If you live in the United States of America, Canada, and Australia and in Europe, you would have come by food trucks. That is trucks that sell stuff ranging from ice cream to fast foods.
As a matter of fact, U.S. and Canadian cities including Toronto, Montreal, Hamilton, Vancouver, Washington, D.C., New York, Austin, Houston, Los Angeles, San Francisco, Seattle, St. Louis, Calgary, Portland and Tampa, are key places where food truck business thrives the most.
Table of Content
- What is a Food Truck?
- Why Start a Food Truck Business?
- 1. Understand the Industry
- Interesting Statistics About the Food Truck Industry
- 2. Conduct Market Research and Feasibility Studies
- 3. Decide What Niche to Concentrate On
- The Level of Competition in the Food Truck Industry
- 4. Know the Major Competitors in the Industry
- 5. Decide Whether to Buy a Franchise or Start from Scratch
- 6. Know the Possible Threats and Challenges You Will Face
- 7. Write a Business Plan
- 8. Choose a Suitable Location for your Business
- Possible Places You Can Park your Food Truck
- 9. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
- 10. Get the Necessary Professional Certification
- 11. Get the Necessary Legal Documents You Need to Operate
- 12. Calculate How Much It Will Cost You to Start a Food Truck
- 13. Hire Employees for your Technical and Manpower Needs
- The Production Process Involved in a Food Truck Business
- 14. Use These Tips to Run your Food Truck Successfully
What is a Food Truck?
Simply put, a food truck is a large truck or means of transportation that is equipped to cook and to sell food and also to sell ice cream and snacks. It is common to see food trucks engage in the sale of French fries, sandwiches, hamburgers, and fast food et al.
In recent years, food trucks are known to sell gourmet cuisine and a variety of specialties and ethnic menus. Little wonder food trucks, and other portable food kiosks and food carts, are on the front line of the street food industry and they serves an estimated 2.5 billion people daily.
Why Start a Food Truck Business?
Food trucks are no longer limited to the sale of ice creams, hot dogs, snow cones and tacos; they now sell any type of food as long as there is a market for such food. There’s a whole lot of food truck menu ideas like sushi rolls for someone willing to dive in and carve a niche.
Food truck business is designed to service areas where it might be difficult to quickly construct the conventional restaurant; areas such as carnival sites, construction sites, sporting event centers, camp grounds, and beach et al.
Food truck also takes advantage of places like campuses, office complexes, military bases, mechanical village, industrial parks, farmer’s markets, cinemas, and religious centers to sell their foods, snacks and drinks. They know that they are likely going to get enough customers that will patronize their services.
As the industry grows, food truck owners are becoming more creative on how they run their business. It is now normal for food trucks to be found at wedding receptions and special events. With the partnership of event managers, food trucks can be hired to service special events, such as wedding parties, crusades, community events, school events, birthday parties, picnics, retirement parties, and any other event as deemed fit by the event manager.
Starting a Food Truck Business With NO Money – A Complete Guide
1. Understand the Industry
For the last seven years; from 2008 to 2015 to be exact, the truck food industry has experienced consistent growth. Despite the fact that the food truck business may not be new in the food service and restaurant industry, it is a known fact that the food truck industry is still growing in leaps and in bounds and there is still more rooms for growth within the industry.
Notwithstanding the introduction of some unfavorable laws and regulations by many cities across the United States and Canada, food truck business is still flourishing trade.
Interesting Statistics About the Food Truck Industry
The annual food truck revenue in the united states is about ,200,000,000 and the Industry revenue increase by 12.4% over the past five years. The total number of food trucks in U.S. is put at 4,130. Food truck Industry revenue increased over the past five years at the rate of 12.4 %.
The average revenue generated per food truck in the United States is about $290,556 and the average spending per order at a food truck is $12.40. The average amount required to own a food truck is about $85,000.
In the United States, Canada, Australia and even Europe, the percent of sales generated by food trucks based on market segments are; Street locations or street corners accounts for 55%, construction work sites and industrial sites accounts for 15%, shopping malls accounts for 12% and other locations, venues and event centers accounts for 18%.
2. Conduct Market Research and Feasibility Studies
- Demographics and Psychographics
Although food truck business is a business concept that is designed for everybody – especially the average person on the street or on a construction site, but statistics has it that the biggest buyers of foods from food trucks are young adults and parents with children at home.
As a matter of fact, people that falls within the age range of 25 to 34 are the largest consumers of snacks and fast foods from food trucks. They spend an average of $44 per month.
