By Stephanie Raimbert
The food truck businesses are distinctively set up to persist during the COVID-19 crisis. They have a perfect model, given the current climate and the perceived future of restaurants. Food trucks offer the nearby convenience of hot food pick-up options and customer safety, especially in communities that have fewer food options.
COVID-19 Impact on Food Trucks
“Pivoting is part of food truck life,” says B.J. Lofback is owner of Nashville’s Funk Seoul Brother. “The fundamental idea with food trucking is to go where people are,” he explains. He focused on neighborhoods with clubhouses and pool parking lots. It worked. “People are thrilled.” According to Forbes, some food trucks are striking deals with essential businesses to let them park in their lots, while other trucks are parking along highways and rest stops. With roadside restaurants shut, many truck drivers are without places to grab a hot meal on the road.
In April, the Federal Highway Administration gave states the option to issue permits for food trucks along highway rest areas. For essential workers hauling across the country, it’s been a welcome sight seeing a food truck on the barren highways. Many trucks are pitching in on aid relief, pivoting to offer their services to hospitals and essential workers. With thousands of workers pushing through long shifts, food trucks are happy to step in with a warm meal.
However, the food truck industry is struggling after being excluded from the first round of Paycheck Protection Program (“PPP”) and Economic Injury Disaster Loan (“EIDL”) funding. In response, trucks are setting up GoFundMe campaigns to pull in money and they can feed essential workers. In addition, National Food Truck Association launched an app, BestFoodTrucks, to support food trucks and help connect customers with trucks near them. This app allows customers to order directly from the app and skip the line without waiting near other people. The demand is definitely getting bigger since COVID-19 started and the food truck industry is gradually growing enough to hopefully weather the current storm.
Food Truck Business – Advantages & Challenges
Primarily, it is best to lay out the advantages and challenges of a food truck business before going further to discuss the steps on how to start one. As stated by Business News Daily, the three main advantages of a food truck business are business ownership, freedom, and mobility. For business ownership, there are many tax advantages which provide relief on the tax front. The freedoms you enjoy as a food truck business are choosing menu items, the vendors you want to purchase from, your employees, and the events at which you want to vend. Lastly, being able to bring your business to different locations based on demand during different periods of the day, days of the week, and months is a huge advantage.
On the other hand, there comes challenges for a food truck business as well. The three challenges are time, competition and market, and ordinances and zoning. Firstly, long hours are the norm with a food truck business with shopping, prepping, marketing, event booking, cleaning, truck maintenance, accounting and tax obligations, etc. Running such a business is more than a full-time job. Secondly, by carefully researching your market to increase the change of success, you will most likely have competition with other food trucks. Thirdly, every area is different in terms of where you can park your food truck and how long you can park there. It is critical that the food truck owner knows the rules in each location where you plan on operating to avoid any tickets and fines.
How to Start a Food Truck Business
There is a lot of planning and preparation required before starting on the steps on how to launch a food truck business. Some critical actions are required first according to Fundera. Firstly, you need to write a business plan to attract investors, gain funding, and get your business running. By thinking out your long-term plan ahead of time, you’ll have a guide to follow as you continue through the process of starting your food truck. Secondly, you need to choose your business legal structure. Will you operate as a sole proprietorship or a partnership? A business attorney or online legal service may be useful in helping you make this decision. Thirdly, you need to register your business. Once you’ve determined your legal structure, you’ll want to register your business name, if necessary, as well as register for federal, state, and local taxes. You’ll likely need to get an EIN, or employee identification number, from the IRS. Lastly, you need to open a business bank account to separate your business and personal finances. This account will be the base for you to manage and organize your funds as you go through the process of starting a food truck.
Once this process is complete, there are seven steps to follow on how to start a food truck business.
Step 1: Food Truck Upfront costs and Finding a Truck
Initially, you’ll need to think about the upfront costs to start a food truck business which can be difficult to estimate at first. However, there are costs you need to consider such as: (1) ingredients ; (2) salary and benefits for employees; (3) insurance; (4) technology to operate your truck; (5) marketing and advertising, and (6) professional, legal, or consulting fees if necessary.
As for finding the right truck for your business, this can be the most critical and expensive initial expense, estimating between $15,000 and $40,000. You’ll likely need to see different layout options to get it custom made to fit your needs or look online for a truck for sale.
