Have you ever bought a sandwich or a taco from a food truck and thought, “I wish I could quit my job and start a food truck for a living”? If so, then you’ve come to the right place!
Recently, UpFlip spent time with food truck owner, Kyle Gourlie, who runs the Vet Chef food truck business in the Seattle area. Kyle has owned his food truck for a few years now and, in an exclusive interview, he shared with us insights on how he has gotten to $400,000+ in annual food truck revenue—and continues growing.
See the full interview here and here to learn how to start a food truck.
Gleaning from Kyle’s food trucking expertise, here we will provide you with the clear steps you need for how to start a food truck business.
How to start a food truck business
After time spent serving in the Marines, Kyle had enough of being told what to do and wanted to be his own boss. So, after getting a culinary management degree, he decided to start a food truck business that has doubled in sales each year since then.
Of course, if you’re now thinking that owning a food truck is an easy way to make a bunch of money while only working a few hours, think again. Starting a food truck is hard work, and learning how to start a food truck is no easy job either!
According to Kyle:
It’s going to consume you—and it’s worth every second!
Learning how to start a food truck business is a huge step into making your dream a reality. So, if you are ready to invest some time and energy into the process, following these steps will allow you to get your food truck business up-and-running, feeding people and bringing in a profit in a fairly short amount of time.
Step 1: Decide What Kind of Food People Want (And Learn to Make It The Best!)
You might be wondering what kind of food you will serve in your food truck. Kyle’s vision for the menu on his food truck began during his military days when he fell in love with the California Burrito. Not sure what that is? It’s an incredibly hearty burrito stuffed full with meat, cheese and fries. Fries? That’s right—the fries make it what it is!
When asked why he chose to focus on the California burrito for his food truck, Kyle’s response was simply that Seattle didn’t already have it.
This falls directly in line with advice offered by Reddit Founder, Alexis Ohanian, who says the best way to ensure a successful startup is to “identify a genuine need and fill it.”
The California Burrito was the obvious choice for Vet Chef food truck. While the food truck’s menu has changed over time, the basic concept has stayed the same. In fact, the California Burrito is the only original item that remains on the current menu. Everything else seems to have grown and developed around it, based on customer preferences and demands.
If you’ve wished there was a great food truck in your area that serves ____(fill in the blank)__, then you may have answered the question of what to offer! However, if you want to open a Chicken-and-Waffle truck, but there are already a dozen in your town, you should find a more creative angle.
According to other food truck operators, those choosing which food to serve for their food truck should heed this advice: do one thing and do it well. The idea is to make sure to choose an interesting concept that others aren’t doing. Make it a quality product and keep it very, very simple.
How do I price my food truck menu?
When doing your initial research on how to start a food truck, knowing how much to charge for menu items can be tricky. Too little and you can’t make a profit. Too much and your competitors will get the business.
The most commonly used pricing method, especially for food trucks, is based on the percentage of food cost. The formula can be worked in two ways. In the first one, the actual food cost is divided by the target food-cost percentage to equal the menu price.
This means that if you expect to spend 30% of your revenue on food, and a cupcake costs you $1, then your menu price will be $3.33 ($1 /0.30 = $3.33). In this case, you would likely want to round up to $3.50 to avoid dealing with crazy amounts of change.
Figuring Food Cost
Actual Food Cost / Target Food-Cost % = Price
100/ Target Food-Cost % = Price Factor
Price Factor x Actual Food Cost = Menu Price
Another way to figure it is to divide 100 by your target food cost, then multiply that by the actual cost of food. For the cupcake example again, at 30%, your food pricing factor would be 3.33. Then multiply that price factor by the actual cost of the food ($1) to come up with the menu price ($3.33).
For the Vet Chef food truck, food costs make up around 33-34% of their monthly revenue. Kyle says this is a bit high for a food truck business, but quality food is vital to their reputation so they are willing to spend more. The lower you can keep food costs, the better your profit margin.
Step 2: Determine Food Truck Startup Costs
Once you’ve decided on your product and considered pricing, it’s time to crunch some numbers for getting started with your food truck. Don’t let this part scare you off. You’ll need to know what you’re getting yourself into—even if you don’t have all of the capital up front.
How much does it cost to start a food truck business?
Because business in the food truck industry is so mobile, it is much less expensive than starting a brick and mortar restaurant.
As expected, the largest investment for starting a food truck business is the cost of the truck. Depending on where you live and what you choose, a food truck could run between $15,000 and $200,000.
