The Future of Food Carts is Corporate

March 5, 2018

Will Bredderman, Crain's New York Business

Each day thousands of tourists and New Yorkers walk along the northern edge of Bryant Park. It would be hard to find a better place for a hot dog cart—and Nathan’s has three of them there, mustard yellow and gleaming.

But those who stop to buy the franchise’s famous franks and crinkle-cut fries are probably oblivious that they are treading once bitterly disputed turf and breaking new ground in the world of mobile vending.

For nearly five years Bryant Park Corp., which has a decades-old deal with the city to maintain the green space and run its concessions, battled the halal wagons that camped along 42nd Street between Fifth and Sixth avenues. The lunch buggies matched the profile common across the five boroughs, with their guttural diesel generators, sooty charcoal grills, ticker-style LED displays, colorful umbrellas and extensive pictorial menus of fare ranging from Middle Eastern to Middle American.

Daniel Biederman, Bryant Park Corp.’s co-founder, called them “horrendous-looking.” He complained repeatedly to authorities that the vendors not only undermined his organization’s efforts to beautify the area but also violated its authority over the sidewalks as provided by his arrangement with the Parks Department.

But he had little success.

“We’ve never been able to get the police systematically to protect our rights on the sidewalks,” said Biederman, also a leader in the Grand Central Partnership and 34th Street Partnership business improvement districts. “So we said, 'Instead of fighting them, let’s work with them, through somebody who understands them.'”

Biederman went to Move Systems, a startup based in Long Island City. When the company debuted its MRV100 mobile kitchen in 2015, media reports focused on the compact, ecofriendly design, which replaced the smoky diesel and charcoal with solar power, natural gas and electrical currents pulled from the city grid.

Environmental benefits aside, what was truly revolutionary about Move’s model was bringing chain restaurants into the street-food market.

Chains have proliferated across the city’s brick-and-mortar storefronts in the past decade, driven by explosive growth in the number of big-brand restaurants and cafés, a 2017 study found. The report, by the think tank Center for an Urban Future, found “fast-casual” eateries had more than doubled in number during the past decade, while fast-food eateries grew by 14%. The number of corporate coffee spots shot up by 65%, and the boroughs now boast roughly three times as many chain bakeries as they did in 2008.

Branded

The city’s street carts have largely resisted the corporate trend. For years the closest they came to boasting a major brand were operators such as Rafiqi’s and The Halal Guys: locally based family-and-friends-run vendors with their names on a handful of carts. But advocates for vendors have long been haunted by rumors that a major company, like McDonald’s or Dunkin’ Donuts, would soon open carts of its own. What’s stopped them, said Sean Basinski of the nonprofit Street Vendor Project, is the illegal and extortionate racket controlling the city’s permits.

A much-maligned city law caps at 5,100 the number of licenses to sell curbside food year-round, and holders can simply renew them every two years for $200. This has allowed longtime licensees to organize into an elaborate and illicit cartel, obligating aspiring sidewalk chefs to unlawfully rent their two-year permits for tens of thousands of dollars.

Big business has little interest in entering into such extralegal, exploitative arrangements.

“They would have to buy permits on the black market,” Basinski said. “McDonald’s is not interested in putting their corporate ass on the line and breaking the law in public.” With the arrival of Move, “it now seems to be happening,” Basinski added.

The four-year-old company has become an ambassador between the chicken-and-rice merchants and national chains, and sets up franchise agreements between the two parties. The corporations get new locations hawking their products. The vendors get to ride on a big brand’s name recognition, advertising and bulk products. And Move Systems offers the vendors a lease agreement for a spiffy new cart.

“You have this market inefficiency of vendors who knew how to get their carts on the street and how to work in the system but didn’t have access to the high-quality brands,” said CEO James Meeks. “Then you had the brands, who would be happy to find a new way to distribute their product but did not know how to deal with the logistics.”

At Bryant Park, Move Systems talked the vendors off their hot dog and pretzel carts and onto Nathan’s-branded MRV100s. The new franchisees told Crain’s they considered it an improvement in every way.

“We raised the standard of our food product. We are using a very famous brand, and customers trust the brand,” said Maged Akl, a seven-year veteran of street food sales. “In the past we didn’t have any names to serve. The customer did not trust the cart, because the cart contained many brands. We are serving a food with a history of good taste, and that makes me very confident.”

Thanks to the intricacies of Bryant Park Corp.’s deal with the city and the thawed relations between the management organization and the vendors, Akl and his peers were able to break out of the black market altogether. Technically, merchants working on sidewalks adjoining public parks need a restricted-area permit, issued separately from the cartel-controlled mobile food vendor licenses.

The carts previously operated in violation of this rule. Now, with Biederman’s blessing, they have legal permits from the city to work alongside Bryant Park.

In so doing, they point toward a future where the city has finally rationalized vending. The City Council has for several years weighed legislation that would expand the number of permits and require holders to be present at carts at all times of operation, which Basinski argues would make the current illegal rental system untenable.

BID leaders have opposed such proposals—the latest of which died in a council committee at the close of last year—because they feared the city would not enforce them. But any move that liberates permits from the black market will make carts more attractive to fast-food giants—unless the law specifically bars them. And the vendors’ primary advocacy group will surely call for that.

“Vendors are independent small businesses; we must keep the industry from being corporatized,” Basinski said. “The city, which failed to pass vending reform last term, needs to address this issue.”

Move, meanwhile, plans to roll out a dozen new carts each month as warmer weather ushers in peak vending season. And it won’t be only Nathan’s; the company also has arrangements with Le Pain Quotidien and a host of as-yet-unannounced brand-name partners.

“People are recognizing that the New York population has higher expectations of what quality food might look like,” Meeks said. “We showed the vendors how they could increase their profits with a better product.”

Akl agrees and now says that he has become an evangelist for the franchise model.

“We start to inform our friends in the market that we have a good business here with a Nathan’s franchise, and the guys [are] thinking about trying this,” the cart runner said. “We are going to spread the idea across all the shish kebab carts on the street.”