3. Decide What Niche to Concentrate On
When it comes to starting a food truck, there are many niches or product lines you can choose from. This will form the basis of your niche. Here are a few examples of business ideas in the food truck industry.
- Hot dog cart
- Hot dog stand
- Mobile catering
- Gourmet Cuisine Truck
- Freshly Prepared Sushi Rolls and Organic Food Vans
- Veg Food Truck
- Fast Food cart
- Street food
- Ice cream van
- Sausage wagon
- Snacks and Drinks
The Level of Competition in the Food Truck Industry
The competition level in the industry is becoming stiffer; the more the competitors, the stiffer the competition. Despite the fact that there are strong performance in the industry, high competition rate and unfavorable regulatory conditions in some cities have negatively impacted the growth in the industry; it has limited the growth of mobile food vendors.
Aside from the fact that food trucks compete with themselves, they are also compete with regular bricks and mortars restaurants and fast food joints; which is why food trucks are required to park 200 feet away from any restaurant restricting the positions they are to station their food truck.
No doubt, the fact that the competition has stiffened, does not hamper the performance of some food truck businesses. Most of them know how to recreate and restrategize to reach out or attract more customers. Creativity and many food and drinks options is key to surviving the competition in the food truck industry.
4. Know the Major Competitors in the Industry
- Don Chow Tacos food truck
- A Kogi Korean BBQ food truck
- Big Gay Ice Cream Truck – New York City
- Chef Jeremiah – Miami, Florida
- Chi’Lantro BBQ – Texas (Austin, Fort Hood, Houston)
- Clover Food Lab – Boston, Massachusetts
- Coolhaus – Southern California, New York City, Austin, and Dallas
- Template: Jersey Dogs – Los Angeles and Ventura county California
- Don Chow Tacos – Los Angeles, California
- Grease Trucks – Rutgers University in New Brunswick, New Jersey.
- The Halal Guys – New York City
- Honeysuckle Gelato – Atlanta, Georgia
- Kelvin Natural Slush Co. – New York, New York
- KIND Movement – tours the United States
- Kogi Korean BBQ – Los Angeles, California
- Korilla BBQ – New York City
- Maximus/Minimus – Seattle, Washington
- Pincho Man – Miami, Florida
- Taco Bus – Tampa, Florida
- The Grilled Cheese Truck – Southwest United States
The few brands listed above can help give you an idea on what to name your food truck business.
Food truck business is subject to the same range of economic concerns as other food related businesses such as restaurants and fast food eateries et al. For example, despite the fact that food trucks are mobile restaurants, they generally require a fixed address to accept delivery of supplies like normal restaurants.
In some cases or cities, they are required to prepare their food in a commercial kitchen that can be inspected and not on the truck. These factors contributes to increase in the cost of starting a food truck business and operating it.
In addition, there are a number of permits that is required to run a food truck business, and of course there are also public health codes to observe. Other cost that should be considered during planning and budgeting are overhead cost; labor cost, supply of raw ingredients and foods, and fuel and maintenance costs.
It is important to try as much as possible to cut down on overhead costs when making plans to start a food truck business and also to operate in cities where you can be allowed to cook and prepare your food inside your truck. Well for now it is only in Chicago that food trucks aren’t allowed to cook their food inside their truck.
5. Decide Whether to Buy a Franchise or Start from Scratch
Good enough food truck business is one of those businesses that sells franchise. Any entrepreneur, who is considering starting a food truck business, has the option of either starting from the scratch or buying an existing franchise.
There are loads of factors that should be considered before choosing the option to follow. Some of the factors to consider are the cost of starting from the scratch or buying a franchise, your financial capacity, your vision, and your business skills and experience.
If your intention of starting a food truck business is to grow beyond one city, if you want to have presence in key cities in the United States and Canada, then starting your food truck business from the scratch is your best option.
But, if you just want to start a business with the aim of just making profits and you don’t have the required finance and experience to build a business from the scratch, then it will pay you to buy the franchise of a successful food truck business.
6. Know the Possible Threats and Challenges You Will Face
If you decide to start your own food truck business in the United States, Canada, and Australia or in Europe, you are sure going to face some challenges and threats that is peculiar to food truck business. Some of the challenges that you are going to confront is finding your way around government regulations.
There are several laws out there that you are expected to follow if you want to run your own food truck business; some of the laws are unique to each states in the U.S. For example; if you want to start your food truck business in Chicago, then you must be ready to also secure a commercial kitchen.
