You love to make food and feel the pull of the road. A restaurant might be too expensive to start, plus you are tied to the spot. The answer to your yearnings could be to start a food truck business, tapping into its growing popularity for food served this way. You can drive your truck to wherever your customers may be.
Here's what you need to know about setting up your own food truck business.
What Is a Food Truck Business?
A food truck is a vehicle that sells cuisine made within the truck or in a commercial kitchen. Food truck owners drive and park in different locations or a single location to sell food. This is a licensed food operation that has to meet many of the requirements of food-servicing businesses, such as restaurants.
While you don't need any special training or education to run a food truck business, it helps to do a lot of upfront planning, have a good business idea, and bring a passion for cuisine and entrepreneurship to the serving window.
The history of the food truck goes back to 1866 when a Texan rancher named Charles Goodnight ("the father of the Texas Panhandle") invented the chuckwagon - essentially a kitchen on wheels. In 1872, Walter Scott reputedly set up the first food stand in Providence, Rhode Island, selling pie and coffee to journalists from a nearby building through windows cut into a covered wagon. In the 1950s, ice cream trucks started selling their wares and food carts appeared outside U.S. army bases (providing an alternative to the commissary) and construction sites. Chip and taco trucks also arrived on the scene.
Today, there is a thriving food truck industry, with some cities known for their choice of cuisine - such as Portland, Oregon, New York, and Houston - and serving everything from pulled pork sandwiches to chicken tikka masala burritos.
What to Consider When Planning Your Food Truck Business
While you don't need as much money to start a food truck as a restaurant, average food truck startup costs can range from $75,000 to $250,000 depending on factors like legal fees, the state in which you will operate the business, customization requirements, and the market niche you're after. You may need to take out a business loan or other financing.
When looking at how to start a food truck business, other factors include:
The Food Truck Market
To ensure your food truck doesn't get towed away, you need to do some work upfront, including researching the food truck market in the city where you'll operate.
Start by checking out the competition, what they are selling, and where. You'll have trouble if you are the third pho truck on a particular street. You want a concept that is different and a place (or places) to park with traffic to keep you busy, including a demographic that wants to try the kind of cuisine you're offering.
Your Cuisine and Business Name
With the research done, it's time to choose your type of cuisine and business name. Ask yourself if you want to choose a cuisine that seems to be popular in the area or one that more aligns with your own experience, culture, and interests. In a perfect world, it would be both.
Some popular food truck cuisines include:
- Gourmet pizza
- Specialty sandwiches
- Fusion dishes
- Organic and health food
- Regional cuisine
In choosing a name for your food truck business, it should be unique, describe what you do, and be easy to pronounce and remember. It should also enable your business to grow and expand with new menu items. "Ben's Big Easy Po Boy Sandwiches" may not work quite so well if you add gumbo and crawfish boils to the lineup.
Your Startup Costs
In setting up your food truck business, you need to figure out your one-time costs and recurring costs. Some one-time costs can include:
- A used or brand-new truck
- A POS system (point of sale) and/or cash register
- Modifications to meet local health department and safety regulations
- Professional, legal, or consulting fees
- Design and advertising
- Truck wrapping
- Initial inventory
- Purchased equipment
Some recurring costs can include:
- Equipment rentals
- Credit card processing
- Truck fuel
- Licensing requirements and permits
- Food truck insurance
- Ongoing marketing
Your Food Truck Prices
While food trucks have various prices and cuisines, they have to be careful with their pricing since some customers expect that food bought from a truck represents a savings over getting it from a restaurant.
When deciding menu prices, you need to understand food costs. It's important to charge a percentage increase - sometimes as high as 25% to 35% - over the actual cost of buying the food. The percentage would cover costs like operating the truck, any wages for workers, and others related to keeping your food truck business running.
Of course, as a food truck business owner, your prices should be competitive compared to other food trucks in the area selling similar cuisine.
