How to Start a Concession Business
Posted on April 28, 2014
Thinking of setting up your own concession business this summer? It may seem like a simple enough operation to run, but it’s still a business. Set yourself up for success with all the proper planning in place. Follow these steps to develop a solid business plan and create an overall strategy for your latest food service venture.
Develop a Business Plan
Your business plan is essentially your plan of attack. Developing a plan is a great way to be organized from the get-go, and banks love to see a business plan if you are applying for a loan. Here is the basic layout your business plan should have:
Have a general statement of purpose.
Your statement should be specific without going into the nitty gritty details such as equipment and costs.
e.g. “I want to sell the best BBQ ribs to Northern New Mexico and I am going to target local festivals and cooking competitions.”
Develop goals and objectives.
Break each step of setting up your business into more small, manageable goals.
e.g. Instead of stating “I will have a trailer set up in six months,” break the large goal into smaller achievements like “I will have the design for a trailer in one month. In the second month I will purchase my equipment. In the third month, I will begin researching events.”
Describe how your concession business will operate.
Tackle the issues of whether you will work alone, with another family member or whether you will be hiring help from outside. This is a good time to outline what your hours of operation will be.
Figure out the logistics.
These are the pieces of your business that will cost you money during your operation. Plan out what type of equipment you will need and how you will arrange it in your cart or trailer. The more you understand the costs, the better off you’ll be.
Research possible financial resources.
There are very few people who have the start up capital for a new business, but there are many banks and financial institutions that can help you with a loan. Find out what options exist in your area. Compare interest rates and payback timelines and figure out which loan is right for you.
Permanent vs. Mobile Concession Stands
Before you start vending food, you need to make the decision whether you want to start your business in a permanent location or if you want the mobility to take your business to the people. Consider the following pros and cons for each type of concession business before you make your decision.
Permanent Concession Stand
|Regulars: By having a stand set in the same area and with regular hours, you are likely to develop regular customers that become loyal to you.||Time Commitment: Running a concession stand requires that you hold consistent hours every week. You must be willing to show up for these hours of operation come rain or shine|
|Routine: Because your stand will be set up and in the same place every day, you can set up routines and you will not have to deal with out-of-the-ordinary snags||Vulnerability: You are tied to your area whether it is busy or dead. If business drops off because the traffic disappears, there is very little you can do to get business to pick back up|
|Normal Schedule: You can set the hours that you want to have the stand open and leave them as such because your stand is not catering to a certain event||Large Up-Front Investment: A fixed location may require an investment in larger equipment such as a restaurant range, charbroiler or fryer, or all three.|
|Ease of Operation: Once the stand is set up, there will be minimal day-to-day manual labor. The equipment is stationary and routines have been put in place.|
Mobile Concession Cart/Trailer
|Variety: Variety of customers that you will encounter at new venues will never end. You will always have a new customer to wow.||Unreliable Income: The events you plan on attending are subject to change just as much as your income. Income from mobile sales can be very inconsistent if events are not as successful as you planned.|
|Part-Time Business: Mobile vending does not require your attention seven days of the week. Instead, you can pick and choose which events and locations are most important to business.||Physical Demands: Pushing a cart or setting up a trailer takes a lot of elbow grease. This may not be a viable option if you have medical conditions that prevent you from strenuous activity. If that is the case, you will need to plan on hiring more help.|
|Independence: Go wherever you want, whenever you want. You are not tied down to a permanent spot and can decide for yourself where you want to sell today.||Higher Risk and Lower Control: If you are only working a few days a week, you are relying on each event to be a success. If it is not, you can be out a lot of money for the week.|
|Lower Initial Investment: There is a lot less money involved in starting a business using a mobile cart. If things go awry, you stand to lose a lot less.|
Research Before You Start
As with any business venture, it is important to take the time to do some research to see what the best fit will be for your lifestyle and goals. There are many ways to research all about the concession industry, but the best way to get the answers is to get out there and do hands-on research. Here are some suggestions:
Scout out concession stands
Consider each concession business from the view point of a competitor and a customer. See what they are selling, how their menu is priced and what type of equipment they are using. Consider whether the prices are too high, whether any displayed signs are confusing, etc. Go to several areas and scope out the competition to get a better idea of what you would want to do similarly and how you want to set yourself apart.
