The food truck business is a $1.2 billion industry, with a reported annual growth of 7.5% between 2015 and 2020. However, the U.S. food truck market is expecting a decline of 12.1% in 2020. That said, food trucks still offer fewer financial risks and the ability to reach wider markets than traditional brick-and-mortar eateries with static locations.
The Covid-19 pandemic has changed dining out as we know it:
As more and more sit-down restaurants struggle to survive during the coronavirus pandemic, food trucks may offer better alternatives to dining out. Customers enjoy safer dining experiences by ordering ahead and collecting their food from neighborhood trucks. At a time when many eateries are going out of business, it may be the perfect moment to start your food truck.
How to Start a Food Truck:
A food truck business can be a very lucrative and satisfying venture, but success doesn't happen overnight. You'll need a detailed business plan, a suitable location, reliable equipment, a winning menu, and — the most essential part — the food truck itself. Read through the detailed guide below to learn what it takes to start your own food truck.
Conduct market research.
Survey potential customers.
Before starting your food truck, you need to find out what types of food your target market would like to purchase from your food truck.
Talk to the locals to find out what cuisines they enjoy. Joining related Facebook groups and following the pages of similar food trucks or eateries will help you connect directly with your target audience. In order to be successful, you need to know how to keep your customers happy.
Study your competitors.
You can find your niche by carefully studying your competitors. What kind of food truck will you have? You could choose cultural or national dishes that are not commonly found in your area, or make popular dishes in a unique way (like making vegan or gluten-free eats).
Study the competition's menus and make sure you have something different to offer customers. Look at the current food truck variety in your desired area and identify which trucks do well and if there is a gap in the market for a specialty that isn't represented.
Name your business.
Research the names of existing food trucks and eateries.
You want your name to be unique, but that doesn't mean you can't get ideas from existing businesses. Analyze the names of the top food trucks and eateries in your neighborhood. Look for food-related keywords and jot them down.
Visiting the websites and social media pages of food trucks and restaurants may help you find keywords that can be used in your name.
During the research phase, don't only look at good names of food trucks — be sure to examine the strange names, too. When a name doesn't quite work, try to identify the reason so that you avoid these branding pitfalls.
Watching cooking shows or YouTube videos related to food trucks or the specific cuisine you'll be serving may also spark useful name ideas.
Use a name generator.
So you've done the research and jotted down your keywords, but you still can't seem to form a decent name. A name generator like NameSnack will be useful in such a case.
Simply visit the home page, enter some keywords and basic information about your food truck, and NameSnack will do the rest. Within minutes, a list of useable names will appear onscreen. This nifty tool will also check domain availability and is 100% free to use.
Purchase the domain name.
First, you should check to see if your domain name is available by visiting domains.google and typing your domain name into the search bar. The results will display insights about your proposed domain name, including how it could potentially be misspelled. You will also be able to see which domain name extensions are available.
Scroll through the list to find the most suitable option, and then purchase it.
If you've created your name with NameSnack, you simply have to click on the name to purchase it through Namecheap.
Gather all the information required to start your food truck.
Prepare an overview of your business plan.
You'll need a solid understanding of your goals, brand identity, and offerings before you can complete your business plan. Jot down the answers to the following questions to lay the groundwork for your formal business plan:
Who are you? What makes your food truck special or different from the competition? Consider the overall experience as well as the individual meals on your menu.
What services/solutions are you providing? Think about how your food truck will ultimately benefit customers.
Who is your target market? What is your ideal customer profile? Think about the customers who will most enjoy your services and/or food.
Who are your competitors? How does your food truck weigh up against the competition? Think about other eateries and food trucks near your location.
How will you market yourself? How will you ensure clients know about your tasty meals? What strategies will you use to create brand awareness?
Who will work for you? Provide an outline of your team. Think about all the workers you will hire to make a success of your food truck business.
How will you spend and make money? Provide a list of your expenses and your projected income.
What are your milestones? Create a timeline and fill it with all of the activities you need to complete before you can start your food truck. Include due dates and the names of responsible staff members.
Write a business plan.
Business plans are crucial as they provide the roadmap for launching your food truck.
A business plan for a food truck should include the following items:
- Executive summary.
- Company description.
- Marketing plan.
- Operational plan.
- Management plan.
- Financial plan.
Download the template toward the top of this page to streamline the process of writing your business plan.
