Starting a Food Truck Business – What you need to know

Food Truck Business Owners At one point in time, food trucks were considered the lowest form of food consumption medium, but that has all changed over the last decade. The popularity of food trucks has been on a perpetual rise, with many cities even getting a reputation for their food truck scene.

With the food truck industry on the rise, the curiosity of many people potentially interested in joining the food truck market has been piqued. With so many people looking to find out more about starting a food truck business, many are seeking pertinent details about how to start one.

One can only imagine the steps an owner of a brick-and-mortar restaurant must take to get their business up and running. A food truck may be a smaller platform for a similar service, but it has its own share of planning and consideration to be established. As with any business, there are many components at play in this venture. These include but are not limited to choosing a food truck concept (theme), learning about the costs incurred, getting funded, putting together a practical business plan, obtaining all of the legal permits and licenses, purchasing and insuring the truck, as well as its internal supplies, figuring out how to get compensated, marketing and advertising.

While it may seem overwhelming to acquire all of this information, it is quite doable if every component of the process is understood and the proper steps are taken. This guide has been put together with the intent of providing a comprehensive breakdown of areas and aspects that need to be addressed by someone interested in exploring becoming a food truck owner.

Does Starting A Food Truck Business Make Sense For You?

Starting a food truck is a great idea, but there are several factors to help you determine if it’s great for you specifically. For instance, if you reside in a city with a vibrant and thriving food truck scene, it may be a harder market to break into. Before starting the research and maneuvers to get your food truck business in gear, you need to do some preliminary, but essential research.

You will want to start by considering the currently existing food truck and restaurant scene in your area. If the city you live in already has a booming food truck business or the area where you plan to operate has many choices for places to eat (or ones that cater to the same market niche as your food truck would), you might struggle to get customers who might already be fans of a different food establishment or vendor in the area.

If you do feel that your food truck would be a unique enough business, you need to think about the demographic that you would like to cater to. If you feel that you are certain to have an interested customer base, you will need to explore if the area in which you plan your operations has space for your truck to stop and vend your products.

Most food trucks try to operate in densely populated areas or in a business sector setting where many need to come out and grab a quick lunch from a food truck, easing the hassle of having to find a restaurant or diner to eat at. You will want to maximize the customer base, so it’s important to research ‘hot spots’ before assuming something will work. Busy streets equal a higher potential consumer base. If there is a demand for your brand of food and the potential of consumers, then you are likely in a good place, at least conceptually, to start a food truck business.

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Selecting Your Food Truck’s Theme

This step is a bit trickier than it sounds. Finding the niche in any business venture of this type is paramount as you will likely be going up against multiple other food truck businesses. For that reason, it is important to scope out the food truck scene, specifically focusing on what food trucks in your prospective area of operation are currently offering.

You are likely to find that there are a lot of food truck businesses already selling things like tacos, burgers, and other fast-food variants. They are likely to have been operating for a while and have some loyal customers in their operating radius that like their food. They might be willing to try something different (your offerings) but it’s a safe bet that most long-term consumers will remain loyal to their old brand. Essentially, the concept of food you pick has to be one that’s not done by other food trucks, or not done in the same way.

Some helpful ideas for alternate gourmet include a food truck that sells organic dishes, wood-fired pizza, gourmet sandwiches, region-specific foods, or fusion dishes which could get the attention of people who enjoy a variety of foods and would love the combination.

Branding & Appearance

Never discount the draw of a good name and a memorable design. When crafting a name for a business make sure you put a lot of thought into a name that will be both memorable, descriptive, easy to pronounce, and unique. Another part of researching other food trucks is to see their names. To avoid the headaches of legal hurdles you will want to make sure that the name you come up with is not already a likeness of a trademarked name of an existing business. You can use the TESS website to find out.

The name you finally settle on should be catchy to be memorable, but also remember that your biggest source of advertising will be word of mouth, so the name should be catchy, descriptive, and easy to pronounce. That name should be paired with a logo.

A great logo is something that is even more challenging than the name to devise more often than not. Many people will recognize your brand by the logo and truck design, more so than the name. Your logo will be on your menus, business cards, and other advertising efforts including social media. A great way to acquire original logos is to seek out an experienced logo designer. This can be a lot less costly than it sounds. Sites like Fiverr and Upwork offer many designer freelancers who will charge far less than going to a professional for your design to craft a great logo or even multiple options.

Write A Food Truck Business Plan

Writing a business plan is the best way to fully layout your food truck idea and concept but in great detail. It will serve as a clear outline for your own step-by-step moves, but it will also be the document that will be presented to prospective investors who will help to fund your venture. For that reason, it is especially pertinent to layout your business’s vision carefully, looking at all angles and aspects of your business.

