A Concession Business Can Be Big or Small

January 2013

 

If you're considering starting a concession business, but don't have a huge amount of start-up money, don't fret. This month, our expert, Barb Fitzgerald, talks about her experience with both big and small concession businesses, and how they work.

 

Have you listed any of your items in our marketplace? The FNO Marketplace is a great way to start out selling online without worrying about start-up costs.

 

Happy cooking!
Jackie
FNO Newsletter Editor


A Concession Business Can Be Big or Small
by Barb Fitzgerald of foodbooth.net

 

 

Last year, I received an email from a woman disputing a claim I made on my website: that a person can start a small concession for $500. The woman said her family had been in the concession business for over 50 years doing some of the largest fairs in the country. She went on to describe, in detail, the tens of thousands of dollars she and her husband were spending to equip their new concession trailer, purchase insurance, support vehicles, pay event fees, travel costs, and so on. I wrote her back explaining my position; that very few people start a concession the way she and her husband were doing, with benefit of a long family history of experience, and with an eye on large sales at high attendance events. Most concessionaires get their start in a much more modest fashion, without previous experience, and with an inexpensive booth doing small events. Some go on to run high volume booths at major events, but many do not.

 

There is a world of difference between concessionaires who routinely attend large events and fairs with attendances of upwards of 100,000 people. These concessionaires often invest $50,000 or more in their concession trailer, pay 25% of sales or more in space fees, hire a large staff on which they pay withholding and workers comp, write checks weekly to suppliers amounting to $10,000 or $20,000, and make payments on newer model support vehicles, such as one-ton trucks and large motor homes. At a ten-day event, these concessionaires' sales might exceed $100,000. Their net profit might exceed $40,000 or $50,000. This is big business dealing with big numbers. They happen because these concessions have the assets and capacity to prepare and serve food to thousands of people. When the event ends the concession company is transported to another event, possibly in another state, where it again serves food to thousands of people.

 

It is far more common for a concession to be a small business run by a sole proprietor, who may or may not, hire one or two people to help set up and serve food at three-to-five-day festivals and small fairs with attendances of 3,000 to 10,000 people. These concessionaires might operate a concession trailer less than 16 feet long, or a 10x10 pop-up tent. The cost of supplies doesn't usually exceed $2,000 per event. Event space fees often don't exceed $500. These concessionaires are generally happy to average $2,000 a day in sales.

 

There are a number of reasons small concession operations don't commonly attend large 10-plus-day events. One is because working a fair 15 hours a day for 10 or more days is logistically too difficult. Another reason is because the cost is too high, both in dollars and energy. Another reason is because the operation doesn't have the sales capacity to make the cost worthwhile. Further, the risk is too high. Sure, many concessionaires can find the money to purchase the equipment and stock, and hire the extra staff to reach for the brass ring of high sales and big dollars at a 10-day state fair. But sales are never guaranteed at any event. Any number of things can go wrong putting the entire investment at risk, such as bad weather, equipment breakdowns, poor organization, or an inability to adequately compete for sales.

 

Nonetheless, even concessionaires who run small or moderate concession businesses quickly become skilled, and often successful in their particular venue niche.

 

As for the email I received, I removed from my website the disputed statement about it being possible to start a concession for less than $500. The woman had a point. Though possible, it is difficult to start even the smallest concession with so little invested. Everything certainly needs to fall into place, and even then, one's opportunities are extremely limited. I think it is much more realistic to expect to invest no less than several thousand dollars. This way, one can also expect to earn a good return on one's investment

 


 

comments

mobilefood
by mobilefood, posted 01/28/13 10:26:56

Discount Food Trucks can assist big or small concession businesses with Financing their Mobile Business. We Partner with finance companies that can arrange financing on Mobile Carts, Trailers, and Food Trucks

