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Hospitality & Tourism NEWS Hospitality & Tourism
CRAINS June 12, 2016 12:01 a.m. Updated 06/12/2016
Inside the underground economy propping up New York City's food carts
Once a path to the American dream, manning hot-dog and coffee carts now traps
entrepreneurs in a spiral of low wages and a black market operating in plain sight
By Jeff Koyen
When Sharif leaves his home in Flushing, Queens, its too early to say goodbye to his wife
and three kids. Long before sunrise, he drives 15 minutes to a cold, brightly lit garage in Long
Island City that smells of spent fuel, cleaning fluid and food thats about to turn.
There, Sharif, an Afghan native in his mid-40s, stocks the front window of his food cart with
muffins and bagels from a wholesale bakery in Queens, sold to him at a markup by the
garages owners. Like the five dozen food-cart vendors busy alongside him, Sharif has
brought his own perishables; for most, its the seasoned chicken, rice and vegetables that will
become halal dishes by lunchtime. Western Beef and two Costco storesfavorites for bulk
provisioningare a short drive away.
Sharif double-checks the propane tanks and grill, hangs his food-sellers permit around his
neck, hitches the rig to his car and heads for the Queens-Midtown Tunnel. (To protect cart
owners and vendors from being prosecuted for illegally renting out or selling permits, Crains
has declined to identify them by their full names or exact locations.)
An hour later, on a corner in midtown, Sharif has already sold the first of the days 125
coffees. At 6 a.m., hes joined by Zamir, a younger Afghan immigrant. For the next few hours,
with Zamir standing over the hot griddle, they sell egg-and-cheese sandwiches to a steady
stream of regulars and early rising out-of-towners.
Though Sharif owns his food cart, a portion of his earnings is sent to a guy in New Jersey
likely "Mr. Q"
Sharif has been working on the same corner for 17 years. Its hard work, six, seven days a
week, he said, but I have bills to pay. I have a family.
Working nine hours a day, food-cart vendors like Zamir take home as little as $400 to $500 for
a six-day week. Many are new immigrants hoping to start new lives. During a brief lull in lunch
service, Zamir, 22, told me he served as a translator for U.S. troops in Afghanistan before he
was wounded and then awarded a visa to settle here. A generation ago, after a few years of
hard work and saving, Zamir could have become his own boss. Sidewalk vending was long
an option for immigrants eager to improve their lives.
Thats no longer the case. Todays mobile food vending business is one of day laborers and
shift workers who, despite hustling all week long, may not earn minimum wage.
Even for bosses like Sharif, financial autonomy is not guaranteed. Though Sharif owns the
actual food cartI built it three years ago, he saida portion of his earnings is sent to a

guy in New Jersey.


According to records obtained by Crains through a Freedom of Information Law request, that
guy is in all likelihood Mr. Q. While Sharif owns the food cart and his own vendors license,
its Mr. Q who controls the mobile food vending permita tiny piece of adhesive plastic that
makes this cart more than just a griddle on wheels. Without it, Sharif has no business.
On a nearby block, its a similar story. In a smaller cart equipped to sell just coffee and baked
goods, another Afghan, a 54-year-old man who asked to be identified only as Steve, has been
fighting for market share with Starbucks, Dunkin Donuts and their predecessors for 27 years.
He supports a wife and five children on the $600 to $700 he earns every weekabout
$35,000 a year.
At least, like Sharif, Steve is the bossalmost.
I

