Portland food carts push through recession

OBMFoodCartsNongs-154Portland’s ubiquitous food carts provide more than great food at a bargain. With low operating costs and the lure of self-employment, hundreds of immigrants, chefs and first-time business owners have turned to food carts as recession-busting businesses.

Portland’s ubiquitous food carts provide more than great food at a bargain. With low operating costs and the lure of self-employment, hundreds of immigrants, chefs and first-time business owners have turned to food carts as recession-busting businesses.

Nong Poonsukwattana opened Nong’s Khao Man Gai food cart using personal savings and a credit card.

Even on the dreariest Portland winter days, hundreds of mobile food cart owners fire up gas stoves, chop vegetables, grind coffee beans and pump wastewater, united in a common goal: to sell enough food to make a profit.

They work inside refurbished Airstream trailers and modified school buses and on tricycles strapped with refrigerators. Some serve crepes, burrito bowls, soup or yakisoba. Others swaddle gyros, grilled cheese, waffles and fried pies in waxed paper.

They’re feeding an increasingly hungry public. There are now 461 mobile carts registered in Multnomah County, a 25% increase since 2008.

In Oregon, food carts remain a mostly urban Portland phenomenon, with a small smattering of carts elsewhere in the state. While other cities, including New York, San Francisco and Los Angeles, also boast high numbers of food carts, the Portland scene has exploded like nowhere else.

Brett Burmeister, editor of Foodcartsportland.com, says the city’s obsession with great food and supporting locally owned businesses has fueled the growth. “It all feeds back to community,” he says, “a support-your-neighbor type of attitude.”

cartnumbersFoodcartsportland.com is an online guide to carts and an integral part of the scene. The site feeds the burgeoning cart buzz on Twitter, where many carts announce daily specials or tweet their changing locations.

But it’s the food that generates the buzz. While dishes come out fast, they have little in common with traditional fast food. Think Belgian pomme frites smothered in gravy and cheese curds, burger patties pressed between grilled cheese sandwiches, Bosnian meatballs, Korean tacos, savory gelato and dense Italian-style espressos.

“Portland grabs on to new food and drink trends quickly and embraces them fully,” Burmeister says. “We’ve done it with beer, artisan coffee and farmers markets.”

The media drools over Portland’s carts, which have been covered by Gourmet, Bon Appetit, The New York Times, The Los Angeles Times, The Splendid Table and the Travel Channel.

Part of the fascination stems from the price point. In restaurants, innovative, high-quality food has a high price tag. Food carts, on the other hand, are a bargain. On average, a cart meal costs $6, a draw and especially during a down economy.

The food-cart formula may look as alluring as a slick infomercial, but with low profit margins, long and physically demanding workdays, and an increasingly competitive marketplace, owning a food cart isn’t for everyone. Even so, there’s no sign of a slowdown. Multnomah County, which licenses and inspects all food carts in the county, has 33 pending applications for mobile food unit licenses.

Tough times also have propelled the carts by attracting a slew of new owners who are able to open a business with fewer startup costs and permitting requirements than restaurants or storefronts. Add low operating costs and the lure of self-employment, and it’s easy to see why hundreds of immigrants, chefs and first-time business owners have turned to food carts as recession-busting businesses.

“A lot of [food cart owners] are creative, hard-working, young individuals,” says Roger Goldingay, a real estate developer who recently opened the Mississippi Marketplace, a planned food cart pod on Mississippi Avenue in North Portland. “They have a little cash in a down economy and they’re creating their own jobs.”

Francesco Ferruzza and his son, Stephen, opened Al Forno Ferruzza, a Sicilian pizza restaurant, from the money they made from their cart.

When 29-year-old Nong Poonsukwattana moved to Portland from Bangkok in 2003, carrying nothing but $70 and two suitcases, she arrived aspiring to open her own Thai restaurant. She started working as a server at various Thai restaurants around town, and saved her earnings from her seven-day work week.

In 2007, she learned that a Thai restaurant called Pok Pok had been named restaurant of the year by The Oregonian. Poonsukwattana applied for a job in the kitchen immediately.

“I wanted to learn why they were so good,” she says.

After less than a year at Pok Pok, she decided she knew enough to start her own venture. But the high cost of opening a restaurant forced her to change course. “I did research and would hang out at friends’ food carts,” she says. “I studied and saw this was all I could afford.”

In April 2009, she opened Nong’s Khao Man Gai food cart using all of the $10,000 she’d saved since arriving in the U.S. plus $8,000 charged to a credit card. A majority of the funds went toward building the custom cart, which is parked in the pod at Southwest 10th and Alder. There, the downtown lunch crowd snatches up her single offering: poached chicken, jasmine rice and a fragrant sauce.

Nong’s Khao Man Gai’s startup costs represent the average, says Alma Flores, an economic development planner at the City of Portland. She says some food carts are constructed for less than $1,000, while a high-end cart can cost as much as $32,000. The dozens of mobile food carts for sale on Craigslist reveal a similar range.

Even when factoring in other startup costs, a high-end food cart has a 50% lower startup cost than a small business with one employee, according to Food Cartology, the only large-scale study of the Multnomah County carts. The study, a collaboration between the Portland Bureau of Planning and six graduate students in the urban and regional planning department at Portland State University, was released in 2008.

In addition, the study found that 51% of vendors received financial assistance from family members and 49% used personal savings. Only 2% received help from a financial institution, and 8% used home-equity loans to fund their carts.

