Starting a new business can be an exciting venture but it also comes with a lot of challenges. For example, when doing research on how to start a food truck business, you will find there are many different ways in which this can be done. In this article, I offer a step-by-step guide to help you get started. Read till the end and I am sure this article will help you kickstart your first food venture!
When it comes to starting a food truck business, you have the option to take any of these routes. For instance, you may choose to purchase an existing food truck or else decide to build your own. In fact, many savvy entrepreneurs starting with little money choose to rent a food truck as part of their business plan. But regardless of the type of food truck you want to start or where you want it to be located within your city/state/country, you need to take certain steps before announcing the grand opening. So, read on below for some tips on how best to go about accomplishing this goal!
Conceptualize It – The First Step to Start a Food Truck Business
The first step to start a food truck is to decide on a concept. Let me explain. Food trucks can be used as mobile kitchens. Some serve as an extension of the current restaurant business. Else, you can start it to sell pre-cooked items that need warming only, before being served. If you are considering starting up a food truck, then it’s important that you know exactly what type of food you want to sell and how often you plan on doing it. For instance, you may plan to run the food truck on a daily basis, or on weekends. There are many food van owners who run their trucks on special occasions only, e.g. Christmas, New Year, etc.
The next thing that needs consideration is which type of truck will suit your needs best: small-scale, medium, or large-scale? Do you want something with a seating arrangement for a maximum of 10 people? Or perhaps 20 seats at the maximum capacity? You may also think about whether or not there will be other activities to be included such as live music.
Finally, another key question must be answered before investing in anything: Where do I want my truck to be located? This may sound like an obvious question but many small businesses fail because they don’t take advantage of their environment by choosing the right location for their venture.
Figure Out The Menu Option
When you’re ready to start a food truck business, you have two options to decide on the main menu. You can either create your own menu or go with an established one.
The pros and cons of each are as follows:
- If you choose to create your own menu, then it’s up to you to decide whether or not to stick with the same items every day or change them based on what’s selling the most in that city and location. This can lead to some interesting combinations. For example, I’ve seen trucks serving tacos with grilled pineapple slices on top. It sounds weird but actually works well together! So, yes, when you create your own menu, you can always be innovative with fusion food items.
- On the other hand, if someone has already created their own unique recipes and published them somewhere like Food Network Magazine’s website or Amazon Prime Video recommendations page, you can include those items in your food truck menu. However, the problem with including such popular, well-circulated items is that they are perhaps already served by others offering home delivery services. So, in all probability, people would prefer to enjoy their favorite meals brought right into their homes rather than traveling across the town to buy from your food truck.
Know Your Finances
The next step is to decide on your finances. This can be the most important part of starting a food truck business. This step determines how much money you can invest in your new venture and whether or not you’ll be able to make enough money from the food truck.
You will need an adequate amount of capital to purchase the truck. Also, you have to consider other applicable fees, licensing costs, necessary tools and equipment, and food start-up costs (including uniforms). You may want to get an idea about how much money it’s going to cost each month before deciding whether or not this would work for you.
Here I have provided a rough idea of starting a food truck, without spending a lot of money.
Cost Estimation to Start a Food Truck Business
As you start your food truck business, there are a few expenses that you should consider. These include:
Cost of buying a new or used truck. This can range from $40,000 to over $150,000 depending on how old/new the vehicle is, what amenities (such as air conditioning) it comes with, and whether or not you need to buy additional equipment (such as tires). And, of course, you need to add the food truck renovation and decorating costs.
Cost of buying/renting kitchen accessories and tools for running your food truck business such as utensils/knives/bowls etc. There are also other costs associated with running a mobile eatery like paying staff salaries including uniforms (if any). Further, you have to consider the setup costs, e.g. you may need to buy/ hire a few tables and chairs, and other maintenance costs. Based on your food truck requirements, you may need to invest a minimum of $30,000 for kitchen accessories and related necessities.
Operating costs include parking, insurance, utilities, food costs, labor, business promotion, and the like. Such costs typically vary from $15,000 to $50,000 a month.
An emergency fund of a minimum of $20,000.
Cost of acquiring licenses for your business. These vary by state but usually fall around $1K per year for each license required by law, for example, sales tax license; health permit, employment permit, etc. Let’s say you want to start a food truck in the United States. Then these are the licenses you need to get started.
What Are The License and Permit Requirements to Start a Food Truck in the United States
- A business license is required by the state in which you are operating your food truck. In most states, this involves filing an application with the Department of Revenue or other departments responsible for issuing licenses and permits. A food truck business license in the United States typically costs $50 to $500 but the application and other costs may vary for each State.
- If you plan on operating multiple trucks, it’s also important to have an EIN or employee identification number (EIN) in order for each truck/tester/etc., to be linked together under one company name/accounting system so that they can share data across all trucks at once. This means having separate accounts set up for each one separately!
- There are several types of licenses required depending on where exactly within America’s borders you decide to set up the food truck. You need vehicle licenses if you want your truck outfitted with wheels. Also, you have to obtain a health permit issued after inspection, showing no violations found during the inspection process. And, finally perhaps most important is the food handler’s permit/certification. You need to obtain it before starting operation. To get a permit from the health department, you need to pay a minimum of $50 which might shoot up to $1000 for certain cities.
If you are selling hot food, you will need to have a permit for that. If your food is sold cold, then you will also need a permit for storing and transporting the foods on board. Finally, if your business involves selling both hot and cold items from the same truck at different times of day, then you need both permits to operate legally within city limits.
