Hi Steve, I had a question I thought you might be able to help me with.
In your experience if you had multiple carts and hired employees to run them do you know what the profit percent would be factoring in the food cost, hourly pay for the employee and misc. expenses?
I figured the net profit margin would be around 50% but I haven’t started my business yet and wanted to ask you first.
Thanks!
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I don’t know your exact numbers so it’s hard to say.
What makes it even more difficult is that you can’t accurately compute your net profit margin unless you pay your employee as a percentage of sales.
If you pay them hourly, then the profit margin depends heavily on how many dogs they sell per hour which can be all over the place.
The biggest cause of failure in situations like this is not acting until you get everything worked out on paper. It’s called “analysis paralysis”.
Instead of sitting around crunching numbers, just get out there and try it for a month. If it works, keep going.
If not, tweak things like employee compensation, hours worked, etc. until you hit the numbers you want. For example, if your employee is selling hot dogs from 10 to 3 and 80% of the sales come between 11 and 1, cutting out those three low productivity hours will skyrocket your net profit margin.
Good luck!
-Steve
I have run businesses for years and I know one thing for sure… Employees DO NOT treat your stuff as though it is theirs, and are never, never, never as good at selling my business as I am.
Had a trucking company with 27 drivers and 17 trucks at one point. The only truck that ever made money was any truck I was driving.
No “guest slinger” or employee EVER came close to making the type of margins I make.
A guy here used to have 7 or 9 carts because he figured it scales.. He’s been out of business for a few years now… Any one else who’s tried is back to one cart.
My friend curly was the best slinger in town… He sold me his second cart because he could never make a second cart work without him running it. Can’t be in two places at one time.
The most important thing in any business is to eliminate discretion… In the hotdogs cart business, you just can’t do that very easily with a surrogate decision maker who is not a general manager type… If your own gross margin is 60% forecast for -10% for each additional cart would be my advise. Then be pleased with providing some income for your workers as the honorable motivator to add carts at all.
The first time a customer sees your worker touch their sandwich or the workers hair,etc. Is the last time they buy from your brand…
Tom, I agree that scaling any business is difficult for the exact reasons you stated. No one cares as much about your business as you do. However, there are those who make it work.
The hot dog biz is a wonderful “lifestyle” business. It provides greater freedom, flexibility, and income potential than almost any other business around. I think it’s the perfect business for a solo-prenuer, however don’t be discouraged from adding more carts. It can work.
$$ more carts more$$ just do your inventory!! Your job and u should b fine
Here’s a thought – hire your relatives. Everyone has a cousin, nephew, niece or relative that is retired, unemployed, underemployed or just needs a flexible schedule. Give them an incentive – share 50% of the net with them. That way they have an incentive for the business to do well – sell lots of hot dogs and create repeat customers! You cover all your expenses up front and collect 50% of sales for their labor.
works for me…
That’s a great way to go. Hopefully your relatives will care more about doing a great job.
Aloha Steve
My plans is to have my son’s school mates (he goes to a special school where every one is challenged in some way)
I intend to write up a cirriculum and have them work max 2 hours a day (mixing syrup , do inventory, etc) & pay them right on the spot (delayed gratification does not work too good for this population).
An day’s end, everyone wins ….I know it’s labor instensive but they are worth it!!!
Great idea Lesley! Let me know how it goes.
I agree with Tom above. I’ve poor employees, and have a great one now, but he doesn’t “own” anything but his time when working. He is a good assistant manager, but there still is an ownership mentality missing.
Case and point; a couple of months ago, left him in charge, he had a cashier in p!ace. I scheduled!Ed so I could do some business errands. I left, but forgot some paperwork. I literally was gone and back in less than 5minutes. I was shocked and disappointed when I saw him on a “vape break”, and the cashier was next door ordering food for herself. Keep in mind I have a NO BREAKS or anything that e!see that take focus away from customers and the business between 1130am & 130pm.
Point #1 – yes, I blew a gasket!
Point #2 – they each have been working hard to gain my trust back
Point #3 – they don’t own it, so the mindset isn’t there
I’ve leased, I’ve partnered with non-profits, I’ve done split profits…. Everything runs smoother in our little hotdog world when I’ve got my finger on the pulse of everything.
And Tom is right on another point; if you are not there, and someone plays with their hair (and you are t there to correct or say “wash up”), or handle money (and you aren’t there to say “wash up”), you can bet your customers aren’t gonna be either, and will hold you personally 100% responsible (even if you aren’t there)
I’m not difficult to work for, but I’m the one with ownership. You might find a good person to work for you, but they aren’t the ones with responsibility? and ownership, and will always have a “I’m here”, or “it’s a job” mentality.
It’s a business, run it as a business.
From what I have been reading on Steve’s site it seems that there are a lot of people trying to run a business that have never done so before. I have never run a “food business” but I have been the owner of a very successful business corporation. I don’t want to take all the credit here but virtually all my employee stayed with me for over 30 years. During that time I started with a $15 investment for letterhead and cards. I hired my first employee 2 years later and that grew to 7 within 4 years. When I retired our gross billing was over 2 million dollars with plenty of net. Other than an ad in the “yellow pages” we never advertised, Our business was from repeats of satisfied customers. Why did my people happily stay so long? I believe it was because I “motivated” them to see something great in themselves and provided a way where they could see it too. I gave them a responsibility that was “theirs” with clear “expectations” for satisfactory accomplishment. Sure a few corrections were needed once in awhile but they acceded to the “expectations” rather than cave in. It became a challenge to them personally to build their own little “nest”and keep their own clients happy. Paying by the hour helps “motivation” but it is more about seeing “self worth” about being positive and productive. BTW I only had to fire one person that had an reflective anger issue. I say all this not to look good but to show that most people want to feel good about themselves and want to feel a “part” of something and satisfied about it. Train them right, have clear “expectations,” chastise when appropriate, and praise whenever possible and as much as warranted. It’s not about money, it’s about “people” and self worth. It’s about instilling a desire to meet the challenge bigger than themselves. From my observation much of the problem in the “food” industry is lack of “motivation” and the view that it is a “dead end” job, and thus difficult to find quality employees. Number one, any “job” should be “FUN,” if it cannot be then change jobs to one that is. Number two develop means for employees to have “pride” in what they are doing. Number three “compliments” can build mountains of self satisfaction and reflect your satisfaction of them. That brings up number four, “respect” your people and build up rather than tear “down.” Help them to see “your” goals by helping to see “theirs” and how both of you working together can make that happen. Conversation is better than lecture, and feeling a “part” of something is better than “just being there.” My view was not simply “employees” but a “partner” where we worked together not just one over the other. Sometimes people just need a little help to see their own value, and not just to you but to themselves. That’s your job, if you are “building” people you are building a company of worth and your product gains the value and you people smile, all of them. Don’t ever lose sight of the fact that you may be “selling” hot dogs but your “business” is really “people,” inside and outside. Again, it worked for me once, now with this new venture we shall see if adjustments are required. Not sure, but I trust people will meet the challenge. I heard it said once that “if you haven’t failed you never tried anything.” Anyway that’s my two cents.
Great input Allan! Everyone should read it twice.