Why it would be good to start a food truck business
If you don’t know it already, food trucks are changing the dining scene and how Entrepreneurs want to run their food business. Maybe you are someone who is motivated to start their own business, and you love being an entrepreneur? Do you also love food and have experience in the food industry? Well, maybe your calling is starting a food truck business. It would help if you kept in mind that many food truck costs are involved when starting a food truck business.
Also, keep in mind that you want to make sure that you decide to run a food truck business, keep your food truck clean, and maintain proper hygiene. It’s as simple as having napkins handy for customers as well as hand sanitizer.
Running a food truck business can be very rewarding, and it comes with many benefits. But there are some things to keep in mind, for example, a food truck license cost, the cost to operate a food truck, a food truck permit cost, and opening a food truck. You need to make sure you can cover all these costs because these are all important in getting your food truck business up and running.
It would be great to start a food truck business as it is an industry that is booming in the US. In fact, starting a food truck business can be better than opening a regular restaurant, and this is why:
1- The initial investment cost is low.
Looking at a food truck, it is identified as a high-profit food business phenomenon. Why, you may ask? Well, it includes much lower financing when compared to a typical commercial restaurant. This, by itself, brings a competitive spark and asset with running a food truck business versus a regular restaurant.
This is because the money you save with starting your business can be utilized for other matters such as marketing and even engineering your menu. When it comes to a food truck, the main food truck costs consist of purchasing your truck, which you actually don’t have to rent a food truck. It all depends on what is more convenient for you.
2- The low operating cost is low.
Owning a restaurant requires you to invest in expensive utilities and hire various staff consisting of cooks, possibly cashiers, servers, hostesses, kitchen managers, cleaners, etc.
And to add to it, if you are the owner of your real estate, you have to pay property tax or monthly rentals depending if the owner is on rent. Compared to a food truck, you are actually saving money. The food truck costs are monthly and only consist of food, supplies, and also gas. Having a food truck means the fewer staff that you have to hire, and even better, your taxes will be significantly less. You will be content at the end of the day if your food truck costs are cheaper than operating costs.
3- Food trucks pull in more consumers.
At the end of the day, a food truck business may not be as fancy as a dine-in restaurant, but the reality is that the price of food is lower, and that inevitably attracts customers. Also, food trucks are actually a safer and healthier option compared to street food. Food coming from street vendors is not considered the safest in terms of health and hygiene.
With continuous people being mindful and aware of their health, people have been switching to other options, including food trucks. Also, with covid-19 still being an issue worldwide, food trucks mean less interaction with people. You don’t have to worry about sitting close to people or having to sit far away as long as you wear a mask and the people making food and taking your order, and when you order your food and leave. It is as simple as that.
4- Food trucks have a bonus of moving to different locations.
When it comes to running a food truck business, the bonus is that you can move to different locations. Moving to different locations means more and different customers, and you also get your name and brand out there better. As well, you can experiment with location, and you can choose where you want to have your food truck.
Certain locations may do better than others, so it is important to choose wisely. But keep in mind that you have to have permission to park your truck wherever you decide and make sure your permit is good and follows protocol.
If your business model is thriving at a new spot and it follows all the right rules and regulations, then you’ve hit the jackpot. In fact, regular restaurants actually fail within the first year of opening due to poor location. So with food truck businesses, they don’t have to worry so much about that happening as they have the capability and advantage to move.
5- With a food truck, you can expand and improve your brand.
When looking at food trucks and their dynamics, they are very distinct from a sit-down restaurant. Figuring out the prime location, testing out new recipes, and changing plans and menus can be so much easier when running a food truck business. After all, sit-down restaurants are identified as a fixed nature, meaning it can be hard and pricey to modify one’s presence and brand as well as an image if necessary.
Evidently, food truck costs are much cheaper when compared to restaurants. The luxury of a food truck permits you to have more jurisdiction as well as flexibility. Outwardly, this is the best route for amateur entrepreneurs because they can research and investigate their business model before diving into commencing a sit-down restaurant that comes with high investments and, let’s not forget, risks.
How much does a food truck cost?
The upfront cost to start a food truck business is not exactly cheap. Food truck costs consist of different elements. The average cost to start a food truck ranges from $40,000 to $100,000. But you could have the chance to earn about $250,000 with your business if you succeed. Regarding earning revenue by having a food truck, the industry has continued to see its revenue increase over the last few years.
