Running a food truck may seem temptingly simple, but the truth is very different, and even the most successful food truck faces immense challenges.
A food truck is a business and should be treated as such. There are all sorts of costs and concerns that affect the successful running of a business, particularly in the food industry.
Many people are aware of how many brick and mortar restaurants fail every year, and how hard it is to carve out a returning customer base even if you do everything right.
Costs are the biggest threat and difficulty for food trucks, and in this guide, we’re going to look at these to give you an understanding of just how challenging setting up a food truck is, as well as how difficult it is to keep things running in the face of uncertain economic conditions and massive competition.
Why You Need To Write A Business Plan
A business plan will give you a clear idea of what your goals are, and where you want to take your business. It will also provide a framework for making decisions, and allow you to see whether you’re on track to achieve them.
This is as important for starting a food truck as anything else, and it will help you to get an initial idea of costs for everything from your truck and equipment to staff and daily operating costs such as fuel, ingredients and site fees, as well as other potentially unexpected costs such as repairs or insurance.
You need to weigh up these costs with your potential revenue streams and work out how profitable your planned offerings will be in line with the various costs your truck will have to absorb.
A well thought out business plan is crucial and will often give you a good idea right away of the costs of your food truck and how profitable, or unprofitable it is likely to be.
Everything You Need To Open A Food Truck
Food trucks are incredibly difficult businesses to start and run. They require a lot of capital investment, and they are notoriously hard to scale up once you’ve started.
If you’re thinking about opening a food truck, then you’ll need to think carefully about the amount of money you can afford to invest – not only in terms of the truck itself but also in any additional equipment like refrigeration units or ovens that might be required.
It’s also worth considering the amount of time you can dedicate to running your truck full-time, as well as the level of experience you already have in the food industry. If you don’t have much experience, then you might consider working part-time or taking some courses to learn more about the industry before committing yourself fully.
These courses cost money, so this is an additional cost you’ll need to work into your plans before you’re ready to start, and often these can be very expensive and build up quickly.
After equipment, insurance, staff and ingredients, as well as fuel and appropriate licenses, you should be ready to start trading, but getting all of this in order takes a lot of time and money, which is one of the great difficulties of getting a food truck up and running.
Standard Planning Expenses For Launching A Food Truck Business
The cost of starting a food truck business varies widely depending on where you live, what kind of vehicle you choose, and how much money you want to invest. In general, though, you’ll pay anywhere from $10,000 to $50,000 to start a food truck business.
In addition to the actual cost of buying the truck, there are other expenses involved in setting up a food truck business. These include:
Depending on the type of vehicle you buy, you could spend between $5,000 and $20,000 on the truck itself. This includes things like the size of the truck, the number of seats, the kitchen area, and the amount of storage space available inside.
Other items you might need include:
- Ice machines
- Other Equipment
There are lots of other small bits and pieces you might need, including:
- Safety gear
- Paper goods
- Disposable cups
- Ice packs
- Coffee makers
- Storage containers
- Table cloths
In short, there’s an almost inexhaustible list of stock and equipment to buy and keep track of as well as store, and these are all costs that can quickly add up and make your food truck dreams a much more dubious prospect.
Obtaining The Proper Permits And Licenses
Food trucks are required by law to obtain a federal license from the U.S. Department of Agriculture (USDA) before they can operate legally. This license allows them to serve food in public places like parks, streets, sidewalks, etc.
The USDA license requires the applicant to pay $200 per vehicle and $25 per employee. The application process takes approximately 30 days and includes background checks, fingerprinting, and a physical inspection of the vehicle. If approved, the applicant must then pay another $100 fee to renew the license annually.
If you plan to run a food truck in a city where you don’t already have a restaurant permit, you will likely need to apply for a local permit. These vary widely between cities and states, so check with the local government website for details.
The Cost Of Securing Insurance For The Food Truck
Securing a food truck is not cheap. It’s important to know what you’re getting into before you start.
You should consider purchasing liability insurance for both yourself and your employees, as well as property damage coverage. You can also purchase worker’s compensation insurance if needed.
Liability insurance covers any injuries or damages caused by your food truck, while property damage insurance protects against theft or vandalism.
Worker’s compensation insurance provides medical benefits for injured workers.
Insurance companies often charge extra fees for these services, which means you’ll end up paying more than you would if you purchased the same coverage separately.
Most insurance policies require you to maintain a certain level of coverage throughout the entire duration of your policy.
The area where you plan to work and park your truck is also a huge factor in insurance costs, so this is something to consider carefully as well when looking at insurance.
How Much Should You Spend In Food Truck Marketing?
The cost of food truck marketing will vary depending on what type of food truck you run, where you want to operate, and whether you plan to expand into new markets.
For example, if you plan to only operate in one market, you won’t need to spend money on advertising or hiring a PR firm.
However, if you plan to expand into multiple locations, you’ll need to invest in marketing and branding to ensure that your brand is well known and that you attract as many customers as possible.
It’s also possible to consider social media and digital marketing, as this is arguably more likely to bring you customers than any other form of marketing available.
Food trucks are not cheap to run, and they require a lot of capital investment upfront. They also require a huge amount of maintenance and upkeep, which means you’ll need to pay someone else to do it unless you’re a skilled mechanic or technician.
In order to make sure you get a good return on your investment, you’ll need to choose a quality model that has been built to last.
It’s also worth noting that some models are better suited to operating in warmer climates, whereas others perform best in colder weather.
When choosing a truck, you should consider its size and capacity. This will affect the size of kitchen equipment required, as well as the number of seats you can fit inside.
It’s also important to take into account the space you’ll need to park your truck. If you plan to operate in an urban environment, you’ll need to find somewhere close to public transport hubs or major roads.
Parking And Storing Costs
The first thing you’ll need to consider is parking. If you don’t have a spot reserved, you’ll need to pay for street parking. This will vary depending on where you intend to park your truck, but there can be charges ranging from several dollars per hour or more depending on how popular and in-demand the plot is.
You’ll also need to think about storage space. A lot of food trucks are small, so you’ll want to find somewhere with a large enough area to fit your equipment.
Is It Better To Buy Or Lease Food Truck Equipment?
Buying food truck equipment can cost hundreds or even thousands of dollars, so leasing makes sense if you don’t want to commit to buying something outright. Leasing will allow you to pay only for what you use, which means lower initial payments.
On the downside, these costs can quickly build up and eat into your profits, as you’ll always be paying for the lease on them.
Expenses To Stock And Open Your Food Truck
Costs vary widely depending on where you live and the food you intend to serve.
Quality ingredients can be costly, as can storing them correctly and managing inventory to avoid wastage, and all of this is complex and the financial impact of a mistake can be severe.
Running a food truck is a big commitment, and it requires a significant amount of time and effort to succeed.
If you’re considering starting a food truck, it’s vital to understand the costs involved before making any decisions, so hopefully, this guide has given you some, ahem, food for thought, and a better understanding of just how massive an undertaking this type of project can be.