Do you want to start own hot dog restaurant business?

If you are thinking about starting a hot dog restaurant then you are right on the track because a hot dog restaurant can give you a lot of profit provided that you make delicious hot dogs and market it successfully.

Hot dogs are one of the most favorite fast foods in the United States and many people don’t mind to spend their cash on eating hot dogs around the year so the market demand of this business is immensely high. Secondly, this business never runs out in any of the seasons. It keeps blooming throughout the year but as with all other businesses, this business also got some problems associated with it.

The biggest difficulty in starting this business is its difficult planning in the initial stages. As with all other businesses, before starting it you must think about a comprehensive plan of your business which can only be done by preparing a detailed business plan. You have to plan everything to make your business successful.

If you don’t know how to write a good business plan then don’t worry. We are providing a detailed business plan of a startup ‘Jeff’s Stop’ to help you avoid all the trouble of thinking and making a plan yourself.

Executive Summary

2.1 The Business

Jeff’s Stop will be a registered hot dog restaurant company and will be located in Tribeca, a neighborhood in the Manhattan borough of the New York City. We are strategically located in the most suitable place for a hot dog restaurant business.

The community living nearby is very diverse and comprises of teens and adults, single as well as married people, most of which love fast foods. There are also a number of commercial and business centers in the vicinity of our restaurant so we can easily attract the employees working in them.

The business will be solely owned and operated by Jeff Pert who is a famous American Chef. Jeff has won various awards for his delicious dishes in various fast food competitions and he definitely knows how to make the best hot dogs.

2.2 Management

Opening a hot dog stand is fairly easy as one doesn’t have to provide the customers any seating facility where they can sit and eat. On the other hand, a hot dog restaurant is a slightly big venture as one has to procure a lot of inventory for providing the dine-in facility and need to hire specialized staff for managing and maintaining the restaurant. Still, the investment needed for hotdog businesses is much less as compared to that needed for other businesses. Jeff’s Stop will be managed by Jeff himself and he will be assisted by his younger brother Nick who holds a degree in finance from the prestigious Harvard University.

2.3 Customers

Our customers will primarily be the residents living in the Tribeca neighborhood and people working in the commercial and businesses centers of the city. We will provide both dine in and takeaway as well as free home delivery services to our esteemed customers.

2.4 Target of the Company

Our main goal is to provide healthy, delicious as well as economical hot dogs to our customers. Our business target is to become the best hot dog restaurant in the New York City within next 6 years of our launch. This target can be achieved by attaining following objectives:

  • To grow our sales by more than 20% every year
  • To recover the initial capital of the startup just within the next 2 years of our launch
  • To achieve the monthly net profit of $50,000 per month at the end of the first year, $70,000 per month at the end of the second year and $100,000 per month at the end of the third year

Hot Dog Restaurant Business Plan 1

Company Summary

3.1 Company Owner

Jeff is one of the famous Chefs of America and is known for bringing innovations in the traditional methods of preparing fast food. He has been working in various fast food related Industries for the last 20 years and has also appeared in various cooking shows as a judge.

3.2 Why the Business is being started

The main motive behind Jeff starting this venture is to introduce economical yet delicious hot dogs. He has developed a recipe which involves inexpensive ingredients but still maintains the health and nutritional aspects as well as does not compromise on the taste. He has been thinking about implementing this recipe and the best way what to do that was starting a hot dog business. He had been planned for this business for nearly a year.

3.3 How the Business will be started

Initially, the first restaurant will be launched in the Tribeca neighborhood of Manhattan. The restaurant building has been procured on the lease. It is a single floor building which was previously used as an office of a Tech company. A lot of work is required to convert the office into a restaurant and Jeff has already hired a private contractor for this purpose.

