Start a Vending Cart Program

Dec 31, 2008
Dec 14, 2017
A hot dog cart in Trenton, New Jersey

Historically, pushcart vending has given people who lack the necessary financial resources to rent or buy a shop analternative way of making a living in retailing. Aside from providing vendors with a means of improvement, a vending program can, if properly managed, also benefit its host. After all, vending can add vitality to streets, provide an additional source of revenue, and contribute to an area's security. Furthermore, vending can serve as an amenity for residents, pedestrians, and visitors; increase contact with the community and among people of different backgrounds, social classes, and values; and foster partnerships among local businesses, public and private-sector property owners, and civic groups.

However, getting a vending cart on your street or property can be tricky business. To help you navigate the process, we've identified the major considerations, which we've amassed into six groups. Click on any of them below for further information and details.

  1. Assess existing amenities and needs in the area
  2. Obtain necessary licenses, permits, and insurances for either Municipal Vending or GSA/Federal Vending
  3. Find the optimal location for vending cart(s)
  4. Set a price, if needed, for vending privileges
  5. Find a vendor and set up to sell!
  6. Outline a maintenance and management program

Note: If enacting a full-fledged vending program seems overwhelming, you might first try a vending trial project for a fixed period of time. Although a demonstration project requires work and cooperation, it is a low-cost, low-risk, and limited approach, which makes it an easier commitment for building management, tenants, and security personnel. The results of the trial may well prove to even the most skeptical that vending can be a desirable addition to a community.

1. Assess existing amenities and needs in the area

  • Get a sense of what's already offered in your area. Walk around your building and the neighborhood to observe:
  • Which types of services currently exist in the area? Which are lacking?
  • Are there any vendors in the area? If so, what are they selling?
  • Who buys from the vendors?
  • On which days/at which times are the vendors busiest?

Note: If the proposed vending is to occur on federal property, you must consider if any vendors are already on the site under the aegis of the Randolph-Sheppard Program. The program, which is administered by the General Services Administration (GSA) and Department of Education (DOEd), affords blind vendors the "first right" to establish a vending or concessions stand on federal land. Once the relevant State Licensing Agency for the Blind (SLA) concludes that no Randolph-Sheppard vendor is interested in that location, then a private vendor may contract with the GSA for that site. To learn more about conducting business on GSA-controlled property, click here.

  • Establish what is to be sold. To preserve community goodwill, it is best not to compete with local stores; instead, set up complementary businesses or fill a gap in the market. Consider the following questions:
  • Who are your intended customers? Do they have a lot, or little, spending money? Do they have any social, cultural, and/or religious preferences that you should take into consideration, not only as potential product areas, but also to avoid causing offense?
  • Which types of goods could vendors potentially provide? Ideas can range from fresh fruit and vegetables, hot dogs, ice cream, popcorn, and smoothies to flowers, gadgets, holiday gifts, art, and crafts.
  • Will the items and services be sold "for-profit" or "not-for-profit"?
  • Are there opportunities to cooperate with existing local businesses? Talk with nearby retailers and service providers to gauge their interest in supplementing their storefronts with a vending cart.
  • Would it help to survey building tenants and/or area residents to see which types of products and services they would like?

Remember that competition can promote choice. For example, a cafeteria that sells a regular cup of coffee for $1.00 can also offer a brand-name "gourmet" cup for $1.75. Make it all scales, not of scale.

The photo at right, taken just off Union Square in San Francisco, shows that vending and retailers can co-exist - if the location and the mix of goods are carefully considered.

2.  Obtain necessary licenses, permits, and insurances to ensure your vending program will be legal

Vendors on municipal property follow a different set of regulations than those on GSA/federal property; however, some basic legalities apply to both groups. First, potential vendors must apply for a vending permit, which usually can be renewed annually. They also need liability insurance, in case they cause injury to a customer; and they may need a health permit if they are selling or preparing food items. Some cities have regulations about cart locations, sizes, designs, and merchandise; as well as clauses on obtaining consent from nearby merchants; proving how the cart will contribute to the city's development; and keeping areas surrounding the cart clean.

See below for details on municipal and federal vending, or go on to Step III.

Municipal Vending

Vending ordinances vary widely from city to city; likewise, so do the civic bodies responsible for regulating and licensing vending carts. In Denver and Chicago, it's the Department of Public Works that makes the decision; in New York, it's the Department of Health (for food vendors) and Department of Consumer Affairs (for non-food vendors). You can try these departments or do a search on the city government's Web site for the appropriate regulator; barring that, ask a local vendor or call the local government's main number. In cases where private or quasi-private organizations manage the space (such as in Eugene, Ore., where private partnership Eugene-in-Common administrates activity in the downtown area), those entities control all vending permits.

