What You Need to Know Before Buying a Food Truck

Buying a Food Truck
Food Truck Customer

So, you want to start a food stuck business. Are you unsure where to start? This guide can help advise you in purchasing a food truck and building your food truck business plan.

How to Buy a Food Truck (and Where)

Most people assume that it is less expensive to run a food truck than it is to run a brick-and-mortar restaurant. However, purchasing a food truck is still a costly investment. Once you have your financing in place, you’re ready to buy your food truck.

How do you find a food truck?

If you’re purchasing a used truck, keep an eye on local and national classified ads. Sites like eBay and Craigslist can also be used, but buying from these sites can be a risky choice. Used trucks may be a short term solution to saving on startup costs. However, used food trucks may require expensive repairs down the road.

Sites like Roaming Hunger, Used Vending, and Food Truck Empire offer information for purchasing both new and used food trucks. These sites are used by those in the food truck business, making them a great place to look for your food truck.

Food Truck Prices

The price of your truck will depend on several factors: whether you buy new or used, what equipment you need, and any repairs that need to be made.

For a new food truck, prices vary greatly. While some food truck sites suggest a new truck costs anywhere from $75,000 to $100,000, other sites suggest that a food truck can cost as much as $250,000. Customizations, cooking equipment, and fees can add significant cost to buying a new truck.

A used food truck can be purchased for $50,000 to $100,000. With time and patience, a used truck can sometimes be found for as little as $35,000. However, used food trucks may require updates or repairs before they are ready for business, adding to the cost of buying a used truck.

A middle ground between buying new and buying used is buying a used truck and outfitting it with a new kitchen. Shipping services like UPS and FedEx often sell their trucks after they’ve been used for a few years. These trucks can be customized with a new kitchen. The cost of getting a custom used truck with a new kitchen can be between $75,000 and $100,000.

For those without startup capital, leasing a food truck is an option. Unfortunately, leasing a truck may mean less customization options for your kitchen. Long-term, leasing is the more expensive option. A leased food truck can cost $4,000 or more each month.

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Choosing Between New & Used Food Trucks

When choosing between a new and used food truck, your decision is largely influenced by your startup budget. There are pros and cons to each option.

New trucks are more expensive, but they carry much less risk. With a new food truck, your vehicle and kitchen appliances will carry warranties, preventing you from costly repairs during the first few years of your business. A new truck will look and feel new. As the first owner, you will know the vehicle’s entire history, leaving no questions about previous care (or lack thereof). Should you decide to sell your food truck, new trucks fetch a higher amount on resale.

Used trucks can be found for less money, but they carry a higher risk. Repairs down the road will add to your vehicle cost. Without a warranty, these repairs will have to come out of your pocket. Although a used truck may already have the needed permits, if it is in bad repair it may need to be updated to be permit-ready.

Purchasing a new kitchen for an old truck has its own risks and benefits. By purchasing new appliances, you will have peace of mind over their condition, as well as warranties in place to cover repairs. Unfortunately, buying a used truck still carries the risk that the truck itself will need repairs. With new emissions standards in some states, an older truck may need updates in order to bring it up to legal standards.

Leasing a food truck is an option, although it is riddled with problems. Leases can be costly, limiting your profits. Leased food trucks are often older models and have limitations for customization. The layout and appliances of your food truck kitchen will greatly influence your business, making a leased vehicle a less desirable option.

Related: Best New & Used Food Concession Trailers For Sale

Buying a Food Truck with No Money Down

It is possible to buy a food truck without a down payment. Some financing options are available for purchasing food trucks. Because the institutions financing these loans have to protect their investments, no money down options typically require the purchase of a new vehicle.

You can also start your food truck business by raising funds from investors. In addition to the cost of the truck, your food truck business will need to purchase insurance, initial inventory, a POS (point of sale) payment processing system, commissary fees, permits and licenses. These additional costs can add up to nearly ten thousand dollars and are necessary before you open up your truck for business.

If you do not have startup money, create a business plan and begin seeking financing options. Banks and other lending institutions can help you finance the truck itself, while investors and other fundraising efforts can help you with the other startup costs. The more comprehensive your business plan, the more likely banks and investors will invest in your business.

Financing a Food Truck

Financing and monthly payments are available for starting your food truck business. Most options will restrict your purchases, allowing you to only buy a new truck. When financing a food truck, you should try to get two separate loans: one for the truck itself and one for the kitchen. The interest rates for the truck itself are often lower than the rates for the kitchen, so financing them separately can save you money that would otherwise be spent on higher interest rates.

Take time to calculate what your monthly costs will be when using loans to cover the cost of your truck. By calculating the cost for your truck, your insurance, permits, food, and labor, you’ll know how much money you need to make in sales to cover the cost of owning a food truck business. Research food trucks in your area to find out if your necessary income is a reasonable target or not. If you’re seeking investors, they will want to know about your projected costs and income.

Out-of-State Truck Purchases

Buying a food truck across state lines may be tempting, especially when an out-of-state truck purchase looks like it could save you a lot of money.

However, moving a food truck across state lines may require additional permits and legal fees. While many of these fees relate to moving the business itself across state lines, if you’re buying a used truck out-of-state, you may find yourself on the hook for more expenses than you think. A ready-to-use truck in one state may not fulfill the permit requirements of another state.

If you’re considering an out-of-state truck, make sure to research what fees you’ll have to pay and what repairs and updates you may need to make to get the truck ready for use in your state.

