Deals on Wheels
This story appears in the August 1998 issue of Startups. Subscribe »
They're in malls, on street corners, at parks and outside office buildings--entrepreneurs who've made their dreams of retailing a reality by opening cart or kiosk businesses. They sell everything from hot dogs to sunglasses, from men's ties to T-shirts. And they do it with overhead costs that are far less than those of full-fledged stores.
For many entrepreneurs who dream of breaking into retail, opening a shop is cost-prohibitive--but a cart or kiosk is a profitable possibility. Just ask Wally Rizza. In November 1995, Rizza, then 21, spent $25,000 to launch Shades 2000 Inc., a sunglasses cart at the Irvine Spectrum Entertainment Center in Irvine, California. Within a year, he raked in $184,000 in sales. Today, Rizza has three sunglasses carts, a watch cart and a jewelry cart, and he expects to gross about $500,000 this year. "A cart business can be very profitable and is economically within reach for many people," says Rizza, now 24.
"If you have the right product and a good location, it's not uncommon to make $2,500 to $5,000 per week [with a cart]," says Bruce Stockberger, owner of Stockberger Marketing Associates, a North Palm Beach, Florida, small-business marketing firm specializing in cart, kiosk and Internet marketing. "You can buy a cart for as little as $11,000 and make $1,200 to $1,500 per day." Kiosks--larger, enclosed, more permanent units in which the operator sits or stands--can pull in $20,000 to $60,000 per week, Stockberger says.
You don't need special training to run a cart business. What you do need is an outgoing personality, stamina and business sense. "The business is stressful," says Stockberger. "Most malls are open from 9 or 10 a.m. until 9 or 10 p.m. every day, and you're expected to be there. That's a lot of standing. Even if you set up shop on the street or in a park, to build a customer base, you have to show up regularly."
Employees may seem a logical solution to the intense labor requirements, but that's not as easy as it sounds. "I have employees, but I have to watch them like a hawk," says Rizza. "If they're talking to friends instead of pushing the product, I lose business."
Julie Bawden Davis is a writer in Orange, California.
Decisions, Decisions
Options for starting a cart or kiosk business include opening a permanent location in a mall and leasing a cart; buying a cart to use for outdoor events or on street corners; or renting a cart short-term.
"The least expensive option is to rent [a cart] for a short time and see how it goes," advises Stockberger, who says you'll spend at least $600 per week for rent.
Whether you lease or buy a cart depends on your product and location. In malls, you generally lease a cart from mall management. The cost of leasing depends on the season and mall traffic volume but is usually at least $800 per month for space and a cart, and can get very high in a good location. Some malls charge a percentage of your sales in addition to monthly rent. Rizza pays more than $2,000 per month for rent on each of his five carts.
You can buy a new cart for $3,000 to $5,000, says Denise Clark, who started a hot dog cart business in 1988 in Los Angeles for $2,500 and made more than $3,000 her first two days in business at the Rose Bowl. Today, Clark has six carts grossing a total of $200,000 to $300,000 per year.
"Kiosks start higher than carts, usually $9,000 or $10,000," says Clark, author of From Dogs . . . To Riches: A Step-by-Step Guide to Start & Operate Your Own Mobile Cart Vending Business (MCC Publishing Co., $39.95, 310-323-5557).
Additional start-up costs depend on your merchandise. Items such as jewelry and crystal require a greater investment than, say, hot dogs, as Suzette Lindsey, 35, discovered two years ago, when she started a second cart business in the Kennesaw, Georgia, Town Center Mall.
Lindsey and her mother, Betty Lou, 57, had been selling crafts at a cart for 10 years. "Our start-up costs were low--probably between $15,000 and $20,000--because we made all our merchandise," Lindsey says.
Then the two decided to switch to pre-made items. Their new company, Top Dogs & Cool Critters, carries pet-related figurines, key chains, T-shirts and mugs. "[It cost] $75,000 to get a good inventory," Lindsey says. Since start-up two years ago, sales have increased 25 percent annually.
