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How to start a food truck business?
It is 2021 and everything is changing. Everything. The times are turbulent and entire businesses and business models ...
It is 2021 and everything is changing. Everything. The times are turbulent and entire businesses and business models are changing overnight. It can be a scary time. But it can also be the time to chase after new, big dreams with a clear goal in sight. Think of the current situation as a catalyst, not as an obstacle. If you have always wondered how to start a food truck business, this is the time and place to start.
Opening a food truck is a lot cheaper than opening a restaurant. The other good news is that entering the food truck industry can easily be managed with a well-thought-out plan. There are tools that allow you to do things digitally. And there are ways to market yourself without having to hire a sales manager. The food truck industry is a perfect meeting place of business skills, creativity and a bit of extra stamina. With a right plan, you are all set to go!
What do you need to start a food truck business?
Unlike many other businesses, you can start a street food business relatively modestly. You can always scale your food business when things get going and the demand grows. Don't have much experience in the hospitality or catering industry? Not an obstacle! Do not let your background hold you back. Many successful mobile catering businesses have been founded by people with no prior experience in serving food or in working with food trucks. What you need is a step by step plan and some smart tools.
How much does it cost to start a food truck business?
A food truck business is an amazing way to become an entrepreneur, to work creatively and make a positive impact in your community.
Food trucks, as we know them, entered the scene in 1961 when street vendors started selling food from push carts in New York. Back in the day, their main clients were construction workers, delivery personnel, and garment workers buying meat, fruit and sandwiches. In 1974, the first taco truck, King Taco began its operation from a converted ice cream truck, and soon became a successful brick-and-mortar restaurant chain in Southern California.
As of February 2020, there were more than 24,000 food trucks in the United States earning about $1 billion a year.
In general, it costs something between $28,000 and $114,000 to get a food truck business up and running. The range is wide because it depends on your concept, and most importantly, whether you already have a truck or need to buy or rent one. Whichever way you choose to go, you will join a long line of businesses making people happy since the 1960s.
7 first steps: certificates, smart tools, permits and licenses
Just like with a non-mobile restaurant, you need to obtain certain licenses and permits before you can start operating your food truck. As each state has specific rules, search for the specific business license and permit requirements in your area from the website of the U.S. Small Business Administration.
If you are wondering how to start a food truck business in the most prepared way possible, follow the 7 steps below. All these steps either include time or money that you need to put aside to start your small business.
#1 Make a food truck business plan
As a first step, make a detailed business plan that will list important information about your business. Do this as a first step, even before buying or renting your food truck. A business plan forces you to think your future income through down to the last detail. You will also need a business plan to get funding, if you are applying for any.
On your food truck business plan, write down your:
- company description,
- goals and vision for your business (your business idea),
- all the equipment you will be using,
- your target market and their needs,
- marketing strategies for your business,
- financial projections,
- the ways how you are planning to keep your business profitable.
There are business plan templates online, just Google them.
#2 Register your food business
Register your business with every local authority whose area you are planning to trade in. Check the rules and regulations on how long in advance do you need to register before you are allowed to trade.
The food truck licenses and permits are not fixed in stone, so it might be a good idea to join your local restaurant or food truck association to stay updated on the changes in the laws that might affect your business now and in the future.
#3 Seller’s Permit
Check whether you need this. Food truck owners need to apply for a seller’s permit in certain states in order to buy food and other goods at wholesale prices. If you need it, get it sorted.
#4 Vehicle License
Check whether you need this in your state. Make sure that your truck (and your drivers, if you have them) are properly licensed. Depending on the size of your food truck, some states can require a commercial driver’s license to operate your food truck.
#5 Health Department Permit
Your local health department needs to verify that the food you prepare is being maintained and created in a safe manner. Get in touch with them about your permit.
#6 Fire Certificate
If you’re using cooking equipment on board, the fire department needs to inspect your food truck before you can open for business. Your local fire department will educate you on the regulations you need to follow. They will also do routine inspections on your fire suppression system.
