How to Open Up a Food Truck Business

Entering the food truck business starts with building an effective business roadmap. Proper research and planning will help you navigate the many challenges of the booming food truck scene, from location scouting to pricing to licensing. So, here’s how to steer a new food truck business full speed into success.

Research the local market

If you’re entering the food truck business, you probably already have a nugget of an idea: a concept, a brand, a menu, or even a vague notion of where you want to operate. Before you commit, it’s best to test your idea against existing market circumstances. Comprehensive research can prepare you for potential challenges, reduce risks, and reveal opportunities you might have overlooked otherwise.

Study food truck culture in your location

Some areas are better equipped to support food truck sales than others. The factors with the biggest impact on food truck demand include population, infrastructure, economy, climate, and culture.

• Population: It goes without saying that more people mean more customers. The highly populated cities of New York and Los Angeles have strong food truck scenes because they overflow with tourists and locals alike. Meanwhile, cities with smaller populations already have establishments catering to their needs, stiffening the competition.
• Infrastructure: Food truck sales rely almost entirely on foot traffic. Again, because food trucks only provide food and not ambiance, customers almost never go out of their way to drive to food trucks. Instead, customers expect food trucks to be present in walkable areas.
• Economy: As mentioned, food trucks are highly reliant on activity from other areas. It’s best to start food trucks in areas with high levels of economic activity, such as universities, offices, factories, and nightlife districts.
• Climate: Food trucks thrive best in areas that support outdoor dining all year round. Harsh weather dissuades customers from visiting the outdoor venues where food trucks park.
• Culture: Some cities have a foodie scene that makes customers more interested in trying food from food trucks. Others might also host events, such as community events, farmer’s markets, flea markets, and food festivals—increasing your opportunities to showcase your food.

List viable locations and events

The customer of a food truck would behave differently from a customer of a restaurant or a cafe. Food trucks only offer food and beverages, while restaurants also provide comfort through seating and temporary shelter. While customers would bend their routines to experience dining in a restaurant, they save little of the same consideration for food trucks.

A food truck’s biggest selling point is convenience. Food truck menu items cost less and leave the kitchen faster. They are portable and easy to eat. Therefore, food trucks can only find success in areas that can support on-the-go eating.

As mentioned, the best place to start a food truck is where the customers are. Look for locations that generate foot traffic, such as commercial areas, business districts, parks, and schools. You don’t have to limit yourself to one location, but remember that the food you sell should appeal to the visitors of all areas you park in.

You can also tap into activities from events in your area. Find out if there are food festivals, flea markets, farmer’s markets, or other events you can take advantage of.

Identify a target market

Again, the key to starting a successful food truck is following the customer. By identifying a target market, you can narrow down the problems, traits, and preferences you want to cater to. This gives you a rough idea of when and where you should operate, what to serve, and how much to charge.

Let’s say you want to sell to college students. By narrowing down the type of customer you want to appeal to, you have a clearer picture of their buying behaviors. This gives you a more specific idea of how to run your food truck.

• When and where to operate: You would likely find college students outside campus during weekday afternoons and in nightlife areas during weekends.
• What to serve: College students likely want portable meals or snacks they can eat between classes. They could also benefit from energy-boosting drinks, such as coffee or other caffeinated beverages.
• How much to charge: College students are typically reliant on finite allowances for money, or work part-time jobs. They tend to be more budget-conscious than customers who are further into their careers.

The more well-defined and specific your target market is, the more you can tailor your products. Not only will this give you a clearer idea of what to do, but it also strengthens your chances of earning customer loyalty.

Analyze the competition

No idea is wholly unique. Study the businesses in your locations of choice to determine whether other establishments have already solved the problems your food truck intends to address. If competition exists, don’t let it deter you—proper research can give you the edge.

There are two ways to approach competition as a food truck business. The first is to study the competition and find a unique problem no other establishment has solved. The second is to identify what competitors are missing and deliver products or services that edge them out.

