Are you looking to start a food truck business? Want to know how to invest smartly in a food truck business? Here’s a complete guide on how to start a mobile food truck venture with almost no money and experience.
As per the latest study from Grand View Research, the global food truck market size was valued at USD 3.93 billion in 2020. It is expected to grow at a compound annual growth rate (CAGR) of 6.8% from 2021 to 2028.
A mobile food truck business involves a lengthy legalization process and marketing research. Here’s a complete tried and tested plan on how you can start a successful mobile truck business on a budget without much hassle.
13 Steps to Start Food Truck Business
Step 1. Create A Business Plan
Starting a food truck may seem easy, but it also involves a whole process. You need a proper setup with the right things in place. Being a food business, there’s a complete legalization process involved with all the necessary permits and licenses.
Start with a plan. Note down all the important details, what you will need, and how you wish to finance it.
Having a business plan will help you to stay on track with a complete guide on what you should do and what not. Mention your business goals and what you wish to achieve with your mobile food truck business. Some of the key topics your food truck business plan must address are the following:
- Startup and recurring costs
- Target customers
- Pricing plan
- How do you plan to sell your food items?
Step 2. Market Research
The food truck is a popular business. Several competitors are out there, so market research is really important. You just can’t put a truck on a street where already many are selling food for years and complain why your business is not raking up well.
Do your market research thoroughly. Start with competitor analysis. See what others are selling.
Step 3. Select Your Niche
Up next, check out how others have priced their items and what special they serve. If customers are loving it, you know what’s popular in the area. Research to build your own menu.
Some of the popular niches in the food truck industry are the following:
- Juice Food Truck
- Hot Dog and Sausage Food Truck
- Street Food Truck
- Popcorn Food Truck
- Ice Cream Truck Business
Step 4. Calculate the Cost of Starting a Food Truck
The cost of opening a food truck business will depend on multiple factors. They are the cost of the truck(used or new), single or multiple locations, and the type of food truck installed.
On average, one can start a food truck with a minimum investment of $40,000. However, for a full-fledged food truck business with a newly purchased van, the investment will be in the range of $1,50,000 to $2,50,000.
Step 5. Financing A Food Truck Business
While a food truck may come at a lesser cost than a restaurant or cafe, there’s a considerable investment involved. From acquiring a truck to designing to licenses to the essentials, the cost may go up to some hundred thousand dollars in some states.
You may look up some financing options with lower interest rates.
If you already own a truck and want to turn it into a mobile kitchen, the overall investment may come down substantially.
Furthermore, one can also apply for government grants to start a food truck business. For example, if you planning to open in the United States, the grants programs of SBA are a good place to approach.
Step 6. Name Your Food Truck Company
It is important to create an attractive name for your food truck venture. A catchy and relatable business name not only helps customers easily recognize the company’s products but also enhances brand growth.
Some of the most important aspects one must follow while naming a food truck business are the following:
- Easy to pronounce
- Must relate to product offerings
- Make it unique
- Qualify for trademark registration
Check our detailed guide on the steps to follow to name a business to learn more.
Step 7. Legalization of A Food Truck Business
For a legally compliant food truck business, it is essential to register your venture. Every country provides different kinds of business structures according to scale operation. For example, if you are from the United States, forming an LLC is a good option as it protects personal assets and makes annual tax filing easy.
It’s a food business, so you will be needing different licenses and permits from the government and local municipality. While this will vary from country to country, the general permits include food security licenses, health department certificates, fire licenses, truck permits, and parking licenses.
Make sure to go through all the city and zoning regulations with all the required permissions from the local government.
Getting all the licenses and permits is going to be a long task. So start early. Apply for the licenses well before you plan to start your business. You also need special permission to sell food trucks in a public space.
Step 8. Turning The Truck Into A Kitchen (Or Cart)
You don’t necessarily need a truck only to start a mobile food business. If budget is an issue, start with a small food cart. It’s affordable and you won’t need as many licenses as a truck. If you choose to go with the truck, it should comply with all the necessary requirements by health departments.
The rules are the same here for food trucks and restaurants. So your vehicle has to have all the necessary specialty equipment.
You can choose to buy a used food truck if your budget is low. If you want to cook on your truck, you need to have a proper setup. Or else you can prepare food in advance and use a micro-oven to sell them later like hot dogs or burgers.
