As appeared in the Washington Business Journal on September 12, 2008.

Taking it to the street
Through fits and starts, D.C. struggles to breathe life into a stale outdoor food cart scene

By Missy Frederick Staff Reporter

As you walk the streets of downtown D.C., looking at the food offered by vendors, the selection can hardly be described as a plethora. Walk one block — hot dogs, chips. Two blocks farther. Hot dogs, chips. One Metro stop over. Half-smokes, candy. A particularly adventurous lunch seeker might stumble on the city’s lone Korean bulgogi cart.

However, at the corner of Eighth and H streets NW, a few innovators are setting up carts that could be the beginnings of a vibrant street-food scene.

One cart offers po’ boy sandwiches and steaming gumbo. Another cart, painted green and white and looking a bit like something out of a futuristic movie, has cuisine from local restaurants, including sushi to tacos. A third vendor offers hummus, grilled meats and other Middle Eastern fare.

After the city’s efforts last year to overhaul D.C.’s vending landscape, new offerings have been slow to emerge. But there are a handful of new vendors, a startup company and a government trying to get the changes right this time so residents and visitors can see everything from gumbo to tacos alongside the city’s ubiquitous hot dogs.

A lottery in 2007 resulted in dozens of new licenses for downtown street vendors, ending a nearly 10-year moratorium.

After the lottery, the city began to see some new selections. A Korean food cart opened up near McPherson Square. Another vendor tried his hand at Middle Eastern fare such as shawarma — but later went out of business.

The program’s successes have been limited because the lottery took place before city regulators were given the authority to rewrite the decades-old rules governing food carts, said Sam Williams, vending coordinator for D.C.’s Department of Consumer and Regulatory Affairs.

The new street vendors were working under an old system with strict, outdated rules on what carts could look like and how they could be owned and operated. Another problem was confusion over regulator authority, according to Williams. While the DCRA was charged with issuing vending licenses, the District Department of Transportation was in charge of site permits.

New rules

Emergency legislation in February gave the mayor temporary authority to make some changes to the vending system, and since then the DCRA has been working to rewrite the old cart regulations.

“This is the first time these regulations are being overhauled in 30 years,” Williams said.

Under the new rules, owners no longer must be the sole proprietor of their cart, he said. Previously, cart owners could not expand their business or hire employees to work the cart — they could not even leave their post to use the bathroom, Williams said.

In another change, the DCRA will become the sole regulatory authority for the vendors.

The new rules, if approved, also would allow vendors to work directly with business improvement districts on creative cart initiatives, such as clustering them together to form food courts.

BIDs often have been resistant to carts for aesthetic reasons, Williams said. One of the challenges of drafting the new regulations is balancing the demands of BIDs and cart owners.

“We don’t want to be put into a situation where we somehow lose the vendors we’ve been trying to hang onto for so long, while trying to address an issue as simple as aesthetics,” Williams said.

The D.C. Council is expected to make the emergency legislation permanent and approve the new regulations. Then there will be a new lottery for licenses, as well as site permits for vendors tied to specific locations, with preference given to those who got permits last time around, Williams said.

Fresh face

Despite the problems that occurred, a new company emerged from last year’s lottery: On The Fly, co-founded by Gabe Klein, one of the brains behind the car sharing company Zipcar Inc.

On The Fly serves its food in eco-friendly, motorized carts and offers original recipes such as tacos and fare like sushi and barbecue from local restaurants, including Teaism and Red Hot & Blue.

Klein got eight licenses in the 2007 lottery but is using only two. The restrictions on cart size and style were too onerous for Klein to operate his podlike carts, although he is running two carts inside the “demonstration zone,” a creation of the emergency legislation that allows for experimentation beyond the original cart standards.

On The Fly invested more than $100,000 in a commercial kitchen so it would not have to rely on outside sources and deliver the standard hot dog fare, Klein said. Because On the Fly uses a motorized vending stand, the company does not have to store a cart in an authorized depot.

On The Fly is working hard to build business and buzz. Klein has agreements with organizations such as the National Arboretum to station carts there. He is close to announcing partnerships with universities to get on campuses. Klein also is one of the vendors who received permission to park outside Nationals Park.

