A food truck is a large vehicle with a kitchen to make and serve food. They are popping up across the United States and are becoming increasingly popular.
Many entrepreneurs opt for a food truck because purchasing a restaurant location is very expensive, while food trucks are much more affordable. Before you forge ahead, here's what you need to know about the startup costs, funding options, how to find a food truck and more.
Food truck startup costs
Many factors go into determining startup costs for a food truck business. There are also one-time costs and costs that can vary by location.
One-time startup costs consist of expenses like purchasing your food truck, a register or point-of-sale (POS) system, a truck wrap, website design, office supplies, advertising and PR, and any professional, legal, or consulting fees. While this list is not comprehensive, it gives potential food truck owners an idea of some of the upfront expenses.
Then there are the recurring costs such as payroll, equipment rental, credit card processing and, of course, fuel. Every new food truck business also has to obtain the proper licenses and permits, which vary depending on location.
While the cost of starting a food truck business varies greatly depending on your specific situation, costs can range from $28,000 to $114,000 to get the business off the ground.
According to Food Truck Empire, these are some additional startup costs you can expect when launching a food truck business, including:
Insurance: $2,000 to $4,000 per year
Initial product inventory: $1,000 to $2,000
Payment processing: $200 to $1,000
Commissary fees: $400 to $1,200
Permits and licenses: $100 to $500
Food truck funding options
Acquiring funding may be the biggest challenge you'll face when starting a food truck business. Your first goal should be to put together a solid business plan. You should also have good personal and business credit, as this will increase your chances of receiving a business loan.
There are other, more creative ways, too, to get funding for your new food truck business. Here are some ways to start your business with minimal funding:
Talk with someone who already owns a food truck and negotiate a lease or rental agreement.
Start with a low-cost, used cart or trailer.
Start selling at a farmer's market, fair booth or pop-up.
Talk to successful restaurant owners about running a food truck for the owner's business.
If your truck idea includes providing a public service or benefit to the community, look to obtain sponsors.
You may qualify for a loan advance if you already have a payment processor.
Create a food truck business plan
Every food truck owner should create and maintain a business plan. In fact, it should be the first concrete step you take when you decide you want to start a food truck business. This document is important to attract investors, gain funding and get your business up and running. At the StartUp Clinic, we provide Business Plan writing services. Find out how we can help with your business plan here: https://www.thestartup.clinic/bookings-checkout/startup-business-plan-writing-service?referral=service_list_widget
Your business plan should include the following elements:
An executive summary. An executive summary is an introduction to your business; it should provide an overview of your business plan. The executive summary should be concise, as the nitty-gritty details will be discussed in other sections of the plan.
Company description. This section should describe who you are and what defines you as a company. Describe what niche you are filling and why your customers will choose you over the competition.
Market analysis. In this section, you explain who your target customers are, what their needs are, where they are located and how you will attract them to your business. Additionally, this section should explain how your business will impact the existing market, and it should demonstrate your knowledge of the existing local food market.
Organization and management. Next, you want to detail how your business is organized as a legal business entity (e.g., sole proprietor, LLC, partnership). List the owners of the company and their percentage of ownership. You also want to list key players, such as your management team, as well as their experience, salary and prior employment.
Service or product line. For a food truck business, your primary product is the food you serve. In this section, describe your menu and how you plan to attract new customers. Additionally, consider how your business will evolve and address new market needs.
Marketing and sales. In this section, you want to expound on your marketing strategies. Explain how you plan to spread the word about your business, identify all marketing platforms (such as social media, a website, paid advertisements, etc.) you plan to use, and how you will gain an edge over your competition. This section must also include your sales strategy, such as menu prices, minimum sales requirements to stay in business and seasonal trends that may affect sales.
Funding request. This section is required for food truck entrepreneurs seeking investment funds or other types of outside funding. Specify how much money you are asking for and describe, in fine detail, how every dollar will be spent to grow the business.
Financial projections. While it can be difficult detailing financial projections, especially for new businesses without a financial history, calculate how much money your business will make over the next three to five years.
How to find food trucks for sale
Angulo found her truck on Craigslist back in 2011, and while that is still a great place to search, there are many new resources out there, including:
Local online classifieds: This is a good option; used trucks are cheaper, and if they are local, you can easily inspect them.
National online classifieds: This will open a lot more inventory, but get as many details and pertinent information about the truck from the seller as possible since you most likely won't see it in person before pickup.