Pick Your Product
What to carry depends on what you like and what you think will sell. "I gave 100 people a list of products and asked which they would buy," Rizza says. "Most people said sunglasses. I determined sunglasses appeal to a variety of ages."
The next step is choosing a cart. Carts come in many sizes and styles with varying capabilities. There are carts for specific types of food, some with refrigerators, grills, steamers--even small ovens to bake on location.
Determine your needs before ordering a cart, says Jeffrey Morris, president of All A Cart Manufacturing Inc. in Columbus, Ohio, a cart design and manufacturing company. "List your products and the equipment required to make or display them," he says. "Also draw a simple layout of the cart to give [the manufacturer] an idea of size requirements."
Think versatility, especially with food. Don't limit yourself to making one item, in case it doesn't sell well and you have to switch gears.
"What sells might be completely opposite from what you thought," says Gerardo Gonzalez, director of food service at the Statue of Liberty in New York City, which has several carts, and president of Gonzalez & Associates, a Piscataway, New Jersey, company that consults on mobile merchandising and food-service start-ups.
You can get a good deal on used carts, but Clark, who also sells custom-designed carts, urges caution. "People buy a cart they think is cute--only to find out they've purchased someone else's headache," she says. "It ends up costing more to modify than to buy new."
Set Your Sites
In cart sales, location is everything. First decision: Do you want a permanent location or should you move from event to event?
With a permanent mall location, you don't have to worry about purchasing a cart, moving or battling bad weather (unless it's an outdoor mall). You can build a clientele and predict how business will go and how much product you need.
On the downside, rent may rise. If mall sales slump, you'll suffer. And if your product isn't exclusive, a neighboring store could start offering the same merchandise.
There are many upsides to owning a mobile cart, says Clark, who does most of her business at special events. "You don't have overhead like rent and utilities," she says, "and if sales are poor, you just move."
Research your location thoroughly. "Visit the area at different times over a two-week period to analyze traffic flow and get an idea of potential clientele," says Gonzalez. "Do you see a lot of children and teenagers or middle-aged people and seniors? Each age group has different requirements."
Don Roeder's Carte du Jour Catering has a regular location in front of a law school in downtown Columbus, Ohio, but is especially successful in front of downtown bars on weekends. "I sell a lot of hot dogs and sausages to men coming out of bars," says Roeder, 32, who has doubled sales since starting his cart business in 1997 for $20,000.
Once you've chosen a location, contact the appropriate authorities about setting up shop. For a mall, that's mall management in charge of carts and kiosks. For a public place, contact the city or county to see if a cart is allowed and what permits are required. In a professional office building, contact building management.
"Don't give up," says Morris. "If someone says you can't put a cart in a certain spot, check with someone else. You may find it's possible after all."
You'll need a business license, and if you haul your cart like a trailer, you must get a license from the Department of Motor Vehicles. If you serve food, you'll need a permit from the Department of Health, which requires a specific amount of training in food preparation and handling. Malls often already have the carts permitted and insured.
Once you've opened your cart or kiosk, attract customers with eye-catching displays. You and your employees should be well-dressed and enthusiastic and make eye contact with passersby.
Most important, keep the faith. "Think positive," says Rizza. "Even if business is slow, look at the big picture and know that, in the long run, you're going to make it."
Hot Stuff
Almost any high-quality product can sell at a cart or kiosk if it's packaged well and offered with a smile. Some perennially popular offerings:
- Balloons
- cosmetics
- crystal figurines
- flowers
- food: hot dogs, coffee, doughnuts, pizza, ice cream, cookies,
health food, candy, cake, pie, popcorn
- hats
- jewelry
- key chains
- perfume
- personalized children's books
- personalized coffee mugs
- scarves
- sports-fan-related products
- sunglasses
- sweatshirts
- ties
- T-shirts
- wallets
- watches
Contact Sources
Carte du Jour Catering, (614) 475-1821, droeder@aol.com
Shades 2000 Inc., http://www.shades2000.com
