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Size and Structure of the Cart & Kiosk Industry

September 21, 2007 at 11:31 am | In Business Ideas | 4 Comments | Get this via email

I received an email this morning from a college student who's working on a business plan to open a cart.

Here's what he wrote:

I am a college student at Grove City College. I am an entrepreneurship major, and I am currently taking business planning as a class. For the class, I am writing a business plan for a mall cart business. I am writing to find out if you have information regarding the size of the cart/kiosk industry, and how the industry is structured. As the specialty retail expert, I thought you would be able to provide the help I'm looking for.

–Eric

In a recent issue of Specialty Retail Report, we stated that the cart and kiosk industry does about $12 billion per year. Most malls across the US accept some form of specialty retailers, including cart, kiosk, or temporary inline store tenants. The major differentiating factor between permanent stores and temporary ones is that temporary tenants typically sign a month-to-month license agreement (it's not called a lease because the term of a lease is one year or more). Most malls allow temporary tenants to decide every month (January-October) if they want to continue operating (and some do sign a lease for a one year term). The tremendous benefit of being a temporary cart or kiosk merchant is that you're not committed to long term leases or expensive store build outs (i.e., renovations to make the space work for your retail location).

The average rents during the non-holiday season range from $1500-$4000 per month depending on the location. The holiday season is two months (November-December) and rents do change during this season, typically from $7500-$30000 based on the location. However, depending on the products you're selling, the increase in mall traffic more than makes up for it.

Many malls charge a base rent plus a percentage of sales if you make over a certain amount (aka, overage). For example, a mall might charge $3500 in base rent, plus 10% over $5000 per week in sales. So for the sake of this scenario, let's say you grossed $7500 in sales for the week. You would owe the mall 10% of $2500, so $250 (you would pay the percentage of rent on the amount over $5000). The overage is calculated on a weekly basis.

Operating a cart gives you the ability to run your retail business in the middle of a mall, or other high traffic venue such as an airport, and some of those have access to more than 1,000,000 shoppers per year. Many successful entrepreneurs have started retail businesses from a cart to test the market and grow into permanent stores. Our industry not only attracts entrepreneurs interested in opening their first retail location, but also business owners who use carts as a way to market their business, including realtors, restaurants, service providers and loads of other local businesses who recognize the power of promoting their business from a cart.

Eric, I hope I was able to give you a brief overview of the industry. Best of luck with your class and business plan. Perhaps after writing your plan, you'll end up opening a cart once you see the potential!




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