Do you want to start a food truck business and want to know the cost breakdown? If YES, here are 15 factors that determine how much it cost to open a food truck.
It is important to point out that there are several factors that will determine the actual cost of launching this type of business. The truth is that some of the factors may not apply to you, because the business model and the kind of business a person wants to build would also affect the overall cost of the business.
These factors are unique to each individual and this article may not cover such. Having said that, here are some of the factors that will influence the cost of opening a food truck business in the United States of America;
Estimated Cost Breakdown for Starting a Food Truck Business
These are the key expenses you are expected to make when starting a medium scale but standard food truck company business in the United States of America;
- The total fee for registering the business in the United States of America – $750.
- Legal expenses for obtaining licenses and permits (Health department license and business license) and permits (Fire department permit, Commercial kitchen permit, Commercial Vehicle Operator’s Registration for the truck, Permits for each municipality being operated in (downtown, various suburbs), Food handler certificate, Appropriate driver’s licenses for drivers, Assistant’s licenses for assistants, Health inspection Certificate, Air and water pollution control permit, and Sign permit et al) as well as accounting services (CRM software, Payroll software, P.O.S machines and other software) – $15,300.
- Marketing promotion expenses for the grand opening of the food truck company in the amount of $3,500 and as well as flyer printing (2,000 flyers at $0.04 per copy) for the total amount of $3,580.
- The cost for hiring business consultant (including writing business plan) – $2,500.
- The cost for insurance (general insurance, health insurance, liability insurance, kitchen Insurance, workers’ compensation, overhead expense, disability insurance, business owner’s policy group insurance, and Motor Vehicle Insurance (Comprehensive) coverage at a total premium – $10,400.
- The cost for the purchase of food trucks – $60,000
- The cost for leasing a standard kitchen facility with government approval- $50,000
- The cost for remodeling the facility – $10,000.
- Other start-up expenses including stationery ($500) and phone and utility (gas, sewer, water and electric) deposits ($6,500).
- The operational cost for the first 3 months (salaries of employees, payments of bills et al) – $60,000
- The cost for start-up inventory (Gas Cookers, Cooking gas, Pots, Pans, and other cooking utensils, food ingredient, food serving wares and food packaging materials et al) – $15,000
- The cost for storage hardware (bins, rack, shelves, food case, food warmer) – $3,720
- The cost for counter area equipment (counter top, sink, ice machine, etc.) – $9,500
- The cost for store equipment (cash register, security, ventilation, signage) – $13,750
- The cost for the purchase of furniture and gadgets (Micro wave oven, Telephone, printing machines, computers, tables and chairs et al): $14,000.
- The cost for building and hosting a website: $600
- The cost for opening party: $8,000
- Uniforms for employees – $500
- Miscellaneous: $10,000
You will need an estimate of three hundred and fifty thousand dollars ($350,000) to successfully set up a medium scale but standard food truck company in the United States of America. Please note that this amount includes the salaries of all the staff for the first 3 months of operation and a business with more than one food truck operating in different locations within same city.
Starting a small–scale but standard food truck company with just one food truck and minimal overhead in the United States of America will cost about one hundred thousand dollars to two hundred thousand dollars ($100,000 to $200,000).
When it comes to starting a standard and large scale food truck company with several food trucks operating in key cities in the United States of America, a food truck company with the intention of selling franchise, then you should look towards budgeting well over one million, five hundred thousand dollars ($1.5 million).
Factors That Determine the Cost of Opening a Food Truck Business
1. The Type of Food Truck
A major factor that will determine the overall cost of opening a food truck business in the United States of America is the type of food truck in question. A food truck is a large motorized vehicle, such as a van or trailer, equipped to cook, prepare, serve, and/or sell food.
Some, including ice cream trucks, sell frozen or prepackaged food; others have on-board kitchens and prepare food from scratch, or they heat up food that was prepared in a commercial kitchen. Sandwiches, hamburgers, French fries, and other regional fast food fare is common. Some food trucks may also sell cold beverages such as soda pop and water.
Food trucks, along with portable food booths and food carts, are on the front line of the street food industry that serves an estimated 2.5 billion people every day. As expected, these different types of food trucks come with different cost implications which ultimately will determine the overall cost of opening a food truck business.
