Running a food truck business is an exciting and trendy opportunity for any entrepreneur with a passion for food. It is also a way for an individual to have a positive impact on their community. That said, just like any business, the venture involves hard work, patience, and determination. If a business owner chooses the right financing options and follows the above tips, then he or she has every chance of success.
Brad Nakase, Attorney
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Jerry has always loved grilled cheese sandwiches, and he has spent years creating delicious recipes. Cheddar and tomato, crab and Old Bay seasoning, blue cheese and arugula – clearly, Jerry is very popular with his friends. In fact, one of them suggests that Jerry start his own food truck. Jerry has never considered this. He once thought about running a traditional restaurant, but he did not think grilled cheese would translate well. However, with a food truck, he could cook up delicious, trendy grilled cheese sandwiches for the local community. However, Jerry has no idea how to start a successful food truck business.
A food truck business is a great choice for an entrepreneur who has a passion for food but does not want to open a restaurant. In fact, running a food truck business is cheaper than starting a traditional restaurant. It is also a great way to begin a career in the food industry, for those individuals who are just starting out.
The good news is that food trucks are more popular now than they ever have been. The average person has likely seen them at festivals, weddings, birthday parties, and simple out and about on the street. Food trucks are also great options for people on the go; just step out onto the street and grab a delicious, unique offering from a themed truck.
The concept of food trucks dates back to 1961, when New York street vendors sold food from carts, catering to hungry people on the run. They would sell meat, sandwiches, and fruit to construction workers, garment workers, and delivery personnel. The year 1974 saw the first official food truck in the form of King Taco. In fact, this truck became so successful that it became a brick-and-mortar restaurant in Southern California.
Since the 70s, the food truck industry has grown in diversity and creativity. Trucks are often brightly colored with unique branding. Often, food truck business owners focus on a particular type of food, including tacos, pizza, cupcakes, and grilled cheese. For example, there is The French Quarter truck in New Jersey that offers Creole-style food, as well as the Kogi BBQ truck in Los Angeles that offers Korean barbeque.
Since 2008, the food truck business has been growing at an unprecedented rate. As of 2019, there were over 23,000 food trucks in the United States. These trucks rake in a total revenue of about $1 billion per year, which is certainly nothing to sniff at.
Shortly after the 2008 recession, food trucks became something of a trend in the United States. Now, however, food trucks are a normal, accepted part of the American culinary landscape. They are another option alongside restaurants and fast food, and often can be found on street corners in major cities.
Recently, the restaurant industry has experienced growth of about 2%, while food trucks have enjoyed an annual growth rate of almost 8%. And the popularity of food trucks has shown no signs of slowing down. In popular culture, food trucks are seen as a fun way of experiencing new foods.
Thanks to the explosive growth of the food truck industry in recent years, more and more entrepreneurs are jumping into this space. And it is certainly tempting. The startup cost associated with creating a food truck business is much lower than that of a traditional restaurant. Depending on the state, it costs about $30,000 to $40,000 to launch a food truck business.
While there are food trucks in most American cities, they are most popular in major cities like Austin, Portland, New York, and Los Angeles. The most successful of these trucks conduct their business in busy streets, business districts, bars, sports venues, farmer’s markets, and any other place where they can legally set up shop.
While it is easier and cheaper to start a food truck business than a brick-and-mortar location, it still requires a lot of time and effort to achieve success. There are certain strategies that can help a business owner’s food truck stand out from the crowd and gain a reputation among customers, leading to increased profits.
Let’s explore some of the best tips for starting a successful food truck business:
Before investing in a food truck, a business owner should conduct market research about the industry to better understand how it operates. This research should answer certain questions, such as:
The answers to these questions will help a business owner make smart decisions about his or her food truck business. These decisions will concern what type of food truck to run, where to run it, and to whom it will cater.
Example: Jenny dreams of opening a food truck that sells specialty desserts. However, she wants to make sure that no one else in her city is already running such a business. When she searches online, she finds that there are already three food trucks selling desserts in her local area. However, she sees that one only sells cookies, another sells ice cream, and the third sells cupcakes. Luckily, Jenny specializes in selling chocolate covered fruit. Therefore, she feels comfortable running a food truck that sells dipped strawberries, pineapple, and apples. She also picks a part of town where the other trucks do not operate so that she can corner a share of the city’s population.
When it comes to deciding what food to serve, there are endless options. A business owner could choose to serve pizza, sliders, barbecue, grilled cheese, tacos, or desserts. But which to pick? Again, a business owner should conduct market research to study local demand. If there are already five grilled cheese trucks in the city, then a sixth will probably have trouble cornering the market. Now if the city does not have any barbecue trucks, then there is an opening.
It is wise to choose a food truck theme that has less competition. The theme should also be affordable, not requiring expensive, hard-to-order ingredients. It should also suit the owner’s interests. If the owner despises ice cream, then he or she should probably not open a banana split truck.
Example: Franny is starting her own food truck business, and she is excited to sell fish tacos to her local community. However, she discovers that there is already a very popular truck that sells fish tacos in her city. Though disappointed, Franny decides to find another category of food that is underserved. She asks around her neighborhood and finds that customers would really like a pizza truck or a quesadilla truck. Franny doesn’t like pizza, so she decides to specialize in quesadillas.
