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Mobile Food Industry

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What do the up coming federal health care reforms mean for the mobile food industry but more specifically, your food truck business?

ObamaCare and food trucks

 

Will the Affordable Care Act add thousands of dollars in extra costs and more paperwork or will federal subsidies make this a “game changer” for small small food truck businesses that have struggled to provide insurance plans to their employees?

Who it will affect

The good news is that the Affordable Care Act (ObamaCare) will only negatively affect a minuscule number of existing food trucks. Food truck businesses with 50 or more employees (which includes less than a dozen food trucks in total) will have a choice beginning in 2014: they can sponsor a health plan for 100% of their workers or pay $750 per worker in penalties to the federal government.

For those truck owners, they might opt to take the penalty and do away with a health insurance benefit. Paying the annual penalty might be cheaper. So that would leave the employees uninsured and they would have to go to state health plan exchanges to buy health coverage that could be more expensive.

Tax Credits

The vast majority of food truck owners won’t be required to offer health insurance starting in 2014, and therefore these mobile food companies won’t have to contend with possible fines like the big boys in the industry. But while vendors with 50 or fewer staff members would be exempt from coverage provisions, they will still have to contend with rising premiums.

If you are part of the almost 99% of food truck business who employ less than 25 or are self-employed, you may find that the health care reforms bring you some tax relief.

If you are a food truck vendor with less than 25 employees and pay the premiums for your staff, you will qualify for a tax credit up to 35% of their premiums. (In 2014, that credit could be as great as 50% of premiums if you arrange insurance via one of the Small Business Health Options Programs, or SHOP Exchanges). The tax break you get will depend on a couple of variables: the number of employees you have and their average pay.

Please note that this tax break won’t be offered to food trucks that are formed as sole proprietorship’s. This factor alone may cause existing sole proprietors to incorporate or become an LLC.

Insurance might become cheaper

The Congressional Budget Office estimates that the SHOP Exchanges could lower annual premiums for mobile food and other small businesses by 1-4% with a 3% increase in the amount of coverage.

If you happen to be a food truck owner that works for yourself, you will likely be able to take advantage of government health care subsidies in 2014. If you are self-employed in 2014 and earn less than four times the poverty level, you can qualify for these subsidies. (To give you some idea, 400% of the 2013 poverty level comes to $94,200 for a family of four.)

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One of the reasons I tell people that food truck are here to stay is that the next generation of consumers is tailor made to the industry’s continued growth and expansion. Why? It’s rather easy to come to this conclusion…it is because the next generation is that of the Millennial.

millennials

Millennials are those ages 19 to 34. Numerous studies are showing that they are buying fewer cars, houses, electronics, and credit cards. Why is this? Being the group hit the hardest by the economy, they have less money than their parents did at the same age. In fact, the average worth of someone from the age 29 to 37  has dropped 21% over the last 30 years. What does this mean for food truck owners owners?

Millennials are eating out less and less. This young generation is watching their wallet, and being more cautious about their spending. However, with this change in spending, also has come a change in what in desirable in food trucks. Millennials want the new, unique, and authentic. Not that this group isn’t eating out, it just means they want something that other generations really haven’t been as worried about.

So what exactly is this group of 80 million prospective customers looking for when deciding where to eat?

Variety and Customization

Millennials demand choices and the ability to personalize their order. Millennials expect variety, more choices, customization and their ability to be able to personalize their food experience.

History and Background

Millennials want some substance behind where they eat. They like to know the story about the places they eat, they think it’s key to feed one’s heart in addition to one’s stomach when going out. This is a place where food trucks can take take advantage by providing the history of how the mobile business came about to be what it is.

Ingredients

Quality ingredients are an absolute must for the this generation. Millennials believe that they deserve the best and will not settle for anything less. Millennials want to know and trust the food they receive in return for their money.

Socially Responsible 

Another new trend with this demographic is connecting with companies and businesses that are socially responsible and trustworthy. The bottom line is if they can’t trust you to take care of the world outside your mobile business, let alone your own workers, then they won’t trust you to serve quality food.

Generation Y is the most dominant demographic today. However, just making your name known won’t guarantee they’ll step up to your service window. As you can see, it takes a lot of factors to grab their attention and their business.