New custom trucks: While this is the most expensive option, it is the best way to ensure that your truck is up to code and standards and that it can be customized to your specifications.
Leasing and franchising: You may be able to find a local truck to lease, or from a national truck leasing company. Yet another option is to franchise a truck from an established company. However, among the drawbacks to consider are that you do not have control over the product, marketing or menu.
State and Federal Level
• California Retail Food Code – The California Health and Safety Code establishes requirements for food safety, including the hygiene, cleaning and sanitizing of equipment and utensils, food storage, and janitorial facilities.
o Food Safety Program:
o Certifications: At least one employee must be certified in food safety by passing an
approved Food Safety Certification examination, and all other employees involved in
the preparation, storage, or service of food in a food facility must obtain a Food Handler
• Classify Food Truck as “Commercial Modular” – Mobile food vehicles may be classified as “commercial modulars” by the California Department of Housing and Community Development (HCD). Check with the HCD for registration and titling requirements. You can reach HCD at (800) 952-8356 or https://www.hcd.ca.gov/building-standards/permits-inspections.shtml
• California Secretary of State (SOS) Filing – Not necessary for sole proprietors, but if you intend to form a corporation, limited liability company, or partnership; you must file with the SOS.
• Income Taxes – All businesses are required to file State income tax with the Franchise Tax Board (FTB) and Federal taxes with the Internal Revenue Service(IRS):
• Sales & Use Tax – If you will be selling tangible property, consult the California Department of Tax and Fee Administration (CDTFA) for a Seller’s Permit. You may also qualify for a Resale Certificate.
o Seller’s Permit info: http://www.cdtfa.ca.gov/services/permits-licenses.htm
o Resale Certificate info: https://www.cdtfa.ca.gov/formspubs/pub103/
o Resale Certificate: https://www.cdtfa.ca.gov/formspubs/cdtfa230.pdf
o Tax Guide for Mobile Food Vendors: https://www.cdtfa.ca.gov/formspubs/pub287.pdf
• For Employers – If your business will have employees, be advised of the following:
o Wages, Hours, & Working Conditions – Businesses with employees must comply with
laws establishing minimum standards for wages, hours, and working conditions. Consult
the California Department of Industrial Relations website at:
o Worker’s Compensation – Businesses with employees must maintain Worker’s
Compensation Insurance coverage. Consult the California Department of Industrial
Relations website at: https://www.dir.ca.gov/dwc/
o Employment Development Department (EDD) Registration – An employer is required
to file a Registration Form within 15 days after paying more than $100 in wages to one
or more employees. Consult the California EDD website at: https://www.edd.ca.gov/
o Federal Employer Identification Number(EIN) – Employers with employees, business
partnerships, and corporations, must obtain a Federal EIN from the IRS. Businesses can
obtain appropriate federal income tax forms from this location. Consult the IRS website
At the State Level
• Business License – Most local governments require a business license (or business tax registration). If your business is in incorporated city, contact the city. If your business is in an unincorporated area, contact the county.
• Zoning and/or Use Permit – Consult your local planning or public works department to determine what food vending or site use permits you are required to obtain for your desired location. For example, you may need a Use Permit. The permit will include such things as requirements about permitted locations or zones, locational requirements, on-site advertising, hours of operation, setbacks from areas of adjacent activities, and equipment
regulations. If your business is in an incorporated city, contact the city. If your business in an unincorporated area, contact the county.
• Fictitious Business Name – A Fictitious Business Name or Doing Business As(DBA)statement is required when: the business name does not include the surname of the individual owner(s) and each of the partners; the business name suggests the existence of additional owners; or the nature of the business in not evident by the name of the business. This is always obtained from the county in which a business is located.
• Small Business Development Center – You can also check in with your local Small Business Development Center (SBDC) as well. The SBDCs assist small businesses that are starting or growing and offer free advice. To find an SBDC closest to you, click this link and enter your zip code: http://americassbdc.org/home/find-your-sbdc/, they may be better equipped to advise you on local requirements.
• Health Permit and Inspection – Most county environmental health departments require mobile food facilities to obtain a health permit. Many also conduct periodic inspections of your facility and equipment.
• Fire Permit – Some jurisdictions require that permits be obtained from their fire departments.
• Insurance – A Certificate of General Liability Insurance with the city or county listed may need to be presented prior to final approval of the use permit.
Learn more about starting a food truck business on the following websites:
Sources: Business News Daily, Go Biz California