Start a hot dog stand business by following these 10 steps:
You have found the perfect business idea, and now you are ready to take the next step. There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your hot dog stand business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
Check out our How to Start a Business page.
STEP 1: Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns. A few important topics to consider are:
- What are the startup and ongoing costs?
- Who is your target market?
- How much can you charge customers?
- What will you name your business?
Luckily we have done a lot of this research for you.
What are the costs involved in opening a hot dog stand business?
Expenses include the following:
- Cost of food
- Permits/registration fees
- Commercial insurance
- Commercial kitchen space (note: not required for all hot dog stands)
What are the ongoing expenses for a hot dog stand business?
Hot dog stands typically need to account for the following expenses:
- Cost of food
- Registration/permit fees
- Commercial insurance
Who is the target market?
The target market can be anyone who wants a fast snack or simple meal. You can also appeal to people with ice cold drinks on a hot day or hot drinks on an ice cold day.
How does a hot dog stand business make money?
Hot dog stands make money by charging a small profit margin on all food and beverages they sell.
How much can you charge customers?
A hot dog can go for as much as $6 in a major stadium but is typically sold for between $1.50 and $3 in most major cities. Chips and drinks can be sold for around $1.50. Check the prices in your area before settling on a financial structure.
How much profit can a hot dog stand business make?
Profits from a hot dog sale can run as high as 80%, though the net margin will be smaller depending on the direct costs of the stand, permit costs, commercial insurance, and kitchen space (if needed).
How can you make your business more profitable?
Besides adding new items to the menu, consider renting out your hot dog stand to groups for special events. A family throwing a birthday party in the park may be happy to pay top dollar for the afternoon — especially if delivery and set-up are included in the price.
What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Hot Dog Stand Business Name Generator
When registering a business name, we recommend researching your business name by checking:
- Your state's business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It's very important to secure your domain name before someone else does.
STEP 2: Form a legal entity
Establishing a legal business entity such as an LLC or corporation protects you from being held personally liable if your hot dog stand business is sued.
Form Your LLC
Read our Guide to Form Your Own LLC
Recommended: You will need to elect a registered agent for your LLC. LLC formation packages usually include a free year of registered agent services. You can choose to hire a registered agent or act as your own.
STEP 3: Register for taxes
You will need to register for a variety of state and federal taxes before you can open for business.
In order to register for taxes you will need to apply for an EIN. It's really easy and free!
You can acquire your EIN for free through the IRS website, via fax, or by mail. If you would like to learn more about EINs and how they can benefit your LLC, read our article, What is an EIN?.
Small Business Taxes
Depending on which business structure you choose, you might have different options for how your business will be taxed. For example, some LLCs could benefit from being taxed as an S corporation (S corp).
You can learn more about small business taxes in these guides:
There are specific state taxes that might apply to your business. Learn more about state sales tax and franchise taxes in our state sales tax guides.
STEP 4: Open a business bank account & credit card
Using dedicated business banking and credit accounts is essential for personal asset protection.
When your personal and business accounts are mixed, your personal assets (your home, car, and other valuables) are at risk in the event your business is sued. In business law, this is referred to as piercing your corporate veil.
Additionally, learning how to build business credit can help you get credit cards and other financing in your business's name (instead of yours), better interest rates, higher lines of credit, and more.
Open a business bank account
- This separates your personal assets from your company's assets, which is necessary for personal asset protection.
- It also makes accounting and tax filing easier.
Recommended: Read our Best Banks for Small Business review to find the best national bank, credit union, business-loan friendly banks, one with many brick-and-mortar locations, and more.
Open net-30 accounts
When it comes to establishing your business credit, net-30 vendors are considered the way to go. The term "net-30," which is popular among vendors, refers to a business credit arrangement where the company pays the vendor within 30 days of receiving goods or services.
Net-30 credit terms are often used for businesses that need to obtain inventory quickly but do not have the cash on hand.
Besides establishing business relationships with vendors, net-30 credit accounts get reported to the major business credit bureaus (Dun & Bradstreet, Experian Business, and Equifax Business Credit). This is how businesses build business credit so they can qualify for credit cards and other lines of credit.
Recommended: Read our guide on the best net-30 vendors so you can start building business credit now, so you never have to worry about cash flow in the future. Keep in mind that poor cash flow is the #1 reason businesses fail!
Get a business credit card
- This helps you separate personal and business expenses by putting your business' expenses all in one place.
- It also builds your company's credit history, which can be useful to raise money and investment later on.
STEP 5: Set up business accounting
Recording your various expenses and sources of income is critical to understanding the financial performance of your business. Keeping accurate and detailed accounts also greatly simplifies your annual tax filing.
STEP 6: Obtain necessary permits and licenses
Failure to acquire necessary permits and licenses can result in hefty fines, or even cause your business to be shut down.
STEP 7: Get business insurance
Just as with licenses and permits, your business needs insurance in order to operate safely and lawfully. Business Insurance protects your company’s financial wellbeing in the event of a covered loss.
There are several types of insurance policies created for different types of businesses with different risks. If you’re unsure of the types of risks that your business may face, begin with General Liability Insurance. This is the most common coverage that small businesses need, so it’s a great place to start for your business.
Learn more about General Liability Insurance.
Another notable insurance policy that many businesses need is Workers’ Compensation Insurance. If your business will have employees, it’s a good chance that your state will require you to carry Workers' Compensation Coverage.