Write A Business Plan Specific To Your Food Truck
A business plan is a document that outlines the goals, mission, and objectives of your food truck business. It often includes information about how you will operate your business or what type of products/services you can provide.
It’s important to have a business plan because it helps investors understand who you are and why they should invest in your company. The more detailed a document is, the easier it will be for an investor to see if their money will be well spent.
When writing your own business plan, try to cover the below-mentioned key points.
Clearly Mention All The Relevant Facts and Figures
A business plan is a key document where you put down all the numbers relating to your truck’s expenses, possible profit margins, and anything else associated with the running of your business. Include all these costs in your business plan:
- Employee salaries (if they are paid hourly)
- Cost of goods sold (including ingredients and packaging)
- Food costs (fruits and vegetables or meat)
- Labor costs – this includes time spent cooking food or waiting on customers as well as salary for employees who work inside the truck.
- Additional expenses related to maintaining and running the food truck, e.g. cleaning, electricity, rent, etc.
On the other hand, you should be able to forecast your sales. You can do this by adding up the projected sales figure from each month and then dividing that number by the number of months of operation. (Ref. link).
Purchase Or Build Your Food Truck
There are many things to consider before you start looking into what kind of food truck you want to buy and build. So, it’s important that you take your time to do research on different food truck models, their looks, and their functionalities.
One thing I recommend is making sure that the truck is in good working condition. Also, the truck needs to be safe for drivers, and customers. If there are any issues with it (like broken windows), then fix them immediately. You need a truck or van that withstands different weather conditions or other adverse situations.
Another important factor when choosing between buying vs building is cost-efficiency. Ask yourself how much money could you save by building the food van on your own? The answer here should depend on how much experience or expertise you have in building such items. Else, it’s better to hire a mechanic to do the job for you.
Do a Thorough Research Of Design And Marketing Strategies For Food Trucks
You should consider the design of your food truck. You may decide to start with a plain white truck. But being innovative with designing the food truck will help your food van stand out from the crowd. So, make your food truck as eye-catching as possible. Include some color in any logo or other branding elements on your vehicle so that it doesn’t look too boring.
You should also think about whether or not there are certain areas where it would be difficult for customers to walk up onto your vehicle. For example, if there are steps leading up to one side of your truck (like those in most commercial kitchens), then this could prevent people from accessing certain areas. This might make them impatient since they might not be able to view the entire display of products.
If you can ensure that people don’t have trouble accessing certain products during peak hours, it might help increase sales. This way your customers will feel like they’re getting better value when purchasing multiple items together as opposed to trying to buy them individually later.
Now It’s Time To Go Mobile!
Once you have the permits and licenses needed in your area and have decorated your truck, it is time to go mobile!
- Get a location to park your truck. You will need to find somewhere safe and secure where you can park overnight without being towed away by the city or police department (or both). If possible, try to locate within walking distance of offices/schools. This way customers can get food on their way home from work or school.
- Pick a name for your truck. This is something that will help distinguish it from other food trucks around town. The best name ideas are ones that describe what type of food service business you’re running. For example: “The Cupcake Cart” would make sense if cupcakes are one of the main items on the menu. Likewise, ice cream trucks that sell desserts made out of frozen yogurt can call themselves “The Frozen Yogurt Shoppe”. But don’t worry too much about naming the food truck. Pick a name that is simple but catchy enough for people to remember and revisit!
How to Make Your Food Truck Profitable Within a Year?
Now that you know how to start a food truck business, you might be wondering how to make it profitable quickly. Here are a few tips you can follow to make a quick profit from your food truck.
- Sell more. If you’re not selling enough food, you’re going to have trouble making money quickly. In that case, you may have to cut costs or raise prices. You can also try adding new menu items or expanding the hours of operation during weekends or on other holidays.
- Be strategic about where and when you park your truck. Be sure to do research on your local area before setting up the shop. You’ll want to find out what other trucks are doing in the area, and how they’re doing it. You don’t necessarily want to compete with them directly. You just need a spot that’s good for business, but won’t negatively affect theirs.
- Offer some kind of special deal or promotion every day or week or month, like free samples or a dollar off every order over $10. This is one way to attract new customers who might not otherwise try your food truck—and once they try it, they might come back again!
- Participate in special events and food festivals to sell more, even if it means spending a few bucks to get registered.
- Target the right age group by being active on social media platforms. Keep posting yummy photos and videos of your food truck. Share daily stories to make people curious about your food truck business.
You can find a few more marketing ideas here.
Few Important Points to Remember While You Start a Food Truck Business
Starting a new business is exciting, but it can also be challenging. You will need to be prepared for the process of starting up, running, and growing your food truck business. There are many factors that need to be considered before you decide to start your own food truck. You should have precise answers to questions like these:-
- What type of food do I want my customers to eat?
- How many hours per week do I want my employees to work?
- Do I have enough seed capital to cover the initial startup expenses?
- Will I be able to sustain the business for a year or so, even if my food truck fails to generate enough revenue?
- Am I ready with the right marketing strategies to promote my food truck business and turn it into a brand?
If these questions have not yet been answered then more research needs to be done to decide whether this venture is right for you or not!
The food truck business is an exciting and challenging industry to work in but with proper planning and effort, you can create a successful one for yourself. There are many things that go into starting a food truck business. And you can’t miss out on any of these key steps, such as deciding on a concept, researching other food trucks around the country, calculating cash flow projections and costs associated with running your own truck, or even building it if need be. Once everything’s figured out, don’t forget about implementing marketing strategies because this is the step that really pays off if done correctly!