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IINN SSEEAARRCCHH OOFFTTHHEE HHOOTTDDOOGGMMIILLLLIIOONNAAIIRREE Food carts once offered hardworking entrepreneurs a wayto get ahead. Not anymore.Why a thriving black markethas left street vendors tapped out

PLUS: Street vendors take the road most traveled

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LICENSETO GRILLRunning a food cart is a tough and dirty business, sustained by

a black market operating in plain sight

When Sharif leaves his home in Flushing, Queens, it’s tooearly to say goodbye to his wife and three kids. Longbefore sunrise, he drives 15 minutes to a cold, brightly litgarage in Long Island City that smells of spent fuel, clean-ing fluid and food that’s about to turn.

There, Sharif, an Afghan native in his mid-40s, stocksthe front window of his food cart with muffins and bagels from a wholesalebakery in Queens, sold to him at a markup by the garage’s owners. Like the fivedozen food-cart vendors busy alongside him, Sharif has brought his own per-ishables; for most, it’s the seasoned chicken, rice and vegetables that willbecome halal dishes by lunchtime. Western Beef and two Costco stores—B

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BY JEFF KOYEN

SMALL BUSINESS|FOOD-PERMIT FRENZY

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favorites for bulk provisioning—are a shortdrive away.

Sharif double-checks the propane tanks andgrill, hangs his food-seller’s permit around hisneck, hitches the rig to his car and heads for theQueens-Midtown Tunnel. (To protect cartowners and vendors from being prosecuted forillegally renting out or selling permits, Crain’s

has declined to identify them by their fullnames or exact locations.)

An hour later, on a corner in midtown, Sharifhas already sold the first of the day’s 125 coffees.At 6 a.m., he’s joined by Zamir, a youngerAfghan immigrant. For the next few hours, withZamir standing over the hot griddle, they sellegg-and-cheese sandwiches to a steady streamof regulars and early rising out-of-towners.

Sharif has been working on the same cornerfor 17 years. “It’s hard work, six, seven days aweek,” he said, “but I have bills to pay. I have afamily.”

Working nine hours a day, food-cart vendorslike Zamir take home as little as $400 to $500 fora six-day week. Many are new immigrants hop-ing to start new lives. During a brief lull in lunchservice, Zamir, 22, told me he served as a trans-lator for U.S. troops in Afghanistan before hewas wounded and then awarded a visa to settlehere. A generation ago, after a few years of hardwork and saving, Zamir could have become hisown boss. Sidewalk vending was long an optionfor immigrants eager to improve their lives.

That’s no longer the case. Today’s mobilefood vending business is one of day laborers andshift workers who, despite hustling all weeklong, may not earn minimum wage.

Even for bosses like Sharif, financial autono-my is not guaranteed. Though Sharif owns theactual food cart—“I built it three years ago,” hesaid—a portion of his earnings is sent to “a guyin New Jersey.”

According to records obtained by Crain’s

through a Freedom of Information Law request,that guy is in all likelihood “Mr. Q.” WhileSharif owns the food cart and his own vendor’slicense, it’s Mr. Q who controls the mobile foodvending permit—a tiny piece of adhesive plasticthat makes this cart more than just a griddle onwheels. Without it, Sharif has no business.

On a nearby block, it’s a similar story. In asmaller cart equipped to sell just coffee andbaked goods, another Afghan, a 54-year-oldman who asked to be identified only as Steve,has been fighting for market share withStarbucks, Dunkin’ Donuts and their predeces-sors for 27 years. He supports a wife and fivechildren on the $600 to $700 he earns everyweek—about $35,000 a year.

At least, like Sharif, Steve is the boss—almost.

“I own 35% of the cart,” Steve said proudly.“When I started 20 years ago, they paid me asalary.” It was unclear if Steve bought or earneda share in the cart; it was also unclear who“they” are. Like most of the vendors inter-viewed for this article, Steve wasn’t keen toelaborate on his business.

One thing is certain: The name on the permitis not his. Either like Sharif, Steve leases hispermit from the legitimate owner—for upwardof $10,000 a year—or that’s why he’s cedednearly two-thirds of his business to silent part-ners.

The city’s administrative code is clear thatpermits can’t be sold or transferred. Section 17-314.1 (b) of the code reads: “No vehicle or push-cart used to vend food in a public place shall beB

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assignable or transferable with a license, permitor plate that has been issued under this sub-chapter attached thereto.”

