Hi Steve,
I finally got a great spot for my cart, just waiting for the city permitting….should be done this week, I hope!
Anyway, I’ll be located at a Car stereo shop right on the busiest corner in our town with great access and parking for customers. The shop owner didn’t ask for rent he only wants me to sell at a discount to his employees….this is my dilemma!
The original spot I was going to set up at across the street was zoned wrong and the guy wanted $50 per month.
A dog, chips and soda sells for $3.00 with a cost of around $1.15….There are about 8 guys working at the shop and claim to be hot dog fanatics! I don’t want them to eat me out of house and home! I can easily see $50 in discounts within a couple of weeks if they eat frequently….Can you give me an idea of what employee discount I should extend to these guys without my profits being eaten up too!?
Thanks for all your wisdom Steve!
Sandy aka Sandy’s Hot Rod Dogs
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Hi Sandy,
You need a bit more profit margin and NOT just so you can afford the employees discount. Underpricing your product is the fastest way to go out of business. At the very least you will be miserable working your butt off for peanuts.
Even a convenience store hot dog (yuck) with a bag of chips and a soda will cost more than $3.
I sell my dogs for $3 each, $4 as a combo with chips and soda. That includes any condiment including chili or cheese. Make a menu of “signature” hot dogs with unique toppings and names. This is a great way to differentiate yourself from the gas station dogs and justify charging a bit more.
Look at it this way. At your current pricing you will keep $185 for every 100 hot dogs that you sell. If you charge $1 more than you currently do, you will keep $285 for every 100 hot dogs that you sell, and a $1 employee discount is totally doable.
Would you rather make $185 or $285 for the same amount of work?
Don’t be afraid to charge for a quality product and a unique experience. You are worth it!
-Steve
HotDogProfits.com
I was thinking the same thing when I saw your combo price Sandy, you should charge at least a dollar more for the meal. My prices are very reasonable I have combo prices ranging from $3 for the kiddos, all the way up to $7 for one of my fully loaded gourmet dog! If you’re serving great food people will pay good money without a second thought. Good luck and much success!
Right on hermano!
Here is a link to our menu we had at an event about 2 weeks ago. I’m only share it to give you ideas on what we do on dogs. Maybe there is a nugget here for you. We built a large trailer vs. a cart but the advice Steve gives applies to all of us.
http://weeniebros.com/wp-content/uploads/2014/10/WeenieBrosMountainArtsFestival.pdf
That’s awesome. Thanks Charlie!
I agree with Steve.
If you under charge you are losing money.
If you have a situation that is unique, ( only cart in town or on the river) there is a convenience factor to add in as well.
So stand out in some way & serve up great dogs.
As for the discount, I would give them a punch card.
After 10 punches, 1 free dog.
It comes out to 10%.
Be safe & warm me hardys. Arrrrr har har har !!!
1St mate Jim.
Aye aye!
I have 5 signature dogs on my cart 2 of them @ $6 and the others are $5. I also sell my regular dogs (Sabrett) @ $3. Every so often I run a special “Buy “any” 2 dogs and get a soda and chip Free” Basically all you’re giving up is the cost of the soda and chip which for me is less than 50 cents, a small price to pay for volume. It works, try it!
Thanks Gary!
Maybe just maybe go4four bucks that is.Give the guys an extra dog that`ll only cost ya what half buck and you have their 4 bucks.To early for all this bucking.
Make up some coupons for the stereo shop something they can give their customer something like free lunch with your stereo purchase.The owner pays you when you turn in the coupon.Never jump over dollars to pick up pennies
Nice!
If I pay 3 dollars for a combo, I”m assuming im getting a cheap product. Get a product you can stand behind and when that cheap person says “3.00 for a dog, come on.” You can say ” I sell only the best 100% all beef dogs with a high quality bun. Its worth it.” Try to sell the employees the left over dogs at a discounted rate. Set limits in your contract too and be very clear. Good luck
Yes indeed Andy.
The real reason that makes many of us undercharge is fear. Plain and simple. We worry about not selling enough so we think that low prices will allow us to compete. In reality you end up working for less than the guy behind the counter of the convenience store that sells the nasty roller dogs.
