How to start a food truck business in 11 steps
In a way, food trucks are perfect for once-in-a-generation global pandemics: They meet the social distancing regulations, and enterprising food truck starters can gobble up the leftovers of the struggling brick-and-mortar side of the industry.
The ingredients for success include a blend of culinary skill, business savvy, and good old-fashioned hard work. Read on to avoid being one of the 50% of small business owners that call it quits within the first 5 years—and learn how to make your new food truck venture a winning one.
1) Create a food truck business plan
"Good fortune is what happens when opportunity meets with planning."
Thomas Edison shared that witty little lightbulb. The quote sheds light on the food truck entrepreneur ready to turn a business idea into a plan. Check out these helpful questions before you start a business:
- Executive Summary: How would you describe the business and your potential success?
- Overview: What's the business's background, legal structure, and other key attributes?
- Industry Research: What does market analysis reveal about the food truck industry in your area, including size, opportunity, and current trends?
- Competitive Analysis: Who are your competitors, and what are their strengths and weaknesses?
- Marketing: What is your marketing strategy to reach potential customers?
- Management: What unique skills do you bring to the business?
- Operations Plan: How will you manage the day-to-day tasks of the business?
- Financial Projections: What are your estimated revenues, expenses, and profits for each of your first 5 years?
2) Find your food truck niche
Picking a niche is simply choosing an area to focus on or specialize in from the larger food truck market. A niche helps you stand out in a crowded marketplace and makes it easier for you to track your ideal client. Trying to do everything for every client is often a path to disaster. Common types of food niches for your truck include:
- American Regional. Bring one American classic to a different part of the country, like Louisiana-style gumbo in New York.
- BBQ. Barbecue is a fantastic idea since it combines low-cost cuisine with a high level of allure—the market for deliciously smoked meat is nearly universal.
- Burgers. You'll have to give a new face to a classic, and the competition here is fierce.
- Cupcakes. Gourmet cupcakes come in a variety of flavors, from basic to indulgent.
- Ethnic Fusion. Combining one or more ethnic cuisines yields some delectable outcomes like kimchi quesadillas, yum!
- European. Your patrons won't need to "cross the pond" for the best bratwurst, goulash, or shepherd's pie.
- Health-Conscious, Local, and Organic. You can help local sustainability, and market yourself to wellness, vegan, or vegetarian customers.
- Ice Cream. Like the Good Humor trucks that started it all, you can bring frozen delight with modern flair and even feature gelato, fudges, or custard.
- Paninis. All you need is a couple of sandwich presses, and these handfuls transform into mouthfuls.
- Pizza. "Pizza, wood, and fire"— for most people, you had them at pizza.
- Waffles. It's one part breakfast, one part dessert, and maybe even one part deep South if you add the fried chicken.
3) Uncover your food truck's unique selling proposition (USP)
Your unique selling proposition describes what distinguishes you from every other food truck entrepreneur.
In a world where customers have a plethora of options, 90% of a small market is preferable to 10% of a large market, as top business thought leaders have said. Your USP will speak to your slice of the food truck customers. For example, a new food truck owner might have the USP, "Locally Sourced Mexican Sushi Fusion."
The USP quickly distinguishes the company from other food truck operators, making it more memorable. Cornering the Mexican Sushi portion of the market is a lot easier than competing with the Mexican or Sushi trucks head-on. Of course, if the specialty does not have enough prospective consumers to support it, you can broaden your concept. Your goal is to balance your niche, USP, and the marketplace.
4) Pick your food truck business name
Here's the fun part. Choose a name that instantly explains your niche, USP, and the kind of food you offer. Maybe you pick something as simple as "Mexican Sushi Truck" or as vibrant as "Paco's Sumo Tacos."
Try a business name generator or scope out your competitors for ideas. Asking close friends and relatives to brainstorm with you is one method that has resulted in many great business names. After everyone else casts a vote, the most important thing is to choose a name that you adore. When you're sweating from long hours serving lines that seem to stretch to infinity, your name must make you as happy as the folks devour your signature dish.
5) Design your menu
Once you've found your niche and USP, you're ready to construct your menu. The most common error that new food truck entrepreneurs make is having too many menu items. It would help if you narrowed your dishes to a dozen or less so that you and your team can execute as close flawlessly as possible. KISS is not just a treat from Hershey's. It also represents timeless advice adapted for food truck owners, "Keep It Simple Service," line after line and order after order.