Are you and your food truck appealing to the Millennials? We hope so.

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As a sports fan growing up in the Northern suburbs of Detroit, MI, I had the opportunity in the 70’s to latch onto a sport that had a relatively small niche following. The National Hockey League was available every Saturday evening via the CBC (Canadian Broadcasting Corporation) before the advent of cable television.

glowpuck

I would watch my home team Red Wings every chance I had and grew to love the sport even though, I didn’t play it. In the 80’s the league expanded and began to take teams out of small markets in Canada and the US rustbelt, and moved them to warmer parts of the country in an attempt to wrestle away viewers of the NBA and NFL. The league had some success in doing this, and went prime time when the NHL signed huge television contracts with ESPN and FOX Sports. What happened next was alien to me, but in an attempt to make the sport more palatable for the whole country, the NHL agreed with FOX, to allow a blue dot to follow the puck during play on their national television broadcasts. This trend quickly died, as long time fans, turned the channel in disgust, as they watched as their small niche sport make the move to the big time.

The ratings started to plummet enough that both ESPN and FOX dropped their weekly programming of hockey, why? Because the original fans stopped watching, and the trendy new blue puck wasn’t enough to keep the new fans. A new trend in the food truck industry has reminded me of hockey history, and if something isn’t done to protect it, we may see the equivalent of a blue dot following the food trucks in our industry.

Although food trucks have been in the United States (primarily NYC and Los Angeles) since the 70’s, the industry has reached new levels of prominence in the country over the last 3-5 years. The big turning point for the industry was this year’s inaugural season of Food Network’s “The Great Food Truck Race” which brought mobile cuisine to the national stage.

Food trucks are popping up in every region of the country, and more and more cities are legislating new ways to allow the industry within their limits. Yes, this is great for the mobile entrepreneurs who prefer to open up mobile dining vehicles as opposed to traditional brick and mortar establishments, but at the same time, large corporations are starting to look at the industry as a means to market for their already established restaurants. It has been reported over the last few months that companies such as Sizzler, Tasty D-Lite and Cousins Submarines are planning entry into the food truck industry. It appears, their marketing strategy isn’t to help the food truck industry, but to attract customers to their in-line restaurants.

I found out from the Wall Street Journal, that Aaron Webster, owner of three Tasti D-Lite stores in Houston, says he bought a used van last year for $90,000 from the frozen-dessert brand’s parent company. It’s complete with a small refrigerator, freezer, sinks, countertop, soft-serve machine, toppings bar and power generator. A bubble-gum pink exterior features the brand’s logo and website address.

Mr. Webster, a former investment banker, uses the van to sell ice cream mostly at community events and for catering jobs. He says mobile sales account for less than 2% of total revenues for his businesses but that the van is helping to raise brand awareness. “It’s really a roving billboard,” he says.

A roving billboard? Is that really where we want to see the industry head? Of course the National Restaurant Association opened up a measly 1,500 square feet of its annual show to food trucks in 2010, how else would they be able to show all of the national restaurant chains how they can expand their current stores?

Please don’t take this article the wrong way, expansion of the industry is a good thing, and healthy competition on the streets will help to maintain creative menus and innovative fare being served from food trucks. However, our concern is what the next step in this evolution may entail.

As it stands today, many cities already have limits on the number of licenses they issue to mobile food vendors, if these mega corporations delve into food trucks with the backing of their huge coffers of capital, where will that leave the small business owner who loves to cook, and has a new twist on burgers or tacos they wish to share? Will they have to wait 10 years before getting the proper license because Taco Bell or McDonalds already has fleets of 10 plus trucks rolling around each major market in the country? Will cities draw back from their current support of the industry because there are too many corporate applications being submitted for review and approval? Or even worse, will there be a backlash by the current followers of trucks such as Kogi BBQ, The Big Gay Ice Cream, or The Nom Nom Truck? Will these loyal fans turn their backs on the established trucks because of the onslaught of profit driven establishments that litter every corner of the public right of way?

I certainly hope not, however, if nothing is done to help protect against this, I am afraid in the next few years we may have our own version of the blue dot following our industry.