Universal Studio in Fla. have venders that sell a plain dog, a packet of mustard and ketchup for $10.00. Of course your dealing with tourist, but they’re selling at that price. More power to ’em
I dont understand how you can give “Chili & Cheese” condiments for free. They both have a substantial cost. Isnt a person losing money if it is the same price as a plain hot dog? Or do you just put very little on the dog ?
Which to me would be embarassing ??
Just wondering …….
No, I put a good amount on the hot dog.
You must consider your total income minus total expenses over the entire serving day including all consumable food items.
Sure, your gross profit margin on a chili dog is less than a dog with no chili. But if you calculate chili cost as a percentage of total costs for the day, it is tiny.
I only get requests for chili or cheese from about 15 percent of my customers. I want them to be as happy as the guy in line behind him who only wants mustard.
My feeling is that up-charging for chili or cheese is a great big turn off for most customers. If you charge for cheese, what goes through that customer’s mind at that moment? “Twenty five cents more just for some cheese? That sucks.”
We must create an excellent experience for every customer in order to turn them into regulars. How the customer feels after they eat and leave is of utmost importance. Any negative feelings means they probably won’t be back.
All inclusive pricing positions you as a premium brand in the market place. And that is where the money is.
I also charge three dollars for my cheapest dogs and they go up from there.The hotdog guy in the next town charges up to six for some of his gourmet dogs.The other vendors sell cheap but dont stay in business very long and the menu they have is pretty weak.I serve the best dogs the best buns the best toppings amish made cookies amish made deep fried pies.This was my first year but people know im the best around, but I dont give it away.
I love your confidence Terry. You are going to do great!!!
I use a simple formula that a restaurant owner shared with me. It goes like this. There are two (2) things to look at.
First: The actual value. It is taking the total basic cost of an item on your menu and dividing it by .3, that will give you a normal 70% markup. So in your case, $1.15 basic cost divided by .3 would equal $3.00. But lets look at the same item from the,
Second: Perceived value. It is this simple. What would a person thinks is fair price, and or would be willing to pay.
At my cart, a 6″ all beef hot dog is $2.50, a can of soda is $1.00, and a bag of chips are .75 cents. But combined in a meal deal, all three items would cost them $4.00. If you do the math, I gave a small discount on this meal, and the customer see’s it. Now here is the kicker. Paying me with a $5, $10, or a $20. bill is not uncommon. So when they get their change, they always have a minimum of $1 back. And that $1, over 50% of the time ends up in my TIP JAR.
I just sold a hot dog meal deal, and I got a tip. So, I just sold a meal that had an actual value of $3.00 at the 70% markup for, $4.00, and 50% of the time it was sold for $5.00, if you count the $1.00 bill that is given in change that ends up in my tip jar.
Or if they buy just a hot dog for $2.50, the .50 cents that is given in change will almost always end up in the tip jar.
Thanks Paul!
Steve,
Thanks for posting all this information. I was selling an eight to one all beef hot dog for $3.00. A combo meal with cost 4 dollars including chips drink and all the stuff I had to put on it. I was selling a quarter pound all beef hot dog Polish sausage for $4.00 &$5 combo meal.I was on the downtown square right in front of the courthouse doing pretty well. But I have people come by and tell me that my prices were outrageous. I have put my card up for now and continue to work on trying to figure out how to market my product because I do have a good product. All input appreciated thank you.
Some people will always complain about price. Those are not the customers you want.
Differentiate yourself by having a theme to your cart. Old fashioned hot dog vendor, beach, hippie, whatever. Dress to match your theme. Play music. Have contests. Sell signature dogs with unique condiments and toppings and name each one. Make sure your signage is professional.
Don’t sell a hot dog. Sell an experience. And don’t be afraid to charge for it.
Please do not DISCOUNT a thing, even to your mother!
Add value to your product by offering different types of garnishes, that only you have and apply to your dogs by you or employees. Always give your mom $$ buy her things spend time with her, when no one is around.
Who Cares what others do!
joe
Even to my Mother!? LOL.
