Blog / January 25, 2020
Breaking Down the Costs (And Benefits) of Starting A Food Truck
Food trucks are one of the trendiest ways for existing restaurants to build new revenue streams and gain exposure to a wider audience. Since 2014, the number of food trucks operating in the US has increased by 300%. In 2019, this portion of the industry was estimated to rake in over $2 billion. While many restaurateurs are tempted to think about adding a food truck to their operations (just like you might be, since you’re joining us for this blog post), the costs involved are not always understood. Here is a breakdown of the costs of launching a food truck and a guide to assessing whether it’s worth it for your business:
Sourcing a food tuckThe most obvious upfront expense is the truck itself. The amount you should expect to spend depends on how much you are going to be using it, how new it is, and how much revenue you expect the food truck to contribute to your business. If you’re only planning on using the truck for occasional events — say, for local festivals or holidays — then you might be better off getting a second-hand truck. This can cost you around $50,000. Older trucks that are purchased second hand will require more maintenance and repairs, so be prepared to budget $5,000 a year into keeping your truck in usable condition. If you want to use your truck regularly, you’ll ultimately save money on maintenance by investing more in a truck that is new or close to new (less than 3 years old). This will cost around $100,000, but ideally cost you less in the subsequent months and years. Keep in mind that repairs are costly not only in terms of direct maintenance, but in opportunity cost. A better-quality truck means less downtime during which the truck isn’t generating any revenue. For that reason, getting additional finance for a more expensive truck initially will save you money down the line if you use it most days.
The equipmentThe expense of kitting out your truck depends on what you’re going to sell out of it—and as the restaurant owner who knows your food best, you’re the best source for the cost of the equipment needed to create your food. Just to provide an industry benchmark, it’s estimated to cost a minimum of $10,000 to equip your food truck in a way that can meet basic food hygiene standards and produce hot food. This would be the expected price for a truck selling simple food like grilled sandwiches. For anything more complicated, this price would increase. When planning your food truck, you should design your menu to minimize the need for equipment that will only be used occasionally. Identify and select items you can make in bulk using minimal equipment. Customize your menu with additions and garnishes ahead of time to save money further.
Licensing and insuranceThere are several types of insurance you will need in order to sell food from a vehicle in a public place. They include:
- Commercial auto insurance to cover any theft or damage to your vehicle
- Business property insurance to cover damage or theft to the equipment in the vehicle
- Public liability insurance to cover any harm done to the public as a result of you selling food. This includes accidental poisonings or people getting injured by your truck
- Workers compensation insurance to cover any injuries to employees working the truck