Food Truck start up costs: The basic costs of starting a food truck
Food trucks are the often forgotten corner of the food and beverage industry, but they offer their owners unique benefits with only a few drawbacks. For many entrepreneurs, a food truck represents the dream of working in the restaurant industry with a less expensive entry requirement and greater flexibility in running the business. However, food truck startup costs can involve some unexpected challenges.
The average food truck investment ranges between $20,000 and $200,000. That window is huge, and throughout this article, you'll see why the cost can vary so dramatically. There are many decisions ahead of you, and the best place to make those decisions plain is in a business plan.
Why you need to write your business plan
A business plan is your roadmap to food truck success. This document will house all of your ideas and help you create plans for best and worst-case scenarios. Most lenders, investors, and banks will want to see some mock-up or anticipated financial documents that would fit the business plan.
There are many elements of a business plan, including:
What makes your company different and more
Organization and management description
Product and services
The business plan's financial section is where you can lay out all of the expenses involved in opening and running your food truck. The initial investment can vary dramatically, so you want to set a clear budget for what you can or are willing to devote to opening your food truck. Learn How to write a food truck business plan.
Working through each section will help you better understand the costs associated with your business. For example, you may realize in your product and services section you may note the need for single-use utensils and food containers.
Everything you need to open a food truck
A lot of planning goes into opening a food truck, and equipment lists easily get out of control. The equipment you need will depend slightly on your concept and products. However, there are some items that every food truck owner needs to get started, including:
A truck or trailer — $1,500 to $100,000
Undercounter refrigerator — $1,000 to $1,800
Ventilation — $1,300 to $5,200
Washing stations — $60 to $800
Disposable plates, utensils, cups, and napkins — $300
Cooking utensils and cutting boards — $400
Trash bins — $10 to $20
Sanitary gloves and PPE — $150
Dishtowels — $60
Food prep table — $200 to $3,000
Menu boards — $90
Food truck POS system to process digital or credit card payments — v .
Then based on your concept, you will likely need some, or possibly all, of these items:
Griddles / Flat grill — $250 to $900
Fryers — $700 to $1,300
Ranges — $400 to $1,000
Panini press or sandwich press — $120 to $600
Coffee brewer — $400 to $900
Please note that all of these prices are for new equipment, and there is a lot of opportunity to find great deals on used equipment or lease equipment.
How much does a food truck cost? That comes down to whether you choose used, new, or rented and how much specialty equipment you need. For example, if your food truck only serves sandwiches, you likely don't need a griddle, fryer, or even a range. That would result in your cost to start a food truck being substantially lower than the cost of other concepts.
Standard planning expenses for launching a food truck business
Most articles that address questions such as, “How much does it cost to start a food truck?” don’t include many of the smaller expenses that come with establishing the business. Standard planning often involves obtaining the correct permits, licenses, and inspections before opening.
Throughout many countries, you'll run into regional changes to food safety and foodservice laws. Always carefully review the local and country-wide regulations which govern food safety and foodservice.
Obtaining the proper permits and licenses
To start, you will certainly need a business license, and if you are in the U.S., you will also need an Employer Identification Number or EIN so the IRS can identify your business. Other food truck permits and licenses are also necessary.
Food truck owners will also need:
Food handler’s certification
Health department or Public health permit
Appropriate safety permits such as fire permits
Possibly a sidewalk license
The best resources for cost information on obtaining permits are your local town, state, or province offices for licenses and permits.
The cost of secring insurance for the food truck
The cost of food truck insurance can change on your location, but you'll likely need to ensure:
Be sure to get commercial auto insurance for your food truck. Your typical auto coverage will not cover you driving a business. You will need worker's compensation insurance for your employees and liability coverage for the business as well.
