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food truck economics

We believe that food truck employees should know that they work in a low margin industry. Typically they won’t figure this out unless they’re told. Want to validate this point? Just ask a few of your employees how much money they think you make see how many say, “LOTS.”

This is because employees see, what many believe to be, large amounts of cash coming into the truck every day but most of them have no concept of what it costs to operate a mobile food business and how much profit remains after all the expenses are paid.

When employees assume the boss is getting rich, it can affect their attitude, behavior and what they might feel entitled to.

Food Truck Economics 101

We recently spoke with a vendor who holds creative meetings with each employee to educate them on the low margin nature of the food truck business. He explained that he conducts these meetings when a staff member first starts. He gives them 100 pennies and explains that the pennies represent a dollar in sales and they will be shown out of every dollar of sales what it costs each month to operate the food truck.

In this food truck economics class the employee is asked to pay:

  • 30 pennies for food and beverage vendors
  • 35 for payroll
  • 10 cents for fuel and truck maintenance
  • 10 for commissary rent and so on

After all the expenses are paid, the remaining pennies represent the amount of profit the truck earned. Whether there are 3, 5 or even 10 pennies left, it’s a whole lot less than most employees assume.

What this food truck economics lesson provides for each of his employees is a basic understanding why the little things like exact portioning, reducing waste and the hundreds of other seemingly meticulous steps he requires help to control costs and give him a shot at making a profit. This little example will show some of them that owning a food truck is not the money making machine they may have thought.

Do you use a food truck economics class in your truck or do you use other teaching methods? We’d love to hear them. You can share them via email, Facebook or Twitter.

gasoline pricesThe national average price of gasoline was $3.25 per gallon last Thursday, within fractions of a penny of the average a week ago, though pump prices continued to fluctuate in different states, falling in some but rising in others, according to the AAA Daily Fuel Gauge Report.

Prices fell 3-4 cents per gallon in Missouri and Minnesota, for example, but in the past week they jumped 11 cents in Ohio to $3.19, wiping out a 10-cent decline from the previous week.

The national average of $3.25 was 7 cents higher than a month earlier, when prices hit their low point for the year, but 6 cents lower than a year ago.

Missouri continued to have the lowest average price, $2.90, followed by Oklahoma at $2.96. Prices were down by 4 cents in Minnesota, tying it with Kansas at $2.99. Those were the only states with averages below $3.

Hawaii remained the most expensive state for regular unleaded at $3.93, but prices inched up in Connecticut to $3.67 and in New York to $3.66, while they remained flat in Alaska, also at $3.66.

AAA noted that crude oil prices have edged upward recently, though they remain below $100 per barrel, partly because of favorable economic news, including a better-than-expected report on U.S. employment, and indications of greater global demand for oil. In previous reports, AAA said it expects U.S. gas prices to decline during December because refineries are operating at normal production levels and able to more than meet demand.

Photo by Aaron Anderer

I wouldn’t make a habit of basing financial stories on pop culture, but sometimes a peg comes along that is hard to resist.

This coming weekend, a new season of the Food Network’s “The Great Food Truck Race” will premiere, and the cross-country competition among eight roadside food stands seems like a good time for a fun feature about the state of mobile cuisine in your market.

Americans spend an ever-growing amount of their food dollars on out-of-home dining. According to the U.S. Department of Agriculture, food away from  home as a share of food expenditures has grown from 17.2 percent in 1929 to 47.9 percent in 2010 (which was down a bit from a pre-recession peak of 48.4 percent in 2007.)

This USDA Economic Research Service page on food expenditures includes that data and a number of other fascinating tables (no pun intended) about food spending and food costs. Here’s a new Gallup poll, too, about who eats out and how often.

Food trucks aren’t a new phenomenon, of course, but their compact kitchens, interesting marketing approaches – social media being an important tool for this niche, with Pinterest being the latest in the food-truck arsenal – and specialty menu offerings keep the concept fresh. For those who dream of zipping around preparing high and low cuisine, what are the start-up and operating costs, typical working hours, supply issues, local regulations and other conditions affecting would-be chefs-on-the-go?

Exploring the tension between food trucks and non-mobile restaurants might be an interesting angle; this FoodTruckFreak blog discusses a new ordinance in Chicago that requires trucks stay 200 feet from existing restaurants.

Find the entire article by Melissa Preddy at businessjournalism.org <here>


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