How much does it cost to start a food truck

Saturday, January 03, 2015
The sight (and enticing scent) of food trucks parked alongside busy city streets has become increasingly more common throughout the last decade. In fact, since 2016, the food truck industry has grown at an average rate of 12.1% per year, establishing itself as the billion dollar industry it is today.

 

With the industry’s increasing success, it’s no wonder why many aspiring chefs and entrepreneurs have grown curious about starting their own food truck business. Food trucks are often seen as a more affordable alternative to setting up a physical storefront, along with being more versatile and an easier business plan to get started.

But when you truly break it down and start to add up all the expenses, food trucks can be significantly costlier than what’s commonly assumed. Differing state fees, the multiple selling licenses required to operate, and compensating staff members all complicate the otherwise simple concept of food trucks.

Because many aspiring business owners may be curious on the logistics of starting a food truck, this article will focus on walking through the various steps, expenses, and challenges those who start the journey will face.

Start up expenses

Buying vs. renting a food truck: Of course, to start a food truck business you’ll first need to acquire the truck itself. These can be costly, and will be your largest expense to get started. Luckily, if you can’t afford purchasing one outright, there’s renting options to make it more feasible.

Purchasing a new truck that’s custom tailored to your specifications could cost upwards of $100,000 in addition to the cost in time as you wait multiple months for it to be made. But, for many, these are worth it, and prove to be a long-term investment that pays itself back with time.

Pre-owned food trucks are also available, and these generally cost somewhere between $40,000 and $80,000. While they may not be constructed perfectly with what you had envisioned, a used food truck will significantly save you in start-up costs and give you the ability to start operations much more quickly.

The price of renting a truck depends on many factors (truck size, length of lease, different leasing companies), but generally, it should cost between roughly $2,000 and $3,000 a month. Renting a food truck is a great way to trial the food truck business and let you figure out if it’s a good fit, especially if the lender can alter your lease into a payment plan later down the line if you become interested in wanting to purchase the truck.

Additional equipment: Aside from the truck, you’ll need to stock it with all the utilities and equipment you’ll need to operate, such as:

  • Grills, ovens, and fryers
  • Refrigerators
  • POS systems
  • Storage units
  • Cookware (pots/pans)
  • Food ingredients
  • Power generators
  • Various other appliances specific to your menu (coffee brewers, blenders, freezers, etc.)

You’ll also need to purchase silverware, napkins, and paper plates/bowls to provide for your customers. While these items are generally cheap, you’ll never want to run out, so it’s best to buy in bulk.

Because of differences in menus and scale, it’s tough to give a good estimate of what these appliances will run you. Expect to spend roughly $1,000 or $2,000 on silverware, cookware, paper plates, napkins, and your first supply of ingredients. For the other more costly equipment, consider leasing these items out or finding them pre-owned to save on costs.

Licenses & permits: In a report by the U.S Chamber of Commerce’s Food Index, it was estimated that the average food truck company spends an average of $28,276 in permit and licensing fees in order to legally operate for their first year.

This comes down to roughly $2,360 a month, which is a fairly significant expense that every food truck business will have to comply with or risk losing operation, facing legal penalties, or losing your selling license.

This number takes into account the operation costs in both the most expensive and most affordable states. Suffice to say, this cost could be drastically different depending on where you plan on operating.

As with so many other industries, the mantra “location, location, location” rings especially true for the food truck industry. Every prospective food truck owner should first check with their local city ordinances and fees relating to food trucks to determine if the costs are worth operating within. It may be worth it to research the most food truck friendly cities and states and consider setting up camp in these locations to save on costs and give your business the best environment to flourish.

Parking: Surprisingly, this isn’t the largest expense, but it should be touched on. When parking your food truck to set up show and sell to customers, you’ll need to either:

  • Park in regulated areas that the local laws permit licensed food trucks to operate
  • Park on the grounds of other businesses that have agreed to let you do so (it’s a good idea to get a written agreement of this)
  • Park in land that you own (typically bad for selling, but good for overnight parking)

Parking at another business is a great idea for both companies to thrive if you mix the services well. For example, if you’re running a frozen dessert based food truck, it’s best to work in conjunction with a business that specializes in hot meals. Or, let’s say you’re a small lunch based food truck, consider working out in agreement with a local brewery to operate on their grounds. Pairings such as these not only provide a unique and great customer experience, but also have less concerns of each business competing for customers.

