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How to start a food truck business

Costs, licenses, permits and other factors you need to consider to start a food truck.

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The food truck industry might have taken a hit in 2020, but portable food is set to come back in a big way as the economy recovers. Startup costs are higher than a business you start from your bedroom — you'll need a truck, equipment and lots of permits and licenses before you get started. That's why strong market research and a solid business plan are especially essential to making your food truck a success.

9 steps to get started with your food truck business

While you might not need to go in this exact order, these steps can help you make your food truck dream a reality.

1. Research your competition to nail down your concept

Before you nail down a menu, see what other kinds of food trucks are in your neighborhood — and which do well. One of the best ways to do this is to visit the food trucks in your area. Take note of their menus, set up and which times are the busiest. Also take note of brick-and-mortar restaurants that might be your competition.

The goal is to find an underserved market so you can fill that niche as a starting point for your truck's concept. This doesn't mean you should pick a concept purely based on the market. But if you want to start a lobster roll truck and there are already several in your area, you'll need to find a way to make yours stand out.

  • Tip: Be wary of trends. While jumping on fads like the birria taco craze means you'll have a captive market, the market can quickly become oversaturated. And new businesses that aren't yet profitable are often the first to go.

2. Pick a name and brand

Once you've done some market research, the next step is to come up with a name and develop your brand. This means designing a logo, planning your menu and figuring out your truck's aesthetic. And double-check to make sure your idea is truly unique, as some trucks have copyrights on their brands.

If you're stuck on this step, consider hiring a freelance graphic designer to help. Hiring a food truck consultant can also help you avoid common mistakes when setting up your truck. But try to go at it alone first. These will both add to your already high startup costs.

3. Write a business plan

Before you finance your business or look into permits, you need to write a business plan. Your plan should include a summary of your business, a description of your company, the research you've already done on the market, the food you plan to sell and a sales plan.

You'll also need to go into finances — including an estimate of how much financing you'll need to get started, where you plan on getting those funds, menu pricing and sales forecasts. And most business plans include financial projections such as monthly or quarterly sales and expected costs and profits.

  • Tip: Depending on where you're located, food trucks can be highly seasonal businesses. Consider whether it's worth operating all year while writing your business plan.

4. Find your truck

Your truck will be your biggest investment in this business, so take your time comparing vehicles. In some cases, you can find a food truck that's already set up. Classifieds can be a good place to start, and some companies offer fully equipped food trucks that you can customize to your needs.

Used foodtrucks are often cheaper — think as low as $5,000. But they cost more to finance and often require extensive repairs. If you want to buy a used truck, have it inspected by a mechanic to make sure it's in good shape — and pay for the inspection yourself.

New custom trucks can cost over $100,000 but will typically meet government codes and require less upkeep. If you can afford this option in the beginning, it could save you in the long term.

  • Tip: Invest in a truck wrap once you've bought your vehicle. A truck wrap is a large decal with your logo and other designs that personalizes your truck. Having an eye-catching wrap can be a great way to bring in new customers and let your fans know where you are.

5. Find a commissary kitchen

In some states, you're legally required to prepare some or all of your food in a commercial kitchen, or commissary. This will cut down on equipment costs, but you'll need to pay a commissary fee each month. Ask around other food trucks and local catering businesses to get tips on which commissary will best suit your truck.

6. Get other equipment and a POS system

In some cases, you won't have all the equipment you need for the food you want to make. Typically, you'll need some or all of the following types of equipment:

  • Gas ranges
  • Grills
  • Fryers and fry dump stations
  • Microwaves
  • Food lamps or warmers
  • Refrigerators
  • Condiment dispensers
  • Thermometers
  • Pots and pans
  • Cutting boards
  • Knives and other cooking utensils

Almost all trucks will need a point of sale system. While you can avoid this by using a lockbox to store cash, you'll miss out on credit card sales. Read our guide to finding the right POS System to learn how to get started.

7. Look into permits, licensing, certification and insurance

Food trucks are required to have a number of licenses and permits before they can start serving customers. While requirements vary depending on where you live, you can at least expect to pay for these items.