own 35% of the cart, Steve said proudly. When I started 20 years ago, they paid me a
salary. It was unclear if Steve bought or earned a share in the cart; it was also unclear who
they are. Like most of the vendors interviewed for this article, Steve wasnt keen to elaborate
on his business.
One thing is certain: The name on the permit is not his. Either like Sharif, Steve leases his
permit from the legitimate ownerfor upward of $10,000 a yearor thats why hes ceded
nearly two-thirds of his business to silent partners.
The citys administrative code is clear that permits cant be sold or transferred. Section 17314.1 (b) of the code reads: No vehicle or pushcart used to vend food in a public place shall
be assignable or transferable with a license, permit or plate that has been issued under this
subchapter attached thereto.
Sharif and Steve are just two of the thousands of unwitting lawbreakers in a black market for
cart permits that operates in plain sight of the citys enforcement agencies. That black market
is worth an estimated $15 million to $20 million a year, costing the city millions of dollars in
potential fees while making it harder for immigrant entrepreneurs to build equity and take the
first step up the economic ladder.
Historian Mark Kurlansky writes that in the 19th century, food carts peddled fresh oysters for 6
cents apiece. When the oyster beds died off and new waves of immigrants arrived, offerings
diversified; it wasnt uncommon to find corn, pickles and sausages for sale on city sidewalks.
In 1890, Jacob Riis wrote, There is scarcely anything else that can be hawked from a wagon
that is not to be found, and at ridiculously low prices.
It was these ridiculously low prices that drove the first wedge between mobile food-sellers
and restaurateurs. The latter, burdened by rent, insurance, payroll, equipment and other
overhead, struggled to compete with 6-cent oysters and their successors.
The relationship between vendors and retailers hardly improved over the next century.
Embarrassed by the lower-class food carts, Mayor Fiorello La Guardia decreed that sellers
had to stand behind their carts, and eventually formed a network of covered markets to get
the peddlers off the sidewalks.
Four decades and six mayors later, Ed Koch inherited this mess. The irascible Koch had little
sympathy for the vendors. Of midtowns crowded 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 citywide
permits for mobile food carts and trucks. The mayors move turned pushcarts into the new
taxis, whose medallionsnot the cars themselvesare the valuable asset.
For $50, just about anyone can get a license to sell food on a city sidewalk. The application
process is cumbersome, but as bureaucratic chores go, it sits somewhere between the
drudgery of renewing a drivers license and the complexity of filling out a tax return.
The problems come with registering the food carts themselves, and with the plastic inspection
sticker known as the mobile food vending permit, or MFVP, for which the Department of
Health and Mental Hygiene charges $200, and which is usually valid for two years. But many
permit holders, having put in their time slinging souvlakis and moved on to more lucrative
businesses, such as driving a cab, keep renewing their permits and renting them out, often
with the cart attached, on a lucrative black market.
Illicitly renting a two-year permit from its legitimate holder can cost as much as $20,000 for a
cart that serves hot food and can bring in far more revenue than a simple coffee-anddoughnut cart, or as much as $30,000 for a food trucka fully mobile kitchen. Because
theyre so valuable but not legally transferable, these permits never officially change hands.
Instead, brokers help permit seekers find permit holders who no longer want to man a cart.
The vendor who needs a permitand a cartmight pay a flat fee every two years, upon
renewal, or work out a profit-sharing arrangement.
In this manner, an estimated 70% to 80% of permits are illegally in use by someone other
than the permit holder. Some have been legally owned by the same person for two decades,
even if he or she hasnt touched a shawarma since the administration of Mayor Rudolph
Giuliani. (The health department, which distributes the permits, couldnt produce back records
of permit ownership.)
At the center of this underground economy sits a loose network of garages known as licensed
commissaries where, by law, every food cart must be cleaned and stored each night. While
these garages serve as a meeting point for the food cart world, there is a decentralized
network of owners, brokers and would-be vendors that has evaded the haphazard efforts of
law enforcement.
On a cold, rainy morning earlier this year, I visited nearly a dozen of these garages to figure
out how, exactly, this illicit system operates.
In Manhattan, the commissaries are clustered in Hells Kitchen. Most are no wider than a
single-car garage, deep as a typical railroad apartment, and hidden in plain sight behind
hanging strips of thick clear plastic. Often, a broken food cart sits along a back wall, awaiting
repairs.
The licensed commissaries are largely modest operations, garages that store and service just
10 to 15 carts whose operators pay upward of $600 per month. The commissary owners often
require vendors to buy their provisions from the garage. Commissary owners make most of
their money from a 5% to 10% markup on supplies.
Manhattans largest commissary doesnt even store or clean food carts. From their
headquarters on West 37th Street, Tom and George Makkos have run M&T Pretzel for more
than three decades. Born in Athens, the Makkos brothers immigrated to New York in their

