How to Start a Food Truck Business

Food trucks suddenly seem to be everywhere, popping at festivals and street fairs, outside office buildings, in parks, and all around the neighborhood. If you’re a chef and want to get into the restaurant industry but can’t afford to build out your own space, a food truck could be the perfect fit.

Starting any kind of business, however, takes a lot of work. The key is to have the knowledge that you need before you start so that you avoid the usual pitfalls. Then, to ensure a successful business, move patiently through the development and launch process detailed in this step-by-step guide.

Step 1: Decide if the Business Is Right for You

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.

Pros and cons

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.

Food truck industry trends

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.

Industry size and growth

• Industry size and past growth – US government-run advisory Food Truck Nation estimates that food truck revenue hit $2.7 billion in 2017, tripling from just three years prior.((https://www.foodtrucknation.us)) Since then, the industry has grown 6% on average per year, according to market analyst IBISWorld. ((https://www.ibisworld.com/industry-statistics/market-size/food-trucks-united-states/))  
• Growth forecast – IBISWorld expects the food truck industry to grow at least 3% in 2022. Globally, the market is predicted to expand around 7% annually through 2028.((https://www.grandviewresearch.com/industry-analysis/food-trucks-market-report))
• Number of businesses – There are more than 35,000 food truck businesses in the US.((https://www.ibisworld.com/industry-statistics/number-of-businesses/food-trucks-united-states/)) 
• Number of people employed – The industry employs more than 40,000 people.((https://www.ibisworld.com/industry-statistics/employment/food-trucks-united-states/))

Trends and challenges

Trends in the food truck industry include:

• Increasing consumer preference for organic, all-natural, and sustainably sourced foods
• Higher demand for vegan, gluten-free options, and meat-plant blends

Challenges in the food truck industry include:

• Regulatory compliance
• High level of competition

Demand hotspots

• Best cities – The cities with the lowest average cost of permits and least restrictive for food trucks are Portland (Oregon), Denver (Colorado), and Orlando (Florida).((https://www.zippia.com/advice/food-truck-statistics/))
• Worst cities – The most difficult cities for food trucks are Boston (Massachusetts), Washington D.C., and San Francisco (California).

What kind of people work in food trucks?

• Gender – 76% of cooking chefs are male, while 24% are female.((https://www.zippia.com/cooking-chef-jobs/demographics/#gender-statistics))
• Average level of education – 31% of cooking chefs hold an associate degree and 30% have a high school diploma.((https://www.zippia.com/cooking-chef-jobs/education/))
• Average age – The average age of a cooking chef is 40 years old.((https://www.zippia.com/cooking-chef-jobs/demographics/#age-statistics))

How much does it cost to start a food truck business?

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

How much can you earn from a food truck business?

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!

What barriers to entry are there?

There are some barriers to entry for a food truck business. Your biggest challenges will be:

• Hitting on a strong concept to stand out from the competition
• The huge expense of the truck
• There are several licenses and permits required, and mobile vending laws to follow
• Food storage is limited, so transporting food supplies is a continuous challenge

Step 2: Hone Your Idea

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.

Why? Identify an opportunity

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.

What? Determine your products (food truck menu)

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.

How much should you charge for food truck services?

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.

Who? Identify your target 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.

Where? Choose a food track location

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.

Understand Your Target Audience

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.

Research Potential Locations

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

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.

Check Local Regulations

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.

Competition

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.

Parking and Accessibility

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.

Availability of Amenities

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.

Experiment and Adapt

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.

Step 3: Brainstorm a Food Truck Name

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:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords in the name, such as “truck” or “tacos”, boosts SEO
• Choose a name that allows for expansion: “The Rolling Kitchen” rather than “Pizza Pit Stop”
• Avoid location-based names that might hinder future expansion
• Use online tools like the Step by Step 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.

