How to Start $417K/Year Food Truck Business

by Norm Tedford
How to Start $417K/Year Food Truck Business

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!” Then you’ve come to the right place!

We interviewed food truck owners Nic and Jada Jones to learn how they run Hen House, a food truck modeled after the farm-to-table style. Jada and Nic started Hen House in Nashville, Tennessee, and shared insights on how to make $300K in your first year as a food truck business.

How to Start a Food Truck Business

beautiful woman wearing orange apron

Starting a food truck business is as simple as following these eleven steps: 

  1. Learn About the Food Truck Industry
  2. Choose Your Food Truck Concept
  3. Estimate Food Truck Startup Costs
  4. Plan for Business Operating Costs
  5. Write a Food Truck Business Plan
  6. Get Food Truck Financing
  7. Obtain Licenses and Permits
  8. Buy Your Truck
  9. Purchase a POS System
  10. Streamline the Process
  11. Build Your Food Truck Business/Brand

Nic had been a cook his whole life before moving to Nashville with Jada and starting their food trucking business. They knew they wanted to start a food truck business and decided to seek a unique food truck concept while they were moving.

They told us:

One of our goals when we started a food truck business was to help local businesses.

Hear about how to start a food truck business directly from Nic and Jada below.

If you are ready to learn how to start a food truck business, keep reading! You’ll get your food truck business up-and-running, feeding people and bringing in a profit in a fairly short amount of time.

Step #1. Learn about the food truck industry

According to IBIS World, the food truck industry makes $1.5 billion per year with a median profit of 6.4%. Food trucks are expected to see industry revenue growth of 1.2% per year between now and 2028. 

There’s a lot of competition, though. There are over 36,000 food truck businesses and 2,000 new people are starting a food truck business every year.

How much do food trucks make a year?

Over the past decade, food trucks have become a viable, reputable business option far beyond the tired pretzel or questionable hot dog vendor. The average food truck makes $41,295. 

Don’t assume you can’t make more. We’ve interviewed five food truck owners, and each business owner makes more than $300K per year. 

Check out our interview with the most successful food truck owner, Carlo Chalisea, who built his food truck business from a taco truck to a brick-and-mortar location and multiple local food trucks.

Next, find out if starting a food truck business is profitable.

Are food trucks profitable?

Many food truck owners are making peanuts, but a great food truck idea can make great money. Nic told us:

Our food truck makes $20K-30K per month depending on the catering and seasonal fluctuations. The expenses break down to: 

Food: 30%
Labor: 25%
Overhead: 25%
Profit: 20%

That means they make about $60K profit after deducting all the business expenses. Given the business owners are working in their business, they pay themselves an undisclosed wage, too.

Assuming they pay themselves the average for a food service worker, that means they are making about $30K each, according to the Bureau of Labor Statistics.

Think working with your spouse and making a combined $120K sounds good? Keep reading to learn more about becoming a food truck owner.

Step #2. Generate food truck ideas

food truck with sign board pointing both ways

You might wonder, “What is the best food to serve in a food truck?”

You should look for the intersection between what you’re good at cooking and what the area needs.

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. Make it a quality product and keep it very, very simple.

How do I price my food truck menu?

One of the key things to research about how to start a food truck is the menu pricing. Pricing menu items can be tricky. Charging too little causes losses, while charging too much means no one will buy from you.

Food costs should stay under 35% of the revenue for successful food trucks. The most commonly used pricing method for food trucks is based on the food cost percentage formula. 

The formula can be worked in two ways:

  1. Actual Food Cost / Food Cost Percentage=Customer Price
  2. (Choose a Value between 3.33 and 5) x Actual Food Costs=Customer Price

Nic told us:

I prefer to stay under 30%.

Step #3. How much does it cost to start a food truck business?

Expect to spend between $15K and $250K to purchase a food truck and start the business. Nic told us starting a food truck business required spending:

∙ Purchase Food Truck New: $150K
∙ Wrapping The Food Truck: $12K
∙ Branding: $10K-15K

The good news is that buying a food truck normally requires less than 20% down. That means starting a food truck company can get started for $57K instead of $250K+.
You can also rent a food truck, which we’ll discuss in a separate blog. Food trucks have some additional costs, which we’ll discuss next.