6) Decide what type of food truck to purchase
Given that your food truck vehicle will consume most of your beginning cash, you must choose one that will serve your business effectively. There are four things to do when selecting your vehicle:
- Pick whether you will lease or own your food truck.
- Decide on a new or used vehicle.
- Find a reputable food truck dealer.
- Select the customizations to prepare your style of cuisine.
7) Research your food truck supplies and equipment
Using a home kitchen for food preparation is prohibited by most health departments. If you intend to prep at home, you may need to renovate your kitchen to reach commercial standards and government regulations.
Many new food truck entrepreneurs prefer to rent commercial space before making such a significant investment. It's a good idea to ask nearby eateries if you may use their commercial kitchen. Renting out space or a commissary kitchen is a wise idea, but so is renting out kitchen equipment. As your business grows, your list will too.
To start, it will most likely consist of the following:
- Business equipment: Laptop, Mobile hotspot, Point of sale payment processing (also called POS system)
- Cooking equipment: Grills, Fryers, Microwaves, Ranges, Toasters
- Food prep equipment: Chef knives, Cookware, Cutting boards, Utensils, Thermometers, Worktables
- Janitorial equipment: Compartment sinks, Floor mats, Floor care products, Hand sinks, Recycling bins, Sanitizing chemicals, Trash cans
- Refrigeration equipment: Ice machines, Prep tables, Under-counter refrigeration
- Serving equipment: Disposable takeout supplies, Cups, Food trays, Napkins, Plastic utensils
- Warming and holding equipment: Food warmers, Fry dump stations, Soup kettles
8) Figure out your financial plan
Food truck startup costs vary, but it's common for new business owners to set aside anywhere from $50,000 to $60,000, according to the U.S. Chamber of Commerce Foundation. Of course, if you do everything luxury, brand-new, and custom, you could spend nearly $250,000.
Here are a few questions to help you determine your potential expenses:
- How much will it cost to cook the food? What will it cost to rent commercial space or a commissary kitchen? How much will you spend on serving and cooking equipment?
- What will I pay to source the food? Will you partner with food service vendors and restaurant suppliers or work with farmer's markets?
- What are your startup costs? Will you buy or lease your truck? Will you buy a new or used truck? How much will you pay for necessary permits, licenses, and insurance? Will you need to hire a lawyer or accountant?
- What ongoing costs do you expect? How much will mobile payment processing cost? What about fuel costs, maintenance, and repairs?
- How much do you expect to make? What's your per-person cost and profit? How much will you pay employees?
One benefit of launching a food truck company rather than starting a brick-and-mortar restaurant is the reduced upfront expenses. Consider renting until you can afford to buy. It’s especially a good idea if you are working the business part-time or as a side hustle.
You will hustle whether or not you start part-time, so check out these simple and effective ways to fund your food truck startup costs:
- Ask friends or family.
- Crowdfund with community help.
- Finance equipment and with vendors.
- Invest your savings.
- Launch a crowdfunding campaign.
- Open a line of credit.
- Secure a personal or small business loan.
- Use personal or business credit cards.
9) Get your paperwork in order
From planning to paperwork, this food truck idea is getting closer to reality.
a) Register your business name with the state
Before you can hunt down hungry patrons, you need to register your business with state and local authorities. Also, you'll need to pick a type of business structure such as sole proprietorship, limited liability company (LLC), or corporation.
b) Apply for your EIN
Your employer identification number (EIN) identifies your business for taxes. Surprisingly, getting one is both free and easy from the IRS. Get your EIN here.
c) Obtain permits and licenses
This step separates the doers from the dabblers. According to the U.S. Chamber of Commerce Foundation, on average, entrepreneurs seeking to start and maintain a food truck will need to hop through 45 regulations, wait 37 days, and shell out nearly $30,000.
Your state, county, and even down to the city level may require several business licenses, permits, and certifications. Standard ones for mobile food vendors starting out include:
- Commissary agreement. Cities may require that all food prep is done in a commissary kitchen prior to your working day in the food truck.
- Driver's license. You need one to drive, and hopefully, a commercial one's not required.
- Fire certificates. In some counties, you must have your food truck inspected by the fire department besides the health department.
- Food handler license/permit. This is for anyone who touches food, so you and all your employees will likely have to get these.
- Food safety certification. A single employee or all employees may need this to sell food.
- Health permit. You can get this from your local health department.
- Liquor license, if applicable. You'll have to get this if you're planning to serve alcoholic beverages, and you can check the Alcoholic Beverage Control board for your state's specifics.
- Parking permit. You should check with your local county clerk to see whether they are required in the places where you want to serve your cuisine.