#7 Getting your HACCP plan
All restaurants, food trucks, bakeries, cafes and even food businesses operating from home (not to speak of hotels, kindergartens, hospitals, etc.) need to comply with food safety regulations in order to prove and guarantee that the food they serve or sell is safe for their customers. This is mandatory and required by the FDA. All states require mobile food service operations to have a food safety system in place. This helps to guarantee that the food that is being served is safe to eat. But not only. It also helps you to grow your business. In other words, you need a HACCP plan.
So what is HACCP? HACCP stands for Hazard Analysis and Critical Control Point. It is an internationally recognized system that aims to reduce the risk of safety hazards in food. This document describes all your food-related activities, processes and the associated dangers. And tells you what to do when something goes wrong, so you would not put your customers at risk.
It used to take a long time to get your HACCP plan, so food businesses tended to be afraid of it. Lot's of money and time got wasted. These days, you don't need to go on a HACCP course to learn how to compile your plan or even have a food safety supervisor come around. Using a digital tool like FoodDocs enables you to get your HACCP in 1 hour You can also try the platform out for free for 14 days, if you are not sold at first.
Instead of spending a month or more trying to draw up flow charts, the program creates your HACCP plan according to your food truck's business activities and current requirement based on 8 questions. It is simple. And a perfectly contact-free solution for our current times.
Food truck business: your next steps
To buy or to rent - that is the question
You are welcome. This is the paramount question you need to answer when starting a food truck business. Usually, this decision heavily depends on the finances available as the price of a new food truck can range anywhere from $50,000 to $175,000. Buying a new food truck is expensive. Buying a used one can be risky. You need to do a bit of research before sending those dollars flying from your bank account.
If you already have a food truck or you have definitely decided to rent one, the next thing you need to factor in is the cost of your kitchen equipment. If you want to update existing kitchen appliances or need to buy all the equipment for your food truck from scratch, you need to list all that down in your business startup costs.
Food stock? Have a clear overview at the starting point
You probably already have a good idea of the food and menu items you are going to create. Trying to understand the quantity of ingredients you need in order to start your business helps things run smoother on your first day, week and month of operation.
Running costs of your food truck
You have paid for the necessary certificates, licences and insurances? There are still a few more costs a starting food truck business needs to take into an account.
These are the most likely ones:
- Fuel cost: this depends on your concept (whether you are set up locally or plan to drive around)
- Wages: you need to do the math on how much to pay your staff and yourself
- Business insurance: check which ones apply to you. For example, if you plan to employ people, different type of insurance comes to play
- Gas and electricity: the cost depends on the size of your setup and on your appliance
- Marketing costs
- Maintenance: your food truck equipment will need regular maintenance and repairs, so take these costs into consideration from the get-go
- Payment system: more and more people are using debit and credit cards. If you don't want to start turning down sales, make sure to have a card machine working when your first queue forms
- Website: your online presence should be a fundamental part of your business strategy. Make sure that your potential customers can easily access your menu online. And don't forget to put your food truck's exact location(s) on the map. (Yes, that does get forgotten.)
How to start a food truck business without unleashing financial ruin?
An average food truck business ears around $300,000 per year. When starting a food truck business, remember not to open with all your dream dishes rolled onto one menu. Keep it shorter and more controllable! Also, don't try to do everything all at once.
Here are some things you should think through in order to earn as much profit as possible already on your first year of operating your food business.
Do your research
Operating a food truck is not that much different from operating any business on a competitive market. You need to be aware of the needs of your target group, of the emerging trends on the food scene and in the food truck business, and to know what your competitors are doing.
Basically, you don't want to add another homemade pasta truck next to a town square full of Italian food. The more research you do before starting out, the easier it will be to make strategic business decisions. And make the magic happen.
Think long term: suppliers and business tools
Make connections. Buy bulk together with other food trucks in your area. Invest into tools and products that help your business grow in the short and long term, and help you provide the safest and highest quality food experiences to your hungry customers.
Use varied ingredients that are in season
Here's a pro tip: instead of having countless menu items all requiring different ingredients, opt for a smaller number of dishes that use similar, seasonal produce.
Many food trucks opt for variations of one idea or a set of base ingredients. As well as keeping your costs down, this way you will also produce less waste and become a greener, more decent company.
Make wise location choices
You know what is the most important factor to consider when buying real estate? Location. Location. Location. The same principle is also relevant for any business. People should be able to find you easily. And to reach you easily. No one will cross two highways, a football pitch and a dodgy underground passage to get to a satay poutine.