teens with their parents; like many Greek immigrants of the time, their father supported his
family with a food cart.
After college, Tom and George returned to the family business. Seeing opportunity in Kochs
permit cap, they amassed a fleet of food cartsand, crucially, the permits that made them
legal. Its not known exactly how many permits the Makkoses held at their peak, but a current
employee (who insisted on anonymity) told Crains it was thousands.
By 1995, the brothers, dubbed the Hot 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 for one year from a single hot
dog cart in front of the Metropolitan Museum of Art. That same year, they paid $480,400 for
the rights to Central Parks 60 concessions, making them the Parks Departments secondlargest revenue driver, after Tavern on the Green.
Soon enough, the high-flying Makkos brothersand at least one other mini-empire of hot dog
cartsattracted the unwanted attention of Mayor Giuliani. In February 1995, the City Council
passed a law limiting mobile food vending permits to one per person or company, effective
Jan. 1, 1996. The idea was to once again make the food-cart business a path for aspiring
entrepreneurs. With the end nigh, the Makkoses diversified (Tom is a longtime co-owner of
the upscale Italian restaurant Nello), relinquishing the pushcarts as their permits expired and
becoming suppliers instead.
Twenty years later, by all appearances, M&T Pretzel is nothing but a wholesaling business,
and has nothing to do with amassingor rentingfood cart permits. Along the back wall of
the large, well-lit space, a row of humming commercial refrigerators holds enough hot dogs to
feed a stadium. Stacks of soft drinks fill more of the remaining floor space.
The Makkoses still appreciate the power of a monopoly. Said one older man at a nearby
garage, If you buy a bottle of Poland Spring in the city, you go through them. Period.
Thats barely exaggeration: The lot next to M&T is filled with shrink-wrapped pallets of
beveragesmany with the familiar Poland Spring logo, stacked two-high and packed Tetristight by two busy men on forklifts.
Tom Makkoscharming, funny, recreationally vulgar and good with a handshakedeclined to
speak on the record with Crains when I met him that morning. Reached by phone several
weeks later, he told me hes no longer involved in the retail end of the business.
I

do not own any permits, he said. I dont own any carts. I have nothing to do with that.

Just one block away, I met Hells Kitchens other commissary king, ZizoNo last name,
pleasewho came to the U.S. from Egypt in the early 80s. Hes been in food carts ever
since, clawing his way up from vendor to garage owner. Today he has the second-largest
commissary in Manhattan.
Like M&T Pretzel, Zizos garage (whose trade name was never made clear, and defied
research efforts) is also enormous by industry standards. I found Zizo sitting at a cluttered
desk in the back. He looks to be in his 50s, fit and solid in that manner of men who dont
actually sit for a living, and he was eager to talk about how the business has changed over
the years.
Not that food vending was ever easy, he made clear, but its harder than ever. When he
arrived, everybody got a permit, he said. Everybody could work. The barrier to entry was

low enough to encourage entrepreneurship. In the 1980s, Zizo said, a classic hot dog
pushcart cost $3,000 to $4,000 to buy; todays carts, equipped to prepare halal lunches with
griddles and coolers, can easily run $35,000.
When asked about permits, Zizo sighed, stood up and pointed to my notebook. The price of
permit going up, up, up, he said, jabbing his finger to make sure I got his point. Today, he
said, a permit costs $20,000 for a two-year black-market rental. He expects that number to
rise to $22,000 next year.
New rules by the city have only made it more expensive to rent a permit illicitly. In 2015, the
health department began requiring permit holders to show up in person to contest tickets for
violating the myriad rules of where and when carts can operate. (Previously, the licensed food
seller was held responsible.) To account for this greater risk, owners are pricing permits
higher still. Some even require a security deposit in addition to the biennial fee.
Where
Go

are these permits changing hands? I asked.

to Astoria, Zizo said. Thats where the brokers are.