Find a good location.
Research potential areas.
Once you have identified your target market, you need to choose a location (or several locations) that have adequate foot traffic. Visit potential spots, make notes, and take lots of photos. Also, jot down the times these areas are busiest so you know when to set up.
During the Covid-19 pandemic, try to find parking spots close to places where frontline workers are stationed. Set up in grocery parking lots or near hospitals, schools, and police stations to keep essential staff fed so they can perform their duties.
Remember, foot traffic in certain areas may experience seasonal fluctuations, so find suitable places to park throughout the year.
Find out where you can park.
Once you have identified suitable locations, you should contact your county clerk for more information about available parking spots.
Form a legal entity.
Choose a legal structure.
Most food trucks take the form of sole proprietorships or partnerships, but there are a number of legal structures that may suit your business.
A few options to consider when forming a legal entity include:
Sole proprietorship: This makes you the only operator and investor, with no employees.
Partnership: Two or more individuals share the expenses and income from the business. An annual return must be filed.
Corporation: A corporation has shareholders but remains a standalone entity.
S Corporation: S corporations forward all income and expenses to shareholders for tax purposes.
Limited Liability Company: An LLC is more flexible, as it can be owned by an individual, more than one person, and/or corporations. Depending on the number of members and the decisions made by the LLC, it will be taxed as a corporation, partnership, or as part of the owner's tax return.
Determine registration requirements.
The licenses and permits required to start a food truck may vary by state, county, or city. There are also various local and regional regulations you should be aware of before you register your business. Contact your Secretary of State, revenue department, or city or county clerk's office to learn more.
Join the National Food Truck Association to keep abreast of new registration requirements. You can also contact them directly with any queries.
Secure funding and purchase equipment.
Weigh up your financing options.
Just like with any other business, your food truck will have several start-up costs and the financing methods you choose will affect the way your business is run. Make a list of all your business costs and consider the advantages and disadvantages of each financing option.
Have detailed business plan ready when applying for financing.
Use your own money.
If you're able to use your own savings to fund your food truck business, this is a great way to avoid debt and reduce financial risks. Because you're not selling equity, ownership remains undiluted and you have full control over your food truck business.
Using personal funds as start-up capital may help you avoid unnecessary expenses.
Because you don't have to seek external financing, your business may be up and running sooner than you think.
Apply for an SBA loan.
You can find a lender on the Small Business Administration website. They offer great term lengths and low interest rates. It takes just two days to find a suitable lender and get the process started.
Shop around when you apply for loans. It is important to compare terms, rates, fees, etc. before signing anything.
Get a loan from the bank.
Once you've determined all your start-up costs, you can approach the bank and apply for a small business loan with them. Be sure to provide them with all the required documentation as soon as possible.
Meeting with multiple lenders will increase your chances of securing the best loan for your business. Some business loans don't even require collateral. Ensure you've read through all the terms and conditions before committing to a loan.
You can sell equity in your company to get the funds you need, but this will mean splitting your ownership of the company as well as your profit.
Get money from friends and family.
Your friends and family already know you, so this may put you in a good position to get a loan from them. Chances are they'll also offer much better payment terms and lower interest rates than a financial institution. However, it is still vital to have a detailed plan of how their funds will be spent.
To avoid any misunderstandings and resultant conflict, have a written agreement drawn up so that all parties are clear on the conditions attached to the loan.
Get a business credit card.
If you have failed to qualify for a loan, you can use a business credit card that will help you cover essential expenses like equipment.
To avoid overspending, you can set a limit on your credit card.
Business credit cards can help you build a good credit score, so use them responsibly.
Create a crowdfunding campaign.
This can be an effective way to generate the capital you need to get your food truck business started. A heartwarming or interesting story about you and your food truck could convince strangers or angel investors to believe in your business and help you fund it.
Carefully read the terms and conditions attached to the crowdfunding platform you're using. Consider different options before deciding which one best suits your campaign.
To make a success of your crowdfunding campaign, a high level of engagement will be required. Be prepared to answer several questions and provide your audience with regular updates.
Set up social media pages and/or a website for your food truck where potential investors can engage with your brand and find out more.
Clearly outline the terms and conditions of your crowdfunding campaign so that the audience is aware of potential benefits when they donate to your cause.
Send a personal thank you to anyone who helps fund your food truck.