Sharif and Steve are just two of the thousandsof unwitting lawbreakers in a black market forcart permits that operates in plain sight of thecity’s enforcement agencies. That black marketis worth an estimated $15 million to $20 milliona year, costing the city millions of dollars inpotential fees while making it harder for immi-grant entrepreneurs to build equity and take thefirst step up the economic ladder.

HISTORIAN MARK KURLANSKY writesthat in the 19th century, food cartspeddled fresh oysters for 6 cents apiece.

When the oyster beds died off and new waves ofimmigrants arrived, offerings diversified; itwasn’t uncommon to find corn, pickles andsausages for sale on city sidewalks. In 1890,Jacob Riis wrote, “There is scarcely anythingelse that canb e h a w k e dfrom a wagonthat is not tobe found, andat ridiculouslylow prices.”

It was these“ridiculously low prices” that drove the firstwedge between mobile food-sellers and restau-rateurs. The latter, burdened by rent, insurance,payroll, equipment and other overhead, strug-gled to compete with 6-cent oysters and theirsuccessors.

The relationship between vendors and retail-ers hardly improved over the next century.Embarrassed by the lower-class food carts,Mayor Fiorello La Guardia decreed that sellershad to stand behind their carts, and eventuallyformed a network of covered markets to get thepeddlers off the sidewalks.

Four decades and six mayors later, Ed Kochinherited this mess. The irascible Koch had littlesympathy for the vendors. Of midtown’s crowd-ed sidewalks, the mayor told The New York Times,

“This is not supposed to look like a souk.”Under pressure from brick-and-mortar

retailers, in 1981 Koch set a limit of 3,000 city-wide permits for mobile food carts and trucks.The mayor’s move turned pushcarts into thenew taxis, whose medallions—not the carsthemselves—are the valuable asset.

For $50, just about anyone can get a licenseto sell food on a city sidewalk. The applicationprocess is cumbersome, but as bureaucraticchores go, it sits somewhere between thedrudgery of renewing a driver’s license and thecomplexity of filling out a tax return.

The problems come with registering the foodcarts themselves, and with the plastic inspec-tion sticker known as the mobile food vendingpermit, or MFVP, for which the Department ofHealth and Mental Hygiene charges $200, andwhich is usually valid for two years. But manypermit holders, having put in their time slingingsouvlakis and moved on to more lucrative busi-nesses, such as driving a cab, keep renewingtheir permits and renting them out, often withthe cart attached, on a lucrative black market.

Illicitly renting a two-year permit from itslegitimate holder can cost as much as $20,000for a cart that serves hot food and can bring infar more revenue than a simple coffee-and-doughnut cart, or as much as $30,000 for a food

truck—a fullymobile kitchen.

B e c a u s ethey’re so valu-able but notlegally transfer-able, these per-mits never offi-

cially change hands. Instead, brokers help per-mit seekers find permit holders who no longerwant to man a cart. The vendor who needs apermit—and a cart—might pay a flat fee everytwo years, upon renewal, or work out a profit-sharing arrangement.

In this manner, an estimated 70% to 80% ofpermits are illegally in use by someone otherthan the permit holder. Some have been legallyowned by the same person for two decades,even if he or she hasn’t touched a shawarmasince the administration of Mayor RudolphGiuliani. (The health department, which dis-tributes the permits, couldn’t produce backrecords of permit ownership.)

At the center of this underground economysits a loose network of garages known aslicensed commissaries where, by law, everyfood cart must be cleaned and stored each night.While these garages serve as a meeting point forthe food cart world, there is a decentralized net-work of owners, brokers and would-be vendorsthat has evaded the haphazard efforts of law

ONE THING IS CERTAIN, THENAME ON THE PERMIT FOR

STEVE’S CART IS NOT STEVE

PREP TIME: A food vendor

prepares his mobile restaurant

as commissary owner Saleh

Hegazy watches.

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enforcement.On a cold, rainy morning earlier this year, I

visited nearly a dozen of these garages to figureout how, exactly, this illicit system operates.

In Manhattan, the commissaries are clustered inHell’s Kitchen. Most are no wider than a single-cargarage, deep as a typical railroad apartment, andhidden in plain sight behind hanging strips ofthick clear plastic. Often, a broken food cart sitsalong a back wall, awaiting repairs.

The licensed commissaries are largely modestoperations, garages that store and service just 10to 15 carts whose operators pay upward of $600per month. The commissary owners oftenrequire vendors to buy their provisions from thegarage. Commissary owners make most of theirmoney from a 5% to 10% markup on supplies.

Manhattan’s largest commissary doesn’teven store or clean food carts. From their head-quarters on West 37th Street, Tom and GeorgeMakkos have run M&T Pretzel for more thanthree decades. Born in Athens, the Makkosbrothers immigrated to New York in their teenswith their parents; like many Greek immigrantsof the time, their father supported his familywith a food cart.