Want to keep your food truck in business for a long term? Test out different locations (and your menu items!) and start building up your loyal following from there. Based on your town or city, it is probably worth trying out some of the following locations:
Food truck parks
Team up with other food truck businesses to meet up on a specific spot on a specific time and day to attract more people.
Another good idea but not always the easiest spot to find. You should choose your spot based on your target customer. (This is where a well-thought-out business plan comes handy once again.) If you know who is your main target group, you will know which venue they are most likely to frequent. And which itineraries they use most often. Construction workers, downtown business district employees and stay-at-home parents follow different itineraries at breakfast, lunch and dinner time. If you target your audience well, you will make money in no time.
Farmers markets are niche events, so before setting up your food truck at one of them, make sure that what you are offering matches the general theme. If the market is all about freshly picked produce, home-baked pies and products from the local butchers, then energy balls with unknown ingredients might not sell that well.
If your city allows, park near large office buildings and other known business venues. These are the sweet spot where the 9-5 workers can easily reach you at lunch time. And don't forget the power of marketing! Your food truck is your business now and you want people to know you are there.
Contact the companies (drop off some flyers!) in those large office buildings and ask whether you can park your food truck in their lot and offer delicious lunches for their employees. Everyone tends to be happy when choice comes walking through their door.
Nightclubs and bars
Aim for your city's renown night spots. People are starving after a late night out and are always willing to pay good money for delicious food. Make sure that your target customers will easily see or smell your food truck when leaving the establishment on their way home. And since you don't want to make enemies as you go along, don't forget to introduce yourself to the nightclub or bar owner. Check whether they are OK with you setting up your business next to theirs.
Colleges and campuses
Students are always on the look-out for quick and tasty food experiences. Think about lunch or dinner hours. And make sure to know when the campus sports events are happening. Food truck vendors need to have a permit to park on campus, so get that first. And then ask to see the sports calendar.
Festivals and sports venues
Food trucks are a warm sight at every festival, state fair and large outdoor event. People who have come here are already in good spirits and are willing to spend money. Renting a food truck spot at a famous festival can be a bit out of your budget at first, so consider parking at a nearby street to still catch the arriving or leaving crowds.
Ever grabbed a coffee or a hot dog when getting fuel? We thought so. Hungry travelers are grateful travelers. And if you have to avoid a long queue to get your mid-route snack, even better!
Just like with the nightclubs and bars - ask the gas station for approval first. Technically, you are both drawing more customers to each other, but since they were here first, it is polite and sensible to ask. The last thing you want to stress about is coming to work every day and having to fight with your neighbouring business. Never. Worth it.
Secrets of successful food trucks
Why do some food trucks become more successful than others? Is it to do with luck, a bigger startup capital, softer local regulations or is there something more subtle at play? Apart from things you cannot always control (changing regulations, pandemics and odd weather patterns), there are things which help your food truck business stand out brightly from the one of your competitors.
Allure your customers in with experiences they can't get at home. Or anywhere else that is local. A successful food truck does not become successful only because of the location it has managed to score. It is the content that makes or breaks it.
Think what makes your eyes shine and your mouth water. And what your city misses. There are ice cream cones but are there ice cream sandwiches? There is Korean food but are there Korean tacos? There is Thai food but is there a Thai place with deep influences from Laos? Partner up with local farms and artisans to create a healthy food truck menu when everyone else is doing deep-fried. Stand out from the crowd and find your niche with pride.
Don't forget to schedule in ample prep time to your day. Especially at first. Food preparation can take up a surprisingly big amount of time, so when preparing your one-of-a-kind menu, make sure that you have not forgotten that.
And one more thing: no one will fall in love with your yummy dishes if reading the menu involves serious effort. So make sure that your signature dishes stand out, that there are no typos on the menu, and that the entire menu looks appealing and eye-catching. Your physical menu is your marketing material, just like the content that comes out of your food truck is.
Don't rely on a worth of mouth. Not only. Put social media to work for you. As a food truck owner, you can save a lot on marketing costs by looking into how successful food trucks or other food businesses are marketing themselves on social media. There is no particular need to hire a sales or a marketing manager just for this. You probably already know what works if you are following any food businesses on social media yourself. If you are not... then what are you waiting for!