Purchase the equipment.
Before maxing out that business credit card, find out what you need to get started. As a new food truck business, try to be conservative in your spending and to purchase only the equipment needed to get started.
Some equipment you may require includes:
- A food truck.
- Cooking equipment such as griddles and fryers.
- A microwave.
- Food prep equipment.
- Warming and holding equipment.
- Refrigeration equipment.
- Janitorial equipment.
- Class K and ABC fire extinguishers.
- A fire blanket.
Food trucks have very specific requirements according to health and safety regulations, so it would be advisable to purchase a vehicle that has already been used as a food truck. Alternatives to trucks include trailers and carts, which can be cheaper.
Spend a few days comparing the prices, brands, and features of all the equipment you'll be purchasing.
Check websites like Craigslist for second-hand trucks. This will not only save money but may also lead to meeting food truck owners who can offer advice. A second-hand truck can cost between $50,000 and $100,000.
Due to the Covid-19 pandemic, the purchase of personal protective equipment (PPE) like face masks, gloves, alcohol-based sanitizer, etc. will also need to be factored in.
Take care of legal requirements.
Apply for licensing and permits.
Depending on your state, you may need the following licenses and permits:
Business license: Any business needs a business license to operate, especially if income is generated from it. You can visit the U.S. Small Business Administration website to learn more.
Vehicle license: Your food truck will need to be licensed, and any employee driving the truck will need a valid driver's license. In some states, a commercial driver's license may be required.
Seller's permit: Also called a state tax ID or resale certificate, a seller's permit is required in some states and allows you to sell products or provide services within the relevant state.
Food handlers permit: Also called a food worker card, a food handlers permit is required in some states, and forms part of the health and safety training to ensure that food is handled correctly.
Health department permit: Your health department must approve the health and safety standards of your truck to verify that your food storage and preparation is hygienic.
Fire safety certificate: The fire department must ensure that you and your staff are educated about fire safety and suppression methods, due to the susceptibility of a fire beginning with cooking equipment.
Parking permit: Many areas have zoning laws that prohibit certain vehicles from parking in them. There are also restrictions on how long a vehicle may be parked in a location. It is advisable that you contact your county clerk for information about where to legally park and operate your food truck.
Ensure that injuries and accidents are covered so that you, your workers, customers, and food truck are protected.
Consider purchasing the following types of insurance:
- Business owner's policy (general liability and commercial property).
- Workers' compensation insurance.
- General liability insurance.
- Commercial auto insurance.
- Liquor liability insurance.
Before signing up with an insurance company, compare quotes and consult an independent insurance agent.
To save money, take out multiple insurance policies with the same provider and bundle them.
Staff your food truck.
When you're just starting out, you may be able to perform most tasks on your food truck alone, but as your business grows, you may need to employ more workers.
Write enticing job descriptions and post them on job sites like Indeed, local job boards, and social media.
Some positions you may need to fill include:
- Short order cook.
- Kitchen workers.
- Service window attendants.
A food truck is a small environment to work in, so make sure the people you employ are respectful of boundaries and that they cope well in confined spaces.
The chefs and cooks you hire will presumably know their way around a kitchen, but it is important to train all your staff so they're familiar with workplace safety and the general rules of the food truck.
Front of house staff should be well-versed in customer service and know how to work point of sale (POS) systems and cash registers.
Market your business.
Create a website or blog.
Your food truck may not have a permanent location, but a website will help customers find out where you'll be stationed. Share pictures of your creations and get customers excited to place their first order.
Creating a website where customers can place orders will make for a safer and more convenient experience. "Ordering ahead" options are vital during the Covid-19 pandemic.
Create social media accounts.
A social media presence will make your food truck more accessible. Followers will be able to see your upcoming locations and use social media to check-in when they visit your truck.
The most effective social media marketing takes place on Facebook and Instagram. These platforms have high levels of user engagement and offer more flexible advertising campaigns.
Create event pages on Facebook. If you plan to be at a specific event, you can create an event page for your food truck to gauge interest. While at your event, you can post stories on Facebook and Instagram with a geotag.
Post pictures of your food. Advertising images of your food, and encouraging others to do so, will encourage new customers to try your products.
Create a hashtag for your food truck. When customers take pictures of your food and tag you, as well as share your hashtag, you can see how many people are engaged with your content and share these images on your own accounts (with permission).