When Giuliani instituted the one-person, one-permit rule in 1996, the food cart business was
dominated by Greeks. Then, Zizo said, the Egyptians took over. Now its Bangladeshis and
Iranians and Turks. Astoria has been home to all these groups, and thats why Zizo sent me
to Queens to find the permit brokers.
On a late Saturday afternoon in March, working with just a few cross streets and first names, I
went looking for Dmitri and Effie, both said to handle certain tasks on behalf of food
vendors.
I wasnt optimisticone cant swing a souvlaki in Astoria without hitting a Dmitribut an hour
of cold-calling in local storefronts turned up a different lead. In the window of a tiny, unkempt
real estate office under the elevated N and Q subway line, I found a flier. FOOD VENDOR
CART with 2 Year Citywide Permit + Spot [in] Very Busy Area in Queens, it said. The photo
showed a typical halal cart, ready for business.
According to an older man inside the storefront, some Indian guy had asked him to put up
the sign; he himself was not involved, he said. He did, however, know a Dmitri (or Jimmy, in
its Anglicized form) who was involved with food carts. Like Zizo, he offered me cross streets
and a polite dismissal.
On the way to find Dmitri, I called the number on the flier. A man who gave his name as Mr.
Singh picked up and, in a very thick Indian accent, explained that he was selling his truck. Its
in Jamaica, near the subway, and it includes everything, 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. Well talk price. Street vendors often refer to the
larger carts as trucks.
Eventually, I got an asking price of between $20,000 and $30,000, and I would be buying the
truck and the permit from him directly. Mr. Singh refused to say more unless I met him.

Buying

Mr. Singhs permit would be illegaland, as a practical matter, impossibleas


permits are not transferable on the citys ledger. I doubt thats what Mr. Singh actually meant.
More likely, Mr. Singh would sell me his cart with the permit attached; together, we would go
to the inspection center in Maspeth, and he would sign the renewal papers. I wouldnt see Mr.
Singh again for two years, in time to renew the permit that would again bear his name.
On a nearby corner, I bought a $3 souvlaki from a man in his late 30s named Ioannis. I tipped
him a few bucks and asked about Dmitri and Effie, about food carts, about getting a permit.
He shot me the suspicious side-eye I had come to know.
Effie,

I dont work with her. Dmitri? This is Dmitri, he said, pointing to a young Greek guy
sitting on a folding chair. It was not the right Dmitri. I thanked him and turned away, but
Ioannis grabbed my arm lightly and asked, You want a cart? I have a cart.
He whipped out his iPhone and pulled up photos of a classic pushcart, perfect for selling $2
hot dogs.
How
No,

I dont sell it, he said. We work together. You pay me every month.

How
No,

much? I asked.

much? A thousand dollars a month?

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 a
clearly marked business called Effies Food Vendors out of a modest storefront on a quiet
residential street in Astoria.
Every weekday from 6 p.m. to 9 p.m. and Saturdays from 10 a.m. to 1 p.m., Ifigenia Effie
Tsatsaronis serves as an expediter, helping food vendors navigate the tangle of bureaucracy
that defines their business.We renew peoples licenses, she told me from behind the single
desk that dominates her modest office.
We

get them a license for the first time, we renew their permits, we adjudicate their violations,
we do their sales taxes.
Tsatsaronis charges $15 to contest a ticket, $50 to help get a new operators license and,
curiously, $90 to renew that license. For vendors earning subsistence wages, its more costeffective to hire Effie than to waste days hauling paperwork around town.
Years ago, Tsatsaronis was also known to broker deals between permit holders and buyers.
In 2009, along with five others, she was arrested in a sting by the citys Department of
Investigation and charged with criminal possession of a forged instrument in the second
degree and falsifying business records in the second degree. The charges were dismissed
and the records sealed.
Tsatsaronis is refreshingly frank about her arrest. There is an industry, and there are things
happening everywhere. We happened to be the subject of the raid, so we paid for
everybodys sins at the time. We were the only ones who had to pay the consequences.