Also, don’t forget local fire and health regulation licenses and permits and recurring costs such as payroll, equipment rental, credit card processing, fuel, and maintenance of the truck. Keep in mind that all these costs vary by location. Overall, the total costs of starting a food truck business can range from $28,000 to $114,000 depending on your location and situation.
Step 2: Food Truck Permits and Regulations
Subsequently, once you have chosen the city and state, there are a few things to consider for necessary permits, licenses, and regulations according to Business News Daily. Keep in mind that this process may take time and will also likely include fees and proof of a health department permit, tax certification, and liability coverage.
● Food safety permit: You must get approved by the Board of Health by complying with local food safety requirements, just like other restaurants in the area. For more information on what Board of Health regulations you need to follow, click here.
● Seller’s permit: Some states require food truck owners to apply for a seller's permit, which allows you to purchase food and equipment at wholesale prices without incurring sales tax.
● Zoning and parking: There may be restrictions on where you can park your truck; make sure you research that before setting up your shop. There could be commercial versus noncommercial zoning restrictions, parking time limits or distance restrictions from other establishments. Your city and local motor vehicle department can help you.
● Vehicle license: Because your business operates from a vehicle, every driver must be properly licensed and trained to operate the vehicle. Depending on your state and the size of your vehicle, you may have to obtain a commercial driver's license to legally operate the food truck.
● Fire certificates: If you're using equipment on the truck to cook food, you will likely need to undergo a fire department inspection. The requirements for a fire certificate vary state by state.
● Business permits and licenses: As with any business, you'll need certain licenses to operate your food truck, including a DBA and a state sales tax permit, which is low-priced and easy to obtain.
Step 3: Best Food Menu and Employees
Fundamental parts of starting a food truck business are deciding what kind of food you’re going to make and sell, how that process will work, what you’ll need, and what your menu will look like. In addition, you’ll want to decide whether it’s best to prepare food ahead of time before going around in the food truck or if you can feasibly prepare everything on site. Most importantly, you should perfect your recipes and make sure the food on your menu is tasty and easy to serve and to eat.
When you have your best food menu settled, you’ll want to consider hiring staff depending on your food, process, and the demand you may face. First, you might want to consider your inner circle such as your friends and family. If your business rapidly grows, some part-time or full-time employees will likely be helpful. Make sure each of your employees acquires a mobile food vendor badge in order to legally work and serve food in your truck. This takes about four months to process.
Step 4: Where to Park?
One of the advantages (and also challenges) of starting a food truck business is being movable. You have the ability to go to where customers are located. However, the challenge to this is the restrictions around parking your food truck which largely depends on your location. Make sure to do some research on areas where you can and cannot park your truck as you can end up paying some hefty fines. Once you understand where you can and cannot park your food truck, you can tactically think about the best places where you can park to attract and serve customers.
Step 5: Marketing and Advertising Your Food Truck
Once you figure out the best place to park your food truck, the next step is marketing and advertising. Marketing techniques such as a “grand opening”, a website, creating social media accounts, as well as advertising around the local community, will help draw attention and customers. In order to build up a loyal customer base, you should keep your customers aware and up-to-date on where your food truck will be by establishing a set schedule preferably on a weekly basis as best you can on your website and/or social media accounts.
Step 6: A Point of Sale (POS) System
After you established your food truck brand with good marketing and advertising, you’ll want to invest in a Point of Sale (POS) System. A food truck POS system is a software that can record orders and accept payments for a food truck. It typically combines a payment processing center, inventory management features, and basic sales-related analytics. With a food truck POS system, you’ll be able to manage orders faster by accepting payments including debit cards, credit cards, or Apply Pay as well as track inventory and create loyalty programs, especially when your food truck experiences a rush of customers. There is an assortment of POS systems on the market designed uniquely for food trucks; you should make sure to select the best POS system for your food truck. For more information on the best POS system, click here.
Step 7: Long-Term Strategy
Lastly, you should strongly consider creating a long-term strategy for your food truck business. One key element to consider is always trying to perfect your day-to-day plan by planning ahead of time to maximize your time and business.
Once you accomplish the steps above on how to start a food truck, it is vital to continue to maintain your business running efficiently. This is always easier said than done. Keeping a food truck business running successfully is going to take substantial time, effort, and investment. Good luck!
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