Laura Burrell
Mobile Food Consultant
www.discountfoodtrucks.com
267-738-1656

raina
by raina, posted 01/28/13 00:22:40

JBacks,
I purchase my General Liability (1,000,000 limit) directly through my property and casualty agent, who also writes my homeowners, auto and WC policy. It is extremely inexpensive at $500 a year for multiple rigs. I too, am in New England so if you want to contact me for my company, please feel free. Raina@keiferskettlekorn.com

lbaughey
by lbaughey, posted 01/25/13 11:43:11

I agree with the fact that you can not start the business for $500. I have a spreadsheet that shows my cost for just having the business and these are the cost I incur even if I never sign up for any events and the cost is over $3K a year. You have to pay for your annual license, you pay for insurance on the concession trailer, you pay for the annual report that is required and this is different from you annual license, you pay for insurance on the towing vehicle. depending on where you live you have to pay for storage of your concession trailer and since we have refrigerators and freezers onthe trailer we must find a storage facility that is equipped for these needs. If you have an RV you must pay for insurance on the RV, you have to pay registration for the RV and the towing vehicle and other expenses, so it is impossible to start a concession business with just $500. The other thing to consider is many of the promoters tell you the are having 15K attend the event and plan on having 20 food vendors and it is impossible to make a profit when you have that many food vendors and the majority of the time the events only have about 7K attend and have all these food vendors and you end up losing money, because the fees to enter the majority of these events range any where from $500 to $1K for a 2 or 3 day event. I can tell you it is getting harder and harder to find good events and promoters that are honest. Once they get your money the do not care if you make money or not, because they already have your money. Also, the promoters duplicate food at the event and will tell you that they will have only 2 food vendors selling the same item and once you get to the event they have 4 or 5 selling the items you have, plus these vendors had a special menu that you can not duplicate and they are also selling the exact same items you have on your menu and that is an issue I have had at many events and event had the promoters make the other food vendors take off the item, because that is not fair and good business when you have been told you are the only one selling a particular item, or just 1 other food vendor will be selling the same item as you. Once in this business you learn to stick up for yourself and realize that if a promoter is not going to be honest than you will not continue to conduct business with them and will let other food vendors be aware of the promoters. I like that FNO allows you to put comments out there for other food vendors to see and wish more people would comment on events that they have attended as a food vendor. I have put plenty of comments out there for other food vendors and hope it helps them from getting in a show that will not make them money.

lilypads
by lilypads, posted 01/25/13 09:10:46

go on line for insurance policys, We purchased event insurance on line very reasonable

lilypads
by lilypads, posted 01/25/13 09:08:14

have run a very successfuk concession business for 3 years. Do small town events with big return. use a 10x10 tent we are very out going family and kid friendly. Some do not require insurance Most are very reasonable to rent space at. Now after 3 years we are going to open a permenant location. No more lifting and carring equiptment no more early am traveling and no more worries of rain and wind. No more sitting out in the hot sun and all the problems that go along with hot summers.Mary

jbacks
by jbacks, posted 01/25/13 09:01:26

I agree with raina's post. I purchased Barb's book, FNO membership(which I might add was my best investment). I've only done 1 show in 3 years due to health reasons. I just want to say, the insurance alone was over $1500 for the year.

I live in a small town and had trouble finding insurance other than for a year. Perhaps, and I would appreciate it, there could be an article on where to purchase insurance. I live on the East coast and called some of the #'s in the book.
I ended up paying $750 for liabillity and when through a temp employment agency where I had to pay them over $14.00 an hour per employee.

I'm glad Barb retracted her statement because it IS very misleading. The county where I lived wouldn't even give me a health permit without proof of insurance.

raina
by raina, posted 01/25/13 01:00:26

Thank You for retracting that comment that a concession can be started for $500. It just gives people false hope and has them spin their wheels for nothing. You would have NO chance of getting into any DECENT, money making events with a rinky dink set up and here in CT , the health depts wouldn't even let you vend.
$10,000 would be a more realisticc outlay for a very SMALL operation that you may be able to grow, providing you are willing to reinvest every dollar you can get your hands on for the next 3 years. Don't plan on getting paid for awhile or paying any employees.



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