Since you’re just starting out with a food truck, it may be useful to aim for a truck in the mid-price range. Your vehicle is the heart of your business, so it must be functional and reliable. But it’s smart to avoid bells and whistles if you don’t need them. Think reliable Ford rather than racy Ferrari.
For Kyle, costs leading up to his opening day were $41,200, including opening day inventory. He was able to do things a bit more cheaply because he already owned the pickup truck which pulls his trailer.
For Vet Chef, Kyle bought the trailer new and had the kitchen custom-designed for efficiency, at a cost of $26,000. Add in $8000 for equipment, another $7000 for truck permits/inventory and various other costs, and it all came to just over $40K.
Whether you’re thinking about purchasing an established food truck business, or simply the truck itself like Kyle did, we can get you up and running with either option.
Step 3: Figure Business Operating Costs
In order to figure out if this will really work for you and exactly how to start a food truck, it’s vital to understand what your business will cost so that you know what kind of profit you can expect to make. As with any restaurant, expect your largest costs to be food, supplies, and labor.
Other food truck financial projections for regular costs may include:
Fuel and Vehicle Maintenance
Paper goods, packaging, labels, etc.
Equipment and Vehicle Repairs
Should I hire employees for my food truck business?
While it’s advisable to keep the staff small, it won’t be long until you’ll need another person or two on your team. If you have a business partner, this might be delayed since you can both commit your time to working in the food truck.
Customers do expect fast delivery times from a food truck, so having staff will help you get those orders out efficiently and keep the wait times down. (Of course, you can only fit a limited number of employees in a truck at one time.)
Keeping labor costs as low as possible is vital to profitability, but you can’t do everything alone. Kyle notes that:
You have to have employees or you’ll drive yourself into the ground. We hired my cousin, who was a high schooler then. We gave her a few hours and we were able to only pay her for the time we were open. I cleaned and sent the employees home.
According to Kyle, it’s best to hire part-time staff that is willing to work very short shifts on an ad-hoc basis at the food truck. High-school students, family members, and others who need just a few hours are often a great way to begin.
Kyle also advises that, at least for the first year, it is important to make sure that you minimize what you need to pay employees for. Do all of the prep work and cleaning yourself until the business becomes more viable.
How much do food trucks make a year?
Over the past decade or more, food trucks have become a viable, reputable business option that has gone far beyond the tired pretzel or questionable hot dog vendor of long ago. In fact, food trucks have now become a $1.2 billion industry annually.
Local profit figures vary greatly based on location, products offered and other factors. However, according to IBISWorld, profit for a food truck may be around 7.7% of your entire revenue, after accounting for overhead costs and wages. That means a food truck making $400,000 in sales each year would pull in just over $30,000 in profit.
So, you aren’t necessarily going to get-rich-quick as a food truck entrepreneur. But with determination (and some hard work) you can make a decent living and own your own profitable business!
Of course, all of this is after you break even in your business, which is when your business finally stops costing you money and becomes profitable. The Vet Chef reached this at around the 1-year point, which is fairly typical. You may need to plan for longer if your starting costs are high.
Step 5: Write a Food Truck Business Plan
Next, in order to understand how to start a food truck business, you need a plan. Very few great things are accomplished without a plan. One of the most important steps in how to start a food truck is the business plan. According to Business News Daily, two important purposes of a business plan are to establish focus and secure funding.
First, your food truck business plan works as a road map for the future of your business. It should include large goals as well as smaller steps and milestones that will take you where you want to go.
Also, if you are hoping to get help with financing your food truck business, you’ll need a business plan to convince the bank or other investors that you have a viable business idea.
Writing a business plan is a fairly detailed, time-consuming process and you may want to access online resources to help you with a template.
A general run-down of what you’ll need in your food truck business plan includes:
Information about legal business setup
Menu and price list
Step 6: Determine Financing Options
If you’re one of those lucky people who has tens of thousands of extra dollars lying around to start a business, that’s great! But, if you’re not, you may need to figure out a way to finance your food truck business until it provides more cash flow.
How can I start a food truck business with no money?
While it’s great if you have some money upfront, it is possible to get business credit. Many business owners start by using personal credit, or by getting a small business loan.
When you’ve done your homework about financials, you’ll understand how much of a down payment you can make. And you’ll also know how quickly you should pay it back and how much you can afford monthly.
Your business plan will help you if you are aiming for a small business loan from a bank, which may have low-interest rate options. Some food truck owners prefer to take out personal loans, which can be risky if the business doesn’t get off the ground.
One small business owner, Jake Brog founder of Lab Athletics in Bellingham, Washington, started his business by using a special 0% credit card rate. Jake was able to pay off the credit card before the introductory period was over and his gym business was financed interest-free.