The application fee for a vending permit can range from $60 in Portland, OR, to $5 in Chicago; this fee is collected from all prospective vendors, whether or not they are approved. A vending permit (or vending license, as it is called sometimes called) can cost from $500 annually in Chicago, to $100 in Berkley, CA, to $25 in New Orleans. It can be valid yearly or seasonally. In some instances, there is also a small business license fee, which can be a substitute for a permit fee (as in Memphis) or in addition to a permit fee (as in New Orleans).

Some other common vendor fees include a health permit fee (see above), which can be minimal ($20 in Portland, Ore.) or more hefty ($250 in New York City); a fire permit fee (charged to vendors using propane gas for cooking purposes); and a variable-rate fee (sometimes charged in lieu of an application, permit, or business fee, such as in Eugene, where vendors pay from $20 a month to sell one food or beverage item from October through May, and $100 per month for selling four food and/or beverage items from June-September).

In addition, certain situations warrant additional costs. For example, New Orleans has a separate fee structure for its 10-day Mardi Gras festival; this special events fee applies to all vendors, who must pay the cost -- from $50 - $200 -- or not sell goods during that period. Minneapolis passes on to the vendors the cost of cleaning up after them; this maintenance fee ranges from $250-$600. Although some vendors are provided with free electricity for their carts, those in Eugene are levied a electrical rate surcharge of $5/month for carts requiring the service.

Collecting accurate sales tax revenue from vendors is often difficult, so some cities don't bother, while others have limited enforcement. Some levy an "inventory fee" that taxes the value of a vendor's sales/revenue at a given percentage. In Atlanta, this fee is five percent of the maximum wholesale value of a vendor's inventory, at any one time, every 180 days, while in Memphis, it is one-tenth of one percent on a vendor's gross receipts per year.

GSA/Federal Vending

Vending is considered outleasing and is to be recorded on GSA Form 3453. Three Authorities (Acts) govern vending in GSA owned-and operated-buildings:

  • Public Buildings and Cooperative Use Act of 1976 - Created to stimulate pedestrian traffic in public buildings, this Act allows GSA to lease space in courtyards, auditoriums, conference rooms, rooftops, and major pedestrian-accessible areas to vendors and firms engaged in commercial, cultural, educational, or recreational activities. Rent collected under the Cooperative Use Act is deposited in the Federal Buildings Fund (FBF) and no competition for the space is required. This is by far the most common Authority under which outleasing falls.
  • National Historic Preservation Act of 1966 - This Act authorizes GSA to lease space in its historic properties (defined as buildings over 50 years old) to any person or organization, as long as the party ensures the preservation of the property. Rent is deposited in BA64 of the FBF, while proceeds received by the GSA's Public Building Service under this Act can be used for improvements to historic buildings. No competition for the space is required.
  • Federal Property and Administrative Services Act of 1949 - This Authority allows GSA to sublet surplus portions of space in both federally leased and owned facilities. If any space under GSA control is vacant and a buyout is not an option, the space can be sublet to a vendor, concessionary facility, and so on. In such situations, the outlease income is deposited in the FBF and can be used to pay rent to the landlord. Rent from outleases under the '49 Act goes into two separate funds: space (Land and Water Conservation Fund) and services (Federal Buildings Fund). This Act is used as an Authority of last resort, as the process is labor-intensive and time-consuming. Space identified for outleases under this Act also may be subject to the Stewart B. McKinney Homeless Assistance Act, which means it is reviewed for its potential for homeless assistance usage before it is made available for outleasing.

3. Find the optimal location for vending cart(s)

Some municipal ordinances specify locations where vending is permitted; others do not. In either case, here are some factors to consider:

  • Establish whether the location provides potential vendor needs, such as a power outlet, plumbing hook-up, storage space, or access to a restroom.
  • Examine the physical parameters of the area. Look at sidewalk widths, pedestrian flows, the presence or absence of store display windows, and the location of building entrances, transit connections, and sidewalk furniture.
  • Choose a location with good visibility.

With the above in mind, look for a spot that will render the vendor visible to the widest range of potential customers, without impeding foot or vehicular traffic. Try to "triangulate" a number of uses and activities: That is, locate the cart(s) in proximity to other elements: bus stop, eating or seating area, waste receptacle, newsstand, or other public attraction.

