The food truck business has become more popular over the past couple of years. In fact, some cities have so many food trucks going around that they have started being known for this scene. In the earlier days, selling food from trucks used to be considered a food risk. But now, this foodie trend seems to have taken over the globe.
If you are interested in starting a food truck business, you have come to the right place. This post will discuss how to start a food truck business and the cost to start a food truck business. We have some valuable tips for you to help you get the ball rolling towards building a successful food truck business.
How Much Does It Cost to Start a Food Truck Business?
The average capital budget you will need to start a food truck business is around $70,000 and $130,000. This indeed is a wide range, but the reason is that your initial cost depends on a few factors, which we will discuss below. You will incur legal fees, truck customization, the state and country in which you choose to operate, the specific niche you choose to target, and several other factors about consumer taste and preferences.
Steps to Start a Food Truck Business
The process of starting a food truck business feels a lot less complicated if you break it down into several steps. We have created an opening list for what you need to do before you consider running a food truck business.
1. Research the Food Truck Scene
There is no surprise in the fact that before starting any business, you need to do some market research to find out about the other players and look into what your target customers actually want. Before you commit your time to starting a food truck business, you need to make sure it can stand out among the competition, or else you will not make a sufficient amount of sales. Look into the trends of the existing market. Begin with finding out the following about your city.
The existing food truck businesses and how they operate
The existing restaurant concepts and other food establishments
Spaces that allow food trucks to stop and sell their products
Timings when the streets are the most crowded
Most importantly, you need to know if there is a demand for a food truck business in your city.
2. Select a Food Truck Business Concept
Since you will be catering to the interests and preferences of the people in your city, you need to find out what kind of food truck concept they are the most comfortable with. Thus once you are done with the preliminary research, you need to choose a concept for your food truck. The idea must merge your unique style of selling with the local population's concerns. This concept will also define how you develop your brand name and brand logo to properly reflect your food truck business.
The concept, brand name, and logo that you choose must have the following attributes.
Be memorable but unique
Be descriptive enough to grab the attention of the audience
Should clearly express your concept and intentions, without being too specific
People often decide whether to stop or not to stop at a food truck by the visual appeal of it. A visually appealing logo and a well thought business concept can have a great impact on the way your customers perceive your food truck business.
Once the concept is built, it is time for you to start working on your food truck business plan. A business plan is a document in which you describe the details and feasibility of your new business before you begin investing or ask others to invest in it. This document is presented to any potential investors to get them to inject a cash inflow. It is thus important to lay out your business vision and financial plan thoroughly.
Following are the sections that your food truck business plan should contain.
∙ Executive Summary
This is where you will establish your company and brand identity. Write down your goals, and mention what kind of food you will be selling and why.
∙ Company Description
List down the reasons you want to start a food truck business. State how your business idea is different from the competitors.
∙ Market Analysis
You must conduct a brief market and competitor analysis and show that you have done it in this section. This will put you in a better position in front of potential investors. They need to see that you have done your homework to ensure the success of your food truck business.
∙ Management Plan
Plan the ranks of the employees you plan to hire. Define your organizational hierarchy and describe the internal structure.
∙ Product or Service Line Description
Provide your menu details and special offers for seasonal menus.
Prepare a marketing plan. Talk about the kind of advertisements you will be running to initially introduce your food truck business to the audience. Tell how you will spread the word about your food truck within the local community.
∙ Financial Projections
You need to calculate and provide an estimate of your monthly, quarterly, and annual financial projections so that your food truck business appears like a feasible and profitable option for someone to invest in. State your company’s future and financial planning for the next five years.
∙ Funding Request
Clearly identify where you will get the funding for your business from. Point out how much exactly you need to get your food truck business off the ground.
4. Get Funding For Your Food Truck
Your business plan will serve as the first step towards funding to start a food truck business. Considering the costs needed for buying and preparing a truck, you will probably need to get a loan to get your business running. The funding can come from a variety of sources.
Once you get your funding sources sorted out, explore the licenses and permits required to run a food truck business in your region. These usually vary from state to state and city to city. Check with the local jurisdiction to clarify.
6. Buy a Food Truck
The largest portion of your capital budget will be spent in buying your food truck vehicle. Therefore, select the vehicle carefully. Invest in something that can serve your food truck business well. Here are a few points to keep in mind.
Decide whether you want to lease or purchase your own truck.
Decide whether to buy a new or used truck.
Choose a reputable food truck dealer.
Think of the customizations you need to do for the truck.
Don’t forget to purchase insurance for your truck as well. The insurance will cover any liabilities or physical damage that may occur as you run your food truck business. Finalize the inspections and permits required for your truck to ensure you are street legal.
Once you have the truck in your possession, you can start furnishing it with the required equipment and supplies. These are the essential items for producing the products you will sell to run your food truck business. Here are several things you will need to stock your food truck.
Warming and holding equipment
Food preparation equipment
8. Invest in Marketing and Advertising
Just like any other business, you will need to market and promote your food truck business to make sales. With so many digital marketing methods available these days, it will not be hard for you to reach out to your target audience and tell them about your products.
The best way to go about this is to create a website, which will serve as a one-stop platform for all your marketing efforts. You can run your marketing campaigns and track your orders and sales through that website.
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It takes a little bit of time for any business idea to be commercialized and bring profits or returns. A food truck business will be no different in this regard. Hence, it is better to create a solid online presence for it, in the form of a professional website, to make you feel like you have practically started your business.