Thinking about starting a food truck business? You're not alone - hundreds of new trucks launch every year. And according to Ibisworld, there are 35,512 food truck operations in the United States as of 2022, a growth of 13.7% from 2017 - 2022. And the food truck industry is currently worth $1.2 billion in revenue and is expected to continue growing. So, now may be the perfect time to start your own business!
Learning how to start a food truck company is the first step toward making your vision of a mobile food business a reality. By following these steps, you'll have your food truck investment up and running in no time, selling to people and generating profit along the way. Keep on reading!
How much does a food truck cost: a startup mini-guide
A food truck business is a great way to get your passion for food on the go off the ground without breaking the bank.
A food truck often called a "roach coach" or "gut truck" is a mobile kitchen that cooks and serves dishes. A food cart, on the other hand, is simply a cart with a roof that you can put food in. They are appearing across the USA as they become increasingly popular among entrepreneurs. The allure of a food truck is that they're often more affordable than purchasing a brick-and-mortar restaurant location outright. Plus, preparing and serving food from within the confines of a large unit presents its own unique set of challenges to overcome.
Why a food truck is a great business opportunity
While some people focus solely on establishing themselves by providing a restaurant experience to their patrons, they may be missing out on other opportunities. Nowadays, food trucks are a popular choice for starting a restaurant due to their low startup costs and minimal risks—especially for first-time restaurateurs.
There are numerous reasons why owning a food truck is better than working in or managing a brick-and-mortar restaurant, many of which have to do with the freedom and flexibility that come with being one's own boss.
Here are just some of the top advantages:
- One of the best things about having a mobile operation business is that you can bring your services right to your target audience, instead of waiting for them to come to you.
Food trucks may be marketed in a number of ways, such as near busy roads during lunchtime for office workers, catering summer festivals, or participating in other outdoor events. These are only a few examples from a long list of options that can help you attract new consumers.
- The initial costs in a food truck are typically less than that of a sit-down restaurant, and there are fewer overhead costs to worry about. As a result, they can produce profits more quickly than restaurants.
For entrepreneurs, reducing risks is always a top priority. Fortunately, with food trucks, there are fewer startup costs to get into the restaurant industry as compared to opening a dine-in establishment - making it less risky overall. In fact, many chefs start out by owning a food truck before becoming establishing themselves as successful restaurateurs.
Some food truck operators, on the other hand, realize that they don't want to open a restaurant because of the higher costs and risk involved and instead choose to focus their efforts on expanding their mobile cuisine business.
Because customers typically order and pick up their meals at counter service, running a food mobile business requires less manpower than operating brick-and-mortar restaurants.
Make a plan for your food truck company
For new food truck owners, the most common obstacle is a lack of funding. To surmount this, it's important to draft a thoughtful and resolute business plan as your first step. This should include your financial forecast for the next few years, an estimation of what you'll need to get your business up and running like the food truck costs amount, and how you believe your business will progress in its earliest stages. The faster you can get things off the ground, the better chance you have at success.
Finding and creating a food truck concept
Creating a food truck concept is all about finding the right niche. You need to find something that sets your truck apart from the rest, and that will appeal to your target customers.
Once you've found your niche, it's time to start creating recipes and menu items that will delight your customers. Remember, a successful concept is all about offering great food at a reasonable price.
Some of the most popular food truck concepts include the following:
- Coffee truck
- Comfort food
- Fusion dishes
- Gourmet sandwiches
- Indian food
- Hawaiian food
- Healthy drink trucks
- Lobster rolls
- Mediterranean menus / Gyros
- Organic and healthy foods
- Regional cuisine
- Street tacos and burritos
Food Trailers in the City: Where to Put Them
Images of quaint small-town festivals and outdoor concerts probably come to mind when you think of food trailers. However, these rolling eateries are so much more versatile than that! If you’re thinking about opening a food trailer business, here are some ideal locations to get started:
- Parks and recreation areas
- Tourist attractions
- Flea markets and farmer’s markets
- Office buildings and factory complexes during lunchtime
- Concert venues
- Sports stadiums
- Colleges and university campuses.
Ways to finance your food truck
One of the primary challenges potential food truck business owners may face securing enough funding for their food truck costs.
If you're looking for funding to start your new business, here are a few options.
- Find a food truck owner and work out a deal to lease or rent their vehicle.
- Start by finding low-cost, a used food truck or a trailer.
- Talk to successful restauranteurs about launching a food truck for their company.
- Look for sponsors if your business idea contributes to the community or provides a public service or benefit.
If you already have a payment processor, you may also apply for different loan options:
- If you're looking to finance your food mobile business and buy the equipment you need, equipment financing is likely the best option for you.
- Business lines of credit are the best type of financing for food trucks because they offer flexibility, especially when it comes to working capital.
