The Simple Life
August 25, 2015
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Today, I got thinking about a business model that just doesn’t seem to make any sense to me. At my workplace, once a week, we have a food truck come by. It’s not really a food truck, it’s a hot dog stand. You can get a couple of hot dogs, chips, and drink for $5. Not a bad deal, but I didn’t like the flavor of their hot dogs, so I go elsewhere.
Anyway, my mind is trying to figure out how these guys survive. My office isn’t huge; it can’t have more than 100 people in it. And I can’t imagine that many people eat hot dogs every week. So assuming 30 people getting food, that’s $150 a day. That’s gross income. Take out daily expenses like: vehicle gas, cooking gas, cooler ice, food cost, taxes, and cleaning supplies; and less frequent expenses like: insurance (doubtful), advertising/marketing, and cooking equipment, and what would you be left with? And there’s two guys running it, so divide whatever profit is left in half.
Now assuming that maybe they can get by on whatever they are bringing in. What’s the end game? They can only be at place at one time, so they can’t increase sales. The only way to do that is to go to a place that has more customers. There’s no decent economies of scale because a second location requires double of just about everything. Bulk purchases of supplies wouldn’t help all that much.
As far as entrepreneurial businesses go, this one is definitely in the “I love what I do” category.