For example, you aim to open a food truck that will operate primarily in parks, farmer’s markets, and community events. Because of the quality expectations of food in farmer’s markets, prices run a little higher, which can add up if the customer is attending the event with a large group. To solve the question of cost, you start an organic pizza food truck, allowing customers to buy whole pies for less than individual slices.

In areas with stiffer competition, there is simply no choice but to make your products or services better than your competitors. Look into reviews online to see what customers enjoy and what they want improved, then incorporate the feedback into your own business. For example, if all the food trucks in the same area received praise for pricing but lukewarm reviews for flavor and food quality, you should find a way to prioritize taste while maintaining the same price point.

Research startup and operating costs

After researching your local market conditions, the vague idea you began with will have narrowed down into something more concrete. You’ll have a clearer picture of where you want to park, what you want to sell, and how often you want to operate. Now, it’s time to calculate how much everything will cost.

Your initial food truck costs will include your food truck, equipment, supplies, starter inventory, licenses, permits, and other registration costs. You’ll later incur the ongoing costs of parking, commissary kitchens and storage, insurance, liability coverage, labor costs, utilities, and debtor or shareholder payments. On average, opening a food truck costs between $50,000 and $150,000.

It’s also important to check whether the ingredients, materials, supplies, and other items you need are available in your area. Starting a seafood truck in a landlocked state might sound like a unique idea on paper, but you might struggle to source fresh ingredients. The scarcity will force you to compromise on quality, price, or both.

Create a food truck concept

After collecting information on your local market, it’s time to hammer out your food truck idea. Use your research to figure out what your target customers need, what gaps you can fill, and how to make your brand stand out.

Create a SWOT analysis

The best way to narrow down your food truck concept is to create a SWOT (strengths, weaknesses, opportunities, and threats) analysis. Your SWOT analysis helps you outline your main selling points so you know what to capitalize on when you open your business. It also prepares you for the challenges you need to navigate in the future.

Often, businesses include SWOT analyses in their food truck business plans to prove feasibility. They weigh your strengths against your limitations while forecasting opportunities and challenges. Here are the best questions to ask for an effective SWOT analysis:

Strengths

• What does your food truck do well?
• What does your food truck do better than competitors?
• What resources and assets are readily attainable?

Weaknesses

• What can the food truck do better?
• What do competitors do better?
• What resources and assets do you have limited access to?

Opportunities

• What existing customers might value your food truck’s services?
• What trends align with your services?
• What market opportunities can you capitalize on?

Threats

• What consequences might the business’s limitations bring?
• What external factors might affect food truck sales?

Here is an example of a SWOT analysis for a food truck that sells vegan crepes.

• Strengths: The leadership team has over 20 years of experience in the food industry.
• Weaknesses: Producing menu items that meet the quality vegan customers expect requires high COGS and labor costs.
• Opportunities: The area where the food truck is located often hosts food festivals, community events, and flea markets with high attendance.
• Threats: Seasonality limits the availability of necessary ingredients.

After creating your SWOT analysis, plan how to overcome weaknesses and threats. Given the information above, the food truck should participate in events for the upper-middle and upper classes, who won’t mind spending extra money for quality food. They can also change menu items per season to accommodate ingredient availability.

Define your brand

Food trucks have a stronger chance of standing out in a crowded food market if they have a unique brand. A strong brand identity humanizes your business in the eyes of customers. You become more than just a product—you are your story, personality, voice, and values.

Restaurant branding is the difference between Starbucks and Dunkin’ Donuts. The former prioritizes being a comfortable third space for the middle and upper classes, while the latter focuses on serving efficiency and quality to the everyman. Despite offering the same products, the two brands carry different connotations.

To define your brand, ask the following questions:

• Who are you?
• What sets you apart from your competitors?
• What value do you provide?
• What is your mission statement?
• How would you describe your brand’s personality if it were a person?

