No matter where you live, you’ve likely seen or eaten at a food truck. There are some great reasons why savvy entrepreneurs are opening restaurants on wheels: the overhead is low, and they can go where their customers are. Operating a food truck is also a great way to test out a restaurant concept or menu to see how diners respond before investing what can be millions in a brick-and-mortar restaurant that you’re not sure will succeed.
If you’re considering launching a food truck business, there are a few things you should do first to ensure success.
Research the Market
All food decisions are local. Smaller towns may have just one or two food trucks, but that might be because it’s hard to attract business. Larger cities are filled with food trucks catering to every taste, and the competition is fierce.
Talk to food truck business owners to get a sense of what the market is like. Would they do it all over again? Do they make a living at it? Getting insight into what it is to run a food truck business in your city is invaluable, because it might keep you from making a bad business decision.
Determine Your Niche
It’s not just about what you serve, it’s also about where you will do it. I live in Philadelphia, PA where Insomniacookies started on college campuses around town. Their niche was warm fresh chocolate chip cookies until 3am. They had a two prong niche, they focused on late night sweet cravers, and they always located their trucks on college campuses, a target rich environment. These days they have store fronts and even deliver warm cookies to your front door, but they knew their audience, and no one had that niche when they started. What will your niche be tacos, sushi, cupcakes, or cheese steaks? Look at your competitive landscape and pick a niche food focus and location area.
Find Out What’s Required
Just like with a standard restaurant, you’ll need a business licenses and a parking permit to operate your food truck business. You will likely need a separate license for preparing and selling food as well, so check with city, county, and state to ensure that you know what is required. And just like any other restaurant, you’ll have a health inspection, so make cleanliness a priority from the start.
Keep in mind: you may move around to find the right location your food truck, so map out a few locations that are easy to get to where the locals will support your presence, not fight it (maybe parking in front of another restaurant isn’t the wisest idea).
Buy a Truck
Your food truck business has one central theme: a food truck! You may be able to find a recently-used truck that’s been outfitted with a modern kitchen that will stand up to health codes for under $40,000. Otherwise you can buy a new truck and do the customizing yourself, though it will cost more, a lot more like $100,000+.
Protect Your Business
Anything you can do to protect both your business and your personal assets, you should do. Start by considering your business structure. Setting up your business as an LLC or S-Corp will separate your business from your personal assets, so that should someone sue your business, they can’t touch your personal assets. There are also some tax benefits to choosing certain business structures, so contact your accountant or tax prepared for advice on this.
You may be required by local government offices to carry certain types of business insurance. It can cost between $500 and $3,000 a year, but should anything negative happen, you won’t go in the hole paying legal expenses or doctor bills.
Also be aware: your city government may require you to have specific types of business insurance, such as general liability and commercial auto insurance, says Ted Devine, CEO of Insureon. You may even need additional coverage if you plan to sell food at events like festivals or football games.
“Most event organizers and venues will require food trucks have $1 million in general liability coverage. Even if you don’t have any upcoming events, research ones you may want to attend and take note of their insurance requirements. Carrying those types of coverage will give your food truck the opportunity to land more venues in the future, while also giving it the freedom and mobility to grow.”
Build Your Budget
Before you launch your food truck, make sure you’ve budgeted for your first year of operations. You’re not guaranteed to turn a profit within the first few months, so it’s important that you have enough cash in the bank to cover both business and personal expenses.
Make sure to include in your budget:
- Startup expenses (truck, graphic design, equipment)
- Food and supplies
- Your own salary
- Business insurance
Be Ready to Leverage Social Media
Because yours is a business on the go, you’ll need to rely on your social media to tell your hungry followers where to find you, especially if you are not going to be in the same location all the time. Before you launch your business, work on building your following by providing teasers of what you’ll be cooking up for locals. Then as you set a schedule for your business, be sure to keep followers updated on where you’ll be serving up meals in real time.
Just like you’d prepare for launching any type of business, take extra care with your food truck company. Spending more time prepping up front the more likely you’ll be and set up for a thriving business.