Food trucks are not allowed to cook their food inside their truck, they are expected to cook and package the food in a commercial kitchen. Another challenge is the fact that food trucks are not allowed to operate or park less than 200 yards from a regular canteen.
The threat that food truck business is likely to face might just be economic downturn; usually economic downturn affect the purchasing power of the average man or women of the street. Of course the arrival of another food truck in same location where you usually operate will pose a threat to your sales. Other challenges to expect are:
- unfavorable government policies (fiscal and economic policies)
- Finding a good place to site your truck
- Maintaining high quality
- Lack of startup or operating capital
7. Write a Business Plan
If you want to start your own food truck business, you are required to write a detailed business plan that can pass reality test when subjected to it. The whole idea of writing a business plan for your food truck is not just for the sake of having a business document in place; but a detailed guide on how to effectively run your business. Your business plan should outline and cover strategies on how you intend to manage your food truck business.
The rule of thumb in writing a business plan is to try as much as possible to be realistic and never to over project when putting figures on income and profits et al. As a matter of fact, it is safer to underestimate when writing a business plan so that you won’t be so disappointed when reality sets in. These are the key areas that should be covered in your business plan;
Executive summary and Company’s descriptions; here, you are expected to write about the concept of your business, descriptions of your company, your company’s vision statement, mission statement and where your company will be located.
Other key components that should not be missing in your food truck business plan are product offering, SWOT analysis, competitive analysis, food truck marketing and sales analysis / strategies, pricing, costing and financial projection, publicity and advertising strategy, budget and start – up capital generation et al.
8. Choose a Suitable Location for your Business
Indeed a lot of street food lovers line up at food trucks across the United States searching for local, fresh and unique menu offerings. Even though food trucks and food carts aren’t new to America, they are exploding in popularity. We believe that a lot of food trucks connect with their customers via Twitter.
Researchers used Twitter to determine that more than 4,000 food trucks are operating in US cities. The difference between restaurants and these food trucks boil down to one thing – LOCATION. Some industry experts believe that in this business, location is even more important than your menu.
Food truck business thrives in heavily concentrated vicinities in urban areas-particularly in the central parts of large cities. If you are considering starting your food truck business in the U.S., then you should look towards operating in cities such as L.A, Portland, New York, Austin and San Francisco. From recent survey, it was observed that food truck business thrives in those cities mentioned.
The idea of starting a food truck business is to sell food and drinks on a mobile truck in areas where people find it difficult to access a restaurant, areas such as carnival sites, construction sites, sporting event centers, camp grounds, and beach et al.
Food truck also takes advantage of places like campuses, office complexes, military bases, mechanical village, industrial parks, farmer’s markets, cinemas, and religious centers. This should guide you in choosing a location for your food truck business. However, you will still have to find a place to park your food truck when you get to these locations.
You need to understand that there is a lot more to your food truck business success than just parking somewhere and hoping people will show up. It is your duty to observe the best place to park your truck. You might even consider getting food truck contracts for weddings and events. But before you park at any place, you must take these factors into consideration;
- Is there a permit required to park your truck there?
- Do you need permission from a business owner?
- What is the cost to park your truck? Can you sell enough to make the fee worth it?
- Are there laws preventing you from parking?
- Is the space large enough for your truck and your customers?
- Is there enough foot traffic (people) to make the location viable?
- Are there other restaurants or food trucks in the area?
- What hours will you need to park to access the most customers? Are those acceptable to you?
Possible Places You Can Park your Food Truck
- Street Parking
We believe that street parking is the logical choice for your truck, but not always the easiest to find. It is also hard to decide on your target customer. But if you can study the demographics and psychographics of your customers, you can find a venue they frequent.
For instance, if you hope to focus on lunchtime diners, you will have better luck on a street near a bustling business district. But if your decision is to specialize in cold, sweet treats, try side-street parking near a park full of hot, hungry youngsters. Target your audience and you will have a successful food truck operation.
- Food Truck Parks
A lot of entrepreneurs believe it is a bad idea to sell next to your competitor, but this isn’t always so. We believe that the food truck revolution has exploded, and a lot of owners have decided that working together is good for all. We suggest you create and maintain a professional relationship with competitor food trucks so you’ll get invited to “their” food truck park.
Note that food truck owners meeting in a single location on a consistent day and at a consistent time will surely attract much faces than a single food truck. Have it in mind that in a food truck park, diners have more choices, so it’s easy for a family to find menu items to satisfy different tastes.
