Food trucks abound on small-town street corners and big-city blocks, selling everything from fancy French crepes to Thai street dishes. If you love your community, appreciate flexibility, and don’t have a large down payment, then becoming a food truck entrepreneur could be right for you. Food truck startup costs tend to be lower than a traditional restaurant, so keep reading to find out exactly how to get started. You’ll need to write a business plan; get funding, permitting, and licensing; purchase a truck and food, and determine your total costs to get your truck up and running.
Early Decisions When Starting a Food Truck Business
Making key decisions early will help guide you along the rest of the business setup process. Get started on the right track by taking these elements into consideration when launching your business.
- Food Truck vs. Food Trailer. When it comes to starting a food truck business, you have the option of running your kitchen out of a truck or a trailer. Trailers are less expensive but are smaller and require a separate vehicle to move them. Trucks are more expensive but more mobile, and they usually have more room. Keep in mind that the motor vehicle you choose will impact your parking options.
- Type of Food. A food truck business is going to be all about the food. Because prep and cooking space is pretty limited, your menu should be simple. But that doesn’t mean the food is boring – in fact, curating a menu for a food truck is all about finding your niche and sticking to it. Whether you’re offering breakfast sandwiches, poke bowls, or grilled cheese sandwiches out of your mobile commercial kitchen, it should be a straightforward and exciting menu that works for you and your customers. Food cost is important, too; you want to make a profit, but not turn off potential customers due to high prices.
- Parking. Unlike running a traditional brick-and-mortar restaurant, you’ll likely have more than one location for your business. Many factors will go into where you decide to park your food truck on any given day. Some cities, such as Los Angeles, Portland, and Austin, have dedicated food truck parks. Other cities reserve parking lots near business districts for the lunchtime rush. In other areas, it’s common to spot rotating food trucks near bars or breweries that don’t offer food.
After you’ve made these early decisions, follow the steps below, starting with writing your business plan.
1. Draft Your Business Plan.
Writing your business plan will force you to confront the main challenge of owning a business: money. How much startup funding will you need? How long will it take you to recoup the initial costs? Who will be in charge of the administration of the business, such as payroll, taxes, and accounting? What are your future plans for expansion?
The truth is that you’ll edit and refine your business plan as you do the research detailed in the other steps in this guide. That said, you should complete your plan entirely before spending a single dollar.
Here’s an overview of what you’ll need to include in a solid business plan:
- Executive Summary. This is not the place for your financials, but instead a high-level overview that includes your product or service, the competitive landscape, and what makes your product or service rise above the rest.
- Company Description. Here’s where you want to include your mission statement, your legal structure, and list any partners.
- Market Analysis. This important section is where you give an industry overview, describe where your product or service fits in and how it differentiates itself from the competition, and the details of your marketing strategy.
- Organization and Management. This is a table or listing of the management team that includes a description of their role, their salary, and their responsibilities and qualifications.
- Service or Product. Here you want to describe your food truck business in detail. Include what you sell, your audience, your business model, pricing structure, and more. At the most basic level, you need to make sure that the cost to make one food item is less than the selling price of one food item. This is the nuts and bolts of your business!
- Marketing and Sales. Take a moment to discuss your marketing strategy and growth goals here. Who is in charge of marketing and sales? How much will you allocate towards these strategies? Will you use social media marketing, or something else?
- Financial Analysis. Make sure to include your cash flow and income statements here, as well as budget and cash flow forecasts. Financial projections work in this section, too. If you need financing, be sure to note the size of the business loan you’re looking for.
- Funding Request. Here’s the section where you ask for the funding you need to get your food truck up and running. Remember to explain how you will use the money both now and in the future.
Take a look a How to Write a Business Plan That Will Get You a Loan for more details on each section.
One final note: remember that a business plan isn’t the only thing lenders look at when deciding whether or not to offer you a loan. Banks will also usually check your credit history, current credit score, whether you have any personal loans, whether you already have any relevant food safety certifications, and more.
2. Determine your Local Board of Health Requirements.
Now that you’ve written your business plan, it’s time to determine health department requirements for you to join the food industry.
The Board of Health has food safety requirements for food trucks and their kitchen equipment just as it has requirements for restaurants. Before you invest too much time and money in menus and infrastructure, learn those requirements. They will vary state to state and city to city, but here are some example requirements:
- Proof of ownership, identification, and license of the vehicle
- Proof of Food Manager Identification Card
- Food is stored and kept at the proper temperature
- Records of food/ingredients purchase
- Health and fire code compliance
- Submission of a to-scale drawing of food truck layout, including all equipment
- Licensing fees
- Plan review fees
- Pre-operational inspection by a Health Inspector
- Eating and Drinking license
- Planning and Zoning license
- Submission of food served and planned schedule
- Storage location restrictions
- Preparation location restrictions
- Cleaning location restrictions
Knowing your local board of health requirements will help you better prepare the layout, equipment, and suppliers for your food truck business. For example, if you’re not allowed to wash dishes in a home kitchen, you must locate a licensed commissary kitchen or equip your truck with the necessary dishwashing facilities.