In addition, do not forget to buy POS software for your food truck business. In the present day, more and more customers are looking for ways to pay online instead of cash.
Step 9. Choosing What to Sell
This should be in line with your market research. Supposedly if you want to sell pancakes in an area where no one else is selling them, you get the first-mover advantage. And if you want to sell something someone else already is, either try to come up with something better in it or sell it at a cheaper price.
Don’t go overboard with the menu. Keep it simple.
Adding a ton of items will trouble you. More items mean more inventory and space. So, keep it simple with a few items.
Step 10. Finding Parking Places
The biggest advantage of a mobile food truck business is its flexible nature. You can choose to move anywhere you want. Take up a few parking permissions, and you are set to operate at multiple places on different days of the week.
It’s not necessary to switch places. It is seen that public places are better suited for food truck businesses than regular streets.
You can operate at a single location for the whole week even. Make sure you have proper timing and customers don’t have to wait.
Step 11. Business Insurance
Unlike other food businesses, you being on the go, you have to sign up for a few insurances. As you are on wheels, make sure you have coverage shielding all your important assets. This may include standard car insurance, other risks and liabilities, and more.
It’s better to consult with an agent. Explain your business and get customized insurance according to it.
Step 12. Marketing & Promotions
Start with soft marketing before launch. Use Facebook and Instagram to target users with ads that are specific to your location. This would help to generate buzz among the people in that area. Even keep posting about your upcoming food truck with daily updates.
This will help you to attract new customers from social media.
Even you can ask your followers to vote on the menu items you plan to include or send them special launch offers. You should also focus on catering to special events and corporate functions. List yourself as a caterer and join local associations and organizations so that others can find you easily.
Do not forget to create a unique logo for your food truck business. This logo will get imprinted on every promotional material like brochures, visiting cards, pamphlets, and also on your menu card. Nowadays having a website is a must for online sales and promotion.
Step 13. Expanding Food Truck Business
As your business grows, you need to shape a shopping plan accordingly. As a food business, you have numerous opportunities to grow and expand beyond a food truck business. You can opt to multiply your carts or trucks as your sales grow.
You can even choose to partner with delivery aggregators to boost sales.
Even add packaged products to your truck to diversify your offerings. You have a lot to experiment with. Just execute each opportunity minutely and never compromise on customer experience.
Frequently Asked Questions
How Profitable is a Food Truck Business?
The mobile food business is worth a few billion dollars now. While it’s comparatively easy to set up, the return on investment is quite high at the same time. The biggest advantage is your option to move anywhere you want.
You don’t have a fixed place, unlike a restaurant or cafe.
Why go for a Food Truck Business rather than a Restaurant?
Because a mobile food business offers you the flexibility to work the way you want. You have the opportunity to go anywhere and take your business literally anywhere you want, a concert, match, parks, and whatnot.
Also, you don’t have to shut it down if sales go down.
You can even sell it to anyone at a great price if you wish to switch businesses. If a cafe or restaurant doesn’t work, you have no option other than to shut it down.
How About Starting With A Cart Instead of a Truck?
You necessarily don’t need a truck in particular to start a mobile food business. If you sell what you want on a food cart, spending a huge sum on a truck may not any business sense. Instead, invest in a few more food carts to expand your presence around the city.
If you make your food in advance at a commercial kitchen, it’s better to go for a food cart rather than an expensive truck.
But in case you have food to cook right there and it may require a larger space, like Pizza, then you should probably choose a truck over a cart. This will vary from product to product.
How Do I Choose a Location for My Food Truck?
It is most important to select a location for the overall success of a food truck business. You must find a place with high traffic and can be easily accessed by customers. Some of the spots that generally make good profits for food trucks are busy commercial streets, food truck parks, office buildings, farmer’s markets, bars, nightclubs, venues for events, gas stations, college campuses, etc.
The Mobile Food truck business currently is among one of the most sought-after businesses with exceedingly high returns. Just make sure you plan up correctly and tactfully to establish your own super successful mobile truck business.
About the Author: 99businessideas.com led by Rupak Chakrabarty is committed to helping beginners, entrepreneurs, and small business owners in starting, managing, and growing their businesses.