Jeff hopes to balance the initial amount of investment within next two years of the launch and after that, the second branch will be launched. The location of that branch has not been decided yet but it will be located in the New York City.
The company’s financial experts have forecasted following costs for expenses, assets, investment, and loans for the Start-up.

hot dog start up cost

The detailed start-up requirements, start-up funding, start-up expenses, total assets, total funding required, total liabilities, total planned investment, total capital and liabilities as forecasted by company’s analysts, is given below:

Start-up Expenses  
Legal $55,300
Consultants $0
Insurance $32,750
Rent $32,500
Research and Development $32,750
Expensed Equipment $32,750
Signs $1,250
TOTAL START-UP EXPENSES $187,300
Start-up Assets $0
Cash Required $232,500
Start-up Inventory $32,625
Other Current Assets $232,500
Long-term Assets $235,000
TOTAL ASSETS $121,875
Total Requirements $245,000
START-UP FUNDING $0
START-UP FUNDING $273,125
Start-up Expenses to Fund $11,875
Start-up Assets to Fund $15,000
TOTAL FUNDING REQUIRED $0
Assets $23,125
Non-cash Assets from Start-up $18,750
Cash Requirements from Start-up $0
Additional Cash Raised $18,750
Cash Balance on Starting Date $21,875
TOTAL ASSETS $0
Liabilities and Capital $0
Liabilities $0
Current Borrowing $0
Long-term Liabilities $0
Accounts Payable (Outstanding Bills) $0
Other Current Liabilities (interest-free) $0
TOTAL LIABILITIES $0
Capital $0
Planned Investment $0
Investor 1 $332,500
Investor 2 $0
Other $0
Additional Investment Requirement $0
TOTAL PLANNED INVESTMENT $695,000
Loss at Start-up (Start-up Expenses) $313,125
TOTAL CAPITAL $251,875
TOTAL CAPITAL AND LIABILITIES $251,875
Total Funding $255,000

Services for customers

At a place like New York where there are hundreds of hot dog business opportunities and established restaurants, we have to provide something special in order to stand out. That’s why we have planned to offer various kinds of hot dogs which are as follows:

  • Traditional Mexican hot dog
  • Ultimate hot and spicy hot dog
  • Bacon burger-style hot dog
  • Mac and cheese stuffed hot dog
  • Grilled bratwurst hot dog with onion sauerkraut
  • Lamb sausage hot dog with cumin-mint yogurt sauce
  • Bacon wrapped hot dog with jalapeno cheese sauce

Along with these different hot dogs, we will also provide other fast foods such as burgers, tacos, and fries. We will also provide various beverages sodas, non-alcoholic drinks, juices, tea, and coffee.

We will present three options for the customers to consume our products:

  • Dine In: We will provide a luxurious and beautiful seating facility for those customers who wish to dine in our restaurant.
  • Takeaway: We will provide a ready-to-take service for the busy working-class community who don’t have time to stop and dine in the restaurant.
  • Free Delivery: We will also deliver our hot dogs to the residents of Tribeca neighborhood free of cost.

Marketing Analysis of hot dog restaurant business

As for a general trend, the market demand for hot dog business is on the rise. According to The National Hot Dog and Sausage Council, Americans consume more than 20 billion hot dogs every year. Hot dogs are one of the most popular American fast foods that’s why the number of hot dog stands as well as established restaurants have been increasing during the last few decades. You can even start a small hot dog stand with a very low investment and it will yield profits in thousands. But before you do that you will have to prepare a hot dog stand business plan as well.

As with other plans, marketing analysis is the most important component of a hot dog business plan. A good business has always an effective strategy which can only be developed after an accurate marketing analysis. Jeff obtained the services of experts to carry out an accurate marketing analysis of the current market demands especially in the neighborhood of New York City where we will be located.

The success or failure a startup totally depends upon how they market themselves to target their specific customer groups. A successful marketing strategy can only be developed after knowing the target audience and potential customers. Jeff has carried out an extensive research with marketing experts to know their target customers and focus their marketing strategy towards them before developing the hot dog restaurant business plan.

5.1 Marketing Segmentation:

Our marketing experts have identified following type of target audience which can become the potential customers of our restaurant.
hotdog market segmentation

The detailed marketing segmentation comprising of the company’s target audience is as follows:

5.1.1 Local Residents:

The first and the most numerous group of our customers will be the community residing in the vicinity of our restaurant. The teens love to eat fast foods as many times a day as possible so we hope to have a lot of sales due to them. Not only teens, sometimes the adults, as well as older people, also like to have lighter snacks such as hot dogs for their food. This customer group will drive the most number of sales so our marketing strategy will be specifically built to attract this group towards us. Initially, we will also offer various promotional packages.

