Principal 401k: A food truck business is a restaurant on wheels. The owner prepares meals or snacks and serves customers from a truck, van or trailer. The business owner should have culinary talents and the ability to quickly and efficiently serve tasty meals from a contained space, attract hungry customers and to deal with the business obligations of obtaining all necessary licenses and permits.
Learn how to start your own Food Truck Business and whether it is the right fit for you.
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Start a food truck business by following these 10 steps:
- Plan your Food Truck Business
- Form your Food Truck Business into a Legal Entity
- Register your Food Truck Business for Taxes
- Open a Business Bank Account & Credit Card
- Set up Accounting for your Food Truck Business
- Get the Necessary Permits & Licenses for your Food Truck Business
- Get Food Truck Business Insurance
- Define your Food Truck Business Brand
- Create your Food Truck Business Website
- Set up your Business Phone System
There is more to starting a business than just registering it with the state. We have put together this simple guide to starting your food truck business. These steps will ensure that your new business is well planned out, registered properly and legally compliant.
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1. Plan your business
A clear plan is essential for success as an entrepreneur. It will help you map out the specifics of your business and discover some unknowns.
2. What are the costs involved in opening a food truck business?
- Insurance, licensing and permit acquisition – This varies greatly depending on the requirements of your city or location and can cost several thousand dollars, including consultations with a lawyer. Most of the information can be found online.
- Vehicle costs – This depends on the kind of vehicle you buy and how you have it outfitted. Will it include a kitchen or merely an area to warm up food prepared in a commissary? The low-end purchase price of a used trailer can be less than $20,000 while the cost of a new, fully outfitted truck can exceed $100,000. Visit RoadStoves.com to shop for used food vehicles of all kinds.
- Vehicle exteriors – Designing your truck graphics and wrapping it can cost $1,000 or more, but it’s a necessary expense since your vehicle will be your mobile billboard.
- Ingredients – This will also vary greatly, depending on your menu, but it can easily exceed $1,000 a month.
- Commissary/commercial kitchen – If you need a place to store and prepare your food, many cities have shared-space commercial kitchens for this purpose. The cost can be $400 a month or more. Some of these places also offer space for parking your vehicle off-hours. Explore less costly options for food prep/storage, such as renting kitchen space in a nearby restaurant, school, church or other place with health inspection licensing. Better yet if your food truck business is an extension of a restaurant you already own.
- Fuel and vehicle maintenance – This will depend on how far your vehicle roams on a daily basis and the cost of gasoline at a given time.
- Employees – This will cost at least a couple thousand dollars a month per employee.
- Sales and marketing – Consider printing and distributing flyers. Other associated costs can include website development and advertising (if budgets allow). But most of your promotion costs only your time on social media.
3. What are the ongoing expenses for a food truck business?
Your most consistent ongoing expenses will be for food, gasoline and maintenance, and employee costs, if any. Food and fuel have both gone through recent periods of price escalation, so your challenge here is to shop for the best deals possible.
4. Who is the target market?
Defining your customers will be your first and perhaps most critical job. You can’t finalize your menu unless you can get inside their heads and understand their motivation for ordering from you. Workers in an industrial park on a half-hour break are looking for a quick lunchtime meal that won’t cost much. If you’re on the fairs and festivals circuit, they might be more in the market for elephant ears than a nutritious and costly dinner. Once you’ve identified your customers and understand their motivations, everything else springs from that, from designing your vehicle wrap to finalizing your location and developing your menu and pricing.
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5. How does a food truck business make money?
You must draw customers who will love your menu offerings and spread the word. In addition to your culinary abilities, your profitability will be affected by your location or locations. If you have a taco truck in an area of overcapacity of Hispanic food trucks, you won’t stand out. Similarly, you might not do enough business to break even if you exhibit at under-attended festivals or events.