Questions to Ask When Buying a Food Truck

You cannot ask too many questions when making a large investment like a food truck. Before you purchase any equipment, make sure that you have a plan for your food truck business. Some questions to ask before getting started are:

  • Where will I set up? Their mobility is part of the appeal of food trucks, but it is important to know where and when you will set up your truck in order to make a profit.
  • What permits do I need for my food truck? These permits will vary by state and by city. You may want to hire legal counsel to make sure you’ve covered all of your bases.
  • What appliances do I need in my kitchen? The appliances needed for your food truck will vary, based on what food you plan on serving. A food truck selling tacos will need different equipment than a food truck selling pizza. Make sure you have all of the tools you’ll need.
  • How will I lay out my food truck’s kitchen? If you’re purchasing a new truck, you can customize the kitchen to be laid out however you want. Make sure you’re intentional about how the space is used. A bad kitchen layout could lead to slow service. You may want to talk to other food truck owners to get input on your kitchen’s layout.
  • What is my menu? Plan your menu carefully. You’ll want to make great food that can be served quickly. While changes can be made to your menu over time, make sure you have a strong starting menu planned.
  • How will I market my food truck? Online and social media advertising is increasingly important for any business. Make sure you have a plan for marketing your food truck brand. Create a brand name, a logo, and a brand identity. If you plan to hire outside help for creating and managing your brand, make sure to factor this into your startup costs.
  • What payments will I accept? People have become accustomed to food trucks accepting cash only. However, as more businesses accept card and mobile payments, you will want to seriously consider offering these payment options to customers. The sales system needed to collect these payments will add an additional cost to your startup costs. Card fees will need to be factored into your regular budget as well.
  • Who will cook and serve the food? A food truck can be successfully run by two people. If you have a larger truck with food that requires more preparation, you will want additional help. Hiring additional workers will add to your costs and their pay and uniforms will need to be factored into your business plan.

As you prepare your food truck business, you’ll discover more questions that need to be answered. If you are preparing a business plan to attract investors, you’ll want to include as much detail as possible so they can make an informed decision.

Running a Profitable Food Truck Business

While you may open a food truck because of your love of food and a love of cooking, turning a profit is a necessary and desired outcome. How can you ensure that your food truck business will be profitable? Below are some factors to consider when building your food truck business plan.

Why Food Trucks Fail

Food truck businesses fail for a variety of reasons. While economic conditions can account for some closures, many food truck closures can be prevented by proper planning. Here are just three of the reasons food truck businesses fail:

  • The business plan didn’t properly prepare for food costs. Most restaurant and food truck owners agree that your food cost should be between 28% and 35% of the sale price of your food. For example, if your food truck plans on selling tacos for $2, it should cost no more than 56-70 cents to make each taco. While your food cost will largely remain fixed, some foods like meat and cheese may fluctuate in price. If you do not properly plan for the cost of food, your business will not make a profit.
  • The food truck itself is poorly outfitted or in bad repair. If you kitchen has a poor layout, your serve times may keep customers away. For older trucks, the cost of repair to the truck and its kitchen can eat into your profits, forcing you to close your business.
  • The owner underestimated the time commitment of owning a food truck. Even if you hire additional help, you will likely be working more than full time in order to get your food truck business off the ground. In addition to the hours spent serving food, you need to consider the time spent preparing food, cleaning your kitchen, advertising online, and managing the business side of your food truck.

When a food truck fails, it is often because the owner has not thought through and prepared for these things. In researching and creating your business plan, make sure you account for all of the possible obstacles and costs.

Most Popular Food Truck Foods

Your food truck can make and sell almost any type of food. Below are a few of the most popular food truck foods:

  • Barbeque: Barbeque is a food truck classic. Ribs, pulled pork, and more make these a popular choice for food trucks.
  • Mexican Food: Mexican food is a common choice for food trucks. Street tacos and empanadas especially are a popular choice for food trucks.
  • Pizza: Many food trucks serve pizza and other Italian food.
  • Cupcakes & Other Sweets: Who doesn’t love a good dessert? Because a lot of work can be done ahead of time, dessert food trucks allow you to serve food to customers quickly.
  • Burgers & Sliders: These make a great food truck food, especially at fairs and carnivals where customers may eat while standing.
  • Seafood: Lobster rolls, shrimp, and other seafood are popular food truck foods.
  • Grilled Cheese: Grilled cheese can be simple or complex. Many food trucks offer lots of grilled cheese variations for customers to choose from.

These are just a few options for your food truck business. If you’re planning a food truck business, it’s likely you already have a menu in mind. As you plan the details of your menu, keep your customer in mind. If you provide a great product at a fair cost, customers will flock to your food truck.

Disadvantages of Running a Food Truck

There are some disadvantages to running a food truck. As you make your business plan, it is important that you are aware of these:

  • Running a food truck is more than a full time job. Even if you only have your truck set up part-time, operating a food truck is a full time job. Ordering and preparing food, cleaning your kitchen, and making sure your truck are well-maintained are just a few of the tasks you’ll be responsible for as a food truck owner.
  • There is high competition with other food trucks. Especially if you plan to serve food at events, competition will be fierce. You’ll want to make plans to stand out among the crowd.
  • There are ordinances and zoning issues. You’ll need to learn where and when you can park your truck. Although it will cost you money, you may want to consider hiring a business attorney to help you navigate these ordinances.
  • Vehicle maintenance can be costly. Not only do you need to maintain the kitchen and its appliances, but you must keep the vehicle in working order. Your food truck will be useless to you if you cannot move it to new locations. If you purchased a used truck, repairs can be a costly and unforeseen expense.
  • A large truck may require a commercial license to drive. If you purchase a larger food truck, you will also need to obtain a CDL license to operate the vehicle. The classes and certifications for this license can add up quickly.

Conclusion

A food truck can be an exciting and profitable venture. Before you purchase a truck or any equipment, make sure to properly plan your business. Proper planning can be the key to your business’ success!