5.1.2 Working Class:

The second category includes the workers and employees who work in the businesses or offices located in the vicinity of our restaurant. Most of these workers live singly and depends on restaurants like us for their daily food needs. Usually, they have a tight budget so cannot afford expensive food that’s why our economic hot dogs will be the best option for these singles struggling with their financial lives.

Majority of working class people have a tight routine and they prefer to eat something as fast as they can without compromising on their busy schedule. Our take away service is specifically designed while keeping such busy people in mind. Our hot dogs will always be ready for these people to pick up while on their way to their respective companies and offices.

5.1.3 Passers-by:

The third category includes those people who do not live or work near our restaurant but have come to the area for any business purpose or commercial activity. We also hope to attract these passers-by with our economical and tasty hot dogs.
The detailed market analysis of our potential customers is given in the following table:

Market Analysis
Potential Customers Growth YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 CAGR
Local Residents 45% 11,433 13,344 16,553 18,745 20,545 13.43%
Working Class 38% 22,334 32,344 43,665 52,544 66,432 10.00%
Passers-By 17% 8,322 9,455 10,655 12,867 14,433 15.32%
Total 100% 42,089 55,143 70,873 84,156 101,410 9.54%

5.2 Business Target

Our business target is to become the best hot dog restaurant in the New York city within just 6 years of our launch and to recover the initial investment within next 2 years of launch.

5.3 Product Pricing

Our hot dogs will be nearly 7% cheaper as compared to our competitors while the prices of other snacks and beverages will be in the similar ranges as of theirs.

Strategy

Before you start your hot dog stand business, you have to develop an effective strategy for your company’s future operations. After carrying out an accurate market analysis, Jeff created an amazing strategy for targeting the identified potential customers. Being an experienced Chef and association with the food industry for last 20 years, he knew how to start a hot dog business. But still, he sought the help of experts to help him through this phase. The sales strategy developed by him with the help of finance experts is as follows:

6.1 Competitive Analysis

We will have a really tough competition because hot dog restaurants are nearly everywhere in the New York City. According to a recent report, there has been a staggering 21% increase in the restaurants offering hot dogs in the New York city just in the last 4 years. As of now, there are thousands of established restaurants which provide high quality and delicious hot dogs but none of our competitors is offering the hot dogs for as low price as ours. This is over mean competitive advantage over other established businesses. Our recipe uses inexpensive ingredients to prepare delicious hot dogs without compromising their nutritional value.

6.2 Sales Strategy

Our company experts have developed an amazing strategy to attract our potential customers. We will offer a 50% discount on our hot dogs for the first week of our launch. We will create various packages and subscription programs to the employees working in the nearby offices and businesses. We will carry out a large-scale advertising campaign on social media websites. We will offer free-delivery services to encourage sales for local residents and businesses. We will also allow users to order their food by means of online channels.

6.3 Sales Forecast

We believe that if people try our delicious and healthy hot dogs, they will then eat them for the rest of their lives. The most important consideration is the drastic difference in price of our hot dogs as compared to other restaurants. That’s why we have forecasted our sales pattern to increase with years. By analyzing our market segmentation strategy, our experts have forecasted the following sales on a yearly basis which are summarized in the column charts.

hot dog stand business unit sales

The detailed information about sales forecast, total unit sales, total sales is given in the following table:

Sales Forecast      
Unit Sales Year 1 Year 2 Year 3
Hot Dogs 1,887,030 2,680,320 2,588,240
Burgers 802,370 815,430 823,540
Tacos 539,320 770,230 1,002,310
Fries 265,450 322,390 393,320
Drinks 143,530 125,030 176,240
Tea and Coffee 134,240 394,340 842,230
TOTAL UNIT SALES 3,771,940 5,107,740 5,825,880
Unit Prices Year 1 Year 2 Year 3
Hot Dogs $140.00 $150.00 $160.00
Burgers $600.00 $800.00 $1,000.00
Tacos $700.00 $800.00 $900.00
Fries $650.00 $750.00 $850.00
Drinks $140.00 $120.00 $100.00
Tea and Coffee $150.00 $1,300.00 $1,450.00
Sales
Hot Dogs $2,149,800 $2,784,000 $3,383,200
Burgers $120,050 $194,500 $268,500
Tacos $50,110 $71,600 $93,000
Fries $139,350 $194,600 $249,850
Drinks $62,350 $72,300 $82,250
Tea and Coffee $229,500 $365,500 $501,500
TOTAL SALES
Direct Unit Costs Year 1 Year 2 Year 3
Hot Dogs $0.70 $0.80 $0.90
Burgers $0.40 $0.45 $0.50
Tacos $0.30 $0.35 $0.40
Fries $3.00 $3.50 $4.00
Drinks $0.70 $0.75 $0.80
Tea and Coffee $3.00 $3.50 $4.00
Direct Cost of Sales
Hot Dogs $989,300 $1,839,000 $2,679,700
Burgers $66,600 $119,900 $173,200
Tacos $17,900 $35,000 $52,100
Fries $19,400 $67,600 $115,800
Drinks $27,700 $69,200 $110,700
Tea and Coffee $64,200 $224,700 $385,200
Subtotal Direct Cost of Sales $1,294,100 $1,699,400 $2,104,700

Personnel plan

The success of a company heavily depends on its staff the number and type of which should be determined in the initial stages. That’s why a detailed personnel plan is needed before opening a hot dog restaurant. The company experts have developed the following plan for the staff needed for the company along with their average salaries.

7.1 Company Staff

Jeff will act as the Head Chef of the restaurant. The company will initially hire following people:

  • 1 Manager to manage the overall operations of the restaurant
  • 1 Cashier to receive cash from the people
  • 2 Accountants to maintain financial records
  • 4 Sales Executives responsible for marketing and advertising of the restaurant
  • 15 Chefs for making the hot dogs
  • 10 Waiters to serve the customers
  • 8 Cleaners to clean the dishes and other facilities at the restaurant
  • 7 Drivers to deliver the hot dogs to the local residents

To ensure the best quality service, all employees will be selected through vigorous testing and will be trained for a month before starting their jobs.

7.2 Average Salary of Employees

The following table shows the forecasted data about employees and their salaries for next three years.

 Personnel Plan      
Year 1 Year 2 Year 3
Manager $85,000 $95,000 $105,000
Cashier $66,000 $73,000 $80,000
Accountants $45,000 $52,000 $59,000
Sales Executives $145,000 $152,000 $159,000
Chefs $550,000 $650,000 $750,000
Waiters $410,000 $440,000 $480,000
Cleaners $60,000 $63,300 $70,000
Drivers $70,000 $73,300 $80,000
Total Salaries $1,280,000 $1,430,600 $1,598,000

Financial Plan

The last and the most important component of the hot dogs business plan is its financial plan. The business will be solely financed by Jeff and no equity funding or outside loan will be required unless it expands faster than forecasted.

8.1 Important Assumptions

The company’s financial projections are forecasted on the basis of following assumptions.

 General Assumptions      
Year 1 Year 2 Year 3
Plan Month 1 2 3
Current Interest Rate 10.00% 11.00% 12.00%
Long-term Interest Rate 10.00% 10.00% 10.00%
Tax Rate 26.42% 27.76% 28.12%
Other 0 0 0

8.2 Brake-even Analysis

The following graph shows the company’s Brake-even Analysis.

hotdog business brake-even analysis

The following table shows the company’s Brake-even Analysis.

 Brake-Even Analysis  
Monthly Units Break-even 5530
Monthly Revenue Break-even $159,740
Assumptions:
Average Per-Unit Revenue $260.87
Average Per-Unit Variable Cost $0.89
Estimated Monthly Fixed Cost $196,410

8.3 Projected Profit and Losss

The following charts show the company’s expected Profit and Loss situation on the monthly and yearly basis.