 

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The mobile food industry has quickly become an industry that spends most of its advertising and marketing time as mobile marketers. QR codes may be one of the hottest topics in the mobile marketing world today. They are becoming more popular with marketing firms, and in turn, the consumer base is catching on. If you’re still wondering what those funny black-and-white squares are, and what they’re for, here is a quick introduction.

MCM Facebook QR

QR code for MCM Facebook page

QR codes are an increasingly popular way of converting data like website addresses into an image that can be easily scanned. Thus, it’s possible to publish a website address in print, and readers can go to that address without having to type in the address.

Technically, QR codes are a specific type of 2D barcode that are similar to the UPC codes on your groceries or merchandise and the ISBN number codes you find on books.

Almost every smartphone today has a built in camera, and there are many QR code reader apps for all of the major platforms. You can generate your own QR codes at Google, bit.ly, Jumpscan, as well as many other sites. Users can have the camera on their phones scan a QR code from a print ad, a business card, or a computer screen. Once scanned, the scanner software on the phone will read the data and ask the user what to do — most likely, open the website address embedded in the code.

How can you use QR codes?

The variety of uses for QR codes are endless, they provide a seamless link between online and offline marketing which is a topic we have written a series of articles on this week.

According to a survey from MGH, mobile consumers are responding to the influx of popularity with QR codes, “32% of smartphone users say they have used a QR code and 70% say they would be interested to do so, either for the first time or again.”  Currently marketers in other industries are using QR Codes to offer promotional discounts (53%) and enter sweepstakes (33%).

Directing QR codes to Facebook Fan Page with an offline call to action, such as “Like us!” greatly increases social community followings and engagement. Directing users to a website could be a “one and done” solution. The hardest part is getting a user to scan the code. If that code directs to a website, maybe they will remember your brand later, and maybe they won’t. However why would you risk it? If they “Like” your companies Facebook page, they will be constantly updated on everything you so desire.

Are you thinking of unique ways to drive engagement that make sense for your food truck or cart? Here are a few ideas:

  • Twitter page
  • Facebook Place check ins
  • Customized landing pages
  • Facebook “Like” page
  • Coupon page

It is widely acknowledged that QR codes work to drive engagement, however as more marketers adopt this technology, it could flood the market. If this happens it would make the QR code less unique and exciting, so it is very important to set up an integrated QR campaign for your mobile food business as soon as possible. For those of you looking to use QR technology to increase brand retention, place your codes in an interesting location and direct them to a social page, you will reap the benefits later.

Getting someone to purchase a meal from a direct code may be a tall task. Whether it is the failure to adopt mobile commerce technology, or just simply the market isn’t there yet; increasing brand loyalty may be a better goal for your mobile marketing campaign. Think about placing codes around your service window, linking them to your social media page to continually be updated on news from your mobile eatery. Keeping a customer should always be a primary focus for any business, and generating new customers secondary.

Do you use QR codes already? What is the most intriguing use you’ve seen for these codes? Let us know!

 

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Dearborn, MI — One night each month, the streets of downtown Dearborn come alive with the one-of-a-kind tastes and the flavors of gourmet street food.

El Guapo Grill

Photo by: Ricardo Thomas / The Detroit News

The sizzle of hot dogs and smell of tacos pervade a stretch of West Village Road, where eight restaurants on wheels — and a live band — set up shop for a few hours to introduce their Mexican, Middle Eastern and American cuisine to a couple thousand customers. It’s a scene more common on a street corner of New York or Los Angeles than in suburban Detroit.

“When we come to town, people are curious about it and they come and check us out,” said William Anatra, as he served $2 hot dogs from a baby blue 1965 Volkswagen pickup dubbed Franks Anatra. “We’re like a circus.”

His mobile eatery is among a growing number of food trucks canvassing Metro Detroit. Food truck rallies similar to Dearborn’s have popped up in Royal Oak, Ferndale and Detroit’s Eastern Market and New Center.

Not too long ago, less than a handful of mobile restaurants were operating in the region; now more than a dozen food trucks are offering inexpensive gourmet grub and the number is expected to grow, observers say.

