So, you’ve watched a few episodes of The Great Food Truck Race and now you want to open your own mobile food business but before you start investing too much time and money into this dream, you need to know things like, “Are food trucks profitable?”
Are Food Trucks Profitable?
The first thing you need to do to begin answering this question is understanding the simple equation of total of expenses divided by average entree cost, which gives you the amount of meals you need to sell to break even every month.
Let’s say you have $10,000 of expenses and want to average $8.00 per entree. This means you need 50 dishes a day, 25 days a month. Sounds easy, huh? We haven’t even included drinks, side dishes or desserts yet. So what do you think? Are food trucks profitable?
Well, hold on before you jump in and answer the question there are few more costs involved. In addition to the $120,000 in operational expenses ($10K x 12 months) you will have to include your start-up costs.
Additional Start-up Costs
- How much is the truck you are going to work in?
- Does the equipment in the truck’s kitchen work properly?
- Does the truck have a working generator?
- Will the truck you buy meet local health code, or are you going to have to spend money to get it approved by the city?
- How much is licensing to operate a mobile food business in each municipality you plan to work in?
- How much will it cost to get your truck wrapped so it properly explains your brand?
- Are you going to spend any money on marketing your new business?
- Are you going to be working alone or do you have to hire employees right off the bat?
- How much will it cost to hire legal and accounting help to get your business registered?
- How much do you need in the bank when you start to make sure you have at 6 months’ worth in reserve?
The list can go on and on, but if you leave those items out of the equation, you may answer the “Are food trucks profitable?” question without all of the data needed to come to the correct answer.
Now don’t get too too discouraged. Once you begin the process of laying out your business plan financial section you can start working on ways to reduce your operating and start-up costs.
Assess Your Options
There are pros and cons of most start-up situations; here’s what to think about so you can assess your options when answering, Are Food Trucks Profitable?
- Should I buy a new truck which comes with everything new?
- Should I buy an existing food truck and save on start-up costs?
- Are there opportunities to keep the operational and start-up costs down?
If you go full out, buy a new food truck with all new high end equipment and technology, you’re looking at about $250,000 in operating capital and start-up costs. If you go the other route and get extremely frugal and able to do some of the build out work yourself, you can probably get away with $50,000 to $75,000.
The Bottom Line
If this still sounds way too aggressive for you, then you may need to re-think things. Instead of just street vending, you will have to include frequent evening and weekend food truck events and catering to supplement your revenue.
So what do you think? Are food trucks profitable? Have they been for you? We’d love to hear your story. Share your thoughts on this topic in the comment section, our food truck forum or social media. Twitter |Facebook.