After college, Tom and George returned tothe family business. Seeing opportunity inKoch’s permit cap, they amassed a fleet of foodcarts—and, crucially, the permits that madethem legal. It’s not known exactly how manypermits the Makkoses held at their peak, but acurrent employee (who insisted on anonymity)told Crain’s it was “thousands.”

BY 1995, THE BROTHERS, dubbed theHot Dog Kings by The New York Times,were in a position to pay the city a

$288,200 franchise fee for the right to vend forone year from a single hot dog cart in front ofthe Metropolitan Museum of Art. That sameyear, they paid $480,400 for the rights toCentral Park’s 60 concessions, makingthem the Parks Department’s second-largest revenue driver, after Tavern onthe Green.

Soon enough, the high-flying Makkosbrothers—and at least one other mini-empire of hot dog carts—attracted theunwanted attention of Mayor Giuliani. InFebruary 1995, the City Council passed a lawlimiting mobile food vending permits to one perperson or company, effective Jan. 1, 1996. Theidea was to once again make the food-cart busi-ness a path for aspiring entrepreneurs. With theend nigh, the Makkoses diversified (Tom is alongtime co-owner of the upscale Italianrestaurant Nello), relinquishing the pushcarts astheir permits expired and becoming suppliersinstead.

Twenty years later, by all appearances, M&TPretzel is nothing but a wholesaling business, andhas nothing to do with amassing—or renting—food cart permits. Along the back wall of thelarge, well-lit space, a row of humming com-mercial refrigerators holds enough hot dogs tofeed a stadium. Stacks of soft drinks fill more ofthe remaining floor space.

The Makkoses still appreciate the power of amonopoly. Said one older man at a nearbygarage, “If you buy a bottle of Poland Spring inthe city, you go through them. Period.”

That’s barely exaggeration: The lot next toM&T is filled with shrink-wrapped pallets ofbeverages—many with the familiar PolandSpring logo, stacked two-high and packed

Tetris-tight by two busy men on forklifts. Tom Makkos—charming, funny, recreation-

ally vulgar and good with a handshake—declined to speak on the record with Crain’swhen I met him that morning. Reached byphone several weeks later, he told me he’s nolonger involved in the retail end of the business.

“I do not own any permits,” he said. “I don’town any carts. I have nothing to do with that.”

Just one block away, I met Hell’s Kitchen’sother commissary king, Zizo—“No last name,please”—who came to the U.S. from Egypt inthe early ’80s. He’s been in food carts eversince, clawing his way up from vendor to garageowner. Today he has the second-largest com-missary in Manhattan.

Like M&T Pretzel, Zizo’s garage (whose tradename was never made clear, and defied researchefforts) is also enormous by industry standards.I found Zizo sitting at a cluttered desk in theback. He looks to be in his 50s, fit and solid in

that manner of men who don’t actually sit for aliving, and he was eager to talk about how thebusiness has changed over the years.

Not that food vending was ever easy, hemade clear, but it’s harder than ever. When hearrived, “everybody got a permit,” he said.“Everybody could work.” The barrier to entrywas low enough to encourage entrepreneur-ship. In the 1980s, Zizo said, a classic hot dogpushcart cost $3,000 to $4,000 to buy; today’scarts, equipped to prepare halal lunches withgriddles and coolers, can easily run $35,000.

When asked about permits, Zizo sighed,stood up and pointed to my notebook. “Theprice of permit going up, up, up,” he said, jab-bing his finger to make sure I got his point.Today, he said, a permit costs $20,000 for atwo-year black-market rental. He expects thatnumber to rise to $22,000 next year.

New rules by the city have only made it moreexpensive to rent a permit illicitly. In 2015, thehealth department began requiring permit hold-ers to show up in person to contest tickets for vio-lating the myriad rules of where and when cartscan operate. (Previously, the licensed food sellerwas held responsible.) To account for this greater

EVERYONE COMES TO ZIZO’S:Each night, food carts park

and restock at this Hell’s

Kitchen garage.

risk, owners are pricing permits higher still. Someeven require a security deposit in addition to thebiennial fee.

“Where are these permits changing hands?” Iasked.

“Go to Astoria,” Zizo said. “That’s where thebrokers are.”

When Giuliani instituted the one-person, one-permit rule in 1996, the food cart business wasdominated by Greeks. “Then,” Zizo said, “theEgyptians took over. Now it’s Bangladeshis andIranians and Turks.” Astoria has been home to allthese groups, and that’s why Zizo sent me toQueens to find the permit brokers.

