How to Start a Food Truck
The American perception of food trucks has shifted drastically in the last several years. Instead of producing mental images of sketchy street vendors with subpar offerings, the phrase conjures brightly-colored trucks that offer gourmet food. Kogi BBQ, which launched a food truck in Los Angeles back in 2008, is usually given credit for making food trucks hip, but the industry has since become a thriving aspect of American food culture. According to market research released by business intelligence publishing firm IBISWorld in September 2015, the food truck industry in the United States generates an estimated $857 million in revenue and experienced a 9.3 percent annual growth rate from 2010 to 2015.1
Because the start-up costs for brick-and-mortar restaurants can easily climb to $500,000 and beyond, mobile food vending operations are often seen as a more accessible way to launch a foodservice business. Although mobile food operations do generally come with lower start-up costs, entrepreneurs hoping to get one rolling will still have to navigate business plans, rules and regulations, permits and licenses, truck types, and insurance options before they even think about selling their first item.
Table of Contents
- Making Your Business Plan
- Rules and Regulations
- Choosing Your Truck
- Equipping Your Truck
- Getting Insured
- Tips for Success
Making Your Business Plan
A food truck is a unique platform and you'll want to craft a comprehensive business plan specific to the niche. Drafting that outline will give you time to think about the creative side of your business, such as your concept and menu, but will also help you consider the fiscal requirements for necessities like ingredients, supplies and equipment, and permits and licenses. Having a business plan prepared that shows how money will be spent can help convince potential investors to contribute, but even if you don't have to seek financial investments, allocating money ahead of time will help ensure you can pay employees, afford fuel, and handle unexpected repairs down the road.
In an industry as competitive and unpredictable as food trucking, having a comprehensive business plan can help you avoid issues like spending too much money in the wrong places, accidentally breaking the law, and not knowing where your business is headed next.2 Ultimately, your business plan should be as in-depth as possible, with an analysis of your company, competition, and customers, as well as a description of your plans for finances, management, and marketing. If you've never created a business plan before, online resources like the U.S. Small Business Administration's guide to writing a business plan can help you understand where to start.
Rules & Regulations
The unexpected rise of food trucks created legal quagmires in many cities, which either lacked established laws to properly regulate the industry or had outdated ordinances that imposed unfair requirements on food trucks. While some cities have worked with mobile food vendors to update laws and create a positive environment for the growing industry, others have resisted the pressure to adapt. Laws vary drastically from one region to the next and some cities still have laws that make it almost impossible to legally operate a food truck. 3
Before you begin the process of starting your own food truck business, it's important to do extensive research into what county, city, and state laws stipulate about the food truck industry in the area where you'll be operating. Unfortunately, there's no comprehensive database that will outline which rules and regulations will apply to you, so you'll have to do that research on your own. Contacting your local health department is always a good place to start, but you can also see if your area has an active food truck association willing to steer you in the right direction. Although we can't offer an exhaustive list of what challenges you might face, there are some common legalities to consider.
Which permits and licenses are required? Aside from a business license and health inspection, your area might also require a permit or license specifically for mobile vending, which might be issued to the business or to an individual person. Some laws require that only one employee on the truck be certified in food safety, but others require that every employee receive that training. Some permits, licenses, and certifications are easier to obtain than others, but you won't be able to operate legally until you have all of them.
Where can you park? Knowing where you're allowed to park your food truck and where it's forbidden will not only keep you from wasting time and effort, but can help you avoid costly fines. There are usually restrictions placed on where and for how long a food truck can park. For example, you might have to park a certain distance away from any brick-and-mortar restaurant and periodically move your truck. These restrictions vary from city to city and even from county to county, so it's important to plan your stopping points ahead of time. Consider plotting them on a map that shows permitted and restricted areas until you commit those to memory.
Do you need a commercial kitchen? Some cities don't permit food truck operators to actually cook on the truck. Others have rules stipulating that all food storage has to be handled in a commercial kitchen that has been inspected and licensed by the proper regulating authority. The most common way to adhere to these rules is by using a commissary, which provides a space for food truck operators to prepare and store food and/or equipment; some commissaries even provide inspections and/or a space for food trucks to park at night, which some areas also require. If your city does not have a commissary or similar commercial space, you might have to find a business or organization willing to rent time in a commercial kitchen when it isn't being used.
Choosing Your Truck
Although you should not begin truck shopping until you’ve established your concept and decided what equipment it will need to accommodate, you will have to choose between renting and buying. Both of these options have advantages and disadvantages, but knowing what you want out of your truck will help determine which option is best for you.
Renting a Food Truck
Because renting a food truck is not a permanent commitment, it will give you an opportunity to experience what operating the business is like without investing too heavily upfront. Renting is an attractive option for someone hoping to enter the industry with the lowest start-up cost possible or who isn't sure about entering the industry, either because of a lack of experience or because the venture might not be profitable. If you rent a food truck and decide it isn't for you, or if your business fails, you won't have to worry about reselling your truck.
Not owning your food truck can also be the biggest downside, as a lack of ownership can place restrictions on your customization or operation. For example, you might not be able to make modifications to the interior to improve your workflow or production, and your lease might include a mileage limit that restricts where you're able to operate.
