Television shows like “The Great Food Truck Race” and movies like “Chef” have motivated many cooks and dreamers to start up a food truck business. Despite the incredible competition, the industry is growing. According to Mobile Cuisine, mobile food truck revenue has increased by 12.4 percent over the past five years, with the average truck grossing nearly $300,000 per year. However, while you can supply the inspiration and hard work, youꞌll want to balance that with proper planning and business acumen.
If you’ve been considering starting your own mobile food business, there is a lot to learn. Your business will benefit greatly if you research your market and create a solid business plan.
We’ve researched the industry extensively and put together this guide to help you start your new business. This is a good starting point, but youꞌll also want to conduct your own research, especially into your market and local ordinances.
Startup costs to consider
Most food truck businesses start out with a dream and an idea, but that will get you only so far. Your biggest initial expense will be the actual food truck. You may be able to find a used truck suitable for your business for around $25,000, but most experts say you should expect to spend about $80,000 on a truck. You can, of course, easily spend much more. Expenses for truck retrofitting and altering need to be considered in your budget. Food cart or trailer options are less. If you choose a franchise option, you can likely get around this part of the investment at first. You may also find leasing options available.
Other startup costs to consider include:
- Permits, licensing and insurance (business and vehicle): $500 – $1,000
- Inventory (food and supplies): $1,000+
- Payment processing: hardware, processing agreement, mobile data plan: $400+
- Commissary fees (professional kitchen rental for prep work): varies ($400+ per month)
- Truck appearance: paint, wraps, lighting and such (varies)
- Propane and or generator costs: fuel (varies)
Unless you already have startup funds, acquiring funding may be your biggest challenge. Your first goal should be to put together a bulletproof business plan. Youꞌll also have more success if you have good personal and business credit. Most truck financing options will require good credit, a down payment and possibly even collateral. If you already own a restaurant with a successful history, you should be able to acquire funding and decent rates.
If traditional financing is not an option for you, youꞌll have to get creative to cover startup costs. But you may have to start out small. Here are some ways to start your business with minimal funding:
- Talk with someone who already owns a food truck and negotiate a lease or a rental agreement.
- Start with a low-cost, used cart or trailer.
- Start selling at a farmers market, art fair booth or pop-up.
- Talk to a successful restaurant owner about running a food truck for the ownerꞌs business.
- If your truck idea includes providing a public service or a benefit to your community, you may be able to obtain sponsors.
- If you are already contracted with a payment processor, you may qualify for a processing advance loan. This type of loan is paid back by fees added to your regular processing fees.
How to find food trucks for sale
Once you have secured funding, you’ll want to start looking for a suitable truck. There are many purchase options for food trucks, including new customized options, used, leasing and franchise opportunities. A quick internet search will reveal numerous options nationwide. Since it is such a large purchase, it is worth your time to shop outside of your area to find the truck that fits your needs at the right price.
There is a lot to know about food trucks. Take your time when considering the type of truck you want and what you need in your truck. Plan out your food processes entirely to better understand the components you will need, from prep space to refrigerator space. You may also have local health and fire codes you’ll need to satisfy to make sure your truck will pass inspection if required. It is prudent to reach out to professionals and those experienced in the mobile food industry to help you design your truck.
Once you are ready to shop, you have a few options:
Local Online Classifieds: This is a good option since used trucks are cheaper and you can easily inspect it. Even if you cannot buy the truck outright, you may be able to negotiate a lease option if the truck is not currently being used. Used food trucks usually cost $25,000 to $70,000, before modifications. Obtaining traditional financing may be difficult.
National Online Classifieds: Widening your search will give you more options. Make sure to have frank and lengthy conversations with the current owner. You may need to travel to pick up the truck, but it could be worth it.
New Custom Trucks: This is the most expensive option. Some may be well over $100,000; but generally around $80,000 before customization. The advantages are that you can purchase a truck built to your exact specifications and the equipment will have active warranties. Financing options may be available, but costly, and may require a large down payment for a new business.
Leasing: You may be able to find a local truck to lease or via a national truck leasing company. Even though you are not financing the truck, you’ll still need decent credit, and down payments are often required. Lease-to-own agreements may be available.
Franchising: Many established companies offer franchising opportunities. But it is not a low-cost investment, you may need collateral, at the minimum. You’ll have no control over the product, marketing or menu. However, this investment can pay off if you are smart about it.
As with any large purchase, especially of a used truck, you’ll want to do your due diligence and inspect the truck’s equipment yourself. Test everything. Additionally, you’ll want to have a trusted mechanic inspect the vehicle as well. If you have special local emissions and safety requirements, you’ll want to ensure that you can meet those requirements. Some cities have size restrictions, so youꞌll want to know what those are before your purchase. Contacting your insurance about coverage ahead of time concerning special insurance requirements is a good idea.
Although financing may seem attractive, you’ll be better off in the long run if you figure out a lower-priced option. According to Prestige Food Trucks, about one-third of trucks and trailers financed to new businesses are repossessed. On the bright side, that means more used trucks on the market for you to choose from.