The city’s demonstration zones are starting to gain interest. Two other vendors were set to join On The Fly after Labor Day in a cluster at Eighth and H streets.

“We’re testing more of a market setup,” said Scott Pomeroy, events program manager for the Downtown D.C. Business Improvement District.

The shuttered Middle Eastern food cart, run by Akindele Akerejah, who could not be reached for comment, is reopening in the cluster. The other cart is being run by D.C. Central Kitchen, serving gumbo and sandwiches such as po’ boys.

“Our goal was to make this a micro-enterprise project where we would create an opportunity for graduates of our culinary job training program,” said Mike Curtain, the kitchen’s chief executive officer.

The organization has another license at Ninth and E streets NW and is considering teaming up there with the nearby Spy City Cafe.

“I grew up on these hot dogs — I love them — but a city like D.C. should have more available,” Curtain said.

Same old, same old

The businesses behind the hot dogs are less excited by the changes proposed by city government.

One of those is WG Food Distributors, which runs the major depot where food vendors store their carts and also sells hot dogs, chips and other food to its tenants.

“We got into this business, and we’re sort of stuck in this business,” said Akbar Nazary, who started out as a vendor and co-owns the company with his brother. “We’re not really interested in selling or moving on, but right now we’re basically trying to survive.”

If the new regulations place aesthetic restrictions on the old carts, Nazary’s vendors, already struggling with rising food costs, will not be able to afford an upgrade, he believes.

Nazary said the regulations show favoritism to newcomers such as On The Fly, because the demonstration zones waive restrictions on carts and allow motorized vehicles.

Klein counters that his competitors are “the hot dog kings” who have built an empire under the old system.

Williams, the DCRA’s vending coordinator, acknowledges that individual vendors have expressed concern over the costs involved with the changes and that money has been a roadblock to food beyond the hot dogs sold downtown.

“A lot of it is about economic opportunity,” he said. “A lot of people are stuck just selling one product for so long in one location because they don’t have the capital or the knowledge to retool their carts.”

The city and nonprofits are both working on programs to help would-be food vendors get set up.

D.C. Central Kitchen is developing a lease-to-own program for vendors of its cart and is partnering with another nonprofit, Capital Asset Builders, to create individual development accounts with a matching component.

District officials are working with the Latino Economic Development Corp. on a cart loan program, which uses public funds to help recipients buy carts and merchandise.

Areas outside D.C. also are trying to improve their street food selection.

Arlington County passed legislation this summer that allows entrepreneurs to set up kiosks selling retail and food throughout the county.

Jill Griffin, a commercial development specialist with Arlington Economic Development, said no one has signed up yet.

Getting a start with carts

Running a food cart is a good way to get started in business, but it is by no means an easy way.

“If you want to start your own business, owning a merchandise cart or a food cart is one of the few ways you can get out there without that much capital,” said Sam Williams, vending coordinator for D.C.’s Department of Consumer and Regulatory Affairs.

A standard model food cart, used for hot dogs and similar products, usually costs between $15,000 and $20,000. Entrepreneurs who want to own their own cart often turn to WG Food Distributors, said co-owner Akbar Nazary.

The company charges $75 to $100 a month for vendors to rent space in the company’s city-approved depot. WG also sells hot dogs, snacks and other items to the company’s vendors.

It is difficult to provide food beyond hot dogs without a commercial kitchen, said Gabe Klein, co-founder of On The Fly food carts. The company invested more than $100,000 in its kitchen, which turns out everything from tacos to sushi. On the Fly runs its business differently. It owns the carts and provides the food, either cooking the items in the kitchen or partnering with local restaurants. On The Fly pays managers and cart operators a salary. Many workers are college students or people starting over after being burned out in their traditional careers, Klein said. Klein declined to disclose how much On the Fly’s employees earn but noted that “no one makes under $10 an hour.

”The company provides health insurance, bonuses and stock options based on performances. “It’s like any other startup,” Klein said.

Cart owners have to pay the District to receive permits and licenses. The city is overhauling its regulations, but Williams said an annual site permit under the new system will likely cost $587, and a two-year annual vending license for food carts is $383.