Making a Solid Business Plan
Writing a business plan is a good idea so you can have a handle on the details of your food truck business before you start investing in it. It helps you map out a financial plan, giving you an idea of how long it will be until you turn a profit. Parts of your food truck business plan can include:
- A business description
- Market analysis
- Organization and management
- A product line description
- Advertising, marketing, and sales strategies
- Funding proposals
- Financial projections
Obtaining Registrations and Licenses
Regulations vary from state to state, but you'll likely need to obtain a food service permit and business license. Some states require additional permits, including a mobile food facility permit, health permit, food safety certification, and food handler permits for staff.
Workers' compensation, business insurance, and parking permits are other costs that may come into play, whether you are parked in the street, in a special food truck lot, or at different farmers markets.
Getting Your Food Truck Business on the Road
Now that the preparation is done, it's time to form a legal identity for your mobile food business, decide how you'll market yourself, and run the day-to-day business as a food truck operator, including billing, accounting, and driving and cooking.
Legal Considerations for Your Food Truck Business
For legal and tax reasons, you need to select a business structure for your food truck startup. The two most common for this field are limited liability companies (LLC) and sole proprietorships. LLCs provide limited liability protection if you maintain good recordkeeping and separate your personal and business assets.
A sole proprietorship is a business owned by one person. There is no separation between the business and personal finances of the owner. While this type of business entity is simple and inexpensive to start up, it leaves you personally liable for any debts the company occurs and any business actions it takes.
How you register your food truck business may differ from state to state (and even city to city). Often, you will have to reserve and register a business name, checking with local government registries available through the Secretary of State to ensure your name doesn't match another business too closely.
You might also be required to get an employer identification number (EIN) from the Internal Revenue Service (IRS) if you plan to hire employees (you may also need a separate state ID). You also may need to register your business and apply for tax permits. For your business license, you may need to obtain a "doing business as" (DBA) name if you are conducting business under your food truck name. Check with your local government and health department to see if any inspections and location permits are required.
You'll also need to open a business bank account and obtain the right insurance - general liability insurance and a commercial vehicle policy, at the very least.
Ways to Market Your Food Truck Business
When marketing their businesses, food truck owners find that a good place is to start with the truck itself, making sure it's branded with the company's colors, name, logo, and perhaps a snappy slogan and contact information. To design a logo for the truck and other marketing materials, you may need the services of a professional graphic designer. You can find a wide variety of designers, experience, and price points on remote freelance platforms like Upwork.
You'll also need to have a good website to communicate, among other things, where your truck will be on a given day and time, special menus, and information about catering and events, if that's what you offer. You can hire a freelance web designer or you can learn to do this yourself, with an easy site builder like Wix, Weebly, or Squarespace.
Social media marketing is a must for connecting with customers, seeing what they are saying about you, communicating about special menus and truck locations, uploading pictures, and much more. One good resource to develop a social media marketing strategy is HubSpot's Ultimate Guide. It segments the various social media channels, reveals benefits of this kind of marketing, and offers tips on creating an effective strategy.
You can also get your food truck listed on Google My Business if you are tied to a specific location and have permission to represent that location through a lease agreement. Yelp is another way to promote your business easily and cheaply. Yelp has a ton of people interested in finding great restaurants and food trucks or catering help for events.
Daily Operations to Consider for Your Food Truck
When running a food truck business, you'll have to juggle a variety of payments (including ones for small business loans), order supplies, take care of payroll, and handle the financial interactions of a catering business. Keeping track of customer payments may involve a traditional cash register. You might also take credit cards, internet orders, mobile wallets, and other POS systems. Keeping track of this income is important for having an accurate financial snapshot of your business and tax reasons.
Skynova's accounting software is designed for small businesses like food trucks, providing a range of useful features that you don't need in-depth accounting knowledge to employ. It's easy to keep track of your expenses and income, take care of your tax obligations, and have an accurate view of your financial picture.
Turn Your Food Truck Plans Into a Successful Business
Starting and running a food truck business takes planning, hard work, some business savvy, and a passion for food service. With the right planning and ongoing management of your operation, you can turn a good profit.
To be successful, you need access to products designed for a small business, such as those offered by Skynova. Our more than 30 online software modules make it easy to handle functions ranging from accounting and invoicing to work orders and bills of sale. See how Skynova can turn your new food truck into a thriving business.