Tsatsaronis said the system is not brokenperhaps because shes built a cottage industry on
its inefficiencies. The city has a point in saying, Okay, you have a permit that is your property
for as long as you use it. But if a vendor no longer wants to stand all day in a cart, she said,
the permit should revert to the city. Then more people get a chance for the $200 fee every
two years, like it should be, she added.
In my months reporting on this story, I got no sense of there being a criminal mastermind or
an evil overlord running this black market. By and large, this trade is done face-to-face,
through texts, and on Craigslist. Rightly or wrongly, most permit sellers are just taking
advantage of a system that happens to be broken in their favor.
Sean Basinski, founder and director of the Urban Justice Centers Street Vendor Project,
agreed. It doesnt make it any better, he said of the permit owners, but its former vendors
who are not rich peoplebecause why would they have been vending in the first place? Now
theyre doing a little bit better. Maybe theyre driving a taxi.
Indeed, Mr. Singh said he has a new job, which he wouldnt name; Ioannis has graduated to a
larger truck. But theyre holding on to their permits. Its $20,000 every two years, Basinski
said. Its almost like a retirement fund, like a pension.
Why doesnt the city lift the cap on permits? Or, at least, relax the limit and charge more than
just $200, putting money in the citys coffers?
For one, the citys business improvement districts, or BIDS, staunchly oppose any legislation
that would increase the ranks of mobile vendors. They see sidewalks clogged with cheap
meals. They see carpetbaggers occupying valuable real estate. They see ugliness, visual
clutter, noise and fumes from diesel generators, unfair competition, litter and lines of
customers blocking access to their own storefronts.
Basinski says vendors do not compete with local businesses. The removal of vendors has
led to a loss of foot traffic that harms brick-and-mortar small businesses, he has written.
Andrew Rigie, executive director of the New York City Hospitality Alliance, which advocates
for the citys restaurants, bars and hotels, agrees. Most brick-and-mortar business owners
arent anti-vending, he said. Rigies organization wants a new permit program, though he
cant say how it would work. There are a lot of honest people who want to comply with the
law who might be eligible for a permit under a different system, he said. But until the various
stakeholders come to the table, its difficult to say what a new system would look like.
The City Council has spent more than a year looking for a compromise everyone can support,
or at least can tolerate, and is no closer to a solution.
Finally, theres the issue of bureaucratic appetite. Officially, city agencies are concerned. The
health department has taken significant steps to increase enforcement and reduce the illegal
transfer of mobile food vending permits, said a spokes-person for the Department of Health
and Mental Hygiene. This has increased compliance and reduced permits being illegally
transferred or sold.
In fact, fewer than 70 permits have been removed, suspended or placed on probation since
2014, and the health department failed to provide any proof of increased compliance. On the
street, there doesnt seem to be any slowdown in permits changing hands.
The Department of Investigation has been running occasional stings to tamp down the black

market, but appears to have little interest in making arrests. In 2014, for instance, the
department confirmed that permits were being sold on Craigslist and referred those findings
to the health department. The police are tasked with ticketing vendors.
The black market preys upon working-class immigrants, discourages entrepreneurship and
has done nothing to foster financial security. The vendors who started under Giuliani are now
well into middle age, and most have little to show for their decades of hard work.
What

else am I going to do, asked Steve, the 54-year old who has sold coffee and pastries
in midtown for 27 years. Whos going to hire me? Im not an electrician.
With a resigned grin loaded with gallows humor, he noted, Who knows what will happen? A
few weeks ago, I know one guy who dropped dead in his cart.
With that, he shrugged, snapped a plastic lid on my coffee and turned back to his line of
customers, $1.50 richer by my handbut still a long way from being able to retire.
A version of this article appears in the June 13, 2016, print issue of Crain's New York
Business as "License to grill".