Aim for high-quality visuals, engaging copy and don't forget whom you are talking to (your target customer). Office workers and stay-at-home moms will probably not respond to the same slogan or even time of day. If still in doubt, listen to an audiobook on social media marketing or take a short course.
One more thing: do not try to copy anyone else. Find your own voice. This will make you stand out. Think of campaigns from other fields of business and see whether they would work for you. Do not worry if no other food truck you know has ever had a similar campaign idea. Be the one who stands out.
And this goes without saying: don't forget to network. The entire food truck industry relies on regular cooperation of food truck owners, their suppliers and local businesses. Be part of the gang.
Putting smart tools to work for you
Want to a delivery service to your food truck? Add more vegan options? Change your food containers? A digital food safety specialist will be your best business partner, adapting to every change your business needs to undertake.
With a unique tool like FoodDocs, you can bring yourself up to date with all food safety regulations whenever the world or your business has to change. There is no need to hire a food safety consultant every time a small change needs to be registered, or to spend a lot of time waiting for them to come inspect your food truck. But if a food safety supervisor does come and inspect your food truck, a digital HACCP allows you to instantly change necessary items according to their recommendations. Once again, you will have a lot more time to do the things you really want to do. Like growing your fabulous food truck business!
A digital HACCP is accepted by the authorities just like the paper version is. A HACCP plan is a lot more than a document for food safety supervisors, however. When it is part of a digital food safety platform, it becomes a business tool which helps you stand out from your competitors by building a brand or an establishment known for its safe - and delicious! - food. Using a digital platform helps to make sure that you are compliant with all all food safety laws, follow all food safety guidelines, and also allows you to:
- reduce hazards from raw material,
- reduce chemical and physical hazards,
- maintain high food hygiene standards,
- streamline processes,
- guarantee traceability of all data collected.
What makes food trucks fail?
As you are interested in how to start a food truck business, you are probably equally curious about how to keep a food truck business from going under. As we have talked about everything that gets your truck on the road, let's now look into factors that can kill off your small business before it can even fully take off.
Here are 4 most common mistakes to avoid:
#1 Lack of planning
Lack of planning will result in failed inventory management and underestimated food costs. If your food takes too long to prepare, if you constantly under- or overestimate the quantities needed, or if everyday life keeps showering you with bad surprises, you need to sit down and have a look at your schedules and bigger strategy to see where the mistakes come from. Fix them before it is too late.
#2 Lack of marketing
Thinking that people just run to you because you are there. There is no shortage of restaurants, food trucks and take-away options on the market. You need to be aware that work and effort needs to go into getting the word out, and that no food truck gains a loyal followership just because they are painted nicely and sell something that smells really good. (Although that helps!)
Never forget the marketing aspect, no matter how good your food is. A lack of proper, strategic promotion is a factor that can make or break your business.
#3 Lack of energy
It is not uncommon to burn out when working in the food industry. Beginning food truck owners tend to underestimate the amount of work that goes into running a food truck. Don't try to bite off more things than you can chew when first starting out. For example, there is no need to have your food truck present at all festivals during your first summer. Give yourself days off and protect your abilibity to be inspired. After all, it is your creativity and inspiration that helps you create your unique brand.
Pro tip number 2: there is no need to do everything yourself. With a bit of funding on board, it is worth employing some people who know what they are doing and how to do it fast.
#4 Choosing a wrong product
This relates back to doing your research before getting your food truck on the road. How to start a food truck in a way that it will bring in money? Here is your most important answer: find the right product. Don't just jump on the first idea that enters your mind. Look around. Walk around. Google around.
Your product should not be too uncommon. It also should not be too common. If it is of poor quality, the customers will not return. If it sells OK but the profit margin is too low, your business will not last. Think it through on all levels. For example, it is a good idea to incorporate one popular or common meal into your menu when opening up your business. And then let your customers explore their way from there.
If you think everything through, talk to people who already own and operate food trucks, take it step by step (and bite by bite), your unique brand will be ready to take on the streets. It will be good. And it will be worth it.