The food truck business can be a very rewarding, flexible, and lucrative business opportunity. You can work when you want to, you have total control over your business, and you can go where the people are instead of waiting for them to come to you.
The steps below on how to start a food truck business are the basics on getting yourself going. There’s a lot of work that goes into making a good food truck business successful but if you want it bad enough, you’ll be very successful! Let’s get to it!
What Kind Of Food Truck Do You Want To Open?
The first thing you want to get right is the concept. Do you know what kind of food truck you want to start? Have you ever operated a business in the food & service industry? Do you know how to cook? Make sure you get to these questions before investing too much time and money. If you have clear cut answers on these and a vision, you’re ready to take the plunge, let’s get going!
How To Get Yourself A Food Truck
Food trucks can cost anywhere from $50,000 all the way to $250,000. You have a choice of either buying a new truck or a used truck. There are pros and cons to each of them but unless you have major dough, I recommend financing a used truck to start out. What do they say about cars? It loses 10% of it’s value as soon as it drives off the lot. It’s true for trucks too.
You can google your way into finding used food trucks for sale. I just did it. Go to Roaming Hunger online. See? Easy. Think about the layout of the kitchen, miles on the truck, size of the vehicle, etc. Make sure to think of what you need in a truck before you go out to buy one. Don’t worry about the paint or anything. You’re going to rebrand it, regardless. Once you know an estimation for your truck, go to a bank for a loan, then buy your new food truck!
Food Truck Buildout
Once you buy your food truck, depending on the condition, you’re going to have to put some sweat equity in. This means you’re going to rebrand your truck. You’re going to make the kitchen yours and complete. You’re going to add some cool features to make it stand out.
For branding, make sure you have a name and color scheme. Once you have those, you can design your truck then get to painting. I recommend making sure it’s done right. The worst thing you can do is make your food truck look like unsanitary with a poorly done paint job. If you don’t trust yourself, go hire someone. It’s worth it.
Next, you’re going to get the truck an oil change and do whatever you need to do to make it run efficiently. Breaking down on your way to an event can lose you thousands of dollars. In addition to truck maintenance, you may need to invest in some kitchen equipment. This could include a grill, a new fridge, knives, tools, etc. This is where you’re going to be spending hundreds of hours a month in. Make it yours. Make it work.
Once the basics are complete, you can think about adding some additions. Maybe an LED tv on the side to showcase the menu and pictures. Maybe you’d want speakers or a retractable awning. How about A/C for yourself? If you have some cash, it could be put to good use on the truck which helps drive marketing.
Now that you have a fully built out truck, let’s talk about numbers! Revenue, costs, breakeven, and margins here we go!
Food Truck Business Financials
Now that you have a fully built out food truck with your sexy company logo, it’s time to figure out what to charge, what your margins are, and how to make some money. That’s why you’re here, right? To make money?
Let’s pretend you are a taco truck. What do you charge? Instead of looking at prices, you should first look at expenses and your breakeven. What are your fixed costs? If you were to sell NOTHING all day, how much money would it cost you? Think about things like gas for the truck, electricity, labor, etc. These are things that will cost you money no matter what. Add those up and that’s your breakeven! Until you make that amount of money, you won’t make any profits.
Now let’s look at expenses for each taco. Let’s pretend it costs a $1.00 to make a taco. That includes beef, lettuce, tomato, cheese, and the tortilla. Cheap, right? But what do you charge? Well, it must be over a $1.00, right? If it were lower, you’d lose money. You’d probably price your taco anywhere from $2.00 to $5.00 depending the quality, your popularity, and what you want your margins to be. Let’s pretend you charge $3.00 per taco. This means your margin for each taco is $2.00! Every taco you sell, you make $2.00 in profit!
Now that you have the fixed costs, your price, and your margins, you can figure out how many tacos you need to sell to make your money back for the day! Let’s pretend truck costs and labor will cost you $200 for the day. $200/$2 profit per taco = 100 tacos. This means you need to sell 100 tacos to breakeven on your fixed costs. Anything sold after that is pure profit!
