Mobile food vendors often focus on profitability without much regard for where exactly their food truck profit is coming from. Running a profitable food truck should be looked at like a stock broker. Vendors must diversify to minimize risk. You may have a great concept, some popular menu items, and a decent lunch rush. Great! But your profits could be better, and your mobile food business more resilient, if you take the time to diversify.
Know Where Your Food Truck Profit Comes From
Slicing and dicing your food truck income statement to understand how income breaks down by menu item can help you make better decisions about how to price products, where to invest resources, and perhaps when to cut costs.
Identify your profit-leading menu items and be sure you’re making the right choices with which items stay on or are removed from your menu. Find out which items aren’t making you money and why. As a food truck owner you can do this by approximation if your accounting systems aren’t sophisticated enough to cut through the minutia. If your mobile food business has an extensive list of rotating menu items, break them down into categories that will make this type of measurement easier.
Calculating Food Truck Profit
Understanding how to define and calculates profit is important because profit is necessary for your business to grow.
So what is the profit the calculation formula? The simplest food truck profit formula is:
Total Revenue – Total Expenses = Profit
But it’s important to ensure that you have all the revenues totaled as well as include all the expenses: it’s easy to overlook some of the costs.
Please Note: Remember that increased profit doesn’t always lead to increased profit margins. Understand the difference between profit and profit margin and realize which one serves as a better measurement for understanding costs.
The Bottom Line
Food truck profit drives your business success and growth in the food truck industry. Calculate profit as part of your overall business performance measurement. Without profits, why are you in business?