The food truck business has more than survived its “fifteen minutes” of fame — it is still growing. According to 2015 research compiled by Statistic Brain, annual food truck revenue in the U.S. is $1.2 billion, a number that has grown 12.4 percent over the past five years.
Last year, there were more than 4,000 licensed food trucks in this country, with the average revenue per truck reaching a little over $290,000.
Gone are the days of food trucks meaning hot dogs and ice cream. Now legitimate “foodies” have embraced the concept, and popular chefs and restaurateurs have joined the ranks of this growing trend.
More than half (55 percent) of the number of American food trucks are located on street locations. Another 18 percent are parked at events and other venues, and 15 percent are at industrial or construction work sites.
If you have dreams of owning your own restaurant but are concerned about the overhead, you may be wondering if owning and operating a food truck would be a smart small business move. It may be. Most have few employees – 78 percent have four or fewer on the payroll – and start-up costs range from $40,000 to $150,000 (depending on whether you use a new or used truck and equipment, as well as other factors, including location and insurance costs). While those costs may seem steep, they are much lower than opening a brick and mortar restaurant.
However, before you start shopping for that truck there are some important factors to consider. First, like most start-ups, running a successful food truck will take a lot of time and effort. Most food truck owners report routinely putting in 60-hour-plus workweeks. Here are seven other important considerations:
- Secure licensing. Each city has its own licensing requirements for food trucks. Do not assume you can just set up shop anywhere. Some locations, such as New York City, have limited the number of food carts and have waiting list for permits. Other local governments do not allow them in public spaces. Once you have determined the rules in your area, follow them and complete all necessary applications.
- Shop carefully for your truck. If your budget cannot afford the $100,000 it might take to get a new bells and whistles food truck, you may be able to find a used food truck in the $20,000 to $40,000 range. Remember your truck is your kitchen, so think carefully about what equipment you will need to prepare the foods you want to sell.
- Establish a niche. Research what types of food trucks are already serving your area. If you love Vietnamese food, but there are three Vietnamese food trucks in your location, for instance, you may need to come up with a new plan. Perhaps you can do a new twist on something already being done, or develop your own special creations to gain a strong clientele.
- Develop a business plan. Every business needs a business plan in order to secure financing and to keep afloat once you have opened. Spend the time researching how much you will need to make every month to make a profit after you have paid licensing fees, rental costs, equipment fees, wages and food and beverage expenses. If you need to obtain a small business loan from a bank or credit union to finance your business, determine how much you will need to put down as a down payment and what your interest charges will be.
- Obtain insurance. The insurance costs for running a restaurant of any size can be significant. Talk with an insurance agent who is experienced in food service to find out what you need for coverage and how much it will cost.
- Find out about parking. After you determine where you will park your truck during business hours, find out where you can park it when you are off duty as well. Some communities have strict regulations on overnight parking, and some health departments mandate that food trucks be parked only in approved locations.
- Spread the word. Word of mouth advertising from satisfied customers will be a big part of your business, but you can get a jump-start that by catering events and functions. Be a part of your local business community by joining local organizations such as the Chamber of Commerce. Use social media to promote your business and get a buzz going about the food you are selling. Use a recognizable logo on all publicity and products so that customers will recognize your brand.
Americans are embracing food trucks in both large urban areas and smaller communities as fresh and tasty alternatives to fast food meals. Many entrepreneurs are using the success of their food truck business to spin off into a brick and mortar establishment. And the reverse trend is also true.
Research by the National Restaurant Association reveals that owners of about 19 percent of casual restaurants in the U.S. report that they are likely to add a food truck business within the next two years.
If you are interested in this potentially lucrative business, here are a few websites to visit for more insights.
http://www.chicagobooth.edu/magazine/fall-2015/conversations/inquiry-required
http://www.nationalfoodtrucks.org/
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