- SBA Microloans are best for when you need a smaller amount of funding and can't afford more expensive financing.
- Business credit cards are ideal for most food truck operators who need help financing daily ongoing expenses, purchases, and supplementing other loans.
- Crowdfunding is a method of raising capital that has been used by numerous individuals to assist them to achieve their objectives. It can be utilized to finance all sorts of requirements, such as buying land or starting a new business.
What is a startup expense for a food truck?
Food truck startup has become increasingly popular in many locations over the past decade. A significant contributing factor to this popularity is that food trucks require much lower operating costs as compared to brick-and-mortar restaurants. Even though starting a food truck business generally requires less of a startup cost than opening a typical restaurant, it still significantly demands a sizable amount of investment.
The Food Truck Vehicle
The amount of money needed to start up a food truck business vary significantly on the state you're in, as well as fees for licenses and permits.
Of course, the costs of your food truck are going to be the most significant line item in your budget.
Food truck startup costs are determined by a variety of factors, including age and any extra features it may have. Food truck costs vary depending on where your investment falls on that spectrum.
- The condition of the truck
- Equipment available
- The size
- The location of your purchase
What is the price of a food truck?
If you want to keep things simple with just a small mobile kitchen and storage, it's possible to get started with an average rate of $50,000 for a food truck vehicle. The truck and some of the kitchen equipment would be paid for with that amount, however, it's important to note that you get what you pay for. While a new food truck and all the supplies can cost up to $175,000.
When thinking about your own food truck, remember that it is primarily a means of transportation. You can't rely on a building to transport your restaurant, but you can with a truck.
In addition, having your truck in the shop for repairs can be costly, and even put you out of business if it's not running properly. So be sure to get a mechanic's opinion on any type of model you're thinking of buying, no matter how simple or luxurious it may be.
What is the average rental cost for a food truck?
Even if your operating budget is tight, you don't have to put your business on hold. While getting a new food truck might be costly, renting it rather than purchasing it can considerably lower those costs. Food truck operators may expect to pay an average rate of $2,000-3,000 per month on a truck for a lease of six months or more.
Necessary cooking equipment and decor
If you're starting from scratch, another thing you would consider is the customization of your vehicle - and it's no easy feat. Make sure to include this in your food truck startup costs.
The majority of food trucks are converted step vans that have been used for the purposes of food service. If you acquire a used catering vehicle that is prepared for operation, all you'll have to do is make some minor changes or improvements to match your concept.
According to Food Truck Empire, here is a list of what you'll need:
- Plan and install electrical wiring
- Frame the interior
- Cut out holes for your serving window and ventilation
- Finish inside walls with fireproof material
- Install gas/propane tank, hood, and cooking equipment
- Configure plumbing
- Set up your generator
- Design the outside of your truck and have it wrapped
The process is multi-faceted, so it's ideal to either work as your own independent contractor or hires a company that specializes in customization.
Additionally, ensure your truck is equipped with the legally required gear:
- Functional refrigerators and ovens
- Extinguishers and first aid kits
- Properly labeled containers to store food
- Hot and cold water with suitable pressure is accessible.
- Essential equipment is installed by a professional.
You should also consider other special features:
- Security Awning
- Flat Panel TV
- Retractable Awning
- Misting System Vinyl Wrap
- Perforated Window Film
Commercial Kitchen Space for a Food Truck
It's possible to serve meals on wheels. Preparing meals on wheels is a different story, and in most cases, it's just not feasible.
Food trucks, in particular, are often required to use commercial kitchens – commissaries – to prepare and store meals. Commissary space is so essential to food truck operations that some jurisdictions demand proof of a commissary agreement as part of the application procedure.
A commissary space kitchen, on the other hand, may cost anywhere from $1,500 to $5,000 per month and include both annual and hourly costs. Commissaries cater to a wide range of small food industry enterprises rather than just food truck owners, so they're quite popular. It's not unusual for commissary space in high-demand areas to have a waiting list.
One way to ease the tension of finding enough space is by brokering an arrangement with others who are certified owners of commercial kitchen space. For example, you could rent out a certified kitchen from restaurants, community centers, or even churches for food preparation purposes.
The Food Truck Parking Space
While you're planning your menu and licensing issues, don't forget to select a safe food truck parking spot, especially at night. Other food trucks are only allowed to park in certain locations, not just while serving but also when they're closed.
You may opt to store your commercial kitchen on private property if you have the available space. Commissaries typically charge a small fee for overnight parking. Keep this in mind as you shop for your ideal kitchen space.
Expect to pay an extra $500 - $1000 per month on this, so be sure to factor that into your monthly budget.
Permits, Licenses, and Certificates
The specific permits and licenses needed to start a food truck differ by state. At a minimum, you'll need three sorts of permits: general commercial, food service, and vehicle.
