So, you want to start a food truck but not sure how? We’re here to help turn your idea into a reality.
Maybe your grandmother had the world’s best biscuit recipe. Or all your friends rave about your chili or gumbo. Or you’ve always wanted to open a restaurant but just can’t come up with that much money.
Whatever your reason, you’ve made up your mind that a food truck is the answer. But before you run out and buy one, you need to give your idea all the careful scrutiny you’d give a restaurant or any other business. That means doing some research and making a plan.
In This Report:
How to start a food truck. Here, we’ll walk you through the basics of a business plan for a food truck—specifically, what information to include in your plan and why.
We’ll address these key elements:
“My best advice for anyone who wants to get into the business is first to be a customer and study who your competition will be,” says Lori Johnson, president, and founder, Washington State Food Truck Association, Bellingham, Wash. “Find out what trucks are out there, what food they serve, whether it’s good or not, and what their graphics look like.”
Johnson also urges potential food truck operators to write a business plan. Because with any business, opening a food truck requires careful planning—so do your homework first.
A plan is essential. Planning helps you clarify and focus in on your idea and how it will generate revenue and profit. A business plan also shows financial institutions or investors how you can pay off a loan or investment. Not every business plan is alike, but every plan should contain certain types of information, which is easily divided into sections.
How to Start a Food Truck:
Starting a Food Truck Starts with a Concept
Explain your concept. What makes your food truck concept different and special? Include a brief history of its development and the market area where you plan to sell. And use descriptive language to present the food truck’s appeal in terms of food, service, pricing, and graphics, as well as the team responsible for putting it all together (owner/chef, key employees, etc.). List your vision and goals.
“I tell people to be unique and stand out,” Johnson says. “One of every three food trucks coming into the market here now is doing Thai food, but it’s the truck with the Keto diet menu that’s selling like gangbusters.”
Describe the industry and its growth potential, then describe the market you’re in, your competition, your target audience, what differentiates your concept and the “problem” your business will solve. Include a SWOT analysis (strengths, weaknesses, opportunities, and threats) of your food truck.
Knowing your market and competition is crucial to your success. Some markets have a limit on the number of licenses issued to food trucks; if you’re in one of those cities, you may not even be able to operate a food truck. Some markets are very open to food trucks, while others like Chicago or New York make it extremely difficult to do business. Some areas may be saturated with trucks, so it’s harder to compete. King County, Washington, for example, has more than 500 food trucks, so if you want to open one in Seattle, you’ll have plenty of competition.
Research the types of food trucks already in your market. Follow them on social media and check them out on the streets. Find out what locations they choose and why. Study their menus and pricing and watch how they operate during peak hours—how many employees they have worked, how long it takes to fill orders, how many customers they serve, etc. Evaluate their strengths and weaknesses in addition to your own.
Also, study your customers. Research the demographic groups you want to target and learn where concentrations of those groups are highest. Find out where food trucks are allowed to park and get pedestrian traffic numbers for the locations where you’re most likely to try to establish your business.
Go into detail about your truck, your food, pricing, service, general vibe and how you will deliver on your promise. This section should include details such as where you plan to source your ingredients and supplies, location strategies, sales and growth, and long-term plans.
Focus your homework for this section on developing and fine-tuning your core menu and the truck itself. Since food trucks have limited space, your menu should be limited to five or six items. Consider not only what foods or menu items will help you stand out from the competition, but also items that will be fast and easy to prepare or assemble when ordered and will hold up well in transit.
Many first-time food truck operators think they should have a fryer in their trucks, for example, because everyone likes fried food. But fried foods take time to cook, which means you may have lines of customers waiting for their orders while a competing truck is serving more customers in a shorter time.
Your menu will dictate what equipment you need in your truck. But equipment selection also will depend on whether you use a central commissary to prep your menu items (which is required in most cities); how large a truck you choose (larger trucks give you more room for equipment and staff, but smaller trucks are easier to maneuver and park); and local regulations, from fire and health codes to OSHA requirements.
You also need to think about layout and flow in a confined space. If you plan on building your food truck from scratch, a consultant or food truck manufacturer can help you with design and layout. If you buy a used food truck, you may reconfigure the equipment and layout based on your menu, or you might make do with what you have. Consider, too, how many employees your space will allow you to have on the truck.
Read also: Choosing the Right Food Truck Equipment
Provide a quick overview of your legal structure, more detail on your management team, your organizational structure and who you still need to hire.
Explain how you intend to attract and retain customers. Describe your advertising, public relations, and promotion plans in detail, including the types of media outlets you intend to use.
Two pieces of your plan are worth spending extra time on in the food truck business: The first is your brand and how you project that graphically. The exterior design of your food truck will speak volumes about your business and act as a traveling billboard. A “wrap” for a food truck can range in cost from $2,500 to $5,000 or more, and it has to capture the feel of your concept and convey essential information quickly. You may want to invest in the services of a graphic designer to develop your logo and truck graphics.
The other important piece of the marketing puzzle is your online presence, which includes both your website and social media. You’ll use both of these to let customers know where you’ll be on any given day when you’ll be open, what menu specials you have and any promotions you’re running. Like the food truck itself, your online presence is both a brand statement and an essential communications tool to reach your customers.
Here’s where the food truck rubber meets the road (and where the food hits the plate). Provide at least three years of financial projections for your food truck business. Include a profit-and–loss statement, cash flow statement, balance sheet, sales forecast, personnel plan, and break-even analysis. You may also want to include exit strategies for potential investors.
You have options when it comes to financing your food truck business. The truck itself will be the bulk of your start-up costs. Look into the costs of purchasing a used food truck and retrofitting it to your concept vs. buying a new one to your specs. You also can consider leasing the truck with basic equipment, and some companies may give you an option to buy at the end of the lease. The kitchen equipment, too, can often be leased (talk to your Central Restaurant Product Consultant about leasing programs).
You can secure financing from a number of different sources. Equipment financiers offer loans on equipment like your food truck. Banks may give you a personal loan with the truck as collateral, a good option if you need less than $50,000. The Small Business Administration has a microloan program for funding under $50,000. Another program for this size loan is a rollover for business startups (ROBS), that allows you to use money from a retirement account like an IRA or 401(k) without a withdrawal penalty. Crowdfunding on sites like Kickstarter and GoFundMe is another option.
Kelsey Moriarty is a Content Specialist at Central Restaurant Products. Her focus at Central is in the Food Prep and Furniture areas. Kelsey’s background is in technology and marketing with particular experience in SEO and E-Commerce. She enjoys helping customers make better decisions as well as working on her copywriting skills!