In this article, you’ll get a complete guide on starting a food truck business, including the food truck startup costs that include equipment, permits, and more.
Who among us hasn’t fantasized about leaving their 9 to 5 job for the culinary aspirations of opening his own food truck worthy of Instagram?
It’s probably not a sign that it’s time for lunch if you just had stomach butterflies. Instead, it was probably simply your ardent enthusiasm getting the better of you.
You should stop delaying your goals because you are worried about the startup expenditures to start a food truck. For you, we’ve done the investigation and contributed our labor.
We created a helpful reference guide since no small business owner should enter the food truck market without knowing what to anticipate.
Over the past ten years, food trucks have become incredibly popular. With Americans embracing mobile restaurants, what was once a fad has become mainstream.
As a result, ambitious chefs and restaurant business owners have started using food trucks as a less expensive and riskier option than starting up traditional eateries.
However, before trying out to start a food truck, aspiring business owners must be aware of their possible expenditures.
If you have no past expertise in the food business, the amount of effort necessary to launch your own physical-and-mortar restaurant can seem overwhelming. A food truck, however, might be the ideal way to break into the catering industry.
It can be a good idea to start a food truck business today since there are numerous new food truck owners entering the market and the food truck industry as a whole is currently estimated to be worth $3.93 billion (at least that’s what it was in 2020).
The idea that launching your own food truck is a relative bargain compared to (or as a precursor to) opening a brick-and-mortar restaurant is perhaps the most alluring feature. However, the food truck startup costs may be higher than you anticipate, particularly dependent on where you live.
You might believe starting a food truck business and being a food truck owner will only cost you a small portion of what opening a regular brick-and-mortar full-service restaurant would.
You’re somewhat right, I suppose. However, it does not imply that getting a cool business name and taking your new set of sparkling wheels for a lunchtime drive down Main Street will be inexpensive.
Startup costs will vary (much like for any other restaurant) when beginning a mobile food truck business, but you should budget from $28,000 to $114,000 for this endeavor.
When all is said and done, the number of variables will determine which end of the spectrum you fall on. Here are a few food truck startup costs to think about.
Cost of a food truck
The price of a food truck will vary depending on its age and the features it has. Your investment’s placement along that spectrum will rely on:
- Condition (new or used)
- Equipment included
It goes without saying that a truck without many bells and whistles will cost you much less than one with them. Similarly to this, be ready to pay more if you live and intend to use your truck in a pricey area.
The most obvious startup cost for a food truck owner is this one. Nevertheless, you must think about the price of buying your own truck.
Prices will vary, as with all automobiles. Of course, buying a used food truck can save you money. A food truck can cost anywhere between $50,000 to $200,000, depending on whether you buy a new one or a used one.
Remember that this does not include the price of decking out the truck, such as by designing and putting a truck wrap or by adding any extra burners, fryers, refrigerators, or other restaurant equipment that may be necessary to prepare your specialty food.
Therefore, if you’re worried about spending $200K on a vehicle, we suggest starting modest and then outfitting as necessary.
Costs associated with food truck licenses and permits
According to the U.S. Chamber of Commerce’s Food Truck Index, an entrepreneur spends $28,276 on licenses, permits, and compliance with the law on average to establish a food truck and run it for a year.
Even though your food truck will be movable, you still need to obtain several licenses and permits before you can start doing the food truck business. These consist of:
- Employer Identification Code
- Food Truck Business Permit
- Driver’s License
- Selling Permit (some states only)
- Food Handler’s Permit and Food Safety
- Department of Health Permit
- Fire Certificate
Costs vary depending on location, however, Portland (Oregon), Denver, Orlando, Philadelphia, and Indianapolis are the five cities that are most accommodating to food trucks.
Boston, Washington, D.C., San Francisco, Minneapolis, and Seattle are the five hardest cities for food trucks to operate in.
The lowest fees are in Indianapolis at $590, while the highest expenses in Boston are $17,066 (Seattle has the next-highest fee at $6,211).
If Boston is taken out of the equation and the average permit and license prices of the other top 19 food truck cities are calculated, you see that the average fees paid by food truck owners are approximately $1,864. Boston is an anomaly with its unusually high rates.
The price difference between renting and purchasing a food truck
A new, custom truck can cost anywhere between $75,000 and $150,000 and take months to create. Between $40,000 and $80,000 is the typical price range for used trucks, and you should be able to use them right away.
The price to rent a food truck varies depending on how long the contract is, but if it’s longer than six months, it should be about $2,000 to $3,000 each month.
Selecting the appropriate payment method for your food truck business
Customers who patronize food trucks typically want their orders filled as soon as possible. The majority of customers will also value the choice of payment options.
You must therefore spend money on a point-of-sale system that can process transactions fast and effectively and that takes all widely used payment options.
Your POS system’s price will change depending on the bundle you select. Some service providers charge a flat fee, while others tailor each transaction based on several variables.
Food and other necessities
A portion of your beginning money will also need to go toward purchasing the ingredients and the food truck equipment required to prepare and deliver your meals.
According to restaurant industry experts, your food expenses should be between 28% and 35% of what you charge for the product. Therefore, if you sell a taco for $1, your cost of food for that taco should range from $0.28 to $0.35. Otherwise, you run the danger of future cash flow problems.
