How to Start a Food Truck Business
If the idea of starting a food truck appeals to you but you're not sure what it entails, this article will help you demystify what's involved. Then you'll be able to make an informed decision to see if this is the business you wish to pursue.
The Rise of Food Trucks
You may have eaten from a food truck in your area or at an event and wondered if this was a business for you. The stylized vehicles are adapted to produce and serve meals on the streets and have become a business option for many considering investing in the food market without the outlay of opening a restaurant.
Food trucks are nothing new and have been a part of the American history from around 1860. It's thought that, in 1866 in Texas, a man by the name of Charles Goodnight adapted a military truck to take meals out to the men who were herding cattle. He had no way of knowing that he'd hit on an idea that 150 years later would change the way many people 'go out to eat.'
The Wide Range of Food Carts, Wagons, Trucks, and Trailers
Street food vendors range from small carts selling peanuts, popcorn, and hotdogs, to elaborate trailers which are taken to exhibitions and major outdoor events. In these, you may find luxury foods ranging from premium coffee to burgers made from emu or bison. It's difficult to imagine a public area which doesn't have food wagons or trucks serving some sort of refreshments.
At one time, a 'food truck' was seen as serving low-quality food that you bought only when there was no other option nearby. The food trucks of today have changed this preconception of food wagons completely as they are clean and serve excellent products at a fair price.
2008: Restaurants Closed and Food Trucks Opened
There was a sudden upturn in the number and quality of food being provided after the economic problems which started in 2008. The economic downturn saw restaurants closing their doors as everyone was feeling the financial pinch. Many of the people who had restaurants at that time saw the sense in getting a food truck. They were able to still prepare and serve their quality food to a receptive audience but without the unnecessary overheads such as rent and multiple staff. They simply scaled down their existing business to fit within the confines of a vehicle.
The market took to the idea well, and soon long lines were seen around food trucks in New York City. This boom attracted the attention of entrepreneurs around the world, and the concept spread as a fantastic business opportunity in an otherwise depressed economy. Today, food trucks are found in major urban centers, such as London, Paris, Berlin, and Tokyo, serving quality ethnic, local and gourmet food at an affordable price.
Research the Food Trucks in Your Area
To see if the idea of a food truck could take off in your area, do market research. Are there already food trucks in your area? Is the area oversaturated with them, and can you bring something new to the table?
Don't just assume that food trucks serve evening meals. Let's look at some other venues where food trucks are generally located.
- Places of work. If your area has a high density of businesses, then this is definitely one to look into. If not, you'll be driving from one office area to another. If your business area is sparse, then you will lose time driving from venue to venue.
- Outdoor retailers or 'power centers' where there is a lot of footfall traffic and few places to eat.
- Racetracks (horses, dogs)
- Sports stadiums
What to Sell
The different types of food supplied by these mobile wagons is astounding. A wide overview can be categorized into:
- American (burgers, sandwiches and hot dogs)
- Central and South American
- Mixed Ethnicity
- Mediterranean Style
Within these broad categories, there are still specialties such as sushi, seafood and pasta.
Stick to a Small Menu
Most successful vendors have found that a smaller menu is better. Offering too many choices leads to waste, plus confusion on the customer's part. This is why specialization is often preferred.
You want your customer to come to the wagon, place the order quickly, pay and be on their way. Any delay at any stage could cost you money.
Competition or Symbiosis?
It is easy to think that other food trucks are the competition, and in one way they are as you are both competing for the consumer's dollar. But in another way, they are also your best allies. Let me explain.
There are a few reasons why, if you decide to venture into this business that you should welcome other mobile vendors.
There's strength in numbers. Often when grouped with other food wagons, the gathering becomes an event instead of just a wagon selling food. With tables and chairs placed in the area of your vans, you will attract a larger crowd. Plus the advantage of a group, you have more clout to get noticed as a popular event. Many cities are looking at attracting crowds into certain areas and they don't have a pull. You and your fellow food vendors could be just what is needed to revitalize an area. Couple this with a band, and you have an event which would be welcomed in many areas.
How to Find a Pitch
Finding the perfect pitch could be like finding hen's teeth and when you do find one which meets your needs, expect regulations. The biggest unexpected hassle any business has is getting the necessary certification in place before beginning. I can't stress this strongly enough, this will be your biggest hurdle, the necessary documents must be in place before you serve anything. If you thought you could buy the van or food wagon and begin serving, you'd better think again. Unless you are on private land, you could be landing yourself into some very hot water.