Here’s how the questions would apply to the vegan food truck example above.

• Who are you? We are a food truck that sells sweet and savory vegan crepes.
• What sets you apart from your competitors? Noticing that many food trucks and fast-food chains trade nutrition for preparation speed, our food truck only sells menu items created with healthy and organic ingredients.
• What value do you provide? We create high-quality and healthy meals that align with the values of socially conscious customers. Our services are fast and efficient, helping us provide lightweight snacks for visitors attending events.
• What is your mission statement? To provide convenience without sacrificing health and quality.
• How would you describe your brand’s personality if it were a person? Our food truck is reliable, accommodating, and wise. We are there when you need us, showing you that health-conscious lifestyles can also be peaceful and enjoyable.

Design a menu

The final step in crafting your food truck concept is designing your menu. Look back on your research to see ingredient costs and seasonal availability. Refer to your budget to determine what dishes you can feasibly create, given the cost and availability of needed ingredients.

Food truck cooks work with a constrained kitchen and storage space, limiting the number of items you can include in the menu. To address this issue, center on easily customizable menu items, such as burgers, tacos, and pizzas. This allows you to cater to a diverse range of tastes without overcrowding your storage spaces or overloading your cooks with preparation techniques.

A good rule of thumb is to stick to one to two types of main dishes, then add one to three types of sides for variety. If your main menu item is versatile enough, you can do away with sides entirely.

Write a business plan

Formalize your ideas into an official business plan so that you have an easy reference for how your business works. Business plans prove the feasibility of your ideas, outlining the key aspects like your target market, competition, business model, marketing strategies, and financial forecasts.

The target reader of a business plan would typically be your potential investors or creditors. They put your business idea on paper, helping you prove its profitability and secure funding. However, you can also use a business plan as a formal blueprint for business development, outlining goals and challenges to make future steps easier to imagine.

Food truck business plans consist of the same components as any good restaurant business plan.

• Cover page and executive summary: The first section of your business plan is functionally an elevator pitch. It sells investors on your food truck concept by summarizing your idea, market position, competitive advantages, and financial projections.
• Company description: As the name of the section suggests, the company description explains your brand identity, including your concept, mission statement, management team, and sample menu.
• Market analysis: The third section proves the viability of your concept by explaining how you will position yourself in the existing market. You describe your target market, locations of choice, and your SWOT analysis.
• Marketing strategy: After explaining your market position, you describe your strategies for attracting and retaining customers. This section discusses your choice of marketing channels, promotion strategies, and plans for the official food truck opening date.
• Operations overview: The operations overview describes the nitty-gritty details of how you will run your business. It covers your staffing strategies, BOH systems, kitchen layouts, and employed technology.
• Financial analysis: The most crucial part of the food truck business plan is the financial analysis section, which projects initial costs and revenue to prove feasibility. It should include a summary of your startup costs, sales forecasts, projected profits and losses, and a break-even analysis.
• Appendix: The appendix includes important details that don’t fit into any of the above components. Examples include supplementary financial analyses, truck design mockups, and kitchen floor plans.

Register your business

Once you submit your business plan, it’s time to register your business as an official entity. This step requires choosing the business structure that determines how you operate, the tax rules you will face, and your liability. The most common types of business structures are sole proprietorships, partnerships, limited liability companies (LLCs), and corporations.

The main difference between the types of business entities is your level of personal liability protection, which protects your personal assets, such as properties, houses, and savings, from any debts or legal obligations your business incurs. Typically, business structures with more personal liability protection have more regulatory requirements and fees.

Apply for relevant licenses and permits

The sale of food and beverages is regulated at the federal, state, and local levels to protect the health of customers. As a food truck owner, you will need to prove to relevant regulatory bodies that you are qualified to sell food or beverages. You might also need to obtain additional permits, such as business licenses.