On a late Saturday afternoon in March, work-ing with just a few cross streets and first names, Iwent looking for “Dmitri” and “Effie,” both saidto handle certain tasks on behalf of food vendors.

I wasn’t optimistic—one can’t swing a sou-vlaki in Astoria without hitting a Dmitri—but anhour of cold-calling in local storefronts turned up

a different lead. In the window of a tiny,unkempt real estate office under the ele-vated N and Q subway line, I found a flier.“FOOD VENDOR CART with 2 YearCitywide Permit + Spot [in] Very Busy Areain Queens,” it said. The photo showed atypical halal cart, ready for business.

According to an older man inside thestorefront, “some Indian guy” had asked

him to put up the sign; he himself was notinvolved, he said. He did, however, know aDmitri (or “Jimmy,” in its Anglicized form) whowas involved with food carts. Like Zizo, heoffered me cross streets and a polite dismissal.

On the way to find Dmitri, I called the numberon the flier. A man who gave his name as Mr.Singh picked up and, in a very thick Indianaccent, explained that he was selling his truck.It’s in Jamaica, near the subway, and it “includeseverything,” he said.

“The permit is included?” I asked.“Yes, all five boroughs,” Mr. Singh said. “I

have a new job. I am selling everything.”“How much do you want?”“No, no, please, come out, see the truck.

We’ll talk price.” Street vendors often refer tothe larger carts as trucks.

Eventually, I got an asking price of between$20,000 and $30,000, and I would be buyingthe truck and the permit from him directly. Mr.Singh refused to say more unless I met him.

“Buying” Mr. Singh’s permit would be illegal—and, as a practical matter, impossible—as permitsare not transferable on the city’s ledger. I doubtthat’s what Mr. Singh actually meant. More

“GO TO ASTORIA,”ZIZO SAID.“THAT’S WHERE

THE BROKERS ARE”

SMALL BUSINESS|FOOD-PERMIT FRENZY

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likely, Mr. Singh would sell me his cart with thepermit attached; together, we would go to theinspection center in Maspeth, and he wouldsign the renewal papers. I wouldn’t see Mr.Singh again for two years, in time to renew thepermit that would again bear his name.

On a nearby corner, I bought a $3 souvlakifrom a man in his late 30s named Ioannis. Itipped him a few bucks and asked about Dmitriand Effie, about food carts, about getting a per-mit. He shot me the suspicious side-eye I hadcome to know.

“Effie, I don’t work with her. Dmitri? This isDmitri,” he said, pointing to a young Greek guysitting on a folding chair. It was not the rightDmitri. I thanked him and turned away, butIoannis grabbed my arm lightly and asked, “Youwant a cart? I have a cart.”

He whipped out his iPhone and pulled upphotos of a classic pushcart, perfect for selling$2 hot dogs.

“How much?” I asked.“No, I don’t sell it,” he said. “We work

together. You pay me every month.”“How much? A thousand dollars a month?”“No, no,” he said, “we talk price later. You

come see the cart. It has the sticker.”I pressed—$800? Finally, he relented. “The

permit costs $18,000,” he said.While the real Dmitri proved elusive, Effie

revealed herself without much effort. She runs aclearly marked business called Effie’s FoodVendors out of a modest storefront on a quietresidential street in Astoria.

Every weekday from 6 p.m. to 9 p.m. andSaturdays from 10 a.m. to 1 p.m., Ifigenia“Effie” Tsatsaronis serves as an expediter, help-ing food vendors navigate the tangle of bureau-cracy that defines their business.

“We renew people’s licenses,” she told mefrom behind the single desk that dominates hermodest office. “We get them a license for thefirst time, we renew their permits, we adjudi-cate their violations, we do their sales taxes.”

Tsatsaronis charges $15 to contest a ticket,$50 to help get a new operator’s license and,curiously, $90 to renew that license. For ven-dors earning subsistence wages, it’s more cost-effective to hire Effie than to waste days haulingpaperwork around town.

Years ago, Tsatsaronis was also known tobroker deals between permit holders and buy-ers. In 2009, along with five others, she wasarrested in a sting by the city’s Department ofInvestigation and charged with criminal pos-session of a forged instrument in the second

degree and falsifying business records in thesecond degree. The charges were dismissed andthe records sealed.

Tsatsaronis is refreshingly frank about herarrest. “There is an industry, and there arethings happening everywhere. We happened tobe the subject of the raid, so we paid for every-body’s sins at the time. We were theonly ones who had to pay the con-sequences.”

