The Half-Million-Dollar WienerHow can New York City hot dog vendors afford a monthly rent of $53,558?
Posted Wednesday, Aug. 12, 2009, at 4:13 PM ET
A hot dog vendor was kicked from the curb outside New York City's Metropolitan Museum of Art last week for failure to pay his monthly rent—of $53,558. Pasang Sherpa was under contract to pay the Parks Department $362,201 a year for a stand on the south side of the Met's entrance and $280,500 for another on the north side. That's a lot of hot dogs. With rent astronomically high, how much do New York City hot dog vendors actually make?
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StumbleUponIt's hard to say. Neither the Parks Department nor the Health Department (which oversees food sales outside parks) requires vendors to report income. They don't bother calculating expected sales, either—in part because rent is set at auction (with vendors battling it out) rather than by the city. What we do know is that even though Sherpa, a rookie, got in over his head, vendors have long been willing to pay hundreds of thousands of dollars to push $2 dogs outside the Met. (The museum attracts 5 million visitors a year, and the hot dog stands are the only food outlets for blocks.) Last year's occupant paid $415,000 a year for the Met stands plus at least $25,000 for supplies and labor, and didn't go under—so we can assume he brought in significantly more than $440,000.
Vendors on city streets (as opposed to outside park areas) don't have to pay rent for specific spots; their only real estate expense is the cart permit the city requires them to buy. Theoretically, that'll put you back just $200 a year. But since the city caps the number of food vendor permits at 3,100, far below demand, there's an extensive black market. Some companies buy up the permits for dozens of carts and then lease them to individual vendors at highly inflated prices.
Most food vendors outside the parks system don't see in a year the kind of money that Sherpa agreed to pay every month. According to street vendor advocacy groups, average vendors make $14,000 to $16,000 a year after they've paid for their (likely illegal) permits and received a few tickets. Vendors rack up thousands of dollars in fines every year. They can be fined anywhere from $250 to $1,000 for being parked on the wrong street, being stationed too far from the curb, setting up illegal cart "extensions" that increase their shelf space, or any number of other violations.
Unlike the Parks Department, the city doesn't regulate where vendors can set up shop, as long as they're on streets where vending is allowed. The vendors largely police themselves. New salespeople who encroach on an established colleague's territory will often get a verbal warning within 15 minutes of showing up at a new site. If the new guy doesn't take off, anything can happen. The police may be called, the new vendor may be physically threatened, or he may just find his tires slashed.
Explainer thanks the Street Vendors Project and Zach Brooks of midtownlunch.com. Thanks also to reader Christina J. Powell for asking the question.
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OK, let's test these hotdog economics with a little elementary arithmetic. $361K/year rental is about $1K/day. I don't know what these hotdogs sell for. Let's guess fairly high and say $4. Dividing that into $1K is 250 hotdogs to gross the $1K. If the cart operated 10 hours/day then that is 25 hotdogs per hour or one every 2.4 minutes!
But that is just gross income. And I think most of the numbers are high estimates. In fact it would probably require something more like a hotdog every minute for 10 hours/day, 365 days/year to actually make the rent.
Pretty good sweatshop system that the Parks Department is running ... best of all is that the cart operators are slave drivers of themselves. Remember this Thoreau quote: "It is hard to have a southern overseer; it is worse to have a northern one; but worst of all when you are the slave-driver of yourself."
-- bubba_barry
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That ignores high margin products like water and soda, not to mention pretzels and other foods sold by the vendors. I'm guessing selling drinks in the summer is the primary source of income and profit. Also, they run far longer than 10 hours. Many carts sell breakfast, lunch and dinner and cater to the drunks at night.
-- Momo988
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Forgetting the high margin products (what hot dogs are low margin? I can buy a pack of 50 Sabretts for $20 at Costco, $0.40 each, add buns and it's maybe $0.75 each), this is still pretty reasonable. They cost about $3 each around there, $4 is a little much.
The Met is closed on Mondays, so it's only open 313 days a year, and the traffic around there outside museum hours is pretty slim. Museum hours are 9.30-5.30, and they're open till 9 on Fri/Sat. So 55 hours a week times 52 weeks a year is 2860 hours. So it's more like 42 hot dogs an hour, or one every 86 seconds.
As we said, you're forgetting drinks and other stuff, but if you've ever been there you'll know that's not really so unreasonable.
The wonder is how they're able to stay stocked through the day. These things have the storage space of a Prius at best.
-- finkyboy
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