How To Start A Food Truck Business: A Cost Breakdown
Dream of starting a food truck and want to turn the idea into reality? Let’s take a look at some numbers on food truck costs so you can build a realistic expectation of what your dream is going to cost to get off the ground.
The Cost Of The Actual Food Truck
The largest cost of your food truck business is certainly going to be the actual food truck itself. These aren’t just small vehicles outfitted with stoves and refrigerators—they’re heavy duty pieces of equipment with commercial kitchens inside. And they’re not cheap.
According to food truck business experts like Roaming Hunger and Food Truck Empire, you can reasonably expect to spend $50,000 to $150,000 on your truck. Let’s break that down.
→ Used food trucks: $50,000 on the low end. Used trucks, like with any used vehicle, have questionable internals. You really can’t anticipate repair costs, but you can be certain they’re coming eventually. Banks often raise loan interest rates for used trucks since they’re more risky. So, while a used truck will save you on startup fees, they’re a bit of a gamble.
→ New food trucks: $75,000 to $150,000. A brand new truck will certainly cost quite a bit more up front, but you’ll also have a valid warranty, lower bank interest rates, and far lower repair costs for a few years. The final price will depend on the size of the truck, the kitchen elements, and any customizations (like wrapping) you require.
→ A food trailer: $15,000 to $50,000. If you’re after a trailer, rather than a fully operational vehicle, you’ll probably be able to save some serious cash in the beginning. While this doesn’t eliminate auto repair costs since you still need a vehicle to haul the trailer, it does mean you don’t lose revenue from downtime because of auto repairs since you can just attach another vehicle.
→ Renting a food truck: $2,000 to $3,000 per month. Renting can be a great way to get started when you’re really strapped for capital. You don’t have to worry about maintenance and repair costs, many of them come with a commissary kitchen included (likely $1,000 in savings), and you can test your idea before jumping in with a massive investment.
No matter which direction you go, starting a food truck business is not going to be cheap. Generally, experts suggest you budget $70,000 to $85,000 for the cost of the food truck if you’re looking for a used truck with a couple years of reasonable wear that needs only minor customizations.
Don’t Skip The Business Plan
A business plan is one of the often-forgotten essentials of any successful venture. It empowers you to create a well-rounded business vision, forces you to take a deep look at the numbers, and sets some expectations that you can use to assess progress later on.
Do your homework and write a solid business plan! There are so many trucks that rolled out that didn’t do the proper R&D, financial projections, break-even and capital requirements. Without this essential piece, you are setting yourself up to fail.
— Juan, MIHO Gastrotruck
Creating your own business plan will take several hours of research, learning how the plans are structured, and actual writing. Hiring a professional plan writer will cost $200 to $500.
Permits, Licenses, Parking, And Insurance
Now that you have your actual truck, it’s time to make it legal—and there are many things to consider. Insurance, food service permits, inspection costs, parking. Keep in mind that these are usually annual costs, so you’ll want to make sure you budget them in for every single year.
On the regulatory level, you’re going to need to register your business, register the vehicle, pay for health permits, and go through a handful of other regulatory hoops.
→ Business Registration: $75 to $150
→ Vehicle Registration: $75 to $100
→ Health Permit: $250 to $1,000
→ Fire Permit: $100 to $150
→ Food Truck Application + License: $100 to $500
Insurance for your food truck is another doozy, but one that must be dealt with. Not only do you have to cover your business for general liability in case someone gets sick from your food, but you probably also want to insure against employee injury, property damage, and auto damage. These costs can add up and are highly dependent on your truck value. Estimate between $2,000 and $4,000 per year for basic liability.
But wait—you can’t forget about other operational costs like parking your truck and finding a commissary kitchen to prep your food for service.
→ Food Truck Parking: $250 to $1,000 per month
→ Commissary Kitchen: $500 to $1,200 per month
→ Event Fees: $500 to $1,000 per event
Please note: all of these costs will depend on your specific city or state and you may end up having to pay extra fees that other food truck operators don’t on the other side of the country. It all depends on the regulations and requirements of your local area.
The Tech That Makes Your Business Work
You have your truck, the kitchen, parking, and all the regulatory documents required to serve food, but you’re still not quite ready. To actually start serving, you still need a handful of systems and equipment in place.
→ Mobile Phone + Internet: $50 to $150 per month. This is highly dependent on your locational and local ISPs, and it’s not optional. People need to be able to call you by phone and you’ll certainly want to be able to accept debit and credit payments.
→ A Flexible POS System: $50 per month. Your point-of-sale software can make or break a customer interaction. A strong POS makes the process smooth, fast, and simple. A bad POS feels clunky, inflexible, and can create poor memories with customers. Look for POS systems with sales and trend reports, integrations with printers, and offline use at the very least.