Here's a summary of some of the most essential permits and licenses that food truck owners must have. Take note, it's not unusual for cities to have additional standards as well.
General commercial licenses
- Wholesale license
- State sales tax permit
- Employer Identification Number (EIN)
- Doing Business As (DBA) Registration
Foodservice Permits & Licenses
- Health Permit
- Mobile food facility (or unit) permit
- Food safety manager’s certification
- Employee food handling permit
- Commercial kitchen lease contract
To get commercial license plates for your truck, you will have to go to the Department of Motor Vehicles. In some states, a commercial driver’s license (CDL) is required if your truck exceeds certain length and weight limits. However, there are some states that do not allow vehicles requiring a CDL to be used as food trucks.
If you want to park your service truck, be aware that you can't just park it anywhere like a regular unit. You will likely need to obtain a parking permit that meets the town's regulations which vary from place to place. In addition, other organizations such as neighborhood associations or local health departments may have their own separate guidelines for you to follow.
Keep this checklist on hand to prevent any issues:
- You can check with your county clerk for a list of banned parking areas or for areas that require a permit.
- For parking restrictions that are not commonly known, please contact your local motor vehicle department.
- In your commercial kitchen rental, include overnight parking
Get food truck insurance to protect your business.
If you don't have the right business insurance or enough coverage, your food truck may end up costing a thousand dollars or forcing you to close down.
The average annual total cost of food truck insurance is around $2,000 - $4,000, although this will vary depending on the coverage option you select and your insurance provider.
Food and other supplies
Once you've got your own food truck, the next step is to choose what materials and equipment will go inside it. When it comes to kitchens and equipment installations, food trucks allow for more originality than a food cart since they provide a larger capacity for creativity. As a result, you have more freedom in terms of menu items.
You'll also need to expect to pay some of your startup cash toward food and supplies for the meals you'll make and serve. Most restaurant experts state that the food cost should only be 28% to 35% of your menu item's final price.
For example, let's assume that your average food cost for a taco will cost $3.00 to produce. You should charge, at minimum, $8.57 for each taco ($3.00 / 0.35). This will ensure that you're making a reasonable profit while still providing affordable prices for your customers.
Moreover, make sure you have plenty of disposables, like plates and utensils, on your food mobile operation - that way you can serve customers their meals to-go. Keep an eye on your stock levels so that you don't run out--if you do, then it's possible you'll have to close up shop for the day.
POS system to keep lines moving
A POS system is a vital asset for all food business types - it will not only help with sale systems, but also monitor inventory levels, manage supply, and reduce employee theft.
New POS systems come with integrative tools that make it easy to store customer information for future marketing campaigns, manage social media posts, and monitor internet reviews.
Monthly operational costs for food truck owners
As a food truck owner, you must expect the overall start-up cost and ongoing expenses to keep your business going. The following are some of the most common monthly fees that most food truck operators face. It's also essential to plan for any miscellaneous expenses and other costs.
- A monthly parking ticket may cost over $600.
- Kitchen space for commercial use can cost up to $500 to $1,500 a month
- The Commissary may be rented for approximately $1,000 to $1,500 per month.
- At a minimum, you can expect to spend $400 per month on truck insurance and maintenance.
- On average, it can cost you $600 on gasoline and propane per month.
- The cost of a food handler's license varies by state; however, it ranges from about $100 to just under $200 per employee.
- Expect other miscellaneous
Hiring and training employees
When staff members are first hired, training is key, but you can't stop there. Everyone on your team should be given ongoing opportunities to learn more not only because it benefits them individually, but also because it creates a culture of learning that will help improve retention rates and employee effectiveness.
Start by hiring a food truck manager as your first employee to train and onboard. You want a manager who sets the tone for your workplace and knows how to keep things running smoothly even when times are tough. This person should be high-energy and genuinely enjoy working with people. Having a positive attitude will rub off on employees, which in turn can lead to increased sales and decreased turnover.
The following responsibilities need to be fulfilled:
- Running the day-to-day operations
- Training staff members and managing them
- Enforcing sanitary rules
- Practicing health and safety guidelines
- Managing your finances and cash flow.
- Operating the truck
Completing a driver record check is essential to the hiring process. By doing this, you can confirm that the manager has both the right level of license to operate the truck and clean driving history.
You need to figure out how many people can work in the truck at the same time. It differs depending on the type of service, but it's typically between 2-6 people. The following are some of the most common positions available on a food truck:
- Service window attendants
- Kitchen prep
If the employee will be performing several duties that include all of the above responsibilities, you may post a general "Food Truck Crew" position instead of listing each one separately.
Promote your food truck business
To see significant growth in your food truck venture, an impactful marketing strategy is key. Everyone knows that websites, email marketing, and social media marketing usage are important staples, but there are also a number of other out-of-the-box ideas that can bring more customers to your window.