Talk with peers
Some concessionaires may not be as open as others, but if you are tactful, you can usually get some information out of them. Find out what their best selling foods are. If anything, ask them for the one piece of knowledge they wish they had before they began their business. Their knowledge is your power.
Talk with venue planners
Find out what they look for in a concession stand. They will eventually have a hand in your overall success, so take time to listen to what they like or dislike in a concession vendor. Find out what kind of general specifications, if any, they have for their carts or stands.
Develop a Strategy for Operations
Now that you have a general idea of what your business is going to look like and what your goals are, you’ll need to spend some time deciding how your business will operate. As with any new venture, there will be some unique challenges ahead.
Plan your menu
This is where you can pair your research with your own culinary expertise. Take into consideration what is popular in your niche and what can become a signature item for everyone to come back for. It’s also important to keep prep time, space, seasonality and cost of ingredients in mind throughout the menu-planning process.
Design your booth, trailer or cart
Many privately owned outdoor arenas have specifications that need to be met before you can open a concession stand. Review all contractual stipulations before finalizing the colors, style and size of your concession stand’s overall design.
Ensure that you have the appropriate equipment or vehicle
Once you have your menu planned out, it’s time to start creating a blueprint for the type of equipment you’ll need to safely prepare and serve food to the public. Also, if you have a trailer, make certain your car can handle towing it.
Arrange for storage and transport
If you have a small cart or trailer, chances are you will not have room for every piece of equipment. If this is the case, you will need to find the proper storage space for any additional items.
Find commercial space for food preparation
Check with local vendors to see where they rent commercial kitchen space and research rates for commissaries or commercial kitchens in the area. Oftentimes this type of arrangement is provided within a commissary or warehouse space, but occasionally a restaurant will agree to let vendors use their space for a fee during times when they are closed.
Obtain the proper licensing and insurance
Research what your county’s and city’s permit regulations are as well as what types of inspections you will need to pass. This is also a good time to start talking with local insurance companies to see what insurance options are best for your business.
Develop a Marketing Strategy
Marketing is not all giant billboards and glossy ads. It’s about taking the time to plan how you want to attract customers and keep them coming back for more. Consider the following aspects when you are developing your marketing strategy:
Decide who your target customer is
Every business has a targeted demographic. Your business should be no different. Choosing your customer base will dictate many things, from the type of menu you create to the prices you charge.
For example: If your target client is a business person out to grab lunch, you will want a menu that includes sandwiches and perhaps chips. Your price point must be competitive with surrounding restaurants so that your customer will choose you over a standard sit-down eatery. By the same token, if you decide that your target market is families that are out for a day at the fair, your menu might include more snacks and fun food like cotton candy and popcorn, and your prices can be higher as you will have a more captive audience.
Fix a schedule for your cart or stand
Your stand should have consistent hours so that your customers can rely on you to be there during your stated hours of operation. Some of the best marketing for vendors is word of mouth, and if your customers can tell a friend when to visit your stand, the odds of them visiting are higher.
Price based on location
Your surroundings will dictate pricing. If you are the only vendor in the area, you can charge more for your product than if you are one of several concessionaires in a single location.
Choose the proper signs
It is important to let your customers know what kind of food you are selling, but be careful not to overdo it with displaying too many signs. This can overwhelm customers. Pick a few of your specialties to highlight and then create a clear menu with all of your offerings and the prices.
Once you have everything organized, getting all of the pieces to come together will take a little work and a good deal of start-up cash, but being ready for all of the obstacles that you may come up against in the starting phase will help you in the long run.