“At first I thought it was a fad but it seems to have staying power,” said Bonnie Riggs, a restaurant industry analyst with The NPD Group, a New York-based market research company. “It’s still pretty small in Michigan but it hasn’t gone away. You hear more and more about it growing.”
Find the entire article at the Detroit News <here>

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food truck start up cost

A common question we are asked by our readers relates to food truck start up cost. Due to varied factors that can be used to determine this answer, we typically provide a broad range of $40,000 – $250,000. While it technically answers the question, it’s still a bit broad for someone trying to determine if opening a food truck business is something they can afford, or something they need to get a loan for. Because of this, we have generated this chart to help those interested in joining the mobile food industry.

In the chart, you’ll find three areas; one time start up costs, re-occurring start up costs and costs that vary from area to area. Each of these sections is subdivided by three price ranges; $ = low, $$ = average and $$$ = high for each area.

While this guide should be used as a general group of ranges, it is helpful for those interested in finding how much starting up a food truck business can cost.

Food Truck Business Start Up Costs

$ $$ $$$
One time start-up costs
Purchasing your food truck 5000 25000 125000
Vehicle inspection 100 300 500
Retrofitting and/or bring the truck up to code 25000 40000 50000
Generator 1500 5000 10000
Register/POS System 150 1250 2500
Paint 1000 2000 3000
Truck wrap 2500 3500 5000
Initial food purchases 500 1250 2000
Utensils and paper goods 500 1000 3500
Website design 500 3500 7500
Initial office equipment and supplies 200 500 1000
Initial advertising and PR 500 750 1000
Professional, legal and consulting fees 500 2000 5000
Reoccurring start-up costs
Payroll 1500 2500 3500
Commercial kitchen/Commissary rent 500 1500 3000
Credit card processing equipment 50 150 500
Fuel 250 300 400
Start-up costs which vary by location
Permits and licensing  50  500  10000
Insurance  300 500  1000

Please note:

  • Prices shown are not set in stone, and can change without notice.
  • Prices shown in the reoccurring categories are for 1 week.
  • Prices shown which vary by location are for 1 month.

So what do you think about the cost to start a food truck?

cost to start a food truck

While is may seem like a steep price to start a food truck business, try to compare these costs to that of a brick and mortar restaurant. The high end prices in this chart don’t come close to comparing to starting a small quick service restaurant.

Be sure to keep an eye open for contests. In season three of The Great Food Truck Race, they gave away a food truck to the eventual winners. Talk about a great way to cut your food truck start up cost.

So how much were your food truck start up costs? Let us know in the comment section or drop us a line via our contact page if you would prefer to keep your food truck business start up cost a little more private.

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Business is so good for food truck manufacturer Armenco that the Spring Valley, California-based company is moving to a new factory this fall, where it expects to double its annual output of the rolling kitchens that have revolutionized urban street food in many U.S. cities in the last few years.

It’s one of perhaps a few dozen manufacturers around the country that specialize in retrofitting ordinary delivery vans with broilers, fryers and other cooking equipment. For more than a quarter century before the food truck craze, Armenco specialized in building the catering trucks that have long trolled construction sites and motion picture lots. Its business began to shift toward the more upscale mobile food emporiums in 2007, says Arthur Djahani, general manager of Armenco Cater Truck Manufacturing Co. Inc.

“Our clientele has changed as a result of the changing public perception,” Djahani says. The trucks “used to be known as ‘roach coaches’ with sub-pare fare,” he notes, but today they’ve captured urban imaginations and appetites with a wide array of ethic and gourmet offerings. His company’s customers are now “younger, hipper” entrepreneurs, he says, many with culinary school degrees and a strong grasp of social media.

Today’s food trucks can come equipped with upscale features ranging from touch screen menus, flat screen TVs, sound systems for creating the mood, GPS satellite linkups to help their customers find them, and free Wi-Fi for customers, Djahani says.

In the last year or so, demand has been so strong that Armenco hasn’t been able to stock enough new chassis to keep up with orders from independent chefs looking to break into the mobile cuisine business. Besides the truck outfitters, there are permit expediters, menu consultants, lawyers, lobbyists, website designers, marketing professionals, and phone app developers who have managed to expand their businesses thanks to the food truck phenomenon.