  • Mobile food selling permits are often required for all food trucks — some cities like New York use these to avoid overcrowding.
  • Health department permits are required after your truck passes a health inspection. You'll need to show you have easily washable surfaces and a safe place to cook and store food that meets government standards.
  • Parking and zoning permits are often required to allow you to park on the street for an extended time. Your city's parks department might also require an additional permit if you plan on setting up in a park.
  • Food safety certification and food handler's permits are a must for all employees handling food to meet health department guidelines.
  • Fire safety certificates are also usually required — especially if you're doing a lot of cooking in your truck.
  • Business insurance is especially important for food trucks. It can cover the cost if your truck is stolen or damaged.
  • Vehicle and commercial driver's licenses might be required by your local Department of Motor Vehicles, depending on the size of your truck.
  • Business licenses are also required in many states.
  • The IRS also requires you to apply for an Employer Identification Number (EIN), which you'll need to get funding and pay taxes.

In most cases, you need to have your truck set up as if it's ready to go in order to pass inspection. But the best way to find out what you need is to reach out to your local government and other food truck owners.

A nonprofit business organization might also be able to guide you through the permit and licensing process at no charge. You can find a business center near you on the Small Business Administration (SBA) website.

8. Stock up on inventory and other supplies

Since your inventory is mostly perishable, wait until after you have all of your licenses, permits and certifications lined up before you place an order. In addition to ingredients, you might also need utensils, plates, napkins, food containers and paper or plastic bags.

9. Start marketing and advertising

Social media is especially important for food trucks. Many food trucks announce their upcoming locations on Twitter and bring in new customers with food posts on Instagram.

Reach out to members of the local food media like a local newspaper and bloggers to see if they'll cover the opening of your truck. Also reach out to food-focused Instagram accounts in your area. You'll often have the best results with people with a small but loyal following.

Also consider asking other business owners in your area to see if they can help spread the word about your new truck through their Instagram and Twitter accounts. Small business communities can be supportive of newcomers.

Food Truck startup costs

Starting a food truck business often costs between $50,000 and $100,000, depending on where you live and your expenses. In most cases, you'll need to budget for the following types of expenses:

  • Food truck and wrap
  • Kitchen equipment
  • Commissary fee
  • Consulting fee
  • License, permit and inspection fees
  • Point of sales system
  • Inventory
  • Disposable items
  • Advertising
  • Fuel
  • Staff payroll
  • Insurance

Fuel can be particularly expensive for a food truck. Not only do you need it to drive around, you also often need it to keep you warm and the lights on. But this can vary depending on your climate and local gas prices. Ask other food truck drivers in your area how much you can expect to spend.

Pros and cons of starting a food truck business

Starting a food truck business can be rewarding, but it has a unique set of drawbacks that don't always apply to other startups.

Pros

  • Cheaper than opening a restaurant
  • Mobility allows you to go where the customers are
  • Small kitchen that's good for making small adjustments

Cons

  • Low revenue during winter in cold climates
  • High startup costs compared to other businesses
  • Changing regulations that can be difficult to follow

Types of financing for food truck startups

Food truck startups might need to approach several different sources for seed funding — or the money you need to get your business off the ground. Unless you already have a truck that's ready to go, you'll likely need vehicle and equipment loans.

Crowdfunding and microloans can also help you finance those first batches of inventory. And in many cases, you and any co-owner will need to invest some of their personal funds. Our guide to financing a food truck teaches you about financing options for ongoing expenses.

New food trucks can qualify for Restaurant Revitalization Grants

Unlike other coronavirus assistance programs, new food trucks can qualify for this federal food service grant program. Businesses established in 2021 will be able to qualify for a grant based on payroll expenses. After you're ready to start making sales, you have until December 31, 2021 to apply on the SBA website.

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Bottom line

Starting a food truck business can be expensive — but it's less of an investment than opening a restaurant. Read our guide to resources for small business owners to learn more about what you'll need to get your truck on the road.

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