The business plan must include several key parts, each with its own specific purpose:

  • Executive Summary: This is the high-level description of your food truck business, including the goals you aim to achieve, your company’s identity, what type of food you will be selling, and your reason for doing so.
  • Company Description: This section will specifically focus on a more in-depth description of your company, with a particular focus on what distinguishes your brand from competitors.
  • Market Analysis: This will be a section that describes the target demographic that your food truck intends to service.
  • Management & Organization Plan: This section will outline your vision for the hierarchical management structure and explain the business goals you seek to achieve.
  • Description of Service: This section will explain not only what type of food you plan on selling, but also, provide your menu, and planned alterations for seasonal and future servings.
  • Marketing/Sales Plan: In this section, you will need to layout how you plan on getting the word out about your business and what types of marketing tactics you feel will help facilitate the growth of your business.
  • Funding Request: In this section you will need to focus on your startup & operating costs, as well as other types of funding you will need to keep your business operational.
  • Financial Projection: This section will focus on the plan for anticipated business growth for the next 5 years to show investors that you have a plan to grow your business and make their investment in it worthwhile.
  • Appendix: This section will include everything not already mentioned. This consists of any additional information about the truck, logo designs, blueprints, and photos.

Evaluate Startup & Operational Costs

Before heading to seek out investors, you will need to have all the numbers you will need in hand. First, you need to consider start-up costs, which could include additional cost considerations depending on your intended area of operation. The biggest cost, clearly, is purchasing the truck itself. However, that one-time cost can often be dwarfed by the cost of modifying the space to fit your intended operations as well as to abide by local health and fire regulations. These will be different based on the region of operation too. It is important to mention the registration and licenses of operation which need to be factored into the cost evaluation.

Another important upfront cost the decoration of your truck to make it stand out among the competition. These costs will depend on the level of detail and scope that you plan on using for this design. Another cost incurred will be associated with establishing a point-of-sale system (POS), which is essentially how you will collect money from your consumers.

Your food truck will also need to not only get its name out there but also have information available for those who actively seek it out. This means that certain costs will go to advertising, as well as website design. A website can be a powerful tool to get more interested consumers since they can go there to see your menu offerings and find interest in trying your food. That will go much farther in drumming up interest than simply hearing the name of your business.

Additionally, every business needs to invest in some type of PR assistance, and certainly legal and consulting fees to be safeguarded in case any legal issues are to come about.

Other costs will be recurring in nature. These include renting the equipment for your food truck, credit card processing fees, and of course payroll to any of the staff that works at your food truck. You will also need to replenish basic smaller scale items like napkins, utensils, and office supplies on the regular. Specifically, you will need to buy the food or items you will use to prepare the food regularly as well. It is also important to insure your truck, and that will add to the recurring costs you will incur too.

Overall, the cost of establishing a food truck can range from around $30,000 to $115,000 depending on the scope and extensive nature of the truck.

Obtain Necessary Funding

Armed with a detailed business plan, you will need to seek out investors who can help you with the start-up and operational costs, in order to get your business off the ground. One of the best places people get started with the acquisition of funding is through friends, family, and crowdfunding campaigns. These contributions are interest-free and are better than any loan could provide on a borrowing scale. However, depending on your need for funds, this may not be enough. If you require additional funding, there are some other options.

  • Investors: You can seek out investors around the community who might be willing to invest in your business, or at least to front some of the costs from which they will need to see a return on investment.
  • Small Business Loan: A good credit score and consistent bill payments will help you get a loan from a credit card company or a bank. Keep in mind that these loans will need to be paid off promptly and interest will be involved.
  • Equipment Financing: Certain food truck vendors will assist new food truck business owners in purchasing their truck and equipment through a financing program during which the loan will need to be paid back over a period of time.

Acquire Food Truck Permits & Licensing

Once funding is secured, you will need to obtain all of the proper food truck permits, which can vary depending on the state, or even the city that you are operating in. To find out everything you need, it is helpful to contact the Chamber of Commerce, the Motor Vehicle Department, and the Health Department to get a comprehensive list of requirements.

While some licensing is regional, most food truck owners will face the same general requirements in needing to obtain a business license, food service license, an employee Identification Number (for tax purposes), and an employee health permit. Because food trucks will need public space to operate in, they will also require zoning/parking permits, as well as mobile food facility permits.

Purchase A Food Truck

Needless to say, that a food truck business would be tough to run without the food truck itself. This will be one of the biggest initial investments, so it is pertinent to start off with a truck that will be as conducive to your needs as possible.

You will need to decide whether it is more cost-effective for you to purchase the truck outright, or to lease it. If you do decide on purchasing, will you be purchasing a new truck or a used one? Once those decisions are made, you will need to seek out a reputable dealer as you want to assure your investment will be reliable and have the peace of mind that you will be getting a quality vehicle.