Develop business relationships.
Expand your professional networks to gain more knowledge and improve the overall success of your food truck business.
- Join a chamber of commerce or a business association such as the National Food Truck Association.
- Attend networking events to meet other food truck and eatery owners.
- Schedule meetings with suppliers.
Food Truck Start-Up Expenses:
$50,000 – $100,000
Propane fuel cylinder
$200 – $1,000
Cutlery and plates/napkins
$8 – $15 /person /hr.
Estimated at $500 /mo.
How The Cravings Truck Uses Social Media:
Linking Foursquare to Facebook and Twitter: Foursquare is an app that shows nearby restaurants based on users' locations. The Cravings Truck updates their daily location on Foursquare and links this account to Facebook and Twitter, instantly alerting followers.
Using polls to engage with followers: Facebook, Instagram, and Twitter have poll features that allow users to vote on questions posed by others. The Cravings Truck uses this feature to ask customers what they would like served for the week. The business has also asked customers to come up with new dessert options and has named these desserts after the users who suggested them.
Responding to customer complaints on social media: When a customer complains about poor service on social media, The Cravings Truck uses this opportunity to apologize and offer a coupon, where appropriate. This boosts their public image and settles the dispute.
Rewarding employees based on customer feedback: Customers are encouraged to post about positive experiences with staff, and the staff who are mentioned receive rewards for their excellent service.
Communicating with customers on a personal level: The business talks openly about their old truck and the various mechanical mishaps they encounter. They feel that this connects the audience to the truck as well as the staff. The business tries to post relevant conversation starters like views on events or news to engage with customers about more than food.
How profitable is a food truck?
On average, food trucks earn $5,000 to $20,000 per month. Depending on your expenses, this can be extremely profitable.
How much does it cost to start up a food truck?
According to our research, food trucks can cost between $55,000 and $105,000 to start.
What licenses are needed to start a food truck?
- Business license.
- Parking permit.
- Health department permit.
- Fire safety certificate.
- Seller's permit.
- Food handlers permit.
Why do food trucks fail?
The most common reason that food trucks fail is because of unexpectedly high expenses. Failure to budget for these expenses can lead to minimal profit, with no room to expand.
Are food trucks a good investment?
If you would like to enter the food industry, a food truck is far more affordable than a brick-and-mortar restaurant and shows a higher annual growth rate.
Can you park anywhere with a food truck?
No, you can't park anywhere with a food truck. Zoning laws prohibit food trucks from parking in particular areas, so it is advisable to contact your county clerk to find out where you can park legally.
How much profit can you make owning a food truck?
On average, food trucks earn $5,000 to $20,000 per month. Profit is dependent on your individual expenses, but this is a fair estimate of what to expect.
Do food trucks pay to be at events?
Yes, food trucks pay to be at events. They can either be charged a flat rate, or be asked to pay a percentage of sales from the event.
Can you rent a food truck?
Yes, you can rent a food truck for between $100 and $1,000 per day depending on the type of truck and facilities included.
Do food trucks have running water?
Yes, food trucks are required to have running water.
Do food trucks pay taxes?
Yes, food trucks pay taxes because they earn an income by selling products. Food trucks must have a seller's permit and an Employer Identification Number (EIN).
Do I need a CDL to drive a food truck?
If your truck is heavier than 26,001 pounds, you will need a commercial driver's license to drive it.
Can you prepare food in a food truck?
Most cities require food trucks to have a commissary where food is stored and prepared.
Can food trucks sell alcohol?
Food trucks may serve alcohol if they have a liquor permit, and they may only serve it in allocated areas.
Where can I park my food truck?
County clerks will be able to give you specific information about where you can park, but generally, food trucks park outside of office buildings, at events, outside of shopping centers, and near other restaurants or street vendors.
How can I make my food truck successful?
You can make your food truck successful through proper research and planning. Follow our step-by-step guide to do this.
How do I start a small food truck business?
- Conduct market research.
- Name your business.
- Create a business plan.
- Find a good location.
- Form a legal entity.
- Secure funding and purchase equipment.
- Take care of legal requirements.
- Hire employees.
- Train workers.
- Market your business.
Do you need an LLC for a food truck?
An LLC is one option for registering your business but is not the only choice. You can also form a corporation or an S corporation, but most food trucks operate as sole proprietorships or partnerships.