Lender Typical Interest Features
Credit Card 0-25% Instant, risky
Bank Loan 2-13% Certain criteria required
SBA Microloan 6-12% Under $50,000, special criteria
Crowd-Funding 0% Slow, requires asking people for money
Equipment Lease 2-20% Equipment functions as collateral
Retirement Plan 1-2% + prime Borrow from self, complicated
Many other creative ways for financing a business have been successful–including finding angel investors, leasing (instead of buying equipment), asking family members, or even initiating crowd-funding campaigns.
The Small Business Association (SBA) Microloan Program makes available small loans of up to $50,000 (although the average loan is $13,000). Entrepreneurs may use this for supplies, startup costs, equipment, etc. Instead of applying directly through the SBA, you’ll need to find a non-profit intermediary to get you started with your food truck.
Step 7: Obtain Licenses and Permits
As with any business, you will need to make sure your food truck complies with all of the local government standards regarding permits and licenses. This is a very important step when you start to learn how to start a food truck. These may be range from permission to run a business to food-handling certifications and will change based on state and local regulations.
Similar to the advice of other food truck owners, Kyle’s advice is that potential owners of food trucks should contact their local health department right away, and they’ll know how to proceed from there. He says to expect approximately 6 months from the time you make your first contact until you can get up and running.
Entrepreneur.com parallels Kyle’s advice, noting that your local department of health should be first on your list of contacts and then go from there.
Below is a general idea of what you might need but, of course, it is necessary to find out exactly what is needed for starting a food truck in your particular location.
What licenses are needed to start a food truck?
Commonly required licenses and permits for a food truck:
Business License –This depends on the city/county/state where you work and based on the type of service you provide, whether events, catering, etc. In addition to licensing fees, a % of the revenue may also go to the government agency so be sure to factor this into your budget.
Employer Identification Number – You need this in order to start legally paying employees, withholding taxes, etc.
Business Permits—This is usually issued by local municipalities. These can change over time so be sure to review this annually so you understand what is required in the way of food truck permits.
Vehicle Licensing—Make sure the person driving the food truck is appropriately licensed and insured for that particular vehicle. Find out if you need a commercial driver’s license in order to drive the food truck (this is often related to the size/length weight of the truck.)
Food Handler’s Permit—This may require you and your employees to take a Food Safety Course. Often done online and fairly inexpensive, it may be necessary for truck owners and all employees to complete this in order to comply with food safety requirements.
Health Department Permit— This differs between states but is typically similar to what a restaurant requires since, technically, your food truck is a restaurant on wheels.
Fire Certificate – This requires a local fire department inspection. Your equipment must be safety certified, whether electric, propane, generator, etc. If you purchase your truck new and/or have it retrofitted, the vehicle supplier should already know these requirements and have it ready for this inspection.
Parking Permits – If your food truck is invited to a festival or a private event, this shouldn’t be an issue. But if you plan to simply pull your food truck on the side of the road, you’ll need to do your homework about local parking ordinances in your area.
Where Should I Park My Food Truck?
This is the beauty of a mobile food truck business! You can park it almost anywhere you are invited. Look for opportunities including local festivals, schools, neighborhood events and more.
Festivals can be some of the most profitable (and least profitable!) locations for the mobile food truck business. Kyle mentions that some festivals can be packed with customers, with 200 people standing in line. On the other hand, based on weather or other circumstances, they can also be dead and cause you and your food truck to take a financial loss.
One festival we served 900 people in a day. So we went back the next year and we had all this food ready for long lines of people–but they added 20-30 more food trucks and we’re doing nothing.
Along the lines of locations, the Vet Chef truck has recently been invited to park at Boeing during their lunch breaks, which is like striking gold. This came after the business had built a good reputation and won the “Best of Western Washington” Award.
But it took some building of the brand and reputation before these types of invitations started rolling in for Kyle and his food truck. In the beginning, he says, you just need to go wherever the people are and take the opportunities as they come.
Eventually, once you gain a reputation, you can become choosy about which events you’ll agree to, based on how profitable they will be for you.
Step 8: Buy Your Truck
Now comes the exciting (and perhaps a bit scary) part! Buying your truck and outfitting it for your needs is critical to the success of your food truck business.
What types of food trucks are there?
Essentially, you can choose from two styles of food trucks: drivable and pull-able.
Drivable Food Trucks are licensed motor vehicles that can be driven from one place to another on their own. These are typically like a standard delivery truck, often retro-fitted to create a kitchen and serving window in the back.