Typical food truck licenses include the following:

• Business license
• Food truck permit
• Food service license
• Driver’s license
• Liquor license (if applicable)
• Health permit
• Fire permit
• Parking permits
• Employee health permit

The steps for obtaining business licenses differ depending on the type of requirement and your location. Most permits and licenses are issued on a local level through city or town governments.

Food truck licenses by state:

• Food Truck License in Alaska
• Food Truck License in Arizona
• Food Truck License in California
• Food Truck License in Colorado
• Food Truck License in Florida
• Food Truck License in Georgia
• Food Truck License in Hawaii
• Food Truck License in Idaho
• Food Truck License in Illinois
• Food Truck License in Indiana
• Food Truck License in Iowa
• Food Truck License in Kansas
• Food Truck License in Kentucky
• Food Truck License in Louisiana
• Food Truck License in Michigan
• Food Truck License in Minnesota
• Food Truck License in Nebraska
• Food Truck License in Nevada
• Food Truck License in New Hampshire
• Food Truck License in New Jersey
• Food Truck License in New Mexico
• Food Truck License in New York
• Food Truck License in North Carolina
• Food Truck License in North Dakota
• Food Truck License in Ohio
• Food Truck License in Oregon
• Food Truck License in Pennsylvania
• Food Truck License in Rhode Island
• Food Truck License in South Carolina
• Food Truck License in Tennessee
• Food Truck License in Texas
• Food Truck License in Virginia

Fund your truck

After complying with all relevant legal requirements, it’s time to fund your operation. A diverse range of options is available, from personal capital to investments and debt.

Buy vehicles, equipment, supplies, and more

Now that you have money, it’s time to buy all the necessary equipment, supplies, and initial inventory. The first thing to consider is your food truck, which will cost around $50,000 to $175,000 if brand new. Used food trucks run between $30,000 to $100,000, while rented food trucks cost about $2,000 to $3,000 per month.

Aside from your main vehicle(s), the average food truck entrepreneur will need the following:

• Kitchen equipment: Ovens, grills, fryers, refrigerators, sinks, storage units, and POS systems
• Kitchen customizations: Fireproofing, serving windows, and ventilation systems
• Initial inventory: Ingredients, condiments, seasoning, specialty items, utensils, and packaging
• Insurance: General liability insurance, commercial auto insurance, workers’ compensation insurance, and other specialized insurance types

Assemble a food truck team

One of the biggest advantages of starting a food truck is that you don’t need a team that is too large. Food trucks can function with just two employees: a cook and a server. It’s common for food truck owners to fill one of the necessary roles themselves to reduce labor costs.

If you need additional staff, you can use 7shifts to streamline hiring. Our hiring software comes with simplified job posting and applicant tracking tools.

1. Create and share job postings: Create custom screening questions for application forms using 7shifts’ simple job post builder. You can post the finalized application forms to online job boards within seconds.
2. Track job candidates: Use the 7shifts Applicant Tracking System (ATS) to organize candidates by application status. The ATS stores all relevant applicant information, such as contact information, availability, and hiring notes.
3. Hire the top candidates: Once you’ve selected a candidate to bring into the company, you can transfer their profile details to 7shifts automatically to formally welcome them into your staff. 7shifts gives them easy access to shift schedules and other calendar information, simplifying onboarding.

When picking food truck employees, your primary considerations should be past experience in the food industry, multi-tasking skills, stress management skills, and teamwork skills. Amiability is a plus since it improves customer interactions, which can increase retention and satisfaction.

Let 7shifts lead you to food truck success

Running a food truck is a great way to enter the food business. With proper research and planning, you can easily navigate the challenges of operating a food truck. Keep market conditions, competition, and branding in mind to prepare your business for the crowded food truck scene.

The work doesn’t end after you’ve funded, built, and staffed your food truck. Running a food truck requires keeping your employees motivated and on top of ever-changing food truck schedules. Here’s where 7shifts comes in handy. Our software can create and share food truck shift schedules, helping teams align on work hours, clock in efficiently, and communicate effectively.