STEP 8: Define your brand
Your brand is what your company stands for, as well as how your business is perceived by the public. A strong brand will help your business stand out from competitors.
If you aren't feeling confident about designing your small business logo, then check out our Design Guides for Beginners, we'll give you helpful tips and advice for creating the best unique logo for your business.
How to promote & market a hot dog stand business
The best way to promote yourself is to go where people already are. Few customers will search for hot dog stands online or travel out of their way for a hot dog, so you need to be in the right place at the right time. Your cart should be clean and approachable with clear signage. Prices and menu items should be easy to read. You can also consider adding a daily special to your menu, especially if the majority of your customers are regulars in the area.
How to keep customers coming back
Retaining customers is all about serving them a meal that they'll remember. They should want to tell their friends about your cart the next time they see your name on a street corner. Even though hot dog stands serve an immediate need, they still need to sell quality food. A disgruntled customer could easily tell an entire line of people that the food isn’t worth the wait.
Still unsure about what kind of business you want to start? Check out the latest Small Business Trends to help inspire you.
STEP 9: Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites - full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
STEP 10: Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.
Recommended: Find the best phone system for your business; check out our review of the Best Business Phone Systems 2021.
Start A Hot Dog Stand Business In Your State
Select your state below for an in-depth guide on completing each of these steps in your home state.
Is this Business Right For You?
This business is excellent for someone who loves to cook in a fast-paced environment. Owners should enjoy the action of a busy sidewalk corner and feel comfortable working under pressure.
Want to know if you are cut out to be an entrepreneur?
Take our Entrepreneurship Quiz to find out!
What happens during a typical day at a hot dog stand business?
Hot dog stand owners will typically run their operation alone. They’re in charge of scouting locations, setting up the stand, cooking the food, and handling the money. Owners will spend the majority of their time fulfilling orders, but they’ll also need to handle the details of running the stand. A typical day may entail general accounting duties, negotiating with city officials to use public space, or working with third-party vendors to secure supplies. They'll also need to follow a schedule and arrange for their own transportation.
What are some skills and experiences that will help you build a successful hot dog stand business?
Owners need to be exceptionally fast thinkers and hard workers to handle an unpredictable and impatient customer base. They should feel comfortable working with a variety of personality types as they may need to placate angry or intoxicated customers. However, it will take more than just serving long lines and cutting down on wait times. Ideally, owners should understand how to infuse gourmet quality into their snacks without significantly raising the prices. They’ll need to be excellent planners to map out the most lucrative events or public spaces in which to set up shop.
What is the growth potential for a hot dog stand business?
A hot dog stand has significant growth potential, especially if owners can carve out a space for themselves in the most popular areas of a city. Many owners find themselves ready to purchase an additional stand after only a few months in the business. From bar patrons to theater-goers, there’s always a market for short-order cooks peddling the right fare.
TRUiC's YouTube Channel
For fun informative videos about starting a business visit the TRUiC YouTube Channel or subscribe below to view later.
Take the Next Step
Find a business mentor
One of the greatest resources an entrepreneur can have is quality mentorship. As you start planning your business, connect with a free business resource near you to get the help you need.
Having a support network in place to turn to during tough times is a major factor of success for new business owners.
Learn from other business owners
Want to learn more about starting a business from entrepreneurs themselves? Visit Startup Savant’s startup founder series to gain entrepreneurial insights, lessons, and advice from founders themselves.
Resources to Help Women in Business
There are many resources out there specifically for women entrepreneurs. We’ve gathered necessary and useful information to help you succeed both professionally and personally:
If you’re a woman looking for some guidance in entrepreneurship, check out this great new series Women in Business created by the women of our partner Startup Savant.
What are some insider tips for jump starting a hot dog stand business?
Hot dog stands are usually a more affordable alternative to opening a food truck or a small restaurant. The start-up costs can be as low as a few thousand dollars, and it may only take a few busy months to start turning a profit. The key is to both figure out where people will be, and how you can tempt them to give up their diets and indulge in a treat.
The first task owners should tackle is to learn the local city ordinances that govern where and how you can sell food. Different neighborhoods may have different rules, and they can vary from block to block. If any safety violations are filed against you, you could face strict fines or even legal action. Some areas will require a commercial kitchen to prepare the food (e.g., chopping onions, peppers, etc.) prior to setting up the stand, so talk to a health inspector before getting started.
Once you’ve addressed the practical needs of your business, look for both major events (e.g., sports games, special engagements, etc.) and popular street corners. People may be looking for a fast fix to hunger pangs at the end of the night. Use aromas to spark people's appetites and entice them to stand in line. If there aren’t a lot of low-cost options in an area after the bars close down, you can easily appeal to people who want something affordable and fast.
Because the start-up costs are so low, some hot dog stand owners will use this business as their side gig to learn more about the business. Collect careful feedback at the beginning to see which foods are selling best, and use this data to guide your menu. From bacon-wrapped hot dogs to gourmet sausages, there are ways to distinguish yourself from other hot dog sellers.
How and when to build a team
Most hot dog owners will operate everything on their own unless they franchise their name to several carts. If franchising, look for people who are fast, street-smart, and friendly. However, even if you're doing it alone, you may still need to hire an accountant or general manager if the business quickly grows beyond its original scope.