The Hot Dog Stand Story

This business fable has stayed with me since I first heard it in university. Over the years, interpretations have popped up at conferences, meetings and in articles. It is an entertaining tale offering different lessons depending on what is emphasized. Apologies to the original author. I would gladly give credit if I knew who you are. Here is my version.

There was a man who ran a roadside hot dog stand. It was located far outside the city. For years he worked hard to make it a success. That effort paid off and eventually people would travel long distances for one of his hot dogs. It became a popular and sentimental institution. Families formed traditions around visiting the stand and tourists were told to fit it into their schedule if possible.

So what made it special? It was not one thing, it was a combination of quality and care that was difficult to match or copy.

Hot dogs were all that was served. The man insisted on the finest meats and he offered variety. Beef, pork, chicken, turkey, and vegetarian. The buns were baked daily on the premises. Condiments were a big part of the attraction. The man made his own sauerkraut, relish, mustard and ketchup. Customers could choose from a range of fresh accompaniments. Crisp lettuce, ripe tomatoes, diced onion, shredded cheeses and more.

The man buzzed about the business. From the kitchen to the interior seating to the picnic tables outside. He smiled, joked and welcomed back returning customers. He cleared tables, replenished napkin holders and took orders. He was everywhere.

The stand was simple but smartly laid out and exceptionally clean. The man ensured the restrooms were spotless. He treasured his staff and would provide spot bonuses on the busier days. Many stayed with him for years.

The drink cups and hot dog sleeves featured the name of the business. The cups became collector items. One year a customer suggested the man sell t-shirts with the business name on them. They were an instant hit.

While the man was proud and thankful for the stand’s success he was most proud that it paid for his son to get a college education. The boy graduated at the top of his class. He came home with energy and ideas.

After surveying the stand’s operations he said, “Dad you need to improve your business to be more competitive and successful.” The man was puzzled. Business was very good. But his son had a college degree in business. He asked his son, “How?”

The son explained that the stand could make more margin on the high sales volume if he sold fewer types of hot dogs and sold ones of lesser quality. With that his son was off to his new management job in the city and his father went back to selling hot dogs, albeit cheaper ones.

Soon the man noticed a slight drop in sales. His son visited a few weeks later and suggested raising prices to offset the decline. So the man changed the prices and his son went back to the city.

A few weeks went by and customer traffic was dropping off. On his son’s next visit, the man asked him if he had any ideas. The son suggested reducing staff to save on salaries because they were obviously not as busy as before. This crushed the father having to say goodbye to people who had helped build his business. But it made sense.

Sales continued to decline. And with less staff, the stand and its restrooms were not kept as clean. The food took longer to make it to the customers. On subsequent visits, the son suggested reducing operating hours. Gone too were the homemade condiments and bread. These were sourced from a food supplier. Accompaniments were reduced and were added sparingly in the kitchen. The cups and sleeves became generic.

Soon the man was running the stand by himself just as he had when he started. Not long after a competitor opened across the road selling hot dogs, hamburgers and French fries. Eventually the man closed his stand and became an employee of the competitor.

The Hot Dog Stand Story is simple, yet layered and reminds me of a quote from Henry Ford, “The man who will use his skill and constructive imagination to see how much he can give for a dollar, instead of how little he can give for a dollar, is bound to succeed.” Clearly a big lesson is to respect real world experience and hard work. There are tons of lessons in the parable and it can be crafted in different ways.

One of my professors who referenced it told me another story. That is how a service station could succeed. He believed that a Shell or Texaco or Exxon chain should become known for having the cleanest restrooms in the business. The argument being clean washrooms would bring in more customers who, in turn, would buy more than enough gas, drinks, snacks to offset the upkeep of the restrooms.

Both stories provide instruction for businesses today. We are either enamored with longstanding brands like Apple and Coca-Cola or pay overwhelming homage to ones that are “disruptive” like Uber and AirBnB. The Hot Dog Stand speaks to craftsmanship and attention to detail. It is a timeless tale that we need to remind ourselves of or, better yet, never forget.

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