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Written by: Carolyn Young
Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.
Edited by: David Lepeska
David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.
Published on November 3, 2021
Investment range
$48,200 - $207,300
Revenue potential
$300,000 - $1 million p.a.
Time to build
1 - 3 months
Profit potential
$23,000 - $82,000 p.a.
Industry trend
Growing
Commitment
Full-time
Here is what you need to know to start your food truck business successfully:
Starting a food truck business requires funds, time, and effort, not to mention a large set of wheels. Before you jump in, educate yourself to make sure this line of work is a good fit.
Every business has its pros and cons. You will need to weigh these factors to decide if starting a food truck business is your best choice.
Here are some basic pros and cons of starting and running a food truck business.
Pandemic-driven lockdowns set the industry back in the last two years, but it has begun to rebound as the economy reopens. Reliable recent data is hard to come by, but food trucks still offer tremendous opportunity.
An increased interest in gastronomy has fueled the industry’s growth. The food truck industry is witnessing a number of trends of late, from increasing event partnerships and offering healthier foods and more exotic cuisines, to providing wifi and more vegan options and meat-plant blends.
Trends in the food truck industry include:
Challenges in the food truck industry include:
Start-up costs for a food truck business range from as low as $50,000 to more than $200,000. The truck itself will be the largest investment you will make.
| Start-up Costs | Ballpark Range | Average |
|---|---|---|
| Setting up a business name and corporation | $200 - $200 | $200 |
| Licenses and permits | $200 - $300 | $250 |
| Insurance | $100 - $500 | $300 |
| Business cards and brochures | $200 - $300 | $250 |
| Website setup | $1,000 - $3,000 | $2,000 |
| Initial marketing costs | $200 - $500 | $350 |
| Food truck | $45,000 - $200,000 | $122,500 |
| Initial food inventory | $1,000 - $2,000 | $1,500 |
| Paper products | $300 - $500 | $400 |
| Total | $48,200 - $207,300 | $127,750 |
Your profit will vary depending on location, daily sales, and ongoing expenses, particularly employee pay. Other ongoing expenses include parking fees, event commissions, insurance, and marketing.
The prices you charge will largely depend on the food that you’re selling, but the average profit margin for a food truck is 6-9%.
The average annual revenue for a US food truck is $290,000. If you operate 6 days a week and can quickly reach $1,000 in daily sales, your annual revenue will be around $300,000. At a mid-range margin of 7.5%, you’ll see a profit of $23,000. If you work the food truck yourself for a reasonable amount of the time that it is open, your margin and profits can be higher.
As your truck builds a reputation, you might triple sales and end up with more than $1 million in annual revenue and $82,000 in profits, all while chasing your dream!
There are some barriers to entry for a food truck business. Your biggest challenges will be:
Now that you know what’s involved in starting a food truck business, it’s time to hone your idea to prepare for entry into a competitive market.
Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.
Since you have no track record in the business, you’ll need to find another way to stand out from the competition.
Research food trucks in your area, see what does well and what might be missing in your market. One trend is toward higher-end gourmet offerings, while another embraces dietary restrictions, such as vegetarian, vegan, and gluten- and lactose-free options. Once you have settled on a concept for your truck, you should test your recipes with friends and family.
After selecting and perfecting your main dishes, you should begin to think of complementary products to add to your menu. If your main dishes are shrimp and fish tacos, for instance, maybe you also offer guacamole, horchata, and elotes. Once you have solidified your menu, start promoting your truck by posting it on your website and across social media.
Prices will depend on what you sell. When people buy from a food truck, they tend to look for tasty, inexpensive dishes. But if you’re able to offer a unique, high-end, and high-quality product, you can command a premium price.
Research food trucks in your area to learn more about pricing in your market. Once you know your costs, you can use this Step By Step profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.
Your target market will depend on what you’re offering, and where. Choose your locations based on where you expect your target demographic to spend time. For example, if your main dish is vegan pizza, your main demographic is likely to be college students and twenty-somethings. The best place to park your truck might be near the local university or in a trendy arts and nightlife district.
This may take some trial and error to determine your ideal audience and the relevant locations to have your truck. After you get started, word-of-mouth referrals will be your biggest source of business.
Choosing the right location for your food truck is critical to your success. The right location can help you reach your target audience, boost sales, and create a strong brand image. Here are the factors to consider when choosing the best location for your food truck.
First and foremost, you need to understand your target audience. Who are your potential customers? What kind of food do you sell, and who is likely to buy it? For instance, if you sell healthy vegan meals, your potential customers may be fitness enthusiasts and health-conscious people. Understanding your target audience will help you determine where you should park your food truck.
Once you have identified your target audience, the next step is to research potential locations. Look for places where your potential customers are likely to be present. This could be near office complexes, schools, universities, parks, bustling shopping districts, or even events and festivals.
Foot traffic is crucial when it comes to selecting a location for your food truck. Locations with high foot traffic such as tourist attractions, busy streets, or popular parks increase your visibility and chances of getting customers.
Before deciding on a location, make sure you check local regulations regarding food trucks. Some cities have specific zones where food trucks are allowed to operate, while others may have restrictions on the hours of operation.