Mobile point-of-sale (POS) options
While food truck customers are accustomed to paying cash to food vendors, increasingly consumers are preferring to use cards over cash, even for small transactions. It is difficult to determine how much in sales you could potentially lose by not offering a mobile credit card paying option, but it could be as much as 30 percent.
Starting out with just a cash box is common and a good way to get going if you are low in funding. Here are a few options for processing sales, listed from the lowest-priced option to the most advanced.
Cash box and cash-only sales
Advantages: Low priced. You can purchase a lockable box for under $20.
Disadvantages: Doesnꞌt track sales or food inventory. Cannot process card payments.
Ongoing costs: None.
Where you can purchase: Online sites such as Amazon, office supply stores such as Office Max and Staples or retailers such as Walmart.
Cash box + mobile card processor
Advantages: Low priced. Mobile processors often simply charge for swipe fees. But youꞌll need Wi-Fi access and or a good data plan to connect your mobile phone or tablet to the processing service.
Disadvantages: Most mobile processors include only a simple inventory system and limited additional features.
Ongoing costs: Credit and debit card processing fees and mobile data fees.
Where you can purchase: Most credit card processors offer handheld or mobile app options. Popular services include Square, Spark Pay and PayPal.
Cash box + POS system + mobile processing
Advantages: Mobile credit and debit card processing plus sales and inventory tracking.
Disadvantages: An additional monthly service fee and hardware costs.
Ongoing costs: Monthly POS service fee, card processing, mobile data service and possible hardware fees.
Where you can purchase: Some POS services offer systems specifically for food trucks, including Hike POS, Touch Bistro, Revel Systems, Square and Shopify.
As mentioned, you can easily just start with a cash box and add other elements as you can. You can add mobile processing rather easily with a free card reader and a processing agreement that will cost you, depending on your credit, about +/- 2.75 percent per transaction. Adding a point-of-sale system often requires the purchase of an iPad and a processing agreement. Additional monthly service fees may also apply.
Food truck advantages
These are the things new business owners imagine as the advantages before they start their business. Most are looking for the freedom of running their own business.
Business ownership ─ While owning your own business is challenging, there are numerous tax advantages. We recommend that you hire a good accountant to help you set up your books and to consult with on what kind of data you need to track, such as mileage and fuel.
Freedom ─ You’ll be busy, so you wonꞌt have freedom in the sense of “free time.” But freedom to choose your menu items, the vendors you want to purchase from, your employees, and the events you want to vend at. Youꞌll have control of your marketing and social media. Plus, you can choose when you want to work.
Mobility ─ Food trucks are essentially moving kitchens. Many caterers even use them. Youꞌll need to comply with local ordinances, but beyond that, you can move your business to locations with the best opportunities for sales.
Food truck challenges
These are the things that actual food truck owners say are their biggest challenges.
Time ─ Some think food truck workers just work a few hours a day. That is far from the truth. You have to consider shopping time, prep work, marketing, event booking, cleaning, truck maintenance, accounting and tax obligations, and more. Most say it has to be a labor of love, with an emphasis on labor. You may have to work holidays and weekends ─ and you may need to work every day.
Competition and Market ─ Some may say food truck owners help each other out; others say it is cut-throat competitive. Some report that events may have long waiting lists. A city can support only so many taco trucks or coffee carts. You’ll want to carefully research your market to increase your chance of success.
Ordinances and Zoning ─ Many find, after they get into business, that they are limited by where they can park and for how long they can park. And every area is different. So, if you travel, you’ll need to know what the rules are in the areas you intend to sell in. Some events, parks and recreation centers may have their own rules and charge you for parking and selling in their space.
Franchising provides numerous advantages to those looking to get into the food truck industry. According to franchising business coach Terry Powell, founder of The Entrepreneur’s Source, a good franchise will have done a lot of the hard work for you. Menus have been created, training is available, the product is tested and marketed for you, and the trucks are designed specifically for that business. Often, the trucks have already been inspected by the local health department for compliance. Also, services that would normally cost you extra money or time and stress ─ such as food prep locations, food source agreements and supply contracts ─ are already in place. In many cases, the franchise already has locations selected, and knows what permits and licensing are required to sell in that area.
However, this type of business opportunity is not for those wanting to create and sell their own food products. Creative chefs, or those who want to share their original menu items, will not be satisfied running a franchise. Obtaining a franchise contract is also not suitable for those with bad credit or limited capital. Youꞌll still need to qualify, though qualifications among franchises may vary.
Permits and regulations
According to an article published by Food Truckr, one of the main things food truck owners wished they knew more about before they started their business is constrictive regulations. Contrary to what you might like to believe, you cannot just park your food truck anywhere and start selling food. Not only are there numerous permits and regulations to deal with, but these regulations vary by area and even by event. Additionally, rules and requirements may change and you have to be able to adapt. You’ll want to diligently research your area for requirements you need satisfy.