Required inventory to get started
In addition, to serveware like dishes, cups, lids, cutlery, and napkins, you also need ingredients for your menu items when starting a food truck.
Depending on your menu, the initial expenses for ingredients may vary, but you should plan to spend between $1,000 and $2,000 when you factor in things like cooking oil, seasonings, and other things. The initial investment in serveware for a food truck is about $300.
Where does a food truck go at night when food preparation and service are finished for the day? To a safe, authorized site by the city.
Many communities have severe rules about where a food truck can park, both when they’re open for business and when they’re not. That is undoubtedly an option if you have the room to store things at home on your own land. If not, however, a lot of commissaries charge an extra price for overnight food truck parking.
When searching for a commercial kitchen location, be sure to keep this in mind.
Gas is a regular expense that should also be considered. Fuel costs vary depending on several factors, including the size of your truck, how often you drive, where you fill up, and any other equipment you may employ, like generators. To keep your new food truck business running and the money flowing in, budget between $250 and $500 every month.
Your marketing needs to be at the top of its game considering the amount of competition you’ll be up against. This means emphasizing a strong social media presence and smart email marketing for many other food trucks.
Because the food sector relies heavily on visuals, Instagram marketing makes a lot of sense. Although creating and sharing beautiful photos of your cuisine should be your top focus, there are many other things you can do.
Use user-generated content, showcase your truck’s branding, snap pictures of customers swarming around it, and even post some behind-the-scenes images.
One excellent approach to demonstrate the numerous steps involved in food preparation is through Instagram’s Stories feature.
The most expensive food truck expenses are unrelated to the food. When making a budget and determining how you’ll make a profit, it’s important to take into account expenses like gas, insurance (such as vehicle liability, general liability, workers’ compensation, etc.), licenses, permits, upkeep, equipment, and supplies.
Costs for fuel and maintenance can differ, but they often run $500 and $1,000, accordingly.
The price of installing a point-of-sale system at a restaurant is another factor. You can always get the help of other food truck operators if you need it.
There are some operational expenditures, such as permits and licenses, that you cannot control, but there are ways to reduce your costs. For instance, you could save money on supplies if you choose to use secondhand equipment rather than brand-new equipment or if you keep your menu simple.
FAQ about food truck startup costs
How much does it cost to start a food truck business?
Starting a food truck business can be very expensive, depending on things like location, vehicle size, required equipment and supplies, and licences and permissions. The range, though, is roughly $40,000 to $150,000.
What are the typical expenses associated with starting a food truck business?
The price of the vehicle itself, equipment and supplies, permits and licences, initial inventory, marketing and promotion, and insurance are a few common startup costs for a food truck business.
How much should I budget for the purchase of a food truck?
Depending on the size, age, and condition of the vehicle, the price of a food truck might vary significantly. A brand-new food truck may cost up to $200,000, while a used vehicle may cost between $10,000 and $100,000.
What kind of licenses and permits will I need to operate a food truck, and how much do they cost?
Depending on where it is located and the sort of food being served, several licences and permits may be needed to run a food truck.
A food service permission, a health department permit, and a company licence are some examples of common licences and permits. These licences might cost anywhere from a few hundred dollars and several thousand dollars.
How much should I budget for initial inventory and supplies?
The kind of cuisine you intend to offer and how much of it you intend to create will determine how much money you need set aside for initial inventory and supplies. A general range is between $1,000 to $5,000, but there can be significant variations.
What are some of the ongoing expenses associated with running a food truck business?
The cost of supplies and inventory, gasoline and truck maintenance, rent for a commissary or kitchen space, insurance, marketing and promotion, and employee salaries are a few recurring costs related to operating a food truck business.
How can I keep my costs down without sacrificing quality or customer experience?
Concentrating on straightforward, high-quality recipes that use fresh, local products is one method to reduce costs without compromising quality or the customer experience. Developing a rapport with suppliers and negotiating discounts for larger purchases is another option.
Are there any financing options available for food truck startups?
Indeed, traditional loans, crowdsourcing, and equipment financing are all available to new food truck businesses. Specialized loans are also provided by several banks and lending organisations for food truck operations.
How long does it typically take for a food truck business to become profitable?
Depending on factors like location, marketing plan, and menu, it may take a food truck business a long time to turn a profit. Nonetheless, many food truck businesses start off losing money and then start making money within the first year.
What are some common mistakes to avoid when budgeting for a food truck startup?
Budgeting for a food truck startup should avoid making several frequent mistakes, such as underestimating the cost of permits and licences, splurging on pointless supplies or equipment, and failing to factor in continuing expenditures like fuel and maintenance. It’s crucial to prepare for unforeseen costs and have a reasonable budget.
Conclusion on these food truck startup costs
These food truck startup expenses are by no means the only ones you will need to make while establishing your enterprise. However, they are a few of the more expensive ones, so you should take them into account when estimating the price of launching your food truck.
Before starting the trip of a lifetime, be sure to conduct the required research. To ensure you have all of the information you need to launch your food truck business, consult with industry professionals, food truck operators, and local legislation.
If you liked this article about food truck startup costs, you should also check out this article about the cheapest states to form an LLC.
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