The food truck industry has experienced a boom over the last five years, with average industry growth of 7.5%. If you’re wondering how to open a food truck, here are six steps you can take.
[Read more: 5 Small Business Owners on Taking Their Business on the Road]
Come up with a food truck concept
The concept you choose for your food truck will play a big role in your success. Choose a concept that has a strong consumer demand and aligns with your experience.
Fortunately, there are tons of unique options you can choose from. You can focus on providing healthier options, like gluten-free and vegan meals. Other food trucks specialize in offering fresh seafood or gourmet mac and cheese.
Figure out the startup costs
Opening a food truck is more affordable than starting a restaurant, but the startup costs can be high. On average, it costs about $55,000 to open a food truck in the U.S.
These costs include purchasing the truck, paying for permits and licenses, investing in a point-of-sale (POS) system, and receiving any legal consultation. Plus, you’ll have to consider ongoing expenses you might incur, like payroll, insurance and advertising expenses.
Identify sources of funding
Once you understand how much you can expect to pay for your business, you need to start thinking about how you’ll fund it. You’ll likely have to look for financing from multiple sources, especially if this is your first business.
One option is to apply for a secured vehicle loan, which is similar to a car loan. These loans can be easier to get and come with lower interest rates because the truck is used as collateral. You can also apply for an unsecured loan or line of credit.
The licenses and permits you need to operate your food truck will largely depend on the state you live in. But at the very least, you’ll need a business license and food service permit.
Create a business plan
If you plan to apply for financing, the bank will want to see your business plan. A business plan will give you clarity in starting your business and be one of the best ways to attract potential investors.
According to the Small Business Administration (SBA), your business plan should include the following nine elements:
- Executive summary: Explain what your business does, your company mission statement and basic information about your team.
- Company description: Provide more detailed information about your business and any unique advantages that sets it apart.
- Market analysis: Outline your competitive research and how you plan to outshine your competitors.
- Organization and management: Explain your business’s legal structure and how you plan to run it.
- Product description: Talk more about your product and the types of customers you plan to serve.
- Marketing and sales: Outline the marketing strategies you plan to use to build and maintain a customer base.
- Funding request: Explain how much funding you need and what you plan to use the money for.
- Financial projections: This includes forecasted statements and quarterly projections.
- Appendix: Include any supporting documents, like credit history, licenses, permits or legal documents.
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Apply for the necessary permits
The licenses and permits you need to operate your food truck will largely depend on the state you live in. But at the very least, you’ll need a business license and food service permit. Your best bet is to reach out to your local health department and find out exactly what you’ll need.
And food trucks can’t park just anywhere, so you want to look into any possible parking restrictions. You can contact the local motor vehicle department to learn about regulations in your area.
Purchase your truck
Now it’s time to purchase your food truck. The cost of a food truck can vary greatly, and you can expect to pay anywhere between $50,000 and $175,000. To keep these costs lower, you can look into purchasing a secondhand truck.
The most important thing is to make sure the truck you buy is up to code. For instance, you’ll want to ensure that the equipment is working correctly, the truck has adequate water pressure, and there’s proper storage space.
You can buy a used truck from a seller on eBay or Craig’s List. You can also consider purchasing a new truck directly from the manufacturer.
[Read more: 10 Mobile Business Ideas You Can Take on the Road]
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Published April 16, 2021