Successful food truck owners often find their sales increase when their chosen location is a food truck park because diners want to sample a bit of everything. We also suggest you sign up for events that include trucks from non-competing menu categories. For example, if you sell ice cream, you’ll get a great profit parked next to a burger truck, bistro truck or a beverage cart.
- Business Districts or Large Office Buildings
First and foremost, you need to find out if the city allows it. If they do, then you can park near major offices and business locations where the 9-5 workers can easily reach you during their lunch breaks. We also believe that your city’s downtown area is a great place too.
Successful food trucks incorporate marketing into their location choices. Also, try to contact businesses in large office buildings, seeking permission to park in their lot and provide food to their employees. You can also drop off flyers showing when you’ll be at their location and what you’ll be serving. Be flexible enough to entertain employees with your offerings. The businesses might let you park outside their offices every day or once a week.
- Farmers Markets
We believe strongly that a Farmers Market location works better for some menus than others. For instance, a lot of successful trucks parking at Farmers Markets offer locally-sourced foods such as home grown meat and picked-that-day produce. We suggest you test the market as this location can supply a recurring and ample supply of foot traffic.
- Bars and Nightclubs
We all know that people get hungry after a late night out in town. A lot of people will be starving, and they are always willing to pay for delicious food. We suggest you target your city’s entertainment district or your local, popular night spots.
You can start by introducing yourself to the bar/nightclub owner, always come to his establishment and nurture your relationship to make sure he allows you on his property to earn these night time profits. Also of you don’t mind working late at night, you’ll find you only need to stay open for a few hours. We also suggest you ensure to park your truck close enough to entice patrons with the delicious smells from your offerings.
- Festivals, Events or Sports Venues
From studies, we’ve been able to note that mobile vendors have a history of success when selling food at festivals, state fairs or large events. At these places, you will find a ready-made audience with money to spend on food and drinks. If you can’t afford to rent the space, you’ll still catch a lot of traffic entering and leaving the event if you park on a street leading into the event venue.
- Gas Stations
In your city, you will surely find a busy gas station/convenience store during lunchtime hours as people will be purchasing drinks, hot dogs and sandwiches with their fuel. Note that if there was a better option just outside the door, a lot of those customers would appreciate the convenience and surely better menu from your food truck.
Have it in mind that if you park at a gas station near a highway or interstate, you’ll serve hungry travellers too. But before you park at a gas station, we advise you seek approval from the business owner. This is because your truck will draw more business to his gas station, but you need to make sure he is okay with everything.
- College Campuses
This location can sometimes be overlooked by entrepreneurs in this line of business. Note that very successful trucks know that college students look for different, unique and quick dining experiences. But don’t forget you will need a permit to park on a campus, so you have to ensure you get it first. Consider setting up during lunch and dinner hours or at football and basketball games.
9. Choose the Most Suitable Legal Entity (LLC, C Corp, S Corp)
The best legal entity to use for this business is to register the business as a Limited Liability Company. You should also consider discussing with your attorney to advise you on the most suitable legal entity to use for your food truck business. This is important because the laws that regulates the food truck industry varies from state to state and even from cities to cities in the U.S. and in Canada.
10. Get the Necessary Professional Certification
Before you can be permitted to operate a food truck business; be it in the United States of America or in other parts of the world (developed world most especially), you are expected to apply and obtain certain food certification or permits as the case may be.
You are supposed to get clean health certificate after passing inspection, you are expected to have undergone catering training as well as obtain food handler certificate. You can also check up with your state or city to know if you will require a professional certification before you can be licensed to run your own food truck business.
11. Get the Necessary Legal Documents You Need to Operate
The requirements for food truck business vary widely from country to country, states to states and from cities to cities.
For instance, in Toronto, Canada, some of the requirements for food truck business include business and liability insurance, a Commercial Vehicle Operator’s Registration for the truck, permits for each municipality being operated in (downtown, various suburbs), a food handler certificate, appropriate driver’s licenses for drivers, assistant’s licenses for assistants, and a health inspection. Proof of ownership, proper identification and vehicle license et al.
In Chicago, entrepreneurs in this business are required to carry GPS devices that record their whereabouts every five minutes, on pain of heavy fines. We believe that such restrictions have stifled the industry’s growth. Even though it can boost of having more than 7,000 restaurants and 144 craft breweries, Chicago has just 70 licensed food trucks. This city may be the least food-truck-friendly place in America but New York and Boston are little better.
In New York, they must obtain a two-year government permit, which requires sitting through a 15-year waiting list or shelling out as much as $25,000 to rent one on the black market. But fortunately, truck owners can drive to more welcoming cities, such as Minneapolis and Philadelphia.
Immediately they get there and no matter how cozy they get with policymakers, truck owners still want to cultivate their underdog image. These are some of the basic legal requirements needed before you can successfully start and run your own food truck business;
- Food truck business and liability insurance
- 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
- Proof of ownership, proper identification and vehicle license
- Proof of district-issued food manager identification card
- Food purchase record storage and record keeping
- Depot, commissary or service support facility meets vending unit operation needs
- Copy of license for the service support facility and/or a recent inspection report
- Tax Payer’s ID
- Fire certificate
- Kitchen insurance
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Employment Agreement (offer letters)
- Employee’s Handbook
- Operating Agreement for LLCs
12. Calculate How Much It Will Cost You to Start a Food Truck
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).
Before deciding on how much to invest in your food truck, it is imperative you find out how much food truck owners make monthly and annually. Then you can proceed to work on raising the needed capital to start your food truck.
13. Hire Employees for your Technical and Manpower Needs
Starting a food truck business means that you will have to acquire a truck that is suitable for the nature if the business; a truck that has the required facility. In other words, the key equipment that you need to start your food truck business is a standard truck that has a kitchen, cooling facility and space for storage and dispensing food.
Now to the big questions: What would suit your need, a food truck, food cart or food trailer? Are you going to buy a food truck or rent one? If you are buying, will you buy a new food truck or a used one? Your answer to the questions above will be determined by the amount of startup capital you have.
You can acquire a new food truck if you have the financial capacity. If you intend cutting down your start – up cost, then you should consider purchasing a fairly used food trucks; it will still serve the same purpose. Purchasing a food truck is the major expenditure you will make, so you may consider seeking financing when buying a food truck.
You are also expected to purchase pots, pans and other cooking utensils. You are expected to micro wave ovens, fridge or freezers et al. When it comes to hiring workers, it is important to note that most food truck business owners try as much as possible to cut down on the numbers of employees they can hire per time.
Basically food truck businesses hire Manager, Cook, Cashier, Truck Driver and Assistant Truck Driver. Everybody on board the food truck is expected to handle additional job description. For example; the assistant truck driver can be assigned to assist in packaging foods, moving stuffs, washing and cleaning dishes et al.
On the average, a food truck business is expected to employ about 5 full – time staff per time. Except larger food truck companies that has fleets of food trucks and also run their own commercial kitchen.
The Production Process Involved in a Food Truck Business
There are several processes involved in different business. Just like it is with others, so it is with the food trucking business. Food truck business is all about making foods, snacks and drinks available to people in areas where they may find it difficult accessing restaurants.
In essence food trucks are mobile canteen the normal production process for food trucks is similar to that of bricks and mortals restaurants. The productions process is as follows; List of foods and drinks to be sold on the truck are listed, the raw materials are bought and different food and snacks are prepared and packaged.
The foods and drinks are loaded in the truck (especially when they are prepared in a commercial kitchen and not on the truck) and then sold to customers. After the day’s job, the truck is cleaned, plates, pots and pans are washed and cleaned and positioned for the next day’s business. Accounts are balanced and lodged in the bank. The process continues the following day. In summary, the process to follow are:
- Preparing and serving food from a mobile truck
- Preparing and serving beverages from a mobile truck
- Preparing and serving dessert from a mobile truck
- Serving prepackaged food and beverages from a mobile truck
14. Use These Tips to Run your Food Truck Successfully
The day to day running of a food truck business is slightly different from the day to day running of the conventional bricks and mortars restaurants. Running a food truck business involves itemizing the menus and drinks you want to sell for the day, purchase raw food and food ingredients, prepare the foods, package the foods and snacks, load your truck and then drive to the location where you intend selling your foods and drinks.
After the day’s sales, the books will be balanced, the truck will be cleaned, plates, pots, and pans get washed and kept safely and lastly the truck will be packed appropriately. To reduce your cost of operation in the long run, you can make your food truck eco-friendly.
- In Conclusion
The food truck business is a fantastic trade to delve into, provided you and your team have what it takes to whip up great meals; much more than the zeal and enthusiasm to start and run a successful food truck business.
There should also be a place for acquiring the skill; the skill of knowing how and what meals to whip up is a major determiner, as far as this business is concerned. This is because it takes one who knows what obtains in the trade to run it successfully build it to an enviable state.
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