For a breakeven for your business, you can estimate how much money you will make from each event and see how many events it will take to pay off the truck. Don’t expect it to happen overnight. Let’s pretend you spend $100k on your truck, the buildout, branding, marketing, etc. Let’s also pretend you make $1000 in profit off each event. This means it will take you 100 events to pay off the 100k. That doesn’t include paying yourself, either. Remember the difference of breakeven per event and breakeven for the business. If you beat the breakeven of events, you’ll eventually breakeven for the business.
I recommend making sure your expenses are accurate and to play with the numbers a bit. Increasing your prices may sound great but you may not get as many people to buy tacos. There’s a perfect balance of margin and customer. Play around with the numbers and find yours. Remember, you can always change your prices anytime you want. It’s your business.
Events And Marketing For Your Food Truck Business
The pros of operating a food truck are that it’s mobile and you can go to a large variety of different events. The con of that is that it’s mobile and you must work to find the most popular events to drive customers. Funny how it works, right? Your marketing efforts and choices on where to spend your time is paramount to owning a successful food truck business. Do this right, and everything else will fall in line.
For events, you want to target the most populous of places. You should also think about your food, how it’s eaten, and the clientele. For tacos, you know people eat with their hands and it’s easy to eat and walk. This is great for festivals, sporting events, universities, etc. Tacos won’t be a big hit at a preppy horse race or outside of a mall with restaurants. Think about which events to put your time and effort in. You don’t have to try and hit everyone of them at the same time. Don’t forget to track each event!
Make sure you understand the legalities of going to events. Most events don’t just let anyone roll up and serve food. You need to be licensed, insured, and you need to apply and communicate sometimes. Go online, contact their resource manager, and work with them to attend the event. They normally take a small fee but it’s worth it to get an in. If you do well and work with them, they may even invite you back for recurring business!
When it comes to marketing, it’s all about social media for a food truck. With a business that moves multiple times per day, you want to make sure your favorite customers know where you are. I remember I fell in love with a Korean BBQ truck in college and I could go on their Facebook page and always knew if they were nearby. You better believe that I visited that truck a ton and simply because they posted on their social media page!
Besides social media, you can also provide business cards or coupons to everyone who buys tacos from you to come back. You can give rewards to those who buy 10 tacos at a time. You can make them feel special in so many ways as a repeating customer. Get creative. Have fun. Marketing doesn’t have to be boring. Use your personality and love for your food truck to make people want to come back. Good food + food truck personality + fun marketing = big business.
Reflection And Improvement
After each event has passed and your work is all done, make sure to take 15 minutes and think about:
- What went right?
- What went wrong?
- Did everything go according to plan?
- Were the customers happy with the food and service?
- Did you have fun?
- Did you make the money you thought?
It’s important to reflect on the day and ensure it’s everything you thought it would be and how you feel about the future. How would you improve the previous event? What can you do for the next event? Constantly evaluating yourself is imperative to create the best possible business model.
Expand Your Food Truck Business
Once you have a few events under your belt and have a rhythm going, it’s time to think about expansion! How do you grow your revenue? How do you decrease costs?
A good way to increase your revenue is to track each event and the numbers. Which events work better for your food truck? Do farmers markets attract a line? Maybe a sporting event? What about at Universities during lunch? When you track data, you can see visible trends, which you can then turn into actions! Don’t go to events that don’t make you money. Spend your time in more valuable areas and locations.
Besides targeting more lucrative events, you can increase marketing efforts when you know you’ll be at a certain event or even think about hiring others to start another food truck. You can help set them up since you’re an experience vet now and take a portion of the profits. Doing this expands your brand, as well!
Starting and growing a food truck business can be a lot of work but it can be very lucrative and rewarding. If anything, it’ll help you realize what it takes to start a business and you can parlay that knowledge into something else down the line. Until then, cook away!