A business owner will need to buy various types of supplies to start his or her food truck business. For a mobile food business, required items include the following:
A business owner should create a list of the necessary supplies, then shop around for the best deals on inventory and supplies. This strategy can save a business owner time and money.
Not all food trucks are the same. The price of a food truck can range between $50,000 and $250,000, depending on the type. A business owner must also choose between a new or used truck. There is also the option to lease a truck. While new trucks are customizable and thus allow for more creative freedom, they are also very expensive. That said, while used trucks are cheaper upfront, they come with risk of needing expensive repairs or maintenance. Leasing a truck allows a business owner to test the venture before committing to buying a new truck.
Once a business owner decides what type of food truck he or she would like to buy or lease, they should go to a recognized truck dealer, such as Prestige Food Trucks, FoodTrucks.net, and Cruising Kitchens.
It will also be necessary to think about how to finance the purchase of a food truck. Often, business owners will apply for a food truck business loan, which they will use to purchase a truck. After receiving a food truck loan, a business owner will have the funds on hand to buy a vehicle without using money devoted to other areas of the business.
It is possible to first establish a food truck business as a sole proprietorship, before incorporating further down the road. However, it is a better idea to incorporate the business from the beginning. This is due to liability issues. Because a food truck owner is selling food to people, the chances of someone getting food poisoning or having an allergic reaction is quite high. Incorporating offers a business liability protection, meaning that the company’s and owner’s assets are safe in the event of a lawsuit.
To incorporate a food truck business, an owner must first decide in a name, then register the business in the state of operation. Once this is completed, the owner may then apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
In order to operate legally in one’s home state, it will be necessary to acquire all the relevant licenses and permits. Operating without these can lead to serious consequences.
One of the most important aspects of creating a food truck business plan is establishing a budget. A business owner should record the amount of money he or she is planning to spend on each part of the business. These parts might include kitchen equipment, vehicle maintenance, marketing, and hiring truck operators. These numbers will help create financial projections.
It is important to remember that the food truck market may change over time, especially if regulations change. Therefore, one’s budget may need to adapt. The budget should also be realistic and allow an owner to survive with as little debt as possible.
As discussed above, a great way to finance a food truck business is through loans. After a business owner creates a budget, he or she should research different financing options. These include the following:
Marketing is a critical component of a business’ success. A business owner, therefore, should focus on creating a diverse, wide-ranging marketing strategy. This may include using Facebook ads or Search Engine Optimization (SEO), to get the brand’s name out on the web and in front of as many eyes as possible. One could also create an email newsletter, which would let nearby customers know where the truck is currently parked and what is on the menu. Also, one could invest in traditional direct mail marketing.
Don’t worry about getting it right the first time. Marketing is an ongoing process, and business owners can learn over time what works and what does not.
The owner of a food truck business enjoys the unique freedom of taking their business almost anywhere. He or she should therefore consider where their target customers spend time, then get permission to park their truck in that location. For example, if a food truck caters to young professionals, then it would make sense to park it in a business district to get foot traffic during lunchtime.
The best locations for food trucks tend to be around businesses, at festivals, and in food truck parks. However, food trucks have recently found popularity in residential areas. Customers enjoy the ability to pick up delicious food in their neighborhoods and taking it home to enjoy.
Example: Gregorio runs a food truck specializing in Italian food. He notes that most of his customers tends to be young adults, mostly college aged. So, while most of the city’s food trucks choose to park in the financial district to attract lawyers and accountants, Gregorio parks his truck by the local university.
Nowadays, online reviews can be make-or-break for a small business. A single bad review can be enough to convince a prospective customer to go elsewhere. Therefore, it is in the interest of business owners to regularly monitor their online reviews. If possible, one should respond to every review, good or bad. Thank those customers who enjoyed their experience and offer support to those who did not. This way, people who search for the business online will see that the company values its customers and is always trying to improve.
To increase the number of reviews a food truck receives, an owner may wish to offer an incentive, such as a discount. To receive the discount, customers must leave a review, thereby building trust online between customer and business.
Example: Leah runs a taco truck in a major city. She regularly checks her reviews on Yelp, and one day discovers a nasty review left by an unhappy customer. The customer wrote, “The meat is rancid and not even fit for my dog.” Instead of ignoring the negative review, Leah responds by writing, “Oh no! So sorry you had a bad experience. Our meat is locally sourced, Grade A beef. Please stop by the truck for a refund and discount on your next purchase.”
A savvy food truck owner should use social media to market their business. Creative profiles on Facebook, Twitter, Instagram, and TikTok can lead to followers, or fans. Sometimes, a business might create a viral post that results in hundreds of new customers. On social media, a food truck owner should share the following information:
Social media has the ability to get people excited about a business or talking about it. When people share posts about the food truck, this creates online buzz, which translates into real-life customers.
Running a food truck business is an exciting and trendy opportunity for any entrepreneur with a passion for food. It is also a way for an individual to have a positive impact on their community. That said, just like any business, the venture involves hard work, patience, and determination. If a business owner chooses the right financing options and follows the above tips, then he or she has every chance of success.
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See all articles: Business | Corporate | Employment
See all articles: Business | Corporate | Employment