Check out the competition in the areas you’re considering. While it’s not a bad idea to be in an area with other food trucks or restaurants (as these areas attract foodies), you also don’t want to be in a place where you’re directly competing with a lot of similar cuisine.
Ensure there’s ample space for you to park your truck and that the location is easily accessible for both foot and vehicle traffic. Make sure there’s also enough room for customers to line up without blocking sidewalks, streets, or other businesses.
Consider locations that have access to amenities like public restrooms and seating areas. This can increase the comfort level for your customers and encourage them to stay longer, possibly increasing your sales.
After you’ve made a selection, don’t forget to keep evaluating your choice. You may need to try a few different spots before you find the one that works best for you. Also, consider rotating locations depending on the time of day, week, or season.
Your business name is your business identity, so choose one that encapsulates your objectives, services, and mission in just a few words. You probably want a name that’s short and easy to remember, since much of your business, and your initial business in particular, will come from word-of-mouth referrals.
Here are some ideas for brainstorming your food truck business name:
Discover over 370 unique food truck business name ideas here. If you want your business name to include specific keywords, you can also use our food truck business name generator. Just type in a few keywords and hit “generate” and you’ll have dozens of suggestions at your fingertips.
Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these.
Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.
Here are the key components of a business plan:
If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.
Registering your business is an absolutely crucial step — a prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.
Plus, registration is exciting because it makes the entire process official. Once it’s done, you have your own business!
Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as some states could offer real advantages when it comes to food trucks.
If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.
Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your food truck business will shape your taxes, personal liability, and registration requirements, so choose wisely.
Here are the main options:
We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization, and answer any questions you might have.
Choose Your State
The final step before you’re able to pay taxes is getting an Employer Identification Number, or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.
Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate on a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.
The IRS website also offers a tax-payers checklist, and taxes can be filed online.
It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.
Securing financing is your next step and there are plenty of ways to raise capital:
Bank and SBA loans are probably the best option, other than friends and family, for funding a food truck business. You might also try crowdfunding if you have an innovative concept.
Starting a food truck business requires obtaining a number of licenses and permits from local, state, and federal governments.
Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration (OSHA), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits.
You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more.
You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package. They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.
This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.
If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.
Before you begin making money, you will need to have somewhere to keep it, and that requires opening a bank account.
Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your food truck business as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer business account options, just inquire at your preferred bank to learn about rates and features.
But it is a good idea to look at a few options, as banks vary in terms of offerings, and you want to find the plan that works best for you. Once you choose your bank, you just need to bring your EIN (or Social Security Number if you decide on a sole proprietorship) and your articles of incorporation or other legal documentation that proves your business is registered.
Business insurance is an area that often gets overlooked but is vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business, and your life.
Here are some types of insurance to consider:
As opening day nears, prepare for launch by reviewing and improving some key elements of your business.
Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.
You may want to use industry-specific software such as Restaurant365, square, and toast for your accounting, HR, payments, customer management, and other processes.
Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.
You can create your own website using website builders. This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.
They are unlikely to find your website, however, unless you follow Search Engine Optimization (SEO) practices. These are steps that help pages rank higher in the results of top search engines like Google.
Here are some powerful marketing strategies for your future business:
Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your food truck meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire.
Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your food truck business could be:
You may not like to network or use personal connections for business gain. But your personal and professional networks likely offer considerable untapped business potential. Maybe that Facebook friend you met in college is now running a food truck business, or a LinkedIn contact of yours is connected to dozens of potential clients. Maybe your cousin or neighbor has been working in food trucks for years and can offer invaluable insight and industry connections.
The possibilities are endless, so it’s a good idea to review your personal and professional networks and reach out to those with possible links to or interest in food trucks. You’ll probably generate new customers or find companies with which you could establish a partnership. Online businesses might also consider affiliate marketing as a way to build relationships with potential partners and boost business.
Initially, you may not need to hire any employees if you start small, with a single truck and a business run out of your home. But as your business grows and you add more trucks, you will need to add employees for various job roles. The potential employees for a food truck business include:
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
You should consider creating a niche market for yourself at first by specializing in certain foods. This will jumpstart your word-of-mouth marketing within your niche market. As a food truck, however, you may not want to stick with one niche for long. You may want to expand your product offerings, particularly if you get more than one truck.
You’re now ready to start your food truck business. You might want to bookmark this page, just in case.
Some of the most profitable food trucks serve gourmet burgers, tacos, barbecue, sushi, and pizza. To be successful, you have to park your truck in high-foot-traffic areas.
When food trucks fail it is usually due to poor inventory management. They tend to order too much food and lose a lot of money when it goes to waste. Successful food trucks are managed efficiently and create an identity and food that people remember. They stand out from the competition.
The most popular types of food trucks are those that serve quick and convenient food items that are easy to eat on the go. Some of the most popular types of food trucks include those that serve burgers, tacos, sandwiches, pizza, and desserts.
One way is to offer unique and creative menu items that are not typically found at other food trucks. Another way is to focus on high-quality ingredients and preparation methods to make your food stand out.
Focus on creating an eye-catching design that reflects your brand and menu items. Consider using bright colors, bold graphics, and signage to make your truck stand out.
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