Food truck industry growth rate has goaded various states into rethinking their regulations to accommodate more food trucks in their city/state. With an increase in aspiring food truck owners, it becomes vital to have a guide that helps you in planning to start a food truck business from scratch.
Before we plunge into the details of starting a food truck business, let us first begin with defining a food truck and how it is different from mobile food services of similar types.
- For a truck to operate as a mobile food truck it needs to be licensed. It can sell items from its door or windows and no customers are permitted inside the truck. It need not serve from a single site or location.
- A smaller, kitchen less version is the food cart. Food trailers have kitchens but are not as mobile as food trucks.
- Food trucks can serve a variety of foods and beverages but cannot sell alcoholic beverages.
As against being an employee/chef in a restaurant, by owning a food truck business you get the freedom to run your own business, choose its menu and reach out to a varied customer base.
With so many benefits it has to offer, it is no wonder that the Food truck business is growing by leaps and bounds as per the latest food truck trends shown in the IBISworld report.
- Starting a food truck business
- Legalities involved in owning a food truck business
- Viability of a food truck business plan
If you are looking to explore it as a viable business opportunity it becomes necessary to know what all starting a food truck business entails.
Here is a List of Steps You Need to Take in Order to Start a Food Truck Business
First things first, you need to know about the food truck start-up costs. The costs are not only of raw materials but would include the cost of the truck, license cost, equipment costs, and maintenance costs and so on.
Mobile-cuisine which is a kind of online trade magazine has given a breakup of the cost to start a food truck. They have calculated the total cost to be a little more than $90,000.
The major chunk of this cost includes the cost to buy a food truck and the equipment. The truck alone would cost you around $60,000 according to a Forbes report. The best bet according to them would be to find food truck for sale, buy it and renovate it.
Another option would be to find existing food truck business for sale and buying them out. You can use them after revamping or remodeling them.
Some sites where you can find used food truck for sale are:
Once you have finalized the truck, you will need to repaint and wrap it. That would additionally cost you $2000 and $3500, respectively.
Next comes equipment fitting. Some states require some special equipment to be installed for safety and hygiene concern. You will have to check them out during licensing and permit stage.
Other equipment that you will install will depend upon your menu. If you are starting a food truck business selling ice creams, then you would need freezers. Sandwich trucks will require a grill installed. Food Truck Empire has listed the equipment necessary for 5 different menus and the cost of each equipment.
- Grilled cheese truck – $6500 to $18000
- Burger truck – $5000 to $18000
- Pizza truck – $8000 to $28000
Another thing to bear in mind before starting is once you have calculated the total cost, find out how much you will be able to earn in profits by selling the food you intend to sell. Will it cover your costs in the long term? Is running a food truck business a profitable venture?
#2. Licenses and Permits
Next comes a very vital part of starting a food truck business. Like any other business you would need to apply for licenses and permits to start a food truck. A good start would be to have a look at the Small Business Administration website. It details the licenses and permits required to start any business.
Some common food truck permits and licenses are listed below:
- Business License: This is one of the important licenses to operate your food truck. This is needed to operate any kind of business in a city or state and might differ from region to region.
Contact a local food truck association to get relevant details.
- Vehicle License: Since the business operations are run on a vehicle you will need a vehicle license. Your driver might need a commercial driver’s license to operate the truck.
- Employer Identification Number: This will be required in case you have employees, which you probably would. It is needed by the Internal Revenue Service department to collect taxes.
- Sellers Permit: This is needed to purchase food at wholesale rates.
- Health Department Permits: This permit is required to ensure that you are handling the food preparation in a safe and hygienic manner. A food handlers permit might also be required for which you might have to attend a food safety class.
- Fire Department Certificates: The department would inspect your vehicle to ensure there are no fire hazards and that the business is safe to operate.
Always remember that the laws can change with time and that they are different for different cities. Check out the mobile cuisine site to see if your city is listed in their list of municipality sites.
Some examples of such sites are:
- Austin, Texas – http://www.austintexas.gov/department/mobile-food-establishments and http://austintexas.gov/department/mobile-food-vendors
- New York City – https://www1.nyc.gov/site/doh/business/food-operators/mobile-and-temporary-food-vendors.page
#3. Finding the Right Food Truck Business Location
Once you have completed all the legal formalities, you will have to device a location plan for your food truck. This is extremely important as your businesses’ survival depends upon it.
If you are not at the right place at the right time, then you are losing potential customers.
Follow the given guideline to find the perfect location for your food truck on any day:
- Go by the laws. Before starting a food truck business acquaint yourself with the local parking rules and regulations. Find if a permit if required for parking.
Visit the DMV site to know more. Some regions are also specific about timings. At some places you cannot operate from 3 a.m. to 6 a.m.
- Find places where there is a lot of foot traffic. A place where people are moving around and can easily spot your truck would be ideal. Such places offer plenty of potential food truck customers which is good for your sales.
- Decide upon the type of location you are looking for before you start a food truck operation. Are you looking for a regular location or a location by events. You might want to park your truck at the same location daily to make customers permanent.
You can take advantage of events and park your truck at different locations on different days. This would ensure maximum customers.
- You can either park near food truck vendors selling same type of food or near food trucks that sell food different than yours. If your competitors are not well-known or established then you can park with them.
- Another important part is finding a place that is large enough to fit your truck without making it look congested.
You can use the following resources that would help you decide on your location:
- Chicago booth magazine has run an article where 3 professionals try to find optimal parking places.
- Food truck finder sites are a great resource to find popular locations, active trucks catering different cuisines and sites where trucks are operating.
Some great food truck parking places are:
- Truck parks
- Gas stations
#4. Creating the Menu
This is perhaps the most creative step for starting a food truck business. In order to decide what you will be serving, here are a few pointers that will help you before you start a food truck business.