6. How much can you charge customers?
To answer this question, you must first conduct a survey of options in your marketing area. If you’re going to be located downtown during lunchtime, for instance, how many restaurants are there within walking distance of major employers? What do they charge, on average? Keep in mind, one reason foot traffic will consider your offering is out of convenience. You’ll feed them quickly. So don’t consider restaurants as competitors if they’re a long walk or drive away or they serve leisurely sit-down meals. Your competitors are fast-food establishments and restaurants offering minimal service and quick response. And other food trucks, of course. Try to stay within cost range of your customers’ other options.
7. Observe other food trucks in or near your desired location. How many meals do they serve on a typical lunch hour? Be conservative in your estimation, and figure out how much you must make to be profitable on a daily basis. Divide the number of meals you expect to serve into this number and this is what each meal should cost to hit that number. Does that figure make competitive sense? If not, you might need to further retool your menu or ingredients to bring costs down or sales up.
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8. How much profit can a food truck business make?
A 30 percent profit margin is ideal, but it will depend on your location, competition, and efficiency, among other factors.
9. How can you make your business more profitable? Consider expanding your market through after-hour locations. For instance, if your regular gig is to serve lunchtime diners at an industrial park, explore evening bookings to serve private parties and special events. Perhaps you can handle wedding receptions and festivals on the weekends. Furthermore, your menu should always be a work in progress. Constantly experiment with offerings that might carry a larger profit margin because the ingredients are less expensive or easier to prepare, or your customers are more receptive to them, increasing the popularity of your truck.
10. What will you name your business?
Choosing the right name is important and challenging. If you don’t already have a name in mind, visit our How to Name a Business guide or get help brainstorming a name with our Food Truck Business Name Generator
If you operate a sole proprietorship, you might want to operate under a business name other than your own name. Visit our DBA guide to learn more.
When registering a business name, we recommend researching your business name by checking:
- Your state’s business records
- Federal and state trademark records
- Social media platforms
- Web domain availability.
It’s very important to secure your domain name before someone else does.
11. How to promote & market a food truck business
The way your vehicle is wrapped—the signage with business name, logo and branding—will serve as your billboard. Strategize your time and location to put your business amidst hungry foot traffic. This means picking the right festival or event or getting in front of lunchtime crowds of workers if you’re positioned downtown or within convenient access in an industrial park or other heavy-traffic site. Work with a graphic designer to come up with truck signage with an appealing message.
Also consider producing and distributing flyers to the businesses you’re serving, or for handing out at events.
12. How to keep customers coming back
Start by making sure you’re offering the food your customers want. Take mental note of every time someone asks about the availability of items not on the menu. If you have multiple requests for certain items, consider adding them to the menu or replacing less desired items.
Encourage your customers to follow you on social media or to give you business cards so you can send them a weekly e-newsletter. Perhaps motivate this action with discounts. At the very least, make sure your repeat customers know when and where you’ll be next.
13. Create your business website
After defining your brand and creating your logo the next step is to create a website for your business.
While creating a website is an essential step, some may fear that it’s out of their reach because they don’t have any website-building experience. While this may have been a reasonable fear back in 2015, web technology has seen huge advancements in the past few years that makes the lives of small business owners much simpler.
Here are the main reasons why you shouldn’t delay building your website:
- All legitimate businesses have websites – full stop. The size or industry of your business does not matter when it comes to getting your business online.
- Social media accounts like Facebook pages or LinkedIn business profiles are not a replacement for a business website that you own.
- Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.
Using our website building guides, the process will be simple and painless and shouldn’t take you any longer than 2-3 hours to complete.
14. Set up your business phone system
Getting a phone set up for your business is one of the best ways to help keep your personal life and business life separate and private. That’s not the only benefit; it also helps you make your business more automated, gives your business legitimacy, and makes it easier for potential customers to find and contact you.
There are many services available to entrepreneurs who want to set up a business phone system. We’ve reviewed the top companies and rated them based on price, features, and ease of use.