In this FDD Talk post, you’ll learn the following:
- Section I – Background information on the Hot Dog on a Stick franchise opportunity, including relevant news updates
- Section II – Estimated initial investment for a Hot Dog on a Stick franchise, based on Item 7 of the company’s 2015 FDD
- Section III – Presentation and analysis of Hot Dog on a Stick’s financial performance representations, based on Item 19 of the company’s 2015 FDD, including information on the:
- 2012 average gross sales for the Top 25%, Middle 50%, and Bottom 25% (based upon total annual sales) of company-owned Hot Dog on a Stick Stores that were open on December 31, 2014
- 2013 average gross sales for the Top 25%, Middle 50%, and Bottom 25% (based upon total annual sales) of company-owned Hot Dog on a Stick Stores that were open on December 31, 2014
- 2014 average gross sales for the Top 25%, Middle 50%, and Bottom 25% (based upon total annual sales) of company-owned Hot Dog on a Stick Stores that were open on December 31, 2014
Section I – Background Information
Once-Struggling Hot Dog on a Stick Turns 70
Less than two years after filing for bankruptcy, Hot Dog on a Stick turned 70 under new ownership. The company, officially named HDOS Enterprises, celebrated by offering its original dogs for 70 cents (a 78 percent discount) every Tuesday through March.
The company filed for chapter 11 bankruptcy protection in June 2014 because of high lease costs and declining hot dog consumption in malls. At the time the company filed for bankruptcy, its debt was between $1 and $10 million and its assets were estimated at $10 to $50 million.
Global Franchise Group purchased the company in a bankruptcy court auction in August 2014 for $12.2 million. GFG also franchises Great American Cookies, MaggieMoo’s, Marble Slab Creamery, Pretzelmaker and Shoebox New York.
New Cheese on Stick Flavor Debuts
In January 2016, Hot Dog on a Stick debuted Mozzarella Cheese on a Stick with spicy sriracha ketchup. The launch was celebrated with a giveaway of the new Cheese on a Stick flavor on National Cheese Day (Jan. 20). The cheese snack, dipped in the chain’s signature batter, joins American Cheese on a Stick and Pepper Jack Cheese on a Stick.
Chain Began With No Hot Dog and No Stick
The chain was founded in 1946 by Dave Barham in Santa Monica, California, with a tiny store next to the Santa Monica Pier. The store, originally called Party Puffs, served lemonade and ice cream to beachgoers. Then David Barham implemented his mother’s cornbread recipe to create his hot dog on a stick. He is one of several corn-dog vendors to claim to have invented and/or popularized the corn dog.
The company maintains that its signature food is known as a hot dog on a stick rather than a corn dog, because, it says, corn dogs are frozen and reheated, while hot dogs on sticks are freshly made to order.
The business was successful and expanded quickly. The first mall location opened in 1973 in Salt Lake City, Utah. Eleven years later, the chain had more than 25 stores in nine states.
Barham later went into entertainment with Giant Slides, combining the high slides with his food business to form a combination that was popular at fairs throughout Southern California.
Barham died in 1991 and left his company to his employees, making Hot Dog on a Stick the only employee-owned fast-food franchise.
Currently, Hot Dog on a Stick has more than 100 locations, most of which are located in regional shopping malls. The company also has franchised locations in Korea.
Original Location to be Demolished for Larger Store
The original location, too small to adequately handle demand and in need of repairs, has been earmarked for demolition for some time, but as of March 2016 it was still standing. Plans are to replace the 10-foot-wide store with a larger, 650-square-foot building. The Santa Monica Architectural Review Board approved the demolition plans in November 2015.
Striped Uniforms Stand Out
Hot dogs on sticks and lemonade continue to be the staples for the company, whose colorful motif is seen primarily in the striped uniforms and hats worn by employees, which are red, white, blue and yellow (Barham called it “red, white and blue, with a splash of lemonade”). Years before, the employees wore polka-dot uniforms, also with hats. The stores’ decor is mainly red and white.
Veggie Dogs Also on Menu
In addition to the staple hot dogs, cheese on sticks and lemonade, the stores also sell veggie dogs on sticks, hot dogs on buns, french fries and funnel cake sticks. Some locations also offer additional sides.
The hot dogs on sticks are made from turkey, but the hot dogs served on buns are Nathan’s Famous beef hot dogs. The lemonade is made fresh every two hours or sooner and comes in original lemonade flavor as well as cherry, blue raspberry and lime. All flavors can also be purchased frozen.
Section II – Estimated Costs
- Please click here for detailed estimates of Hot Dog on a Stick franchise costs, based on Item 7 of the company’s 2015 FDD.