For example, in 2017, the food truck industry maintained revenue of $2.7 billion. Evidently, this was a 400 % increase over the last five years. In fact, food trucks are growing at a much faster rate compared to commercial restaurants. When it comes to getting a food truck, you have some options. You can either purchase a food truck, or you can rent one.
If you decide to rent a food truck, it costs about $2000-$3000 a month to rent. Seemingly, the most costly part about a food truck is paying for the permit. It may vary where you are located, but for example, in California, a permit costs about $50,000. An important aspect that you want to do to maximize your profits while reducing waste is negotiating your inventory effectively.
Breakdown of food truck costs
|Cost of truck||$50,000||$125,000||Much lower compared to a sit-down restaurant|
|Small wares etc.||$1,200||$1,600||Similar to a sit-down restaurant|
|License fees etc.||$1,500||$1,500||Slightly higher than a sit-down restaurant|
|Insurance prepay||$2,500||$2,500||Higher than a sit-down restaurant|
|Fuel||$250||$250||Higher than a sit-down restaurant|
|Training||$800||$800||Similar to a sit-down restaurant|
|Rent prepay||$7,500||$7,500||Lower than a sit-down restaurant|
|Other||$7500||$25,000||Legal fees, logo work, etc.|
|Total||$71,250||$168,550||Much lower than a sit-down restaurant.|
Statistics on the food truck industry in the USA
- The market size, calculated by the income of the Food Truck sector, is $1.2bn in 2020 (IBISWorld)
- The market size of the Food Truck sector is anticipated to drop -12.1% in 2020 (IBISWorld).
- The market size of the Food Truck sector in the US has increased by 7.5% per year on average between 2015 and 2020. (IBISWorld).
- In 2020 there have been 23,873 active food truck businesses in the US (IBISWorld)
- The mobile food truck industry collects $2B+ in income per year in the United States (Food Truck Nation).
- The expansion of the food truck sector is doing better than the whole commercial restaurant sector, at 5.4% vs. 4.3% (Food Truck Operator).
How to increase your food truck revenue
Manifest a powerful concept
Not only will a powerful concept spark more awareness of your food truck business, but it will also boost word of mouth regarding your business. This has a large influence on the number of sales you earn. For example, let’s say 1,000 customers talk about your business; this has the power to manifest 500,000 conversations, possibly.
This is why you need to make it a habit of ensuring your customers are spreading the news about your business. Evidently, this is a great way to assist you in generating more income. Your food truck should also have an innovative design and a clever name that speaks to your brand. Lastly, you must have a strong social media presence online to market yourself and get your name out there.
Stand out from the crowd.
This applies to any business you are starting, whether it is a clothing brand or a social enterprise; you want to have a unique brand different from your competition. You want to outweigh your competition and analyze what they are doing better than you can improve on. As well, make sure you have a unique logo or style of doing certain things.
For example, maybe you want to consider offering mobile ordering and payment for your customers. Considering times with COVID-19 now, many businesses are preferring customers to pay with debit or credit.
So having the upper hand of offering online ordering and payment is something to think about. Besides, looking at the younger demographic, individuals prefer to order and pay online as people don’t always have cash handy on them. The younger generation is used to the online world.
Change up your menu seasonally.
Even if you have food that stands out from the crowd and is unique from other food trucks, it is a good idea to change up your menu. Besides, doing it seasonally. Making changes to the menu according to the season is a good idea as it shows you fit in with the season and times. Maybe you want to add some holiday items for Christmas time. This is something that can drive your sales, and that would get people talking.
Besides, changing your menu is good because you can take out food menu items that haven’t been doing so well and add something you believe people will enjoy. Or maybe you took something off the menu that people really liked, and you want to bring it back. This shows your flexibility and versatility as an entrepreneur. Also, it shows that you are accommodating to your customers and care about their needs and opinions. After all, you want to cater to their likes and dislikes as they are the ones spending money and eating the food.
Business costs spreadsheet
When starting your food truck business, you want to be organized. Keep in mind you will be dealing with many finances, and you have to keep track of them. It is a good idea to have a business cost spreadsheet, which you can easily do on excel or google sheets. Also, you can download a menu and recipe cost template online. Best of all, you can access these spreadsheets online for free. Youtube is also a great source as they have videos that show you how to use excel for calculating recipe costs and inventory. You can check out an informative and detailed Youtube video by David Buchanan.