Businesses may charge you to park on their grounds, but many won’t and will encourage your presence. Whatever the case, make sure to get a written agreement in case anything goes wrong or any miscommunications occur; many businesses try to assign different days to different food trucks to surprise customers, so always remember to know which days you’re welcome.

If you’re unable or opposed to parking your food truck on your own property at night, then your best bet is to work with a local commissary or rental unit who will charge you a monthly fee to securely store your food truck. Expect to spend roughly $500-1,500 a month on this.

Renting a kitchen for prepping: This may not pertain to every food truck, but many (specifically those with high traction) will need to make use of a kitchen space outside of their food truck to prep for orders and set themselves up for success.

You’ve got a few options here, all of which carry different costs.

If you’re able to run this kitchen from your own location you’ll be able to save on renting, however, you will still have to pay the costs of routinely operating a fairly large kitchen. For those just starting out, this isn’t the most practical option, but for businesses looking to add on food truck services to their already established physical restaurant, this is a smart and cost effective option.

Another option is to rent a commercial kitchen (commissary). Commissary kitchens are perhaps the most popular option among food truck owners, so a conversation with a local food owner could give you some good ideas of where to go and the costs associated with them. They generally cost $1,500 a month to work out of, and some of them also offer overnight parking for food trucks.

In the event your local commissary kitchens aren’t currently accepting new clients, consider reaching out to community centers, churches, and restaurants to offer them compensation in order to make use of their kitchens.

Daily operating costs: We’ve touched on some of these before (permits, insurance, and licenses) but other daily costs in order to run a food truck that we haven’t mentioned yet are gas, maintenance, and payment processing.

Gas and maintenance are hard to estimate, as food truck owners commute and propensity to breakdown vary considerably. In general, it’s best to have $1,000 to $3,000 aside for mechanical fixes and general upkeep on your truck.

As for gas, you’ll just need to determine your driving distances, how much gas you’ll burn while operating, and calculate the cost given current gas prices (some food trucks have started integrating solar panels to combat gas expenditures).

For payment processing, there are many affordable and modern payroll systems designed with outdoor payments and food trucks in mind (check out our article How to pick the right POS system for your food truck).

Ways to minimize your food truck costs

Take advantage of social media: Marketing and getting the word out about your businesses doesn’t need to be another expense. Make use of social marketing and build your brand through posts, tweets, and instagram stories. For example, if you’re parking on the grounds of an already established business like a brewery, talk with the owners and have them tag your businesses in a social media post and alert their customers to check out your businesses. This can go a long way in developing a customer base, gaining traction, and building relationships with other businesses.

Hire friends & family: If you can’t afford hiring clients at first, but you need help to operate your food truck, consider asking your friends and family to assist you and help get you started before you can afford a more permanent workforce.

Offer a unique and specific menu: Not only will offering a few specialized items save you on costs, it will also grow your brand and have customers remembering your food truck when they think of that certain special entree. Some of the most successful food trucks get by offering only 2 or 3 items; consider sticking to a simple menu and really delivering on the few products you provide.

Closing thoughts

Starting a food truck is a bit more complicated than just acquiring a truck, with the total startup costs to fully operate a food truck business landing somewhere between $75,000 and $250,000. There’s a lot of diversity between food truck owners and their exact expenses, but this is a good estimate on what most will spend on average.

Food trucks are a great way to not only enter the food serving industry, but also just manage a small business in general, with many opportunities for growth and building a recognizable brand that can one day operate from a physical storefront.

Or, if transforming into a brick-and-mortar restaurant or building a food truck empire isn’t your end goal, operating a food truck can be an incredibly fun and rewarding experience. Many food truck owners report greater work-life quality as compared to working at a restaurant and many generally look forward to setting up shop everyday. Who doesn’t love food trucks?


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