Personal interactions with potential customers are necessary to pique interest in your food truck company. Promote your mobile eatery inside and outside the truck to appeal to current customers that could become regulars, as well as new ones. Use some of these ideas to get started.
- Get in touch with organizations close to you
- Make connections with the appropriate individuals
- Train your sales staff in personal selling
- Local companies should be your target market
- Follow up with individuals personally
- Sell your products or services at local events
- Try to be pleasant rather than pushy
- Get involved in the community
- Distribute flyers, menus, or coupons
The difficulties of operating a food truck
Do your research on the food truck laws in your area before you get started because there are a few places where they either aren't allowed or are heavily regulated. Even parking can be difficult to find in the least regulated areas. A few common challenges for those venturing into this type of business include:
Time: Anyone who owns a food truck business knows they are expected to put in long business hours. Running a food truck doesn't come easy- you have to be dedicated and committed if you want your company to succeed.
Market competition: Examine your market thoroughly to raise the odds of success - you'll undoubtedly face competition from other food trucks.
Permits and Licenses: Food trucks must follow numerous rules and regulations in order to operate within the confines of each city, county, and state. It's never as simple as putting up a food mobile business and serving tasty eats. You won't be fined if you don't have the proper permits or accreditation, but it might shut down your food truck completely.
Ordinances and zoning: To comply with the law, know parking ordinances and zoning regulations before driving your food truck to a new location. Parking rules differ from area to area, so you could get ticketed or fined if you're unaware of the laws where you are operating.
How to keep food truck costs as low as possible
To be successful in the food industry, expense management is key.
Consider the following ideas for saving a few hundred dollars on your food mobile service:
- The food truck startup cost might quickly get out of hand, so don't buy an all-new food truck, top-of-the-line tools, and equipment. Rent or borrow used equipment until you know exactly what you require (you could end up never needing the most expensive things).
- You can save money by purchasing some ingredients or supplies in bulk from other food truck businesses.
- Look for competitive prices on the internet: Look around and compare different offers to see whether they're better.
- Think ahead by taking care of your truck now: Just like with people, preventive maintenance checks for trucks lead to a longer life and reduce the chance of more expensive problems down the line.
- Use your loved ones to help staff your company: This may not be a long-term solution, but it can assist you in figuring out and working through any issues you have. Additionally, this will help you understand how many workers you need during different periods of time.
- An efficient and cost-effective way to run this type of food business is by building your menu around versatile, seasonal ingredients. This means having fewer dishes that use some of the same produce, proteins, and spices. Not only will this save money, but it will also reduce food waste. Keep track of what items are selling well and adjust your offerings accordingly.
- Until you are confident in the quantities of ingredients needed, don't buy too much from the grocery store. It is preferable to run out and have to re-stock than to be stuck with unused, wasted food. Even better, if you do sell out quickly, it creates a positive buzz.
- Don't limit your business to just one revenue stream - explore others that could be even more profitable. For example, think about catering weddings, graduation parties, or late-night crowds outside bars or concert venues.
Unlock other opportunities
Not only does starting a food truck venture have numerous financial costs, but it's also an excellent opportunity to generate income by advertising.
As a truck owner, you can use your truck's sides as ad space. Find another local company that is related to yours or to your target demographic and offer them some rent on advertising space on your truck in exchange for monetary compensation. You can work out the details like how much money will be exchanged and for how long the agreement will last.
Is it worth owning a food truck?
The food truck industry has become increasingly popular in the past decade. It can be a great business idea if you're looking to make some extra money and be your own boss, set your own hours, and make a decent living. Some successful trucks bring in over $500,000 per year and only have startup costs of an average rate of around $40,000.
However, starting a food truck is not a get-rich-quick scheme. It's important to do your research and understand the costs involved before making the leap. To have a chance at success, you need more than just an appealing concept - you need a good food truck business plan too. Plus, you'll also have to market your truck well so people actually know it exists!
So, if you're organized, creative, and have a passion for food, owning a food mobile business could be a great way to earn a living. Just be sure to budget carefully and always put your customers first.
Final Thought to Consider About Food Trucks
A food mobile business is a more cost-effective way to enter the restaurant industry, as you don't need to pay for large investments like traditional restaurants.
It's apparent that the type of vehicle and kitchen you choose is a crucial selection. There are costs associated with every decision we make, some more apparent than others. With each choice comes the potential for certain risks. If you're unsure about what steps to take next in your business, do some more research and work on putting together a solid food truck business plan. However, trust your instincts as well. Before you make a decision on which truck to buy, do your research and make sure everything looks right.
You can best become familiar with your target market's local issues and needs by spending time reading the latest blogs about it. Also, don't forget that there are often big differences between large and small markets. So, what might work in one area may not work in another. To get a better understanding of the food business industry locally, make sure to research your target market well.