Food trucks have been around for decades, but they were once known for offering only basic, and often unhealthy fare as a convenience in places where food options were limited. Now, food trucks often offer specialty cuisine and are growing exponentially in popularity.
Food trucks are attracting “foodies,” and often go beyond selling food from the truck. Successful food truck operations often have a business model that includes catering events and weddings to setting up at high traffic venues like sporting events, festivals, and outdoor concerts.
If you are considering opening a food truck, a solid business plan is a necessity. Not only is a business plan necessary for any financing your business might need, but it is also an important document to help you keep track of the things you must do to operate a successful food truck business.
What goes into a successful food truck business plan?
- Permits and licenses—local governments have strict requirements for food service, and you need to know the ins and outs of the requirements before you equip your food truck or cart. Contact your local government to understand what permits and licenses you will need and how to go about getting them. The process can be arduous in some major cities, so anticipate obstacles.
- Purchasing the food truck—be aware that health departments hold food trucks to the same standards as restaurants, making it expensive to buy a fully equipped truck. Before taking this step, you will need to know how large your budget for the startup is, and what type of food you plan to sell. The kind of food served will determine the size of the truck and the type of equipment needed to meet your business model goals.
- Define your niche—to be competitive in the food truck business, and you will need to have something special or unique. Do not plan on selling authentic tacos in an area oversaturated with taco trucks. Instead, focus on bringing a unique twist to standard cuisine or selling a specialized product. Will you have a signature item? If so, is there enough demand? It pays to do in-depth market research before finalizing your business plan.
- Price insurance—as your restaurant will be on wheels, your insurance costs will be high. The costs of coverage will depend on geographic location, the amount of insurance required by your lender, and the driving record of anyone listed on the policy.
- Establish parking—you will need a plan for parking your food truck, both during operating hours and where you can safely park it during the off-hours. Some cities are very strict about where food trucks can be parked, while other municipalities are more relaxed. You need a plan for parking safely during and after business hours.
- Name your food truck business and expand the business’s social media profile—you need to utilize the free advertising of generating social media interest. Advertising is a significant cost associated with opening any new business, so work on providing as much free advertising as possible by documenting your food truck journey on social media. You want to have crowds lined up during your first days of business so that you can quickly take advantage of word-of-mouth advertising as well.
- Secure your financing—Once you have priced the truck, equipment, insurance, and the costs associated with parking, employees, and advertising, then you should be able to complete a professional business plan and seek financing. To ensure the success of your business plan, be prepared by having well-documented market research and how much money you can personally invest.
Take your business plan, bank records to establish your own solvency and know your credit score. Traditional financing through lending institutions will provide the best terms, but they often operate under strict lending practices for small businesses. Credit unions and other small lenders often have more latitude in their lending practices. If you still do not qualify, consider alternative means of financing, such as taking on investors.