Other startup costs

Other startup costs for a food truck may include:

∙ Opening Day Ingredients: $1000
∙ Licenses and Permits: $2000
∙ Parking and Maintenance: $300 (first month)
∙ Kitchen Supplies: $1700
∙ Packaging: $2000
∙ Marketing: $3000
∙ Bookkeeping and Office Supplies: $1000
∙ Insurance: $2000
∙ Miscellaneous: $1000

Kyle, the owner of Vet Chef, bought a food trailer and custom designed his kitchen, which required adding in $8000 for equipment,  another $7000 for truck permits/inventory, and various other costs. All in all, it came to just over $40K. Check out our interview with him below.

Step #4. Figure business operating costs

To figure out if this will 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:

Parking Permits
Delivery Costs
Fuel and Vehicle Maintenance
Paper Goods, Packaging, Labels, etc.
Phone/Internet/POS system
Bookkeeping
Marketing
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 are 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?

businessman holding a money and a food truck at the background

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 one-year mark, 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

One of the most important steps in how to start a food truck is a solid business plan. According to Business News Daily, two important purposes of a business plan are to establish focus and secure funding.

Writing a business plan is a fairly detailed, time-consuming process, and you may want to access online business plan resources to help you with a template.

A general run-down of what you’ll need in your food truck business plan includes:

Business summary
Detailed profile
Information about legal business setup
Menu and price list
Marketing plan


After you’ve written a business plan, you’ll want to consider how to buy a food truck.

Step #6. Determine financing options

woman in business outfit holding money on both hands

If you’re one of those lucky people with tens of thousands of extra dollars lying around to start a business, that’s great! But otherwise, you may need to figure out how to finance your food truck business until it provides more cash flow.

How to 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 food trucks start by using:

Personal credit
Business credit
Small Business Administration (SBA) Loans
Equipment Backed Loans
Partner/Venture Capitalist

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

man working on a laptop

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 learn how to start a food truck. These may 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?

Here are some commonly required licenses and permits for a food truck:

  • Business License –This depends on the city/county/state where you work and is based on the type of service you provide, whether events, catering, etc. In addition to licensing fees, a percentage 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 park 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 like 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 were 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 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

orange food truck with upflip logo and price tag

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

woman having a phone call in front of a laptop

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?

man pays using credit card

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 truck 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?

failed document data and a food truck at the background

Kyle told us many food truck businesses fail because their business owners lack dedication. They agree to be at a community event and 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 to the next event.

If you do this, hopefully you will be one of the people who survives the first five years of business. According to the Bureau of Labor Statistics, only about 55% of all new businesses last through this period.

Are you ready to start a food truck business?

It’s possible to open a food truck business with less than $50,000 in startup costs and some hard work. You can start earning $100K gross revenue really quickly by following this guide.

Though you’ll put in a lot of work to enter the food truck industry, it’s worth it for those who wonder how to start a food truck. With dedication, you can be like Kyle and run a successful small food truck business within a year or two.

What kind of food would you serve in a food truck?


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Author

Norm Tedford


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Comments

Jesse@ 2024-04-23 20:27:04

I really like this article, Thank you for sharing your ideas. I can't wait to implement these tips and level up my business! by the way i also read this blog containing the same topic. I want to know your thoughts about it https://menuwars.com/food-blog/how-food-trucks-conquered-america/

Martin Dubois@ 2023-10-05 05:42:46

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Sweta Dutta@ 2022-07-20 03:52:16

Great post! Almost all the key details related to starting a food truck business are covered and explained in detail. I am sure it will help anyone planning to start a food truck or cart business!

Nancy Latham@ 2021-06-25 21:22:32

In regards to the food truck article. can you tell me about the requirements for a commercial kitchen that most public health regulations require?? It is my understanding that your food truck has to have a relationship with a commercial kitchen for the storage and food preparation etc. All of your other information is so valuable...thanks!! Please explain and advise. Thanks so much.

Hanna@ 2021-05-07 01:50:58

One of my school events, I was organize a food shop and I was very impressed when I also got good profits. The right place, the right time, the right decision for the right profit. That moment I took this business just to enjoy But then realized it can be recognized as a profession. Now I'm thinking To transform this business into a career by completing graduation.

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