I sell my 100% ALL BEEF 8/1 (no fillers, no gluten) Hot Dogs for $3.00 (non festival event or regular location. Any and all toppings are included. My experience is that approx. 1/3 want chili and cheese, about 1/3 want chili OR cheese – not both and approximately 1/3 want it plain with mustard, onions, etc. When I started out I sold my hot dogs for $2.50, $.25 extra for chili or cheese each – so if they wanted a chili-cheese dog the price was $3.00. Also make as many things as possible on the even $ amount. Really helps with the change thing. Not so important if you don’t have a line of people waiting, but if you do, it really speeds up the line. If I don’t feel that I can justify charging the fulll $ amount, I will make it $.75. Now you only go through 1/2 as many quarters as you did before, make $.25 more in profit and shortens the time to make change. Mostly value is a perceived idea and a lot depends on how you advertise your dogs. Hot Dot – $3.00 sound expensive, however, Harvey’s Classic 100% ALL BEEF (no fillers, no gluten) Specially Seasoned Hot Dogs – $3.00 sounds much more valuable. We still get a few tire kickers that say – My heavens, $3.00 for a hot dog, but those people would think that $1.00 was too much. Just ignore them and NEXT. You have to develop an alligator skin too. They are not the ones who drove to the wholesalers, bought a case of hots, hauled it home, then stood out in 95 degree or 25 degree temperature to cook and sell that dog.
I like the idea of the punch card (get a special punch so it makes it easier to punch it themselves. This can be used with the employees or with the customers. I would start at least the employees card initially with 2 punches (again perceived value).
Good for you Dorothy!
You have received some excellent information and guidance in these postings. As Steve pointed out, no matter the price, some people will complain. Those people are used to buying the “junk” dogs at fund raisers that have been donated, that don’t pay for HD permits, town licenses, liability insurance, lot rental, sales tax, etc.
My advise regarding an agreement with the store for lot rental is; think about all the angles. Once locked in you could leave yourself open for abuse. Especially if it becomes apparent that you are doing well there. Be specific on the number of employees or meals that you settle on. I had an agreement to provide 2 dogs, chips and cold drink to the gas station employees at a location I used on Saturdays. The owner said he usually had 3 to 4 employees working that day. After we were up and running, his family started showing up around noon to clean and close up for the day. I found myself feeding 6 to 7 people. Fortunately, when confronted with the abuse, he agreed to no more than 4 people.
I agree with Jack. The real problems usually start when your location owner sees how well you are doing. That is why I NEVER work on a percentage basis. No one needs to know how much you are making but you.
For a number of years I was selling my 4/1 all beef(nathans) for $3. a Good friend that had food service background said one day” you are a fool raise your price and make some money”!! After a really bad year last(-256.00 all fees and gas increases did not help.) I raised my prices to $3.50 for one $4.50 for combo,pop+chips $6.00 for two. after all the figures are in it looks like about a 2500 plus year(for 22 selling days)
I sell nothing special. 68% food profit 42% overall profit. I figure not bad since I do this for the interacting with other people. I once had a third gen carny ask me “do you do this to put food on the table, or for fun and meeting people!! My answer was for fun he said then don’t stop.
Not bad Jerry, you are making $113 a day “for fun”. Nice!!!
Remember this sales hint for selling hot dogs, or brats: If you offer your hot dogs @ three dollars apiece, always put up front with your hot dog sales pitch two hot dogs for five dollars, or a brat and hot dog for five dollars The customers will hear the first sales price you offer for five dollars, instead of the three dollars per hot dog I have found out 90 % or more will give you that even five dollar bill they have in their pocket, instead of waiting for the change back from you Besides they are hungry enough to eat more than one of your delicious looking hot dogs, they smelled the hot dogs from across the street Location and foot traffic are a must for you, and this hot dog man thinks you are on proper track Do not give up, gauge your time and sales, and if things are very slow move on to another hot dog sales spot This is a hot dog world where hungry customers buy over a billion hot dogs per year Find your hottest hot dog spot! Gary the hot dog man!
Right on Gary. Great advice!
One other question to Steve, have decided will get a credit card swiper, recommend best place to find one Staples? Best buy? What store , and they may be different in Indiana than where you live in the Show me state, or where online is the best place to find one? Also where best place to find a business cash register for hot dog sales? Thank you again Steve! Gary the hot dog man!
I use the Square and I love it. Square also has a cash register app that turns an ipad or tablet into a cool cash register. More info at Squareup.com.
I know that Paypal has a swiper too, not sure if they have a cash register app.