Mercy Corps Northwest is one local lender that’s worked with cart owners — 10 to 15 of them the past year. The nonprofit offers loans between $500 and $50,000 to low-income small businesses along with a matching-funds savings program. Sarah Castagnola, program officer at Mercy Corps Northwest, says more cart owners could benefit from loan programs and business training.

“Most low-income, low-asset startup businesses don’t qualify to receive funding from banks, especially in our current economy,” she says.

Profits on startup investments can be slim. Despite receiving plenty of media attention (including a visit from Anthony Bourdain’s No Reservations TV show), Poonsukwattana says she’s making just enough to pay her personal expenses, and she worries her revenues will decrease during winter.

Food Cartology estimates annual food cart revenues range from $10,000 to $50,000. “There’s a myth that food carts are making tons of money,” Flores says. “I don’t think that’s the case, even though it’s a great venture idea.”

Roger Goldingay developed the Mississippi Marketplace, one of two “pods” purposely designed for food carts.

Many consider a cart an incubator, a place to develop recipes, pricing strategies and a customer base. Like Poonsukwattana, some food cart owners have aspired to restaurant ownership. In reality, few food carts make the leap to restaurant. Those that do become symbols of possibility.

Al Forno Ferruzza, a Sicilian pizza restaurant on Alberta Street, opened in February 2009 as the result of a successful downtown food cart.

Francesco Ferruzza and his son, Stephen, opened the cart because they couldn’t afford to start a restaurant in Portland. Instead, the two men bought an old trailer from a rotary club for $270, $2,000 in supplies, and a $5,000 oven. They worked for a month to make the cart functional and parked the trailer close to Portland State University, for $500 a month in rent. (In New York City, one hot-dog vendor pays $643,000 annually to the Parks Department to locate his stand on two sides of the Metropolitan Museum of Art.)

After a year of positive feedback from customers, the Ferruzzas felt confident opening a restaurant serving the same pizzas and pastas.

“The cart enabled us to establish the product quality and create a following,” Francesco says. “We had rave reviews about our product, which gave us the confidence to go farther.”

The Ferruzzas still operate a refurbished school bus equipped with a pizza oven, which expands business to summer fairs and festivals.

Like many restaurant owners, they believe other food carts can boost business at their restaurant. “If a cart pulls up next to us, we see it as an opportunity for more people and more traffic,” Francesco says.

Others disagree and see carts as competition, entities with unfair advantages, such as low overhead and fewer permitting requirements than restaurants. Then there’s the issue of mobility. In Multnomah County, mobile units must “be on wheels and have the ability to be mobile at all times during operation and have no permanent connection to any utility service,” according to the Multnomah County Health Department. But many registered mobile units remain parked in one location, in some cases, for years.

The Oregon Restaurant Association, an industry lobbying group, views these parked carts as restaurants. “Stationary food carts should be treated as restaurants and pay the fees normal restaurants pay,” says Kara Thallon, director of public affairs for the Oregon Restaurant Association.

The ability to establish a somewhat permanent location, while being classified as mobile, has helped fuel the county’s vibrant cart scene, says Brett Burmeister, who has watched many carts improve their surroundings by adding seating and even landscaping.

“That gives Portland carts an edge over those in other cities,” he says.

Jon Kawaguchi, environmental health supervisor for Multnomah County, says food carts are required to operate under the same health and safety guidelines as restaurants, and receive inspections twice annually. Four classifications of “mobile units” determine other regulations, such as waste and water tank sizes and proximity to a restroom. As of November 2009, 57% of restaurant inspections resulted in critical violations, while 39% of mobile-unit inspections resulted in critical violations.

The permitting and inspection requirements for food carts place Portland somewhere between laissez-faire New York City and heavy-handed Los Angeles, says Alma Flores, a somewhat unintentional outcome from the city’s perspective.

“The boom hit us before we knew it,” she says. She anticipates the food cart scene could become oversaturated, if it hasn’t already.

“When you have three Thai carts close to each other it creates competition, which drives prices down. A cart might go out of business,” Flores says. “Food cart owners need to be just as savvy as if they were going into any other kind of business.”

Customers place orders at the Big Egg at the Mississippi Marketplace.

Roger Goldingay, developer of the Mississippi Marketplace, one of two “pods” purposely designed for food carts, handpicked carts for the site. He focused on diversity of food for the 10 spots on the 10,000-square-foot lot, which is anchored by a permanent pub.

“I wanted people to be in symbiotic relationships,” he says.

His approach is an evolution of the cart scene. If successful, more developers might consider working with food carts in the same way, by providing covered seating for customers and electrical and recycling for the carts.

Goldingay says the lot boosts the local economy. “There are 10 new food carts, so 10 new businesses, and each business has jobs for two to four people,” he says.

Gayle Buchanan, an owner of the Big Egg cart in the Mississippi Marketplace, says she’d operate under the same business model, in or outside the pod.

“Carts can be lucrative if you do it right,” she says. “Prices should be lower than what you’d get at a cafe, and quality should be good. The goal is not to push food out fast just to get more money.”

On a cold day in late November, customers wearing warm hats and raincoats were deciding between pizzas made on tortillas, vegan sushi or one of Buchanan’s egg sandwiches with Portobello mushrooms, caramelized onions, arugula and herb aioli. But before they even placed an order, they had already made a notable decision: They were buying food from a cart, not a restaurant. As more food carts pop up in the city’s unwanted nooks, from weedy parking lots to empty street corners, the choices will only become greater.

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