4. Set a price, if needed, for vending privileges

If the vending area is privately or federally owned, you will need to decide on how much to charge your vendor or vendors. (This step does not apply to vending that occurs on municipal land, as the city will charge the vendors for that right.)

  • For vending on federal property, GSA usually adopts one of two models: 1) the vendor pays a licensing fee as well as rent, and keeps all of revenue, or 2) the vendor pays a percentage of his profits to the building. In rare cases, such as in the AJC Federal Building in Cleveland, the vendor serves as a sub-contractor to the building's food-service provider, and therefore pays his profits-percentage to that provider.
  • Because some locations are more lucrative than others, rents may vary significantly between locations. These locations should be reviewed annually, to evaluate whether the locations are good for business, as well as the amount of rent being charged.

5. Find a vendor and set up to sell!

The first thing is to locate a vendor. Consider the following options in deciding whom will providing vending services:

  • If there is an existing restaurant, cafeteria, or other concessionaire in your building, you may wish to offer its operator the first right of refusal for running a vending cart. The cart could supplement the restaurant's serving hours, or offer a wider selection of food and beverages. As an added incentive, the restaurant could bump up the prices of items that are sold outside from the vending cart.
  • If there is no food or beverage service, check to see if your company has a franchise agreement with a local, regional, or national contractor
  • If there is no contractor, look to your company's marketing and advertising staffs. Ask them to publicize the vending opportunity by approaching local businesses, or by contacting a food-contracting agency.

Next, establish insurance and legal liability.

  • Do both the vendor and landlord have adequate insurance for potential legal responsibilities? For example, most municipalities require vendors to maintain public and product liability insurance, as well as carry liability insurance or post a bond to cover city liability. As for federal property, the U.S. Government is self-insured; all onus and liability are on the vendor.

Then, obtain a vending cart. Determine such points as:

  • Will the vendor provide his own cart, will he/the building rent one, or will the building purchase one? On GSA properties, the vendor usually purchases the cart, while ownership varies among private landlords. One popular option is to have the building rent a cart and lease it to the vendor.
  • If the vendor provides the cart, will he have to submit its design for approval? Some buildings, Business Improvement Districts (BIDS), and municipalities have design guidelines, some don't; the GSA has concession guidelines, but they are not widely employed. Instead, potential vendors usually submit a cart design to the regional GSA concession representative. If approved, then the vendor purchases a cart constructed to those specifications.
  • As a rule of thumb, a cart should reflect the particular product being sold (for example, if it is popcorn, people like to see it popping, to know it is fresh); incorporate customer-convenience features (e.g., a place to rest packages or money, shelter from wind and rain); and be easy for the vendor to operate (simple to set up, clean, and move, dirt-resistant, and with rubber wheels). Also, it is wise to ensure that there are no places on the cart where any potentially dangerous goods could be hidden.

6. Outline a maintenance and management program

  • Designate a vending program administrator to process applications, collect fees, monitor on-street vending activity, enforce rules and regulations and, in some cases, develop a marketing plan to attract vendors.
  • Establish which party will be responsible for training the vendor. Vendors need to be educated in health and sanitation issues as well as display techniques. They can and should also take on a role as "ambassadors" for the general public, giving directions (and knowing of a place or person to refer people if they don't have answers), keeping an eye out for crime or suspicious activities. They should also note and communicate potential and evolving problems. (For example, if traffic starts backing up at 4:30pm and vehicle exhaust fouls the vending location).
  • Establish maintenance requirements for the vending carts and the surrounding areas remain clean and aesthetically pleasing. Maintenance could also include setting up and taking down nearby moveable seating and/or café tables.
  • Set up a garbage policy. Will the vendor or building maintenance dispose of vending garbage at the end of the day? In addition, will the vendor be responsible for keeping a set area around his cart tidy? For example, municipal vendors in Grand Junction, Colo., are required to clean up the area within a 25-foot radius of their carts.
  • Arrange for after-hours storage for carts and supplies. Will they be taken inside a building or garage, or locked up at the location?
  • Evaluate, experiment, and make changes to the vending program as necessary. Ensure the vending programming administrator -- or other designated individual -- routinely monitors the vending program to see which locations, products, et al. are working and which are not, so that changes can be made. The key to a successful vending program is consistent evaluation, experimentation, and flexibility, to ensure the arrangement is working best for customers and hosts.

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