While every area is different, there are a few main things to research, including:
Food safety ─ Just like a brick-and-mortar restaurant, you’ll need to comply with local food safety requirements. Plan on a truck inspection as well. You may be required to prepare all of your food in a professional kitchen or commissary. If you already own a restaurant, you can use your own facilities. Otherwise, you many need to pay for the use of a commissary. Contact your local health department to find out more information
Zoning and parking ─ You may be restricted as to where you can park your truck and set up business. You may have to comply with commercial and noncommercial zoning requirements. You may also have parking limit restrictions, such as so many hours. In some areas you cannot park within a certain number of feet of physical restaurants. Check with your city and local motor vehicle department about what the restrictions might be.
Business permits and licenses ─ You’ll need all of the same business licenses as you would for any business. You’ll need a tax ID number and DBA. You’ll likely need a state sales tax permit. Most of these types of permits are low priced and simple to obtain. Check with your city about forming your business, and the IRS can supply your EIN. Legal Zoom, an online document preparation service, costs more than doing it yourself, but is an easy option for helping you form your business. They’ll even file for your tax ID number, or EIN.
Truck registration and insurance ─ Your department of motor vehicles should be able to help you learn what type of registration is required for your truck. Some areas may even require you to have a commercial driver’s license for larger trucks. Insurance can be complicated. You’ll need insurance on the vehicle and drivers, but also to cover your business. If you have employees, you may require additional insurances.
Food trailer and food cart options
Many mobile food businesses start with a food trailer or a cart. They cost less, and you can often obtain traditional financing for the truck to pull it. Used trailers may cost only a few thousand. New trailers usually cost more than $20,000, but far less than a new food truck. In addition, pulled trailers have fewer compliance requirements than those of a moving vehicle, such as emissions requirements. Insurance may also be less. Many mobile businesses start with a trailer since it is more affordable.
New food carts cost a few thousand, but used carts are available. New carts can be customized, and include things such as sinks, refrigerators and cooking equipment. Food trikes are also available. Trikes are a fun option and provide mobility. Even though trikes are rather small, they can be equipped with cooking equipment, sinks and refrigerators. The price for a trike is low enough for you to start a profitable weekend business. As with any food business, youꞌll want to research your local regulations concerning food trailers, carts or trikes.
Food truck tips
While researching this topic, we found quite a few helpful tips and ideas. Here are a few.
- If you plan to have your truck parked in one specific spot on a regular basis, see if you can negotiate with local businesses to use their power, either by paying them directly or by trade. Some, for example, offer a certain number of free meals in exchange for using their power. This can greatly save you in propane and generator use.
- Post your social media information on your truck and regularly post to your social media pages, especially if your truck moves around. Facebook, Twitter and Instagram are good platforms to start with and they are all free.
- You may save money at first by hiring a crew to work in your truck. It makes mathematical sense to pay someone $10 an hour to work in your truck rather than giving up your $30-an-hour job. Especially if you are choosing a franchise option.
- Work on a food truck for a few days or weeks. By doing this you can learn the pace and process. And it may help you decide if it is the right type of business for you or not.
- Though not as fun as creating your own product, you may be able to save money by purchasing prepared food items to avoid commissary costs. For example, by buying in bulk from your local Costco or Samꞌs Club.
- Some have found success by operating a mobile-catering business rather than a traditional food truck business. You can better plan your hours, you know how many youꞌll be serving and you know how much youꞌll be paid. You can also charge a deposit, and you should.
- Negotiate with a local restaurant about using their facilities instead of a costly commissary.
- You may benefit from selling during nonstandard meal times, such as late at night near entertainment venues.
- Find a good mentor. Consult with someone who has been successful in your industry and learn as much as you can from them.
Where to learn more
Youꞌll want to learn as much as possible before starting your business and youꞌll benefit from ongoing research as well. With a quick web search you can find information particular to your area. In addition, look for a booking or directory site, such as Roaming Hunger, for your area. Using these types of sites, customers can acquire about booking your truck or find where you are parked. Facebook also may have food truck pages specific to your area as well.
We found these websites to be particularly helpful:
National Food Truck Association ─ This website provides information to help vendors with local codes and ordinances. There are regional associations as well, such as the Southern California Mobile Food Vendors Association and the San Antonio Food Truck Association.
The Food Truck Empire ─ This website posts volumes of information about the food truck industry. Resources include articles, a podcast and a blog. Consulting is also available.
Restaurant and Hospitality ─ This site covers a wide range of topics, including hiring, trends, news and recipes. While the articles mostly pertain to physical restaurants, many of the tips and discussions can be applied to the mobile food industry.
Mobile Cuisine ─ Mobile Cuisine covers mobile food topics specifically. Here youꞌll find information on starting up and growing your business, marketing tips, funding options and more. It also posts news-type articles on local regulations.
Food Truckr ─ Here youꞌll find articles related to the mobile food industry, including articles about starting up your business. Food Truckr also posts regularly to their blog and podcasts are available. It also offers marketing assistance and social media tips.
Every hour of research and preparation you can do before starting your mobile food business will reduce your stress later, while also increasing your chances for success. The mobile food industry is growing and worth investing in, if you have the energy, good businesses sense and inspiration needed to succeed.