One year ago today: September 25, 2017, a generic day.
Five years ago today: September 25, 2013, Margaritaville, my eye.
Nine years ago today: September 25, 2009, 9 - 5 = 4-speed.
Random years ago today: September 25, 2008, familar-looking kind of sign?
[Author’s note: today’s post, like the day, centers on hotdog cart finances and operations. None of the numbers are surprising any more, but in the process, I’ve set up what amounts to a complete hotdog operations center on this little XP computer. This has implications. I’ve also ceased active research into the licensing process. Ceased and completed are not the same. It’s that I reached the point where I doubt anybody else has gone this far, so call it off.]
A little mild sleeplessness found me watching a DVD “Crazy in Alabama”. The jacket says 1999, but I’d never heard of it before. Too bad, except for the annoying presentation of the white race as evil, it is actually a good murder story. Lucille kills her husband and runs off to California with his head in a hatbox. She’s okay but has that bar hussy look I don’t care for. For all my lack of it for the first half of my life, I am still a firm believer in the right to private property. And if a community builds a community swimming pool, then they have complete say as to who may or may not swim in it. However, since the Nixon administration, that respect only applies to certain communities.
I never liked Nixon since the first time I saw him on TV through the hardware store windo. His agenda was the expansion of federal power by weakening the individual states. His plan was to make the states reliant on federal money. After that, enforced controls like integration, occupational safety, environment protection, pretty much anything that can be gift-wrapped will suffice to bypass Constitutional restraints. The war on drugs doesn’t work and they know it can’t be made to. But what a perfect sell, safety for your children, right? And it gives them the right to kick down your door, or burn down your compound. If I was bent on dictatorship, that’s how I’d go about it, for sure.
Back to the food carts. Tallahassee shows only 312 registrations in this category, yet we know there are many times that number out there. (Some carts may be registered in other ways.) One operation behind my barbershop has been there, she says, since before she opened business 28 years ago. And don’t tell me that run-down wagon has passed any inspection. Conclusion, the city does not go out looking for carts operating unlawfully. The city is unaware whether the health inspections even occur. And the city has no idea if anybody is complying with county or state tax law to the point I doubt they even care. See, I’m learning.
I’ve finished a set of spreadsheets that breaks down the true cost of hotdogs. And it is not the pretty picture that’s painted by the industry. On a $3 hotdog, the price Agt. R thinks is “a bit high”, the advertising would have you believe the cost is 60.3¢ and you walk away with nearly a $2.40 profit. It isn’t profit, it is your contribution margin. That is what you have left over to run the entire operation. All of the sales pitches ignore fixed costs, treating them as if they are sunk costs. That is another error, and if you ask me this brand of mistakes are intentional. And for a reasonable estimation of sales, those fix costs approach 50% of your variable costs per hotdog.
Down boy, I say . . .
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Without a lot of accounting mumbo-jumbo, your actual net on a $3 hotdog is more like 70¢, and when I say net, that is before operating expenses such as propane, mileage, repairs, etc. There are several terms for this amount, but the 70¢ represents the amount that you will have available (working capital) to run the entire business and hopefully have anything left over. It is this aspect of operations that gets glossed over. Good management might bring that up to 75¢, but there is no magic. And what is left over is before income taxes. These figures will change as more information is available, but not by very much.
Those taxes mean that raising your prices by $1 means you only see maybe 62¢ of it. Anybody who has worked overtime can tell you how that works. While conducting all this research, it is clear now why the office makes more money than the field. It is to Agt. R’s ultimate disappointment that he has shown no interest in learning this side of the business. He doesn’t even much like reading the charts. Tell you what, let me cheer you up a bit. Because it is now easy to plug in the costs, hit the ‘what-if’ button and calculate how much I could make in the ideal situation of me sitting right here overseeing the operation of say, eight carts, presuming I could find eight loyal people and eight county fairs. All the spreadsheets I’ve created are scalable up to any number of units.
Are you ready? Ah, here we go. $800 per hour. Not per day. Per hour.
ADDENDUM
Getting away from numbers a bit, let’s peer at the social aspects of this undertaking. Today I pulled together the items that are still blocking progress. All of the current delay is from the paperwork side. This entire industry is, I now think, a vast collection of shady operators. I’ve reassessed my estimates and now believe that only one in maybe five hundred of these carts could possibly be in full compliance, an estimate built on my evaluation of the type of people who run them. If you must know, they are seedy, backwoods unsophisticates and/or little old ladies who could not balance a bank statement. I’m fully aware that puts 80% of Florida on the suspect list.
Continuing on, I’m curious how many of you figured out this is the attack plan of y’day. Is this not the precise situation for some ruthless business mind to come in and, what’s a good word for it, ‘standardize’ the industry? There are many a way to look at that business model. The procedure would be nothing. Find out who has been in business the longest and see where they set up. Those must almost necessarily be the prime locations. They are vulnerable to inspection and it is not like they didn’t have it comin’. And sooner or later it will happen anyway.
Somebody who has done the proper paper work will edge them out of the location. So, is that an unprovoked assault on ordinary folk who, at the end of the day, are just trying to put food on the table? Or is it the clever recognition of one of the few remaining American possibilities for rapid expansion. Kind of do for food carts what Starbucks did to the coffee counter. The rationale is even simpler. I believe the old saw that businesses started with any purpose but to make as much money as quickly as possible will always fail within the first year.
Are these people the competition? Or are they part of the masses that my whole life, who by support or by complacency, allowed the system to become so corrupt? (By fluke, I happen to be reading the Koch story, and they defined voting as “the method for obtaining legal power to coerce others.”) And without coercion, would you see me paying taxes for a welfare state, undeclared wars, career politicians, pork-barreling, foreign aid, or drug rehab? Think about it.
Back to the food carts. Tallahassee shows only 312 registrations in this category, yet we know there are many times that number out there. (Some carts may be registered in other ways.) One operation behind my barbershop has been there, she says, since before she opened business 28 years ago. And don’t tell me that run-down wagon has passed any inspection. Conclusion, the city does not go out looking for carts operating unlawfully. The city is unaware whether the health inspections even occur. And the city has no idea if anybody is complying with county or state tax law to the point I doubt they even care. See, I’m learning.
I’ve finished a set of spreadsheets that breaks down the true cost of hotdogs. And it is not the pretty picture that’s painted by the industry. On a $3 hotdog, the price Agt. R thinks is “a bit high”, the advertising would have you believe the cost is 60.3¢ and you walk away with nearly a $2.40 profit. It isn’t profit, it is your contribution margin. That is what you have left over to run the entire operation. All of the sales pitches ignore fixed costs, treating them as if they are sunk costs. That is another error, and if you ask me this brand of mistakes are intentional. And for a reasonable estimation of sales, those fix costs approach 50% of your variable costs per hotdog.
Without a lot of accounting mumbo-jumbo, your actual net on a $3 hotdog is more like 70¢, and when I say net, that is before operating expenses such as propane, mileage, repairs, etc. There are several terms for this amount, but the 70¢ represent the amount that you will have available (working capital) to operate the entire business and take any profit.
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