There are several companies that specialize in renting food trucks, but what that rental includes varies. Some companies only lease the truck, which means you're still responsible for obtaining most, if not all, of your permits, licensing, and insurance. Others lease food truck concepts, which is an inclusive package that comes with everything you need to get rolling.
Buying a Food Truck
If you'd rather own a food truck, you'll have to decide between buying one in new or used condition. There are established online marketplaces that make it easy to find food trucks of both types for sale, but you'll probably want to find one relatively nearby so you can inspect the truck in person before purchasing it. This will give you a chance to look at the mechanical components, as well as the existing kitchen configuration or interior space to decide if it will be a reliable purchase capable of fitting your specific needs.
Used food trucks may be less expensive than comparably-equipped brand new ones, but might require increased maintenance because of their age and the varying levels of care given to them in the past. Avoidable issues, like remodeling the majority of the interior when you initially thought the existing layout would work or discovering problems with the engine, can turn buying a used food truck into an unexpectedly more expensive venture. Be sure to thoroughly inspect models you consider before making your purchase.
Buying a new food truck will cost more upfront, but can give you a highly customized and reliable vehicle to help launch your business. If your budget allows it, you can team up with a company that specializes in complete food truck builds, from exterior graphics to interior specifications. You can also outfit it yourself, though the higher cost can make this riskier, as you won’t be able to recoup the entire cost of the initial investment if you need to sell later on.
If you're worried about not being able to afford a complete truck, a trailer might be a more manageable investment. These mobile kitchens are smaller and can be easier for less-experienced drivers to handle, especially on busy roads. Because the trailer is not permanently attached to a truck, having a food trailer also means that you can minimize your downtime by pulling it with a substitute vehicle if your usual vehicle breaks down, whereas a food truck breaking down will leave you sidelined until repairs are made. However, the size of food trailers is also their biggest drawback, as they will not be able to accommodate as much equipment as a food truck, making them less suitable for full-service operations.
Equipping Your Truck
Investing in the right food truck equipment for your concept will help you prepare and produce food safely and efficiently. Be sure to take into consideration any restrictions your area might have regarding mobile kitchens and how they're stocked. For example, codes might restrict certain equipment entirely or require a clearance that limits the rest of your configuration.
Enlisting an equipment specialist like ours here at KaTom to help you plan your kitchen and choose the best pieces for your space and purposes can take much of the guesswork out of the process. Because your plans will need to be approved by your local health department, being aware of mobile kitchen laws when drafting a blueprint will save time when it comes to obtaining approval.
Making sure your truck, equipment, business, and staff are all properly insured is a legal requirement, but it's also a step you can take to protect yourself from financial disaster. Without insurance, there are a number of accidents and misfortunes than can derail your business, from an employee being injured on the job to your food truck being stolen or damaged in transit or at events.
Programs specific to food trucks are available, and some companies exist solely to provide insurance to food trucks and mobile vendors. Consult a knowledgeable insurance agent or company with experience with food trucks to make sure you get the right liability, property, and workers' compensation insurance to avoid any gaps in coverage that could leave you exposed or unprotected.
Tips for Success
Now that food trucks have caught on, simply having one is no longer a novel idea. Although we can't wave a magic spatula and give you a fail-proof recipe for guaranteed success in the competitive industry you're about to enter, we do have some tips on how to set yourself apart from other food trucks in your area.
- Concentrate on the menu. You should decide on a concept, and then hyperfocus that concept into a specific menu. Prospective customers probably aren't looking for a five-course meal from your food truck, and a complicated menu will only slow down ordering and production. Having a menu that is easy to describe will also help your customers use word-of-mouth to tell people they know about what your food truck has to offer.
- Crank up the creativity. While food trucks are no longer original on their own, that doesn't mean you can't have an original food truck. Choosing a concept that fills a gap in your market will avoid tension with existing food trucks and help capture a different portion of customers. Pairing your in-demand concept with a catchy name and one-of-a-kind branding can entice potential customers.
- Cater to your audience. Although trucking around your city will get your name out there, making your business available for catering and private events can bring in additional revenue. You can plan for these opportunities ahead of time with a special catering menu or prepared packages with predetermined prices. Knowing how much you want to charge for specific times, days, and services can also help make the hiring process easier.
- Capitalize on social media. Social media helped the food truck industry roar to life, and you should utilize it as a tool for your own success as well. Because you won't have a fixed location, maintaining your Facebook or Twitter with your upcoming schedule or current location will help fans of your food track you down. To cultivate a personal relationship with your clientele, use social media to respond to those who reach out to you, both acknowledging compliments and working with dissatisfied customers to remedy a bad experience. You can also reward followers with discounts and promotions, which can be an additional incentive for them to stop by the truck.
For more tips on how to start a food truck, head over to the KaTom blog, where commissary and food trailer owner Dale Mackey discusses topics like renting kitchen space, creating a menu, and keeping the peace with other food truckers.
- Food Trucks in the US: Market Research Report IBISWorld. Accessed May 2016.
- 50 Food Truck Owners Speak Out: “What I Wish I’d Known Before Starting My Food Truck” FoodTruckr. Accessed May 2016.
- How to get food carts and trucks under control New York Post. Accessed May 2016.