→ Customer Loyalty Programs: Free. If you’re not building long-term loyalty with every purchase, you’re missing out on low-cost customer retention. Great POS systems have flexible customer loyalty programs already built-in—you just need to start using them.
→ Online Ordering: Free. Allowing customers to order food online, whether they’re ten minutes away or at a nearby table, has a variety of benefits. Once again, great POS systems already incorporate this, but lower-level systems will require you to outsource this functionality to other 3rd party apps.
→ Social Media Marketing: Free. Accounts don’t cost you a dime, nor does posting pictures and updating your followers on routes, new menu items, and fun specials.
→ Website And Other Marketing Assets: $0 + $1,000. If you can design your own logo and go without a website, it’s possible to not spend a dime on this category. However, chances are you’ll want a professional to help you set up at least a few items of digital marketing collateral.
Some food trucks piece together a variety of apps and software, but you should really try to find a single, powerful POS platform that you can rely on to simplify everything.
The Food, Cooking Tools, And Serveware
The Food – Inventory
While we can’t really estimate your specific food costs, we can demonstrate how you can calculate these costs based on your own suppliers and order volume.
Let’s say you serve an average of 200 dishes per day for 30 days of service (6,000 total orders) and have a very limited menu: burgers, fries, and soda. Here’s how those costs could play out.
- Burgers: $3.08 per Serving (typical for an upscale product)
- Fries: $0.69 for 0.3lb Serving (based on $70 per 30lb bag)
- Soda: $0.45 per Serving (based on Coca-Cola cans)
For every customer that orders all three items, you’re looking at a per-meal cost of $4.22. This makes your maximum inventory cost $25,320—though you can be certain not every single customer will order all three products.
Let’s assume half of your customers only order your fries. This keeps your fries costs the same over the course of the month (6,000 x $0.69 = $4,140) but cuts your burger and soda costs in half (3,000 x ($3.08 + $0.45) = $10,590). This would make your monthly inventory costs $14,730.
So, in this simplified scenario, your monthly food costs won’t exceed $25,320 and $14,730 is a likely minimum. Of course, you’ll probably optimize your inventory for 5-6 days of service, rather than buying all of your ingredients outright at the beginning of each month.
Now let’s look at the tools you use to cook and serve the food.
→ Serveware (Plates, Spoons, Napkins): $200 to $500 per month
→ Smallware (Pots, Pans, Spatulas): $1,000 to $2,000
Labor: The Other Big Cost
We’re not yet at the age of food truck automation with robots (and who really wants to be served by an emotionless bot anyway), so labor costs are not going to be small.
At the very least, you need a single person to operate your food truck. Though, more likely, you’ll have two or three. If you’re in a city that’s obsessed with food trucks, you may even need five or six workers during peak hours.
Labor costs change dramatically based on location, so we can’t really get too specific with estimates. We can, however, talk about labor costs in terms of operational cost percentages.
According to a poll by Mobile Cuisine, labor costs for the typical food truck were between 30% and 35% of total monthly operational costs. However, smaller businesses like coffee and hot dog carts were closer to 25%.
A Summary Of Food Truck Business Startup Costs
It’s time to take a bird’s eye view look at all the costs we’ve discussed so far to create a set of low, high, and mean (average) estimates.
|Food Truck Startup Estimated Costs|
|Food Truck License*||$100||$300||$500|
|Initial Event Fee||$500||$750||$1,000|
|Phone + Internet Setup||$0||$350||$700|
|Food Inventory (5 Days)||$2,455||$3,337||$4,220|
|Serverware (5 Days)||$33||$58||$83|
|* Annual Expense|
And now let’s take a look at monthly operating costs once you’re up and running.
|Food Truck Monthly Operating Costs|
|Phone + Internet||$50||$100||$150|
|Labor (25-35% of Operating Costs)||$3,945||$6,757||$10,244|
Realistically, no food truck startup is going to spend the lowest amount possible in every single category to hit that low estimate. Similarly, no startup is going to spend the most they can and hit that upper estimate either. Chances are your food truck business will sit right around that mean number.
In The End, It’s All About Cost-Efficiency
Cut the features you don’t need. Spend extra on the things that are more important for your business. Finding that unique spending “sweet spot” for your food truck can be difficult, but there’s at least one area where the choice is a no-brainer.
We’ve designed POSBistro to work specifically with food trucks. With our app’s comprehensive sales reporting, built-in online ordering, and flexible loyalty program, it’s the clear winner when it comes to streamlining the customer ordering process and making them feel welcome.
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