Step 4: Create a Food Truck Business Plan

Every business needs a plan, a rough outline that helps guide a startup through the launch process while maintaining focus on key goals. A business plan is also crucial for helping potential partners and investors understand your company and vision:

• Executive Summary: A brief overview outlining the food truck business plan, highlighting key points like business concept, goals, and potential for success.
• Business Overview: A concise description of the food truck venture, including its mission, vision, target market, and location.
• Product and Services: Details about the specific food offerings and services provided by the food truck, emphasizing uniqueness and customer appeal.
• Market Analysis: Examination of the target market, including demographics, trends, and potential demand for the food truck’s offerings.
• Competitive Analysis: Evaluation of competitors in the food truck industry, identifying strengths, weaknesses, and opportunities to gain a competitive edge.
• Sales and Marketing: Strategies for promoting and selling the food truck’s products, encompassing pricing, promotion, and distribution channels.
• Management Team: Introduction of the key individuals involved in the food truck business, highlighting their skills and roles.
• Operations Plan: A detailed outline of day-to-day operations, covering aspects like location, equipment, suppliers, and staffing for the food truck.
• Financial Plan: Financial projections, including startup costs, revenue forecasts, and profit margins, providing a comprehensive view of the business’s financial viability.
• Appendix: Additional supporting documents or information, such as permits, licenses, resumes of key team members, and any other relevant materials.

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.

Step 5: Register Your Business

Plus, registration is exciting because it makes the entire process official. Once it’s done, you have your own business!

Choose where to register your company

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. 

Choose your business structure

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:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC, which just need to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

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.

Step 6: Register for Taxes

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.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans: This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans: The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan.
• Government grants: A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Friends and Family: Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding: Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal: Self-fund your business via your savings or the sale of property or other assets.

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.

Step 8: Apply for Food Truck Business Licenses and Permits

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.

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.

Step 9: Open a Business Bank Account

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.

Step 10: Get Business Insurance

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:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

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.

Accounting

• Popular web-based accounting programs for smaller businesses include Quickbooks, Freshbooks, and Xero.
• If you are unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

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. 

Marketing

For your food truck business, the marketing strategy should focus on showcasing the unique flavors and culinary experiences you offer, the quality and freshness of your ingredients, and the mobility and convenience of your service. Emphasize your food truck’s ability to bring delicious, diverse, and accessible food options directly to customers in various locations. Here are some powerful marketing strategies for your future business:

Kickstart Marketing

• Professional Branding: Your branding should convey the theme and personality of your food truck, reflected in your truck design, logo, menu, and online presence.
• Direct Outreach: Network with local businesses, event organizers, and community groups to find lucrative spots and opportunities for catering events, festivals, and private functions.

Digital Presence and Online Marketing

• Professional Website and SEO: Develop a simple but effective website that features your menu, location schedule, and catering information. Use SEO best practices to enhance your visibility for local searches related to food trucks and street food in your area.
• Social Media Engagement: Utilize platforms like Instagram and Facebook to share mouth-watering images of your food, update followers on your truck’s location, and promote special events or menu items.

Content Marketing and Engagement

• Food Blog: Share engaging content about your culinary journey, the stories behind your dishes, and the local food scene. This can help build a deeper connection with your audience.
• Email Newsletters: Keep your customers informed about your weekly schedule, new menu items, and special promotions through regular newsletters.
• User-Generated Content: Encourage customers to post photos of your food on social media and tag your truck, creating organic engagement and buzz.

Experiential and In-Person Engagements

• Participation in Local Events: Regularly participate in food truck rallies, local festivals, and community events to gain exposure and build a loyal customer base.
• Pop-Up Collaborations: Collaborate with local breweries, markets, or other businesses for pop-up events, expanding your reach to their clientele.

Collaborations and Community

• Partnerships with Local Businesses: Forge relationships with local suppliers, venues, and complementary businesses for cross-promotional opportunities.
• Community Involvement: Engage in local charitable events or sponsor community activities, aligning your brand with good causes.

Customer Relationship and Loyalty Programs

• Loyalty Cards or Rewards: Implement a loyalty program offering discounts or a free meal after a certain number of purchases.
• Customer Feedback Initiatives: Actively seek customer feedback to continuously improve your menu and service, showing customers that their opinions matter.

Promotions and Advertising

• Targeted Local Advertising: Utilize local online platforms, community boards, and partnerships with local influencers or food bloggers to reach potential customers.
• Seasonal and Themed Promotions: Create special menu items or themed events tied to holidays, seasons, or local happenings to keep your offerings fresh and exciting.

Focus on USPs

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:

• A unique dish found nowhere else
• All locally-sourced ingredients
• An impressive culinary background
• Speed and accuracy of service

Networking

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.

Step 12: Build Your Team

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:

• Office Manager
• Cooks & Cashiers
• Marketing Lead
• Truck Maintenance

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.

Step 13: Run a Food Truck Business – Start Making Money!

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.