2. The Choice of Location of Your Kitchen
In the United States, food trucks are subject to the same range of concerns as other food service businesses. They generally require a fixed address to accept delivery of supplies. Also, a commercial kitchen may be needed for food preparation.
This means that aside from the fact that you will be purchasing and equipping your food truck, you are also required to spend a bulk of your startup capital in renting and equipping a kitchen facility where you are supposed to prepare the food you will sell from your food truck.
The choice of location of the kitchen will determine the cost you are expected to pay for rent. If you decide to rent a kitchen facility in a city center, as against the outskirts of town, then you must be ready to pay more.
3. The Required Licenses and Permits
In the United States of America, you cannot open a food truck business without first applying for the mandatory licenses and permits.
You would need food and drinks handler certificate, commercial vehicle operator’s registration, permits for each municipality being operated in (downtown, various suburbs), and kitchen permits and appropriate driver’s licenses for drivers (commercial driver’s license), assistant’s licenses for assistants, and a health inspection amongst others.
These license and permits cost money and it will influence the overall cost of opening a food truck business in the United States of America.
Please note that there may be several inspections you must pass before you can be issued your licenses and permits and this will cost you money. In order to get the overall cost of licensing and permits, we will advise that you reach out to your city government. You also need to consider state and federal requirements.
4. The Size of Food Truck
The type of food truck you want to use for your business is also a major factor that will determine the overall cost of opening a food truck business. Typically ranging in size from 14 feet to 34 feet, food trucks have room for the operators to cook and serve on the vehicle itself.
Though you may still be required to prepare and store your food at a commissary, food trucks offer many aspiring street food vendors the perfect way to serve their tastiest creations.
If you choose to buy a 14 feet food truck without a kitchen, you are going to be spending less when compared to someone who decides to buy a 34 feet food truck with an in-built kitchen. This indeed will greatly influence the overall cost of opening your food truck business.
5. The Menu and Service Offerings
Another key factor that will determine the cost of opening and operating a food truck business in the United States of America is the menu and service offerings of the food truck. The fact that there are different types of food trucks means that these food trucks are designed to serve different menu.
You will agree that a food truck that sells BBQ food such as beef, chicken, turkey, bacon, pork, fish, et al will be more expensive to open than a food truck that sells gourmet popcorn.
6. Hours of Operation of the Food Truck
In business, the longer your door is open, the higher the cost that you are going to incur especially as it relates to paying for utility expenditures, fueling of the truck and paying the workers. This is because in the United States, people are paid based on the number of hours they put at work.
For example, the cost of operating a food truck that operate 12 hours a day and 7 days a week will be far different from the cost of operating a food truck that only operates 8 hours a day and 6 days a week.
7. The Cost of Hiring and Paying a Business Consultant and Attorney
If you want to get your business started on the right foundation, it will be a wise decision to hire the services of a competent business consultant and perhaps an attorney. For example, a business consultant will help with drafting a workable food truck business plan, a marketing plan and strategy, comprehensive SWOT analysis, and other advisory services.
Also, an attorney will help you with registering the business, drafting contract documents and offering you all the legal expertise that will help you start the business on the right foundation. You will agree that these services will cost you money and it will indeed influence the overall cost of opening your food truck.
8. The Cost of Branding, Promotion and Marketing of the Food Truck
The cost of branding, promoting and marketing the food truck is yet another key factor that will determine the overall cost of opening a food truck business in the United States of America. If you need massive results as it relates to winning a fair share of the available market in your city, then you must be willing to pay for effective branding, promotion and marketing.
It is not cheap to hire an expert in branding, promotion and marketing that will help you compete with brands that are already determining the market direction of the food truck industry in your city. So, if you add the cost of paying a branding and marketing expert, it will sure increase the cost of opening your food truck business.
9. The Cost of Equipping the Food Truck
Another factor that will determine the cost of opening a food truck business is the cost of equipping the food truck and the kitchen. You will quite agree that aside from the basic things that are expected to be found in a food truck, an entrepreneur may decide to spend more than expected to equip the truck to look unique.
Before you can open a food truck business, you should buy gas cookers, deep fryers, fridge, deep freezer, microwave oven, storage hardware (bins, rack, shelves, food case), counter area equipment (counter top, sink, ice machine, etc.), furniture (table, stools and sofas), telephones, filing cabinets), store equipment (cash register, security, ventilation, signage), serving utensils (plates, spoons, foils, glasses, flatware) and backup power generating set amongst others.
