Curious on how to start a food truck?  First, explore the economics of food trucks to make sure the business model will be financially feasible for you.

Food Truck Economics: Income and Expenses

To analyze any the economics of any business, we must break down the potential streams of income as well as expenses.

Food Truck Economics: Income

Your future business’ income is based on a variety of factors including:

1. Population size
2. Weather
3. Competition

Population size

The population of your surrounding area will be the most important factor in defining the income for your food truck business.  Major cities with heavy foot traffic such as New York or San Francisco are great candidates.  That said, food trucks have been shown to thrive in a variety of areas like Brunswick, Maine (tiny population) and the Twin Cities (little outdoor foot traffic much of the year).

Weather

A traditional restaurant’s business might be somewhat affected by weather, but weather and environmental factors can make or break a food truck business. Food trucks thrive in areas like Southern California that have a moderate climate with an incredibly high percentage of sunny days.  Customers can be few and far between on days where it is freezing outside or raining.  If you’re considering starting a food truck in one of the following U.S. cities with the most rainy days, make sure your business plan accounts for some significant down-time:

Just because your prospective city might have a lot of rainy days doesn’t mean you should abandon your plan, however.  Portland for example has a thriving community of food trucks.

Competition

What is the existing competition like in your area?  Competition can be a double edged sword.  On the positive side, it means the business model works in your prospective location and the demand for food trucks is present.  On the other hand, you will be splitting the pie up with other trucks!  Scout out operations in your area, learn from their strengths and weaknesses, and avoid entering a saturated market.

Food Truck Economics: Expenses

Food trucks are particularly popular start-up restaurant businesses because of the low expenses incurred by the owner.  That, said they are not free!  One successful food truck operator in Los Angeles did some research in his area and determined most food truck owners spent between $15,000 and $80,000 to start their business.  That’s quite a range!  Let’s break down the expenses involved in opening a food truck:

1. The truck!
2. Licenses and permits
3. Parking

Buying a food truck

The biggest expense you will face is the truck itself.  Ask yourself if your operation is scalable.  Frequently it will make more sense to start off with a smaller hotdog-stand type operation that can be purchased for as little as $2,000.

If your business plan requires a fully built out truck from the start, expect to shell out $20,000 or more.

Licenses and permits

To operate a food truck, you will need licenses and permits specific to your locality; check with your chamber of commerce to see how much you will need to factor into your expenses in order to acquire a permit.  Don’t overlook this step!  Food trucks in New York City have become so popular that the required Mobile Vending Unit Permit is increasingly difficult and expensive to get.  There have even been reports of a black market for food truck permits in New York developing.

Parking

Finding an area to park your food truck that is both acceptable and frequently trafficked by customers can require significant planning.  Experiment with a variety of spots and record your sales figures in each one to optimize your food truck’s location.  One great strategy food truck owners use to get the best routes and parking spots is to partner with local businesses that benefit from the increased food traffic a food truck brings.

Plan ahead

One of the most important parts of running a successful business is to plan ahead.  Rich Mintzer’s “How to Start a Food Truck Business” is an excellent resource on how to break into the billion dollar industry:

Another book I really like is Jennifer Lewis’ “Starting a Part-time Food Business.”  Sure, it would be great if we could drop everything to pursue our passions, but sometimes that’s not always feasible.  Lewis gives some valuable advice on how to start your food business without quitting your day job.  This approach naturally lends itself to mobile food businesses due to their easily scalable size.

Finally, it never hurts to check out the competition and learn from the best.  Heather Shouse’s “Dispatches and Recipes from the Best Kitchens on Wheels” contains some of the most successful food truck recipes and will inspire your menu creation process:

Best of luck in embarking on your new food truck business!

A recent survey of restaurant owners showed that the total startup cost for a restaurant averaged $494,888.  This figure might sound staggering, but it shouldn’t discourage you from investigating the prospect of opening a restaurant yourself.  Restaurants have been opened on far lower budgets, and almost all budding restaurateurs gain financing or funding from a bank or investors.

Break down your costs

One of the most important parts of your business plan should be determining how much money it costs to open a restaurant.  Do you need to purchase land?  Can you save money by buying a now-defunct eatery’s old set-up?  Examine the following reported average costs and think about how they could apply to your future place of business.

1. Start-up cost without land: $494,888
2. Start-up cost with purchase of land: $735,326
3. Start-up cost per seat: $4,244
4. Kitchen and bar equipment: $115,655
5. Land and building: $406,657

Write a budget

It’s important to note that the average restaurant opening ran a whopping 33% over budget!  Strong planning is crucial to ensure you don’t run into a shortage of funds that hampers your restaurant’s opening.

To formulate a budget, incorporate your anticipated costs and calculate just how many customers you will need to start breaking even.  This process will not only let you know if your restaurant’s business plan is feasible, it will get you on the right track towards attracting investors for your financing and funding.

Restaurants can generate great returns

While these cost figures might look menacing, it’s important to keep the big picture in mind.  Restaurants can be financially successful.  The same study that reported these costs also showed that the average establishment was profitable within 18 months and returned over 33% annually on the original investment to its owners!  For comparison, the stock market has typically generated returns of about 10% annually.

Opening a successful restaurant is no easy task, but if done right it can be very financially rewarding.

Curious about how to open a restaurant?  My website will strive to be the web’s premiere resource for aspiring restaurant owners.

Opening a restaurant has always been a dream of mine.

Food and business are two of my most intense passions.  Unfortunately, I’ve been disappointed by the amount of lousy or spammy information for aspiring restaurateurs on the internet.  Most of the culinary business websites I have come across are either shoddy articles by content farms or incredibly spammerific $299 “no risk training programs!”  My goal with this site is to provide detailed, easy to digest information that will help anyone realize their passion to open a restaurant.

Head on over to my restaurant opening walk-through, How to Open a Restaurant: A Detailed Guide, to learn more about how to open a restaurant.  My guide will walk you through the all-important steps of

• Planning
• Funding, Licensing, and Permits
• Design
• Hiring employees
• Marketing

Like any business, for a restaurant to be successful it must click on all cylinders.  There are plenty of failure horror stories that involve unbelievably talented chefs or whiz-kid marketing teams.  A restaurateur must have the entire package in order to create an establishment that both serves delicious food and turns a profit.

I created this site to learn and help arm me with the tools I need to successfully open an eatery of my own, and I hope it serves the same purpose for you.

Have fun

Do what you love.  The most successful and passionate people in any field consistently harp on this.  World class restaurateur and chef Thomas Keller is fond of saying, “food should be fun.”

Above all else, make sure you are enjoying the process of opening a restaurant.  It will show in the food, the design, and the diners’ experience.  Good food is infused with love.