For permits, licenses, and certifications, your cost breakdown could look like this:
Business License — $50 (Renewal fees can cost hundreds of dollars)
SERV Safe Managers Course/Test — $180
Mobile Food Public Health License — $300 - $900
Commercial Auto Insurance — $135 per month
Business Liability Insurance — $105 per month
Worker’s Compensation — $105 per month
Los Angeles County uses a tiered pricing structure for their public health certifications and inspections. Low-risk mobile cart facilities receive substantially lower charges than a high-risk mobile truck.
How much should you spend in food truck marketing?
Entrepreneurs frequently leave out marketing expenses when calculating their food truck startup cost plan. Simply by using social media, you can begin to cultivate a following before investing a dime into marketing.
When you are ready to open, it's time to pay for Facebook, Instagram, and other social media platform advertisements. You may also want to pay for paper advertising, such as handing out flyers, business cards, and even discount cards. Food trucks can also benefit from local radio ads.
Mobile Cuisine suggests that food truck owners should spend 3 to 6 percent of their sales on marketing. A 2017 survey from Food Truck Empire reported that 85% of the respondents reported annual gross revenue of over $100,000. With that base and a percentage range, it's reasonable to estimate that a food truck business should devote between $3,000 and $6,000 to marketing.
You might bring that budget down to a $1,500 to $3,000 range because you are just starting.
How much does it cost to buy a food truck? That depends on your location and the type of truck you want. The costs of starting a food truck fall mostly into this category. The truck itself, appliances, sanitizing equipment, and even software for managing the business can add up quickly. You must plan accordingly and assess the best options for your concept.
The general ranges on a used food truck fall between $50,000 and $100,000, but looking at online markets made for food truck sales. However, many working and reasonably presentable food trucks are available on eBay between $10,000 and $20,000.
A brand new food truck will likely cost at least $100,000. Purchasing all-new equipment can easily count for another $10,000 to $15,000.
Parking and storing costs
Have you been wondering how much it costs to park a food truck? You're good to consider this as a serious expense because, in some cities, it may cost more to park your truck than it does to pay the monthly lease! What you need is a secure and hopefully covered area to park the vehicle. You may need to pay for storage space or warehouse-style parking.
On a final note, cities with a competitive food truck community will often charge parking fees, meaning you may need to pay the city hundreds of dollars each month to park on the sidewalk within city limits.
Is It better to buy or lease food truck equipment?
Food truck equipment costs can rack up quickly, but you don't have to purchase everything. You can lease many larger pieces of equipment or buy items refurbished or used.
Regarding the truck itself, it is usually not advantageous to rent a truck. It is possible to purchase a food truck online for less than $10,000. At the same time, most lease or rental agreements for food trucks average between $2,000 and $3,000 per month. That is still leaps and bounds away from the average cost to lease a brick-and-mortar restaurant or about $6,914 per month.
Expenses to stock and open your food truck
The cost of running a food truck starts with your first order of food and supplies. These ongoing expenses are the lifeblood of your mobile food business. You'll want to establish ties with a vendor, or vendors, to ensure you're getting the best possible. Keeping your menu small and centered around key items can help keep your food cost low.
How much should it cost to hire and train a team will depend on your location more than anything else. Business owners must meet minimum wage requirements for the region, and business owners must pay additional taxes and insurance costs for employees, such as workers' compensation insurance.
When training your team, you'll want to get the most out of their time. Consider holding a variety of test-runs with close friends and family to help your crew train when there's also a high-demand for orders. Then when you're ready to open, host a soft launch with local business owners, friends, and even those from the Chamber of Commerce to put your team through a real-life situation before you're officially open for business.
Get started by planning to open your food truck
Opening a food truck requires substantial planning and a lot of time spent shopping around. The window for the average cost to start a food truck is so wide because of the great deals and hefty available investments. It's possible to purchase a second-hand truck, lease equipment, and keep a simple menu to control food costs ensuring that the business is a relatively inexpensive investment.
People looking to open a food truck should consider what they want to pay and if they can work within that range when obtaining a truck, purchasing equipment, training staff, marketing, and stocking the truck for business.
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