All these will cost money and it will influence the overall cost of opening a food truck business in the United States of America.
10. The Cost for Insurance
The cost for paying for insurance policy cover is yet another important factor that will determine the overall cost of opening a food truck business in the United States of America.
In the United States and in most countries of the world, you can’t operate a business without having some of the basic insurance policy covers that are required by the industry you want to operate from. Thus, it is imperative to create a budget for insurance and perhaps consult an insurance broker to guide you in choosing the best and most appropriate insurance policies for your own food truck business.
11. The Cost for Registering the Business
The cost for registering the food truck business is yet another cost that will influence the overall cost of opening a food truck business in the United States of America. Although, the cost of registering a business is affordable, it will no doubt add to the overall cost of opening a food truck in the United States of America.
12. Sourcing Your Ingredients
Another major factor that will determine the cost of opening a food truck business in the United States of America is the source of your ingredients. The fact that there are different types of food trucks means that the ingredient they use in preparing their meals, drinks or snacks will be different.
For example, a food truck that serves purely organic food and also own their own organic farms will be cheaper to open than a food truck that also serves purely organic food but don’t own their own farm. Sourcing their ingredients will cost more hence increasing the budget of opening the business.
13. Cost of Recruiting and Training Your Staff
Labor and fuel costs are a significant part of the overhead for a food truck business. The fact that you are opening your food truck as a new business means that you are expected to recruit and train your staff to conform to the kind of food truck you want to operate.
The training will help you sell the corporate culture of your organization to your new employees. It will cost you money to hire trainers that will help you train your new hires and that will add to the overall cost of opening a food truck business.
When it comes to starting a standard food truck company business on a large scale, you would need the services of the following professionals;
- Manager (Owner)
- Human Resources and Administrative Manager
- Kitchen Supervisor
- Kitchen Assistant
- Truck Driver
- Assistant Truck Driver
14. The Cost for the Purchase and Customizing of Uniforms
Another factor that will determine the overall cost of opening a food truck in the United States is the cost for the purchase and customizing of uniforms. As expected, servers, chefs and drivers all have different uniforms and these uniforms will cost you money which is why it must be part of your budget if you are looking towards opening a food truck in the United States of America.
15. The Cost for Grand Opening of the Food Truck
It is a known fact that no food truck opens its door for business without first organizing opening party to officially launch the business. This means that the cost of the grand opening of a food truck is part of the factors that will determine the overall cost of opening the business in the United States of America.
You can choose to do a soft opening if you are operating on low budget or you can choose to go for grand opening party. The bottom line is that it is a cost that must be part of your budget.
Can a Food Truck Be Bootstrapped on a Lean Budget from Home?
Due to the nature in terms of size and cost of food trucks and equipment involved in starting and operating a food truck company, it is obvious that it cannot be bootstrapped on a lean budget from home. As a matter of fact, the business is meant for the public; you are expected to drive your food truck through routes with enough people to patronize your food and drinks.
On the other hand, if you want to start a similar business such as mobile ice cream/yogurt cart business, then you can successfully bootstrap the business on a lean budget right from your home.
How Much Does It Cost to Buy a Food Truck Franchise?
In the United States of America, the Average Cost of Purchasing a Food Truck Franchise is $15,000. Examples of 3 Well – Known Food Truck Franchising Companies in the United States of America are;
- Chick’n Cone – Franchising Company
- Don Chow Tacos food truck – Franchising Company
- Tasti truck delights
Financing your Food Truck Business
Raising startup capital is perhaps one of the major concerns for entrepreneurs; it can be challenging raising capital to launch a business idea. Your idea must be workable and promising for you to secure finance from financial institutions or from investors.
The first thing to put in place before sourcing for start – up capital for your business is to draft a detailed business plan. With a good business plan, you can easily convince investors to invest in your business. The truth is that no bank can give you a loan if you don’t have a good and workable business plan. There are several options when it comes to raising money to finance a start – up business. Some of the options are;
- Raising money from personal savings and sale of personal stocks
- Raising money from investors and business partners
- Applying for loan from bank
- applying for business grants and seed funding from donor organizations
- Sourcing for soft loans from family members and friends.