Both the food trucks and the minions of consultants and companies feeding off their rapid expansion are “giving people needing to find a new way of making a living a chance to break into a new industry,” says Richard R. Myrick, editor-in-chief of Mobile Cuisine Magazine. Myrick, an architect by training, started his online journal about a year ago after being laid off from a construction industry job. Since then, he’s chronicled the trucks’ rapid growth in the $604 billion a year restaurant industry.

Culinary schools in Florida, Virginia, and North Carolina have added mobile food courses to their curriculum, while other college campuses have added off-the-truck fare to the traditional cafeteria offerings.

For the first time last year, the National Restaurant Association included food trucks in its annual trade show.  Of the restaurant industry’s 70 different segments, it’s the single fastest growing component and one that chefs around the country say they expect to continue to be among the hottest trends.

“It’s definitely a long-term trend, not a fad,” says Hudson Riehle, senior vice president of the Research and Knowledge Group for the National Restaurant Association. It’s a view shared by restaurant rater Tim Zagat, of the Zagat Survey, which has also added food trucks in several cities to its restaurant rating publications.

Not everyone is gung-ho. There have been howls about unfair competition from brick-and-mortar restaurateurs in Chicago, Washington, D.C. and other cities. And it’s unclear whether the arrival of new food trucks on New York City’s sprawling street vendor scene has had a role in driving up the costs of vendors permits, which now run about $15,000 for a two-year period on the city’s black market, about double what they cost a few years ago, says Sean Basinski, director of the Street Vender Project that advocates for the city’s 10,000 mobile businesses, about half of which sell food.

But even Chicago restaurateur Glenn Keefer, a staunch critic of the trucks, say the mobile cuisine craze appears unstoppable.

“They are here to stay but the question is how they are going to be allowed to operate,” says Keefer, who has opposed the introduction of full-service food trucks in Chicago but is now pushing for strict regulations even as he prepares to get into the same business.

“Should it (a change in the law) come down, we’ll be out there with our trucks too,” says Keefer, a move that would follow restaurant chains such as Sizzler and Qdoba Mexican Grill that have already taken up an “if you can’t beat ’em join ’em” approach.

In fact, restaurant industry analysts say that rather than bucking the trend, brick and mortar restaurants increasingly are looking to gain market reach and heighten their public profile by putting their own mobile kitchens on the road. And retailers such as Crate + Barrel have hosted food truck nights in their parking lots on the theory that people who come out for the food may come inside to shop, Myrick says.

So far, most mobile food impresarios are independents offering a range of cuisines – Korean barbeque, giant burritos, lobster rolls – as well as a variety of price ranges and levels of quality control. But a couple of new companies, such as California-based Mobi Munch, Inc. and the Chestnut Ridge, N.Y. based Food Truck Franchise Group, are poised to bring the mores standardized franchise model to the business.

The two companies have another thing in common, too: Both are looking to take mobile cuisine beyond city limits and into suburban areas, onto military bases, colleges and corporate campuses, and big box store parking lots, where trucks can pedal their fare without worrying about traffic laws or provoking entrepreneurs like Keefer.

“Our premise is that the whole country’s got to eat. Under-served areas are a big market and with less conflict,” says Josh Tang, founder of Mobi Munch, which describes itself as “the nation’s first turn-key mobile food service platform.”

Mobi Munch custom builds its trucks for each client at a 100,000 square-foot manufacturing site in southern California that it purchased with some of the $7.6 million in venture capital funds raised last May, says Tang, who’s first big client is Qdoba, the Tex-Mex fast food chain. Tang says the company is also talking to other restaurant chains about how Mobi Much could help them reinvigorate their franchise operations at a time when many would-be franchisees are having trouble obtaining financing for sit-down establishments.

“We are able to provide a mobile franchise for as little as $40,000,” compared to the hundreds of thousands of dollars usually required to launch a restaurant, Tang says. “That way, they (the chains) preserve their franchise business and we are like the landlords,” making money by renting the food trucks and providing other services, he says.

