Food trucks seem to be all the craze these days. If you live in a city you have probably noticed yourself as food trucks serving huevos rancheros to cupcakes, are popping everywhere. The food truck industry saw an estimated annual growth rate of 8.4% from 2007 – 2012 according to IBISWorld, an industry research firm. Annual revenue is also expected to grow from $650 million to $2.7 Billion by 2017.
Food trucks have several competitive advantages over restaurants and other fast food establishments. One advantage being that they can relocate to where the demand is, i.e. an event, concert, etc. They provide a fast and convenient way for customers to order food on the go. Each truck offers its own style and menu usually using locally grown food in their meals. So now you’re thinking, “how do I start my own food truck business?” Below are some steps and information that will get you started.
Putting together a business plan:
Like any other business, the first step should be putting together a business plan. This means determining a route or locations, understanding your current competition, which not only includes other food trucks but restaurants as well and among other things, total costs. If you have no idea how to do this, then I suggest looking at this ebook that outlines how to write a business plan specifically for food trucks. You will most likely need a business plan if you are looking for a loan to start the business.
Get the proper license
Before you can actually open up shop, you will need to make sure you have all the required permits. Each city has its own rules regarding food trucks and venders. Be sure to contact your local government to make sure you are in compliance with local laws. Some cities may prohibit, food trucks in public areas, so you will have to find a privately owned parking lot or something instead. Although this may seem like the more unpleasant side of starting a business, it is arguably the most important. Without licenses and health codes, the food truck business probably wouldn’t be where it is today, since for years, they were seen as dirty, old grease buckets.
Figure out what you’ll serve
Designing the menu is probably the most exciting and fun part of the process. You should probably choose a niche that has little competition and that you feel passionate about. Don’t be afraid to be creative and try something new either. The food truck business thrives on innovation. In an Emergent Research report (by way of this excellent article on mobile-cuisine.com), 272 food truck customers were interviewed about their experience and over 80% used words like fun, exciting, new, different, unusual and unique, when asked why they dined at a food truck.
You’ll want to prepare and thoroughly test every meal. Make sure that each meal has the following four qualities:
- Easy to make repeatedly in large quantities.
- Tastes consistently good.
- Easy to serve.
- Travels well.
- The larger the menu the more space will probably be needed in the truck.
- What time of day are you going to serve?
- Are ingredients easy to get?
Next, you’ll need to figure out how you are going to buy the ingredients. You’ll have to estimate the potential volume and buy accordingly. Put together a detailed ingredient list before you go to the store or wholesaler.
Another important consideration is how much you are going to charge for each meal. You will want to see what your competition is charging to gauge what prices are appropriate for your meals.
Location, location, location
You should choose your location(s) wisely. This could make or break your business. You need to find areas where the competition is relatively low and the pedestrian traffic is high. This may require you to speak with various brick and mortar businesses that have an ideal parking lot with lots of traffic. I would expect that if you were to use someone else’s parking lot, that they would require some kind of fee in return though.
When choosing your location, you will also want to consider local events. This can be a major source of revenue for a lot of food trucks. Check your local newspaper and search the web. Most cities have their own food truck organization that you can join. For example, Charleston, SC has the Charleston Food Truck Federation that lists all the upcoming events and as well as all local food trucks.
Start up costs
Start up costs are never easy to calculate for any business, but plan on spending upwards of $25,000 for a truck, unless you know of one that you can rent. When looking for a truck, be sure to search the web by using Craiglist and ebay. According to an Entrepreneur.com article, you could estimate the following start up costs:
“…you could spend $60,000 on a retrofitted food truck, $1,000 on initial ingredients, $2,000 on permits and licenses, $2,000 for the first month of a commercial kitchen rental, $300 for the first month of parking and maintaining the truck, $1,700 on kitchen supplies, $3,000 on marketing and promotion, $2,000 on packaging, $1,000 to set up a small home office for bookkeeping, and $500 in miscellaneous costs for a grand total of just under $75,000.”