CHAPTER 22
Multiple Cart Management
You’ve been in business a while, and all the bugs are worked out. You’re cruising along on autopilot, living your dream. Then it happens. On your way to Aunt Nellie’s house for Sunday dinner, you see it. The perfect location for a second cart. You know it’s a winner because you know your business. What will you do? Will you go for it?
You know that you can get another cart ready to go for very little money. You know you can get it inspected and licensed. Been there, done that. You have a well oiled machine that’s already running. All you need to do is duplicate it, right? The part you’re not sure about is trusting someone with your baby, and you need to take this step very cautiously.
Here are some ways to do it.
Your first option is to hire someone as an employee of your company. This is the way to make the most profit, and if your goal is to someday have 75 carts on the street, this is definitely the route to take. But it will also demand the most out of you because now you need to be a manager.
Are you good with people? Can you tell someone what to do without sounding like you’re telling them what to do? What if the employee calls in sick? Also, you will be responsible for unemployment insurance, and federal tax withholding. Time to get an accountant if you don’t have one already. These are some of the things you need to think about.
There is a second way. It is less profitable, but also has a lot less stress. You simply get the cart licensed and let someone rent it. You could charge a percentage of the day’s sales, or a flat rate like $100 a day. You get more money and they get to be in business without going through the startup process. They can work every day, or just certain days. You could have two or three people lined up to cover every day of the week.
In either case, you do need to worry about dishonest people ripping you off. There are steps you can take to minimize the chance of theft. One is to stock the cart with a specific number of dogs, buns, chips, and sodas. When the employee/renter comes back at the end of the day, they had better have cash equaling the amount of product they moved. Someone could buy their own dogs and pocket the money, but it’s not likely. Just watch out for it.
The best way to keep people from stealing is to pay them well. It’s a lot less likely that someone will steal from you if they believe you are treating them fairly.
Hi Steve,
Any suggestions on what percentage of gross sales to charge? I was just approved for a permit for a great spot and I need to find someone to run my second cart. I definitely want the cart to be another Greg’s Hot Dogs location vs just leasing and having just any old dogs served from my cart. What about licensing my name, logo, etc.?
Thanks!
If you are going to start another Greg’s Hot Dogs location I would probably not go the licensing route. You are building a brand and that means that you need ultimate control over everything. If you grant someone a license then that person would be much harder to remove than a regular employee would in case of shoddy work, uncleanliness, etc.
You could put a clause in the license that grants you the right to terminate said license for any reason, but that would making finding a licensee difficult.
If you are just licensing a no name cart and have no brand equity to lose, then a daily or weekly leasing agreement might be a better choice.
In your case Greg, I would hire employees and oversee the operations in a manager’s capacity.
Good luck – you’re on to something big!
couldn’t you just set the person up as an independent contractor..you can still build your brand.. and go that route and you can off them if they are not performing also…. pay them say $1.00 per sandwich for their 4 hour shift…give them 200 buns etc… they sell out they made $200. not bad for 4 or 5 hours… would that be fair? What are your thoughts on this?
Absolutely. It works great on paper but the big problem I have found with that business model is attracting quality people to be your contractors. You tend to get a lot of people who just need quick money for a day or two then they disappear. When you hire someone and pay them a steady wage they tend to stick around longer. I’m not saying don’t try it. Just be prepared to go through a lot of people.