- Seller's permit. You may need this as a food truck owner.
- Standard operating procedures document. This document is rarely required, but it may mandate that you describe the processes you and your employees use when performing tasks on your truck, from food preparation to sanitation to how you secure the vehicle.
- Special event permit. Special event permits, also called "vending permits," are needed to sell food at a particular venue during an event, such as a concert, festival, or game.
- Vehicle registration. Visit your local Department of Motor Vehicles or contact them to see what's needed for your food truck.
d) Open a business bank account
Once you have your EIN, you can open a business checking account, apply for a small business loan from a lender, and separate your personal and business finances.
e) Insure your food truck business
Some new food truck operators put insurance off until the last minute, but knowledgeable food entrepreneurs keep it on their radar.
Every food truck owner needs dependable small business insurance—that's why it's critical to shop around to see if you qualify for the best deal. Check out this overview of essential coverages you may need to insure a food truck business:
- Workers' compensation: This coverage protects your employees if they get sick or injured while working in your food truck business. Every state requires worker's comp, and the consequences of skipping this coverage may cause the state to close your business. (You can get a quick estimate on what you'd pay for workers' comp with our 60-second workers' compensation calculator.)
- General liability insurance: This policy protects your food truck business if you're sued for an injury or property damage claim. (Expensive lawsuits can quickly put a food truck service out of business.)
- Property insurance: This coverage could protect your food truck and the equipment you own.
- Business Owner’s Policy (BOP): This policy includes general liability, business property insurance, and business interruption coverage for your food truck—all in one bundle.
- Commercial auto insurance: This policy covers your food truck so that you can drive it for business purposes.
10) Hire your first employees
Before hiring your first team member, you’ll need workers’ compensation insurance to operate within the law.
After you’re legal and have completed the proper paperwork, you can get an overview of what you’ll need from the Small Business Administration. Food truck owners and employees wear multiple toques. Some potential positions for now and in the future include:
- Chef. Crafts the cuisine that pleases customers and oversees everything in both the truck and commercial kitchens.
- Cook. Works under the chef’s direction to prepare quality food.
- Driver. Navigates the vehicle from one location to the next while following local ordinances for parking, events, and zoning.
- Kitchen worker. Helps in truck and commercial kitchens to weigh, measure, and prep food.
- Manager. Ensures the whole operation functions and coordinates between the front and back of the house.
- Window attendant. Takes orders and serves food and drinks, itemizes checks, and processes payment.
11) Spread the word about your new food truck business
Unlike your million-dollar recipe, this is a secret you want to share. What’s the best way to attract new customers? Add more than a pinch of hard work and a dash of creativity, and soon you’ve got buzz.
Here are vital parts of a successful food truck marketing strategy:
- Build a website. Get the URL for your business name. A service with templates like Weebly or Squarespace can make this easy.
- List your business on Google and Yelp. Sign up for your Google My Business and Yelp profile.
- Launch your social media profiles. Get your unique Facebook, Twitter, LinkedIn, Instagram, Pinterest, and other handles relevant to your niche.
- Buy online advertising. If the pricing is in your budget, focus on longer keywords with your niche and USP in mind to score new customers.
- Distribute brochures, flyers, and business cards. Yes, it’s old-fashioned, but it could spell more hungry mouths at your window.
- Create word-of-mouth. Ask ecstatic customers for referrals or video testimonials so that you can post to your website and social profiles.
- Attend local events. Introduce yourself to the coordinators so that you can win a spot at local concerts, corporate events, fairs, farmers’ markets, festivals, and sporting events. Just be prepared for the waiting list.
Check out these tips for running a successful food truck business
Running a successful food truck business can give a lifetime’s worth of food for thought. You can come back again and again, hopefully just like your customers. Here are some sites to whet your learning appetite:
- Mobile Cuisine: It’s the “ultimate food truck trade magazine” and covers every part of the industry, emphasizing business improvement for new and veteran entrepreneurs.
- National Food Truck Association: The organization offers in-depth tutorials on starting a food truck and a community where food truck owners can link up this to share best practices.
- Roaming Hunger: The marketplace section is a great place to start your food truck search, and you can see what the price ranges are near you.
Are you full yet? Starting a business is a lot to digest mentally, so here are some ways to stay sane as an entrepreneur.
If you’re ready to bite into the process, you can see if you qualify for insurance with Huckleberry in about the same time it takes to make your favorite dish disappear. (Getting a quote is free, easy, and 100% online.)