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Guide and Tips to Start a Food Truck Business

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:

  1. Talk with someone who already owns a food truck and negotiate a lease or a rental agreement.
  2. Start with a low-cost, used cart or trailer.
  3. Start selling at a farmers market, art fair booth or pop-up.
  4. Talk to a successful restaurant owner about running a food truck for the ownerꞌs business.
  5. If your truck idea includes providing a public service or a benefit to your community, you may be able to obtain sponsors.
  6. 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.

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.

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.