Be sure to write down any fees as you do research and put them into your food truck business plan.
3. Apply for Necessary Permits and Licenses.
Once you understand the requirements of the food truck industry, it’s time to apply for the necessary business licenses. While this process varies greatly from city to city, completing the requirements involves an average of 45 separate government-mandated procedures that take 37 business days to complete.
Be aware that some cities only allow a limited number of food truck owners to operate at any given time, so you may not be able to launch your business when you initially plan. Be sure to review your city’s requirements and take that level of uncertainty into account.
As mentioned above, the permits required will most likely vary by city and state. That said, you’ll usually need the following six permits:
1. Business License
There are a variety of business licenses one must acquire. As a food truck owner, you will likely need:
- Doing Business As
- A Doing Business As (DBA) name isn’t required, but if you plan to run your business by using a different name than your own, then having one helps. Once a DBA has been registered, your company is allowed to conduct business transactions and even open a business bank account under the company name.
- General Business Operation License
- This license permits companies to conduct business in their city or state. Nearly every business is required to have one, as it allows the state to track the business’s activity.
- Sales Tax License
- A sales tax license is required for any small business selling taxable products. If fast food is fast-free in your state, you probably won’t need this license.
2. Employer Identification Number (EIN)
Relative to some of these other requirements, getting an EIN is simple. When you’re ready to learn more or take steps towards getting your own EIN, read Guidant’s three-part series on EINs.
3. Food Service License
To operate your food truck, you’ll need a food service license. The easiest way to find out how to process your application is to visit your county’s licensing page. For example, for King County, Washington state’s largest county, you can apply online for a mobile food establishment license.
4. Vehicle License
This may seem like an obvious one, but because your business is vehicle-based, all drivers of the vehicle must be properly licensed.
5. Employee Health Permit
An employee health permit is also known as a food handler’s permit (or card) and requires that you pass a health and safety course for food preparation in a commercial setting. Food storage, cooking temperatures, and cleaning practices are key components of food handling. The U.S. Food and Drug Administration website is a handy resource you should keep bookmarked for more details on food handler’s permits. If you’re in King County, you can get started with your food handler’s permit by visiting their website and signing up for a class.
6. Mobile Food Facility Permit
This permit is specific to being a mobile unit, as suggested by its name. Again, you can visit your local county website to find out how to obtain the necessary permit that allows you to do business as a food truck operator.
7. Zoning and Parking Permit
Certain areas of cities have restrictions about the types of activities and buildings allowed there. Zoning permits are for any business that operates outside of their home and confirm that the company is allowed to do business at a specific location. In the case of food trucks, it also confirms that owners are allowed to park their trucks in specific locations, too.
4. Build Your Food Truck Brand.
Building a strong brand is one of the most vital pieces to a business, and one of the most underrated. When building your brand, take the time to create the following things:
- A unique business name. Customers should know exactly what you sell just my reading your name.
- A unique business logo. Like your name, customers should be able to look at your logo and understand not only what you sell, but what your unique take on it is.
- Visual guidelines. What are your brand colors? What are your brand fonts? How do those colors tie into your product and your business mission?
- A distinct voice. Is your business voice casual, or formal? Scathing, or self-deprecating? Funny, or deadly serious? What kinds of words does your business voice use? What kinds of words would they never use?
- A unique customer experience. Think beyond the food concept: what are you doing to make your customer experience stand out? Whether it’s the way customers consume your food, how the food is served, where the food is served, or something else, make sure that your experience is unique and memorable.
Now that you’ve got those five things, make sure they all make sense together. Do the visuals of your logo match the feeling of your voice? This may seem trivial, but it is not. A strong, unique brand enhances a unique customer experience. A unique customer experience keeps customers coming back.
Your brand is not only your logo, your color scheme, your values, and your mission. Ultimately, your brand is what others think of you. You influence this with not only your product and customer experience, but the impressions you give with your online presence and your reputation as a business owner.
Consider what kind of feelings and impressions you want to grow in your customers as you build your food truck business.
5. Prepare Your Business Administration.
Before opening day, you need to have your business administration in order:
- How will you pay your employees, if you have any? How will you pay yourself?
- Where will you keep track of your sales?
- Will you need a business credit card?
- Who will file your yearly/quarterly business taxes?
- Where will you bank? Who will have access to