FFE Magazine

FRANCHISING SERIES: Starting a Food Cart Franchise

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Food Cart Franchising is one of the booming micro businesses in the Philippines today, and according to reports it has no plans of slowing down this 2013.

 

Industry estimations show that the 800 different food carts (from fish balls to pearl shakes) rake more than a billion sales annually, proving that it is indeed a lucrative source of income for aspiring entrepreneurs.

 

If you are interested in franchising a food cart, here is information to get you started.

 

NOTE: Bear in my mind that franchise opportunities vary. Thus, some of the information and figures provided might be estimations only.

 

Advantage of Food Cart Franchising

 

People are always hungry and looking for something new to satiate their taste buds, especially in the Philippines where anything new attracts masses of curious and excited consumers. Thus, it is profitable venturing into the food industry.

 

Food carts are income-generating machines that do not need a lot of supervision. This is the reason why mostuse them as a sideline or extra source of income. You can hire personnel to manage your cart at minimum wage, while you pursue other businesses or interests.

 

Where and How to Start Buying A Food Cart Franchise

 

To know about food cart franchising opportunities you should call, fax, email, or make a personal visit to the franchise company. It is better that you set an appointment so that companies can give you an actual tour of their available food carts. To avail of the food cart, you have to undergo the application process. This entails filling up an application form and providing the franchisors a photo or sketch of your proposed food cart location.

 

Most food cart franchise companies have downloadable application forms on their websites.

 

Food cart costs (franchisee fee)

 

Unlike setting up a restaurant that can cost millions of money, food cart franchises are relatively cheap. You can own one for as low as P20, 000 (€378) to a maximum of P300, 000 (€5,676).

 

Franchise Package

 

Food cart franchises often come in package deals, which mean that it will already include everything you need to jumpstart your business.

 

  • The cart
  • Supplies and equipment (fryers, grillers, etc.)
  • Marketing tools (banners, signage, etc.)
  • Training sessions for the personnel you hire to manage your cart. Crew training depends on the value and nature of the franchise, and can’t take 3 days to 6 months.
  • A franchise seminar to help you and other franchisees manage and operate your business. Usually the seminars are mandatory.
  • A license or contract allowing you to operate and to use the trademark of the franchise within 3 years. The franchise cart term is usually 3 years.
  • NO Annual franchise fees, royalty fees, and store-opening fees.

 

Franchise development process

 

It takes about 3 to 4 weeks  before you can open and operate your franchise. During that period, your application is being processed, your cart constructed, your materials and equipment prepared.

 

Start-up Costs

 

Your food cart is not the only cost you will incur when starting your business. Other basic start-up costs include:

 

  • Rent for your location. This usually includes a three months advance, consumable ONLY on your last three months tenancy after declaring pullout (P24, 000.00 or €454)
  • Renovation costs for the location (P5, 000.00 to 10,000.00 or €95 to €189 )
  • Your chest freezer, so you can store your inventory (P20, 000.00 or €379)
  • Required processing fees for legal documents (Php1, 000.00 or  €19)
  • Employee salary for the first month
  • Utilities and supplies for the first month

 

Profitability

 

How much you make would also depend on several factors including location, sales, and product choice. As most things in business, there is no guaranteed amount for profitability especially when you are just starting your food cart.

 

However, most food cart franchising companies say that the gross margin is at 40%. To recoup your expenses (cost of good, rental, etc.) your business must be able to sell at least P2, 500 (€47) per day, assuming rent is P10, 000 (€189) per month.

 

You may use Food Cart Franchise Guide’s sample to gain some insight.

 

Image from Food cart franchise guide

Sample of a franchise’s monthly net profit (depending on location)

Points to consider

 

To keep attracting customers and have them coming back, you must have the right product, price and location. These three factors play a vital role in your making and maintaining your business successful. According to Josm Rosuello, president of the Foodcart Association of the Philippines (FOCAPHIL), pre-packed food like sealed pastries will sell well at bus and jeepney terminals because they are handy and ready-to-eat. He also says that cooking carts (noodles in a cup, rice in a box, waffles) are ideal in enclosed locations because customers can appreciate how their food is prepared.

 

Food Cart Franchise Companies

 

Many food cart franchise companies offer affordable food cart packages and assistance to budding entrepreneurs. You can check their websites for more information.

 

  • Food Cart Franchise Guide > http://www.foodcartfranchiseguide.com
  • Tipid Food Carts > http://www.tipidfoodcarts.com/
  • Franchise Ko To > http://www.franchisekoto.com/
  • Metro Food Cart Business Corporation > http://www.metrofoodcart.com/
  • Food Cart Negosyo > http://foodcartnegosyo.com/
  • Filtrepreneur > http://www.filtrepreneur.org
  • Franchise Queen > http://www.franchise-queen.com

 


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