Trailers and Carts are other options for mobile food service that must be towed from one place to another by a separate vehicle. These are outfitted with cooking and refrigeration capabilities, and everything needed to prepare and serve food. Food carts are smaller, whereas food trailers can be as large as an over-the-road semi.
Step 9: Secure Your Suppliers
While your food truck is in the midst of being purchased or retro-fitted, you should be making contact with the vendors and suppliers you plan to use to source your food. You may choose these based upon quality, price and sustainability factors.
You may want to start by asking other food trucks and similar concept restaurants who their vendors are. Restaurant industry trade shows may also reveal vendors you didn’t know were out there.
Of course, a quick online search might reveal dozens of restaurant supply chains, but many small business owners prefer to deal with local suppliers.
One thing to think about is that you may want to consider vendors who will allow you to be billed monthly (rather than cash up front). Centralized billing and other contract options may help to streamline the financial processes of running a food truck business.
Step 10: Streamline the Process
One of Kyle’s sticking points for his food truck is that he aims to get food to his customers in 30 seconds or under from the time of ordering. It’s part of the reason his customers love the Vet Chef food truck.
This means you’ll need to have your kitchen organized for maximum efficiency. Everything that can be prepared in advance should be. And employees need to be trained to work as quickly and efficiently as possible.
The good news? Your food truck is very small, so you should have everything available at your fingertips!
Should my food truck have a POS system?
One important consideration along the lines of efficiency is whether your food truck will offer a Point of Sale system for credit and debit cards.
While cash used to be the mainstay for food truck mobile businesses, it’s a bit slow and can be complicated when it comes to making change.
More and more mobile food truck businesses are taking advantage of Square and other Point of Sale options for accepting credit and/or debit cards. This not only makes it fast and easy for the customer, but it may also allow for an integrated accounting and business tracking system for your food tuck business.
The startup costs for these can be very low and the fees are typically minimal. But the convenience could definitely be worth it—and you aren’t turning away customers who don’t have cash.
Step 11: Build Your Food Truck Business/Brand
Here is the place where the rubber meets the road (figuratively and literally). Once you’re ready to open your food truck, getting your name out there is everything!
Throwing a bunch of money at advertising is one option. And social media might be a helpful way to get people to find your food truck—since you’re often on the go. On top of that, social media can often be a free option for advertising. A solid Instagram or Facebook social media page may be an effective business tool. But even social media hype can only take your food truck so far.
According to Kyle, the best way for food truck owners to become successful is to create a dependable business that offers a quality product people want:
We don’t spend a lot of time on Facebook. You don’t have time to focus on marketing. It wasn’t our most important thing. What was the most important thing was putting out the very best food, the top quality, that we possibly could.
If you want to jump right in, you may be thinking of buying an already-established food truck business from someone who has done the startup work and created a good reputation for you. Check out this step-by-step guide that will help you understand your options for buying an established business.
Why do food trucks fail?
Not everyone has a food truck success story like the Vet Chef does. Unfortunately, just like businesses in most industries, food trucks often can make it through the first few years. According to the Bureau of Labor Statistics, about 20% of all new businesses fail within the first two years.
When it comes to the restaurant industry, many entrepreneurs have a penchant for cooking but may be lacking in business knowledge and acumen. Other reasons for failure may be poor management skills or even a lack of commitment to the lifestyle of running a business.
But honestly, the problem is usually a simple one.
According to Kyle, many food truck businesses fail simply because their business owners are not dedicated. They agree to be present at a community event but they arrive late, leave early, or maybe even don’t show up at all. The Vet Chef says:
If you say you’re going to be there, be there. I don’t care if your tire pops on the side of the road, you better have AAA and make it to where you say you’re going to be,
Your successful food truck business needs to have a solid reputation for being reliable so that you’ll be the first one who gets an invitation for the next event.
Here’s the deal: if you want to get started in the food truck industry and how always wondered how to start a food truck, it’s going to take a lot of work. But if you are smart and dedicated, you can be like Kyle and find yourself running a successful small food truck business within a year or two.
With less than $50,000 in startup costs and some hard work, it’s possible to have a food truck business grossing hundreds of thousands of dollars in a relatively short amount of time.
Norm Tedford has an associate degree in accounting fromBerkshire Community College. While attending this school, he wowed his professors with his ability to write insightful and penetrating business analyses. He’s also a former director of a homeless shelter. For the past two years, he’s beenhelping businesses generate more leads and sales. In his spare time, he engages in maniacal walking all over hill and dale so he can accumulate a zillion more steps than his Fitbit friends.
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