How a Hot-Dog Wagon Can Earn You Cold Cash

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Question: I am 23 and plan to start a chain of hot-dog wagons by next summer. People laugh when they first hear of it, but in doing the research I found that it can be a lucrative business. Is this a good step for a first-time businessman?

-- Stephen, Cromwell, Conn.

Stephen: Let those people snicker. You might launch a successful enterprise that you enjoy under the summer skies, while your pals are slinking off to a dimly lit cubicle.

Don Cowan agrees and he speaks from experience. "Don't laugh," he says. "It can be a very good business."

Mr. Cowan, of Andover, Mass., spent years as a printing salesman, and one of his clients happened to own a business selling hot-dog carts (or "cahts" as he says in his New England accent). "Before I knew it," he says, "he set me up selling hot-dog carts for him," and Mr. Cowan took over the business.

But that's a sideline. Mr. Cowan, now in his fourth season selling hot dogs, makes more money running his own cart in downtown Andover in front of the old town hall. He is able to suspend business for most of the winter. "I do not collect unemployment," he emphasizes. You can find him at his Web site, www.thehotdogcart.com, which includes interesting trivia and tales of hot-dog vendors making $100,000 a year. That's likely to be the vendors on the busiest street corners, selling the most menu items. For his part, he says $300 a day in grosses is reasonable, and of that, $200 is likely to be profit. If that's the case for nine months of the year, revenue would be about $80,000.

He loves his business and especially gabbing with his regular customers. He can't remember their names, but possesses the more important talent of recalling how they like their dogs. He will have them ready when he sees them approaching. "I'll be thinking, 'OK, here comes Mr. Plain with Ketchup,' " he says.

It doesn't take much to start. You can get a basic cart for about $2,700 -- though a tricked-out cart with a trailer can go up to $20,000. You'd require about another $1,000 for initial inventory, licensing fees and other expenses.

Location should be your highest priority, he says. Obviously, you want to be where lots of pedestrians stroll around. Sometimes the location will be specified by local permits, which should reduce turf battles.

But the permit and license process, he says, is the most difficult hurdle. "It takes persistence," he says. Requirements depend on the city and state. You are likely to need a vendor's license and a city health permit. Some towns require you to take an eight-hour food-safety course, with an exam at the end. Some municipalities treat hot-dog carts as if they were full-blown restaurants, requiring owners to comply with every last regulation. For example, many won't allow you to do preparation at home. If you are chopping up peppers and onions, that makes life on the hot-dog cart more difficult.

Expect to spend a month or so navigating the local bureaucracy. Start on the phone at city hall and someone will tell you what you need to do. "You don't have to, but you should really have liability insurance, too," he says.

Of course, there are downsides. Not everyone, for instance, is comfortable with a weather-dependent business. "I'm a fair-weather worker," Mr. Cowan says. And you're on your feet, working over a hot cart. But for Mr. Cowan, that's all part of the fun.

He's full of advice for young entrants to the business like yourself, and never passes up the opportunity to buy a hot dog from a fellow vendor in any city for a chance to chat and swap tricks of the trade.

He started with the basics: hot dogs, chips and sodas. Now his cart has a grill, and he also sells kielbasa, sausages, peppers and onions. On the advice of another hot-dog cart man, he added a shaved-ice machine, which increased business nicely in hot weather. "They won't buy a hot dog when it's hot if you don't have a slushee," he says.

At one point, he went to the trouble to get the licenses required to sell at various local ball fields. "I used it exactly once in four years," he says. It turned out his following is so strong downtown, that his regulars were annoyed when they couldn't find him at his usual post.

Judging by the success of Mr. Cowan, it helps business if you have a good time. The name of his cart is "Brian's Father's Hot Dogs." Not too surprisingly, his only child is 25-year-old Brian who at first was mortified by his father's tribute, but now enjoys his measure of fame. "He told me at first, 'I'll never go downtown again,' " Mr. Cowan recalls. "Now he thinks it's great." The two work side by side during Fourth of July parades and other big business days.

"Hey," says Mr. Cowan, "you have to have a catchy name."

Have a question about starting a business? Write to startupjournal@dowjones.com, with your first name and the city where you're located, which we'll show if we answer and post your question.