barbara, California, adding even more to their $400,000 annual sales.

Fresh From the Oven

Rick Donohoe owns a brick-and-mortar Cookies In Bloom store in Denver, but when he decided to expand, he wanted to go in a different direction. He called the franchisor, which specializes in cookie-bouquet arrangements, to see if he could branch out with the kiosk format in his local mall. "It's a new format for this type of business," says Donohoe, 43. "Every other Cookies In Bloom has been in a retail strip-[mall] environment." The franchisor was very supportive. Branching out into a kiosk doesn't mean you don't need to own a brick-and-mortar location, Donohoe adds. "The kiosk is too small an environment to produce the cookie arrangements."

Donohoe took special care in choosing the right location for his kiosk--he went right into an area of the Denver marketplace where "there's a lot of discretionary income," he says. Donohoe also notes the difference between a mall shopper who comes to his kiosk and a shopper who visits his brick-and-mortar store. "People who go to the mall want something right there," he says, "while at the retail store, 70 to 80 percent of our orders come in over the phone." Donohoe had to modify his inventory to have more premade cookie arrangements on hand as well as find a way to display and store them in the kiosk environment. He added display cases and signage around the kiosk to entice passersby to stop and check out the product.

With yearly sales from his kiosk at $200,000, Donohoe reports it's "about the fifth highest volume outlet, out of 21 Cookies In Bloom stores in the chain. He hopes to open more kiosks in the Denver area and encourages other franchisees to ask about a kiosk option, even if it's not usually offered.