- Define your niche. There is no point in serving in an overcrowded market. If there are already many sandwich trucks, then design your menu differently.
- The menu should follow the minimalistic approach. Plan for few dishes as making multiple items while customers are standing outside is not a practical option.
- Try to use ingredients that can fit many menu items.
Once you have decided what you want to sell, you will need to effectively market it. Before opening a food truck, design your menu in such a way that it attracts people and make them come to your food truck.
- Make sure to design the menu that focuses more on items rather than their prices. Avoid putting the $ sign.
- Keep your main dish in a place where everyone can see it. Keeping it hidden from public eye will not help in its sales.
- Don’t use columns to display items otherwise people will compare and then order.
- You can use some adjectives to make your menu items more attractive.
#5. Employing Staff
As a food truck business owner there are many aspects of the business that need looking after other than cooking and serving. As your customers increase, you might need some extra help in the form of a permanent or a temporary employee.
When you are starting a food truck business, you would need to consider the cost of hiring employees also in your startup costs. Here is a summary of all the costs that go into hiring employees:
- Employee salary: The basic wages you will be paying to the employee.
- Taxes: This includes the unemployment tax, medical tax and social security tax. Taxes are different for different states so you will need to check what the tax rate in your state is.
- Insurance: This is the workers compensation insurance and will vary according to industry type.
- Recruitment costs: The cost you will be paying to the recruitment agency.
- Training costs: If the employee needs to be trained then you will have to bear the costs.
Once you have calculated the total cost and still find it a better option to employ an extra hand rather than going solo you will have to acquaint yourself with the laws and regulations that govern the hiring process. It would include:
- Obtaining the Employer identification number from the IRS online or directly.
- Completing employee identification verification form.
- Reporting new hires through the new hire reporting program. Each state has its own link. Some links are given below:
- Minnesota: mn-newhire.com
- Ohio: https://newhire-reporting.com/OH-Newhire/default.aspx
- Florida: https://newhire.floridarevenue.com/SitePages/home.aspx
- New York: https://www.tax.ny.gov/bus/wt/newhire.htm
#6. Installing Equipment
Before you start a food truck make a list of equipment you will need. The equipment you will need will depend upon what your food truck is catering. According to different state laws the requirements for specific type of equipment will also change.
As an example, here is the listing issued by the Denver city council on what all is required in a food truck:
- Water fittings and fixtures: The truck should be equipped with hot and cold water that can be used for drinking, washing, cleaning and cooking purposes.
- Sink: The truck should have sink where hands can be washed and shall have continuous flow of hot/cold water supply. The sink should also have soap, paper towels and so on.
- Water tanks: Two types of tanks are required. One is the clean water tank and another is the waste water tank.
- Heating systems: The truck should be equipped with proper heating system that can provide hot water to different fixtures in the truck.
- Three compartment sinks: The sink’s each compartment should be big enough to fit in at least half of the biggest utensils. The sink should have enough drying space.
- Ventilation systems: The trucks should be equipped with hoods and fire extinguishers.
- Storage Units: All food items need to be stored in a clean manner. Freezers in which food items are stored should be operating 24X7.
- Floors, ceilings: The floor and walls of the truck must be made of a material that can be easily cleaned.
It is required that all types of equipment should be of commercial grade. Only disposables should be given to customers. States might also ask you to submit a detailed food truck business plans that covers the operational areas.
The written plan should cover vehicle maintenance, storage supply and water supply details.
#7. Buying Raw Materials
Though raw materials usually include food ingredients or food supplies, we will also discuss ways of procuring tools, utensils and other cooking and cleaning products.
- Food Ingredients: Before you start a food truck business make a list of ingredients and the quantities you will need. The quantity should be decided in such a way to avoid wastage or spoilage. You can get the food supplies from:
- Local suppliers
- Farmers market
- Food cooperatives
- Tools: This will include all the cooking tools you will need to prepare all the dishes listed on your menu. Things like frying pans, spatulas, chopping boards, containers, bowls and even gloves. Include storage material also in the list like foil wraps.
- Utensils: These will include things on which you will serve the food to your customers. It will include plastic ware, straws, napkins, cups and so on.
- Cleaning Products: You will need to buy products for cleaning utensils, the cooking area and the floor. It will include mops, soaps, detergents, sanitizers, paper towels, wipes, trash bags and so on.
Starting a food truck business is not all about set up. Once your food truck is all ready to serve customers you will need to find different ways to advertise your menu and your food truck.
Here are some traditional and digital ways of marketing your food truck business:
- What’s in a name: Before you start a food truck business it is imperative to come up with a catchy and good food truck name. Some examples of creative names used by food truck owners are Hip Pops (selling ice creams) and I Don’t Give a Fork (selling sandwiches).
- Use flyers and coupons: You can park your truck at events and distribute flyers and menus of your food truck.
- Use social media: Make use of Facebook, twitter and Instagram to post timings, locations and some awesome photos of your food truck.
- Use Yelp: Set up an account on yelp where people can put in their review comments and feedback.
- Loyalty programs: Use food apps to offer discounts through various loyalty programs.
Starting a food truck business like any other business has its own set of risks and benefits.
The startup costs might be a big deterrent if you do not have enough cash. But you need not worry. You can make use of various peer-to-peer lending platforms like the Prosper and Lending Club and get loans easily.
Before you start a food truck business you will need to be very clear on laws and regulations pertaining to it in your city of operation. Violating rules might be expensive and at times lead to suspension or closure of business.
Research well and plan for food truck success and you will definitely be able to get a slice of the billion-dollar revenue that the food truck industry earns.