The Food Truck Franchise Group, meanwhile, is focused on the other end of the franchise market: the small business people. The company has developed six different cuisine franchises including Italian and Tex-Mex and Sizzle Stix N’Burger menu options, says Robert Mytelka, a business consultant, who says he decided to get into the food truck business after helping his cousin launch Latin Burger & Taco, a Miami food truck operation. Given the country’s high unemployment, Mytelka says he saw an opportunity to help people who had been laid off as well as soldiers reentering the workforce after serving in Iraq and Afghanistan find opportunities to create their own futures.

“I wanted to see if we could create an easy way for a young entrepreneur to get into the food truck franchise with a minimal investment,” Mytelka says. He launched the business a few months ago and is still in start-up mode. The Group has already obtained operating licenses in about 45 states, hired a sales team, and expects to sell its first franchises within the next three months, he says.

For about $100,000, a franchisee gets a new food truck outfitted to prepare one of the six cuisines plus help with permitting, online worker training, establishing vending locations, and marketing using social media. The company has even developed a mobile app for messaging customers whenever one of its trucks is nearby. People can order online and have the food delivered, Mytelka says.

Find the entire article <here>

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A great debate over plastic containers and bulging landfills is growing throughout the mobile food industry, to the point that some cities are discussing and creating laws that prohibited these vendors from using Styrofoam containers.

Because of this, Mobile Cuisine Magazine wanted to share with our readers some information based on a new product has slipped into the marketplace: Bioplastics.

To take a dialog from the movie The Graduate, and make it fit better for this article we present…

Mr. McGuire: I just want to say one word to you. Just one word.
Benjamin: Yes, sir.
Mr. McGuire: Are you listening?
Benjamin: Yes, I am.
Mr. McGuire: Bioplastics.
Benjamin: Exactly how do you mean?

Made from renewable, raw materials, including corn, wheat, potatoes, beets and a variety of other plants, bioplastics have been on the drawing board since the mid-1980s. They are often referred to as PLAs, or polylactic acid, because this is what the plant matter is ultimately converted into. They are available in the form of containers, dishes, utensils and “plastic” bags.

The Advantages of Bioplastics

  • Producing bioplastics uses 65% less energy than it takes to produce petroleum-based plastics, making bioplastics the energy-efficient choice, hands down.
  • Bioplastics generate 68% fewer greenhouse gases than fossil-fuel-based plastics. Clearly, they are better for the environment.
  • Manufacturing petroleum-based plastics uses approximately 200,000 barrels of oil per day. Switching to bioplastics means being less dependent on foreign oil.
  • As they degrade, bioplastics will remain non-toxic and will not leach dangerous chemicals into the soil. This means they are safer.
  • The process of making bioplastics has finally become cost effective.
  • Bioplastics can be recycled and this is always good news. In fact, certain grassroots recycling organizations are very excited by the prospect of bioplastics.

The Disadvantages

Despite the fact that bioplastics are a great improvement over fossil-based fuels, they are not yet the perfect solution. Here’s why:

  • Most recycling centers are not set up to handle large amounts of PLA. Presently, PLA products cannot be recycled in conjunction with petroleum-based products, which means sorting is critical.
  • Bioplastics are “compostable,” but only under specific conditions. To biodegrade within 90 days, as described, the products have to reach 140° F for 10 consecutive days. This requires a special facility, which few consumers have access to. If your PLA products end up at the landfill, they will not degrade any faster than a petroleum-based product.
  • Planting corn for non-food uses is problematic for a number of reasons. Most corn planted for industrial uses is genetically modified, raising the question of the potential contamination of conventional crops. Soil erosion is another problem.
  • Plant-based bioplastics have a low melting point. This means that if you leave a corn-based take-away container in your car on a warm day, when you return you might find that it has melted into a small puddle.

The Cost of Convenience

The problem of landfills overflowing with non-biodegradable plastic bags and containers is growing. Some cities are passing the cost of convenience on to the customer in the form of a “plas tax,” whereby consumers pay a fixed amount for plastic bags. Reportedly, this has resulted in a 90% drop in consumption in those areas. But not all municipalities are in agreement with this approach. Either way, the best solution is to think of disposables as a luxury. Use them sparingly and try to rely on re-usable products as much as possible.

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