You can find food truck for sale through either nationally or locally listed classifieds. You can also track down local leasing dealers of food trucks or invest in a new custom truck. While the latter will be far more costly, you can scoop in a lot of the retrofitting and equipment installation right from the get-go, instead of having to outfit it yourself.

Finally, give a lot of thought about the level of customization your truck needs. If that comes in under your budget for customizations, you can begin thinking about more that you want.

Related: Best New & Used Food Concession Trailers For Sale

Purchase Equipment

Once you have the food truck, you need to equip it with all of the right components to let you prepare food for your customers. Furnishing your food truck is essential to giving you the equipment and space you need to successfully operate your business. The equipment can be broken down into multiple categories:

  • Cooking: Ranges stoves, grills, fryers, toaster, microwaves
  • Food Prep: Table/counter space, cutting boards, thermometers, turners, pans, food processors, cooking utensils
  • Warming: Soup kettles, fry dump locations, countertop food warmers
  • Serving: Cups, to-go containers, disposable and serving utensils, trays, napkins, condiment dispensers, etc.
  • Refrigeration: Countertop glass refrigerator, under the counter refrigerator, freezer, etc.
  • Cleaning: Trash cans, brooms, mops, sinks, wet maps, sponges, equipment sanitation products, etc.

A full list of food truck essentials can be found on this handy checklist.

Purchase Food Truck Insurance

Insuring your food truck is essential for protecting your investment, but liability claims can mean a swift end to your business, so it is important to invest in insurance for your employees, your equipment, food supply, services, and potential business interruption. It is not advised to sidestep the optional insurance protections either such as insurance against property damage, accidents, and injury (you or your staff).

Remember how much work and money is going into investing in your food truck business. Insurance might be more on the cost end but could save you from financial and legal ruin in the long run.

Point-Of-Sale (POS) System

You will need to decide on the method by which you will collect your revenue. Credit card systems are handy as that is what most customers will opt to pay with, but they typically require internet access and the credit card transactions incur a nominal fee for you.

Some food trucks opt for a cash-only payment collection, but the drawback of this is that most people don’t carry a lot of cash on them. Those who do not, will not have a choice but to bypass your food truck for another meal option, so the investment in a credit card system is worth it.

Very forward-thinking food truck owners tend to invest in mobile payment options as well. Paying from services like PayPal and Venmo are increasingly utilized by consumers armed with smart devices, so it’s important to be aware that investing in mobile payments can draw even more interested buyers who prefer this method of payment.

Advertising

It will be hard to attract attention if you cannot get your name out there. Consumers will do a big part by spreading your reputation via word of mouth, but you cannot simply count on that, and certainly not right at the beginning. Your food truck can be its own advertising medium (which is why a logo and truck design that stands out is so vital) but investing in traditional and digital marketing is also necessary to reach those who may be interested might not regularly be in your area of operation.

Your truck’s logo should stand out and it should be the thing that ties your brand to your truck. Your menu should be bold and prominent, as well as being made available through your advertisement. Setting up a website is a hugely advantageous advertising move. Many could be mildly interested in checking out your food truck menu and information, so they will go to your website to evaluate how much they want to try your offerings. The website should feature photos, history, and an ‘about us’ section that can connect with the consumers on a human level.

Social media promotion is critical to your business thriving as that is the top modern advertising method. You can increase your visibility by attending local community events, just make sure you plan everything ahead of time, including the acquisition of any pertinent licensing to attend.

Another fantastic way to increase your profits is to set up merchandising with your brand. There will be those who are interested in anything from t-shirts to travel mugs and stickers. This also makes your customers walking advertisements for you. When they wear it out or even to other parts of the city, they might be asked about their wear, drumming up more potential interests from others who may not know about your business.

Conclusion

Starting a food truck business has lots of advantages including flexibility and mobility of your business. You can have multiple spots of operation, working in two or three places throughout the week (or even day), which will draw a wide range of consumers to your food truck.

The competition can be problematic, especially in a food truck heavy area, but keep in mind that this is something that should help your business grow better by learning from your own errors or those of others. Plus, more options are never a bad thing. You will also need to stay on top of zoning laws to not get caught off guard by any changes to your mode and location of operations.

A food truck takes work to get off the ground and requires long hours, including cleaning after operations have ceased for the day. You will need to take care of event bookings and cleaning all of your equipment daily in order to keep your customers safe from pathogen-related illnesses (an unfortunate occurrence that can destroy a food truck’s reputation).

On the plus side, you will be able to apply multiple tax deductions, including many not available to restaurant owners, being able to write off renting fees, truck costs, and storage expenses.

A food truck business overall can be a rewarding and lucrative investment, even if it does take up a lot of your time and requires a lot of work. Such a venture makes it especially important to utilize a guide such as this one to help set everything up right from the start, and then enjoy the fruits of your labor.

See more frequently asked questions about food trucks.