Tsatsaronis said the system is notbroken—perhaps because she’sbuilt a cottage industry on its ineffi-ciencies. “The city has a point insaying, Okay, you have a permitthat is your property for as long asyou use it.” But if a vendor nolonger wants to stand all day in acart, she said, the permit shouldrevert to the city. “Then more peo-ple get a chance for the $200 feeevery two years, like it should be,”she added.

IN MY MONTHS REPORTING onthis story, I got no sense of therebeing a criminal mastermind or

an evil overlord running this blackmarket. By and large, this trade isdone face-to-face, through texts,and on Craigslist. Rightly or wrongly,most permit sellers are just takingadvantage of a system that happensto be broken in their favor.

Sean Basinski, founder anddirector of the Urban JusticeCenter’s Street Vendor Project,agreed. “It doesn’t make it any better,” he saidof the permit owners, “but it’s former vendorswho are not rich people—because why wouldthey have been vending in the first place? Nowthey’re doing a little bit better. Maybe they’redriving a taxi.”

Indeed, Mr. Singh said he has a new job,which he wouldn’t name; Ioannis has graduat-ed to a larger truck. But they’re holding on totheir permits. “It’s $20,000 every two years,”Basinski said. “It’s almost like a retirementfund, like a pension.”

Why doesn’t the city lift the cap on permits?Or, at least, relax the limit and charge morethan just $200, putting money in the city’s cof-fers?

For one, the city’s business improvementdistricts, or BIDS, staunchly oppose any legisla-

tion that would increase the ranks of mobilevendors. They see sidewalks clogged withcheap meals. They see carpetbaggers occupyingvaluable real estate. They see ugliness, visualclutter, noise and fumes from diesel generators,unfair competition, litter and lines of customersblocking access to their own storefronts.

Basinski says vendors do not compete withlocal businesses. “The removal of vendors hasled to a loss of foot traffic that harms brick-and-mortar small businesses,” he has written.

Andrew Rigie, executive director of the NewYork City Hospitality Alliance, which advocatesfor the city’s restaurants, bars and hotels,agrees. “Most brick-and-mortar business own-ers aren’t anti-vending,” he said. Rigie’s organ-ization wants a new permit program, though hecan’t say how it would work. “There are a lot ofhonest people who want to comply with the lawwho might be eligible for a permit under a dif-ferent system,” he said. “But until the variousstakeholders come to the table, it’s difficult tosay what a new system would look like.”

The City Council has spent more than a yearlooking for a compromise everyone can support,or at least can tolerate, and is no closer to a solu-tion.

Finally, there’s the issue of bureaucraticappetite. Officially, city agenciesare concerned. “The health depart-ment has taken significant steps toincrease enforcement and reducethe illegal transfer of mobile foodvending permits,” said a spokes-person for the Department of Healthand Mental Hygiene. “This hasincreased compliance and reducedpermits being illegally transferredor sold.”

In fact, fewer than 70 permitshave been removed, suspended orplaced on probation since 2014, andthe health department failed toprovide any proof of “increasedcompliance.” On the street, theredoesn’t seem to be any slowdown inpermits changing hands.

The Department of Investigationhas been running occasional stingsto tamp down the black market, butappears to have little interest inmaking arrests. In 2014, forinstance, the department con-firmed that permits were being soldon Craigslist and referred thosefindings to the health department.The police are tasked with ticketingvendors.

The black market preys uponworking-class immigrants, discourages entre-preneurship and has done nothing to fosterfinancial security. The vendors who startedunder Giuliani are now well into middle age,and most have little to show for their decades ofhard work.

“What else am I going to do,” asked Steve,the 54-year old who has sold coffee and pastriesin midtown for 27 years. “Who’s going to hireme? I’m not an electrician.”

With a resigned grin loaded with gallowshumor, he noted, “Who knows what will hap-pen? A few weeks ago, I know one guy whodropped dead in his cart.”

With that, he shrugged, snapped a plastic lidon my coffee and turned back to his line of cus-tomers, $1.50 richer by my hand—but still along way from being able to retire. �

THE FIXER: Effie Tsatsaronis

fixes tickets, legally, for ven-

dors from this Astoria store-

front. She was once arrested

for selling permits.

$200LIST PRICE: This is howmuch the city chargesfor a two-year city-widemobile-vendor’s permit

$20KPAY TO PLAY: Expect topay $20,000—ormore—to rent a permitfrom a licensed holder

3KTOTAL NUMBER ofmobile food vendorpermits issued by thehealth department

FACTS

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