Do you want to start a concession stand and want to know the cost? If YES, here is a cost breakdown to open and run a concession stand and the profit margin.
Concession stands are vending stands where snacks and drinks are sold from, typically to an audience in an event location. Mobile concession stands have the advantage of traveling to where customers congregate and make their sales there.
Sporting events, concerts, fairs and corporate family days are some of the events they make most of their sales at. A mobile concession stand just arrives a location, sells and leaves. Very little overhead outside of the traveling trailer is needed.
Whether you want to run one mobile concession stand, or turn your business into a nationwide franchise, proper marketing, inventory control and equipment can make your dream become a reality. And more than that, you need to know what it takes to run your business on a daily basis.
If you’re looking to make some money, whether it’s for fundraising, charity or your own pockets, concessions are a great way to go about it. You could even hire someone to man the stand for you, at $8 – $10 per hour you’ll easily cover the cost of that person’s salary with the huge markups you’re making from the menu.
A concession stand owner who works 300 days a year and sells 100 orders daily at an average of $5 an order can expect to make around $37,000 a year. Concession stands are quite profitable and they can turn up to a 94 percent profit on foods like cotton candy, shaved ice and popcorn.
Estimated Cost Breakdown for Running a Concession Stand
A concession stand is a full-fledged business, and as such would require some financial commitment to run it to profitability.
Some people get into the concession business believing it to be an inexpensive way to start a business, and thus they neglect the costs associated with running this sort of business. These costs may appear to be too meager and fool the entrepreneur, who would only realize himself when he is in trouble.
However, with the right approach, and the knowledge of what you will need to get started and to succeed, you can get things up and running with less cost. Remember, with a concession stand you can always start small and grow.
To be successful, you will need to consider all of the various costs involved in running this business. It’s important to keep in mind that different types of concession stands serve different types of food and will therefore have different operating costs. Some of the costs concession stands need to note are;
1. Booth: $1,000 to $6,000
A concession stand needs to have not just a stand but a booth to sell from. You will need to have a professional looking booth or cart with professional signage. Customers will feel more confident about purchasing their food from a stand that looks good rather than going to a rundown booth that has seen better days, no matter how hungry they are.
Put a little extra money into the appearance and quality of your booth or cart and make sure it is aesthetically pleasing. A booth, depending on type, style and standard may cost you anywhere from $1,000 to $6,000. You can equally make a hand-crafted booth for much less.
2. Equipment: $5,000
The equipment that you use behind the scenes is just as important as the booth itself. In most booths, customers can see the equipment as you cook, so you may want to use high quality, durable equipment whenever possible. Old and dirty equipment is not appealing, and it could hurt your business.
Spend money on the proper equipment and keep it clean and well-maintained. This can make running your business easier and more profitable in the long run. You may have to budget close to $5,000 to get standard equipment, depending on what you want to sell.
3. Concession Stand Supplies: $300
The supplies used at your concession stand can eat up a substantial portion of your budget. But you do not want to skimp on these items. Good quality napkins and straws don’t have to cost a fortune, but can make a difference. If you do skimp on quality, your customers will certainly notice and that is something you would rather avoid.
Don’t overspend, but don’t buy bottom of the barrel goods either. Note that sure supplies are one of the things you have to replenish on regular basis, so you have to keep a regular budget for it. Keep aside $300 for this.
4. Employees: $8 – $10 per hour
While you might be able to own and operate a small concession stand on your own, most stands will require at least two or three employees. Take into account breaks, time off and vacations and you could find yourself paying a lot for full time help.
Therefore it might be a good idea to offer only part time work in the beginning, which costs much less than full time employees. This will give you a way to cut your costs, while still giving you extra help. Note that you may have to pay up to $8-$10 per hour for a single employee. This is also an ongoing running cost.
5. Food Costs: $300
One of the largest expenses, and probably one of the most important, is the food. No matter what you sell at your stand, from hot dogs and burgers to cotton candy and pretzels, you will need to offer the best. If customers can’t get food that tastes great and looks appealing, they will not eat at your stand.
It is as simple as that. Your food costs are ongoing running expenses and you must always have a budget for it. Keep aside around $300 for this depending on what you sell.
Other Fees and Expenses to Consider
Most concession stands also need to consider space and permit fees before they can start selling. Make sure you have all of the necessary permits in place long before you begin to sell. Owners also need to consider insurance premiums and maintenance fees for the overall upkeep of their business.
You also need to pay yourself, just as you would get a salary from a traditional job, so you can pay your rent, car, utilities and all your other expenses. All these expenses are what you need to worry about at the end of every month or quarter.
If you account for all of these different costs in your budget and your overall plan, chances are you can run a successful concession stand. By starting small, it will be easier for you to handle your own finances as well. As your business grows, you may need to hire an accountant who can keep the books for you and advise you on business and other money matters.
What Events Work Best For a Mobile Concession Stand to Make the Running Cost Worth it?
It might seem like common sense that the longer the event, the more money you are likely to make, but in a few cases, this might not be so. It is important to consider other factors about the length of the event or event where you are selling.
There are typically three types of events: day-long, weekend and seasonal. Each type of event has its positives and its drawbacks for you concession stand business.
a. Day-Long events
Day-long events are a gamble that can either pay off in a big way or cause an entire day to be wasted. If the event is extremely popular, you will have a steady stream of business all day. Also, since you will only be paying space fees for one day, you will get to keep a larger chunk of your profit. However, if the event is poorly attended, you will have wasted time, money and effort.
Weekend events are a popular choice for mobile concession stand vendors. They offer them the ability to spread their business out over the course of a few days. There is less risk associated with an event that is going to last three to four days.
This is because if business is poor one day, there is always the chance to make up the difference over the course of the remaining days. However, space fees are usually much larger for weekend events, and they usually charge a percentage of the profits rather than a flat fee.
Seasonal events such as Renaissance Festivals can be very profitable because they are heavily attended over the course of the entire season. The events are typically only open during the weekend, freeing up your weekdays for your regular stops.
The seasonal events are typically well-established and are guaranteed work every weekend of the concession season. Because of the events’ maturity, it can be very difficult to get a space in a seasonal event.
It is important to remember the hours of operation these events will have as well as how long they last. If an event closes down around five in the evening and your menu revolves around dinner food, it is not going to be as profitable as a nighttime event.