A food truck is a mobile restaurant of sorts – a large vehicle, such as a truck, which has a kitchen, so that food can be cooked and served out of the vehicle. As a culinary pop-up shop and one of the latest trend in the food scene, they can serve as temporary mobile eateries.
There are many advantages that make food trucks an attractive choice for entrepreneurs, especially small business owners who dream of opening a restaurant. They typically boast lower startup costs than restaurants – ranging from $40,000 to $200,000. Because it’s a mobile operation, owners do not pay rent and therefore do not need to worry about increases in rent prices over time.
Food trucks also have high mobility and the ability to reach a large clientele, and hours and menu offerings can be scaled according to the owners’ finances and time. Mobile food establishments are also surging in popularity right now and are a popular dining spot at festivals and business districts alike.
With such a low overhead cost and excellent flexibility, it’s no wonder this market is taking off. It’s can also a highly lucrative business – with some trucks bringing in over $500,000 of revenue in a year. The main downside to the burgeoning food truck industry is a large number of competitors in this space, which can make thriving as a business a challenge.
As with starting any new business venture, you’ll need to first cover the basics such as choosing a business structure and registering your business with the relevant state and local government authorities. Once you have this handled, it’s time to get down to the nitty-gritty details.
7 Steps to Start a Food Truck Business
So, what exactly does it take to start your own food truck? Here are the first steps to take to ensure success in this industry:
1. Determine your target market (and scope out the competition).
Knowing your target market is essential to avoiding the high failure rate of new business ventures. You will need to know about the food truck industry in your local area. Before you start your new business, you will also need to know what other vendors in your area are selling. For example, if you are thinking of opening a taco truck but there are already four taco trucks in your area, you may want to choose a different business idea or develop a taco ‘niche.’ Being well-informed about the competitors in your area, as well as your local food economy and its customer base, will help you determine your business plan and menu offerings.
You will also need to find available parking space locations. As a mobile food operation, you will have more flexibility with your location than a restaurant. The typical food truck has a go-to place where they can be found on a regular basis, as well as some special times they may be serving food at events such as festivals or outdoor markets. You will need to determine where potential parking spaces are, how expensive it will be to park, and how many people frequent the area during the time you will be serving food. The more research you can do on this topic, the better, because you will need to incorporate this information into a well-researched business plan (more on that later).
2. Select a culinary concept and catchy business name.
You will likely draw on your own strengths and expertise to develop a culinary concept for your menu offerings, but you will also need to consider your target market – your customers and the competitors within in your niche. Because the food truck market is quite competitive, you may want to take extra time researching and crafting a ‘niche’ for your food products. Remember that whatever business concept you choose will be incorporated into your menu, logo and overall business strategy, such as setting the prices of menu items.
Some popular culinary concepts for food trucks include ethnic food offerings, which feature cuisines from around the world; health food; gourmet sandwiches; pizza; and local or regional offerings – for example, a lobster food cart in New England, or Tex-Mex in Texas.
In choosing a name for your business, you will need to make sure that your name is unique, descriptive and easy to remember and pronounce. Word-of-mouth is a common way for food vendors to gain clientele, so make sure to consider that in choosing the right name for your new business.
3. Develop a business plan and figure out financing.
Any business seeking to thrive must have a well-thought-out business plan that can serve as the starting point for the business to launch, operate and expand. The typical business plan for a food truck vendor should include an overview of the food industry in your local area, as well as future opportunities in this market. The business plan should also include your business idea, a detailed market analysis of industry trends, the target market and information about competitors. Your business idea should be outlined in detail in the business plan, including your proposed menu, ingredients, and food pricing. You will also need to include a section regarding who you will hire for your staff and what the responsibilities for each employee will be.
Finally, while starting a mobile food operation is much less expensive than opening a restaurant, you will need to determine how you will fund this new venture. Therefore, you will need to figure out how much funding you will need, and how you will obtain this funding. The ideal business plan should have a complete financial analysis of your profits and losses in the first three years of operation.
The more detail you can include in your business plan, the better, as it will help you determine what you need to get started and provide you with a clear path for starting out in this competitive industry. You may want to consider applying for a business loan to obtain initial funding for part or all of your venture, such as for buying the food truck itself, as it can cost up to $100,000. The Small Business Administration (SBA) can help new businesses seeking funding apply for and obtain business loans.
4. Obtain relevant licensing.
You will need to apply for various permits and licenses in order to stay compliant, such as food safety and business licenses. You will also need to contact your local authorities for more information on the required permits in your state.
Your local health department requires a food service permit and a food handler permit for any employees who will be tasked with food preparation. The health department also visits and inspects commercial kitchens regularly — both food truck and restaurant kitchens — so make sure that your food preparation environment remains in compliance with local food safety rules and regulations.
5. Figure out how your customers will pay.
6. Design your logo and menu board.
A good logo is essential for a successful business, but because your food truck is a traveling restaurant, the menu board also serves to draw customers’ attention and advertise. You will, therefore, want to pay attention to how you design your logo and menu board as it will be the primary way for your customers to learn about your business’s food offerings.
Many trucks opt for a simple chalkboard design for their menu listings so they can easily erase and modify the menu as needed – for example, if the truck runs out of an item, or if the foods available on the truck change. Ensure that the descriptions of the foods are short and easy to understand and that the pricing is also easy to read. Including dollar signs in your menu pricing can make the sign hard to read, so you may want to avoid using them if possible.
In your menu board, highlight specials and best sellers as this will help consumers simplify their decision process while in line. You may also want to consider including large photos of your dishes so that customers waiting in line can peruse your menu offerings easily and be better able to decide when it comes time to order.
7. Market your brand and get active on social media.
A benefit of operating in the food truck industry is that your truck is like a mobile advertisement. However, you may want to dedicate some time to set up and maintain a social media following. Websites such as Facebook, Twitter and Instagram are ideal for food truck vendors as they can post days and times they will be in various locations, helping retain the customer base by letting them know where you will be and when.
Get to know your customers and ask them for feedback about your menu offerings, especially in the early stages of setting up your new business. Use this information to further refine your menu and help you learn more about your target market and your customers. Customers appreciate having their feedback heard and you will gain important information that you can use to develop and refine your service and expand with new menu offerings that are more likely to be successful with your customers.
Owning and operating a food truck can be an excellent, low-cost way to enter the food industry, especially for entrepreneurs who have a dream of opening a restaurant. If you are seeking to start a restaurant business, a food truck is a great way to build a customer base and test out recipes. Those seeking to enter this industry should be prepared to think small, work long days and deal with the intricacies of operating a vehicle on a day-to-day basis. Emergencies can arise such as truck repairs or other unexpected events. Hiring a mechanic and obtaining regular maintenance checks is, therefore, a must for food truck owners and operators.
Like restaurants, obtaining a business license and food service permits are a must in order to stay in compliance with local food safety procedures. Unlike restaurants, however, food trucks can travel to meet customers, have low overhead costs, and can scale depending on the time and financial resources of the owner. Set clear goals and develop a solid business plan and remember that most successful businesses start out small and then expand slowly over time. While this type of venture can be demanding, staying focused on the big picture can help one succeed in this thriving and dynamic industry.