Before committing to purchasing any vehicle, do your research. Go to your chamber of commerce and explain what you want to do, and ask for guidance. The department is there to help you and to protect the customer so that should be your first port of call before starting in any business venture.
Because of their increasing popularity, more restrictions are being placed on mobile food operations. For example in many cities, there are stipulations which require you to be a certain distance from a restaurant, so you don't take trade away from them.
Some may require you to have public restrooms within a short distance of your truck.
The Future of Food Trucks
As with any business, predicting future sales can be tricky. Consider that more and more people are eating out but many prefer not to go to a restaurant. Food trucks fit nicely between traditional restaurants and fast foods.
Competing for the customer's dollar for food are restaurants, bakeries, snack bars and small hot dog style carts. Food Trucks are among the options with the highest rates of growth. In the United States, an analysis by the IBISWorld Research Institute on the street food sales sector points out that the Food Trucks segment grew the most between 2008 and 2012: from 15%, it accounted for 37% of industry revenues.¹
This data includes not just the "Food Truck" also includes tents, trailer and street vendors of ready-made food. This is a trend reflects that the customer wants, variety, quality, convenience, but at a reasonable price.
It is thought this trend will continue to grow in the coming years, but with lower rates due to the economic momentum, an increase in people starting a food truck business, and increased regulations.
Where to Buy a Truck
Buying your truck will be the largest investment you will make for your new business. If your truck is off the road, you are in essence, out of business until it is repaired.
Buying one secondhand will, of course, be less expensive but remember to calculate the cost of making modifications to it to suit your own needs.
- If you know someone who has one, approach them and ask if they know other people who may be interested in selling their vehicle. They will undoubtedly know other traders.
- eBay: Browse on eBay for a food truck. Decide how far you are willing to travel to buy one. If you're purchasing and out of state vehicle, contact your DMV (Department of Motor Vehicles) to find out what is required to change the registration to the state you live in.
- Craigslist is another place to find a food truck in your area.
- Local newspaper: The classified section will offer vehicles in your region.
How Much Do Food Trucks Make
How much money you can make with a food truck will depend on what you sell, your location, and how many other food trucks are available for customers.
- If you have a product which can be produced quickly you will be pushing your product out with one hand and pulling money in with the other. If your team runs like a well-oiled machine, you will see a healthy profit for the day.
- If you have a popular venue such as an open-air exhibition, a concert or any large gathering of people, you'll make more than if you are in the parking lot next to a hardware store.
- If you are in an area with a lot of people, and few food outlets, you will do well. This also depends on how long the people will be attending the event you're at. If it is an all-day event, it is unlikely people would have brought their own food, so will use your services.
What to Consider Before You Start Taking Cash
Because you will be taking (hopefully) a large amount of cash there are a few things to consider.
- Have ample change. It is likely you will be given notes instead of change so make sure you have enough change to see you until the end of the day.
- Keep your money safe. Don't leave your money on show or pull out large wads of cash. People will be watching and it could lead to a situation you don't want to have. Keep your cash hidden and keep it locked away.
- Have a sufficient number of staff working on the food truck. This will prevent thieves from thinking it is an easy target.
- Stay vigilant to protect your property, your staff, and your money.
Regulations on Food Trucks and Trailers
Although a mobile operation, you will find you will be required to get licenses. Besides the license to drive your vehicle you will also need a trading license, a license to sell food, and also a license documentation regarding health and safety for you, your staff and your vehicle. Although this sounds like a lot of hoops to jump through, it is necessary for you to have the correct documentation in place to safeguard your investment.
How often do you eat from a food truck?
It was once thought that food wagons were not only a center of artery-clogging fatty food but also unhygienic. People thought that because they weren't always at a given location, they were less likely to have a check by the governmental body responsible for the food standards agencies.
Now in order to get the correct licenses to trade, a hygiene license is just one of the criteria needed to get a trading license.
As the business owner of the food wagon, it is crucial that you keep the certifications up to date. Also, rules and regulations change and it will be down to you to ensure you, your vehicle and staff are compliant. Failure to do so will see you fined and may result in your trading license being revoked.
This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.
© 2017 Meredith Davies