 Pro Forma Profit And Loss      
Year 1 Year 2 Year 3
Sales $309,069 $385,934 $462,799
Direct Cost of Sales $15,100 $19,153 $23,206
Other $0 $0 $0
TOTAL COST OF SALES $15,100 $19,153 $23,206
Gross Margin $293,969 $366,781 $439,593
Gross Margin % 94.98% 94.72% 94.46%
Expenses
Payroll $138,036 $162,898 $187,760
Sales and Marketing and Other Expenses $1,850 $2,000 $2,150
Depreciation $2,070 $2,070 $2,070
Leased Equipment $0 $0 $0
Utilities $4,000 $4,250 $4,500
Insurance $1,800 $1,800 $1,800
Rent $6,500 $7,000 $7,500
Payroll Taxes $34,510 $40,726 $46,942
Other $0 $0 $0
Total Operating Expenses $188,766 $220,744 $252,722
Profit Before Interest and Taxes $105,205 $146,040 $186,875
EBITDA $107,275 $148,110 $188,945
Interest Expense $0 $0 $0
Taxes Incurred $26,838 $37,315 $47,792
Net Profit $78,367 $108,725 $139,083
Net Profit/Sales 30.00% 39.32% 48.64%

8.3.1 Profit Monthly

hotdog profit monthly

8.3.2 Profit Yearly

Hot Dog Restaurant Business Plan 2

8.3.3 Gross Margin Monthly

Hotdog Restaurant Gross Margin Monthly

8.3.4 Gross Margin Yearly

The following table shows detailed information about profit and loss, and total cost of sales.
Hotdog Restaurant Gross Margin Yearly

8.4 Projected Cash Flow

The following column diagram shows the projected cash flow.
Hotdog Restaurant Projected Cash Flow
The following table shows detailed data about pro forma cash flow, subtotal cash from operations, subtotal cash received, sub-total spent on operations, subtotal cash spent.

 Pro Forma Cash Flow      
Cash Received Year 1 Year 2 Year 3
Cash from Operations
Cash Sales $40,124 $45,046 $50,068
Cash from Receivables $7,023 $8,610 $9,297
SUBTOTAL CASH FROM OPERATIONS $47,143 $53,651 $59,359
Additional Cash Received
Sales Tax, VAT, HST/GST Received $0 $0 $0
New Current Borrowing $0 $0 $0
New Other Liabilities (interest-free) $0 $0 $0
New Long-term Liabilities $0 $0 $0
Sales of Other Current Assets $0 $0 $0
Sales of Long-term Assets $0 $0 $0
New Investment Received $0 $0 $0
SUBTOTAL CASH RECEIVED $47,143 $53,651 $55,359
Expenditures Year 1 Year 2 Year 3
Expenditures from Operations
Cash Spending $21,647 $24,204 $26,951
Bill Payments $13,539 $15,385 $170,631
SUBTOTAL SPENT ON OPERATIONS $35,296 $39,549 $43,582
Additional Cash Spent
Sales Tax, VAT, HST/GST Paid Out $0 $0 $0
Principal Repayment of Current Borrowing $0 $0 $0
Other Liabilities Principal Repayment $0 $0 $0
Long-term Liabilities Principal Repayment $0 $0 $0
Purchase Other Current Assets $0 $0 $0
Purchase Long-term Assets $0 $0 $0
Dividends $0 $0 $0
SUBTOTAL CASH SPENT $35,296 $35,489 $43,882
Net Cash Flow $11,551 $13,167 $15,683
Cash Balance $21,823 $22,381 $28,239

8.5 Projected Balance Sheet

The following projected balance sheet shows data about total current assets, total long-term assets, total assets, subtotal current liabilities, total liabilities, total capital, total liabilities and capital.

 Pro Forma Balance Sheet      
Assets Year 1 Year 2 Year 3
Current Assets
Cash $184,666 $218,525 $252,384
Accounts Receivable $12,613 $14,493 $16,373
Inventory $2,980 $3,450 $3,920
Other Current Assets $1,000 $1,000 $1,000
TOTAL CURRENT ASSETS $201,259 $237,468 $273,677
Long-term Assets
Long-term Assets $10,000 $10,000 $10,000
Accumulated Depreciation $12,420 $14,490 $16,560
TOTAL LONG-TERM ASSETS $980 $610 $240
TOTAL ASSETS $198,839 $232,978 $267,117
Liabilities and Capital Year 1 Year 2 Year 3
Current Liabilities
Accounts Payable $9,482 $10,792 $12,102
Current Borrowing $0 $0 $0
Other Current Liabilities $0 $0 $0
SUBTOTAL CURRENT LIABILITIES $9,482 $10,792 $12,102
Long-term Liabilities $0 $0 $0
TOTAL LIABILITIES $9,482 $10,792 $12,102
Paid-in Capital $30,000 $30,000 $30,000
Retained Earnings $48,651 $72,636 $96,621
Earnings $100,709 $119,555 $138,401
TOTAL CAPITAL $189,360 $222,190 $255,020
TOTAL LIABILITIES AND CAPITAL $198,839 $232,978 $267,117
Net Worth $182,060 $226,240 $270,420

8.6 Business Ratios

The following table shows data about business ratios, ratio analysis, total assets, net worth.

 Ratio Analysis        
Year 1 Year 2 Year 3 INDUSTRY PROFILE
Sales Growth 4.35% 30.82% 63.29% 4.00%
Percent of Total Assets
Accounts Receivable 5.61% 4.71% 3.81% 9.70%
Inventory 1.85% 1.82% 1.79% 9.80%
Other Current Assets 1.75% 2.02% 2.29% 27.40%
Total Current Assets 138.53% 150.99% 163.45% 54.60%
Long-term Assets -9.47% -21.01% -32.55% 58.40%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00%
Current Liabilities 4.68% 3.04% 2.76% 27.30%
Long-term Liabilities 0.00% 0.00% 0.00% 25.80%
Total Liabilities 4.68% 3.04% 2.76% 54.10%
NET WORTH 99.32% 101.04% 102.76% 44.90%
Percent of Sales
Sales 100.00% 100.00% 100.00% 100.00%
Gross Margin 94.18% 93.85% 93.52% 0.00%
Selling, General & Administrative Expenses 74.29% 71.83% 69.37% 65.20%
Advertising Expenses 2.06% 1.11% 0.28% 1.40%
Profit Before Interest and Taxes 26.47% 29.30% 32.13% 2.86%
Main Ratios
Current 25.86 29.39 32.92 1.63
Quick 25.4 28.88 32.36 0.84
Total Debt to Total Assets 2.68% 1.04% 0.76% 67.10%
Pre-tax Return on Net Worth 66.83% 71.26% 75.69% 4.40%
Pre-tax Return on Assets 64.88% 69.75% 74.62% 9.00%
Additional Ratios Year 1 Year 2 Year 3
Net Profit Margin 19.20% 21.16% 23.12% N.A.
Return on Equity 47.79% 50.53% 53.27% N.A.
Activity Ratios
Accounts Receivable Turnover 4.56 4.56 4.56 N.A.
Collection Days 92 99 106 N.A.
Inventory Turnover 19.7 22.55 25.4 N.A.
Accounts Payable Turnover 14.17 14.67 15.17 N.A.
Payment Days 27 27 27 N.A.
Total Asset Turnover 1.84 1.55 1.26 N.A.
Debt Ratios
Debt to Net Worth 0 -0.02 -0.04 N.A.
Current Liab. to Liab. 1 1 1 N.A.
Liquidity Ratios
Net Working Capital $120,943 $140,664 $160,385 N.A.
Interest Coverage 0 0 0 N.A.
Additional Ratios
Assets to Sales 0.45 0.48 0.51 N.A.
Current Debt/Total Assets 4% 3% 2% N.A.
Acid Test 23.66 27.01 30.36 N.A.
Sales/Net Worth 1.68 1.29 0.9 N.A.
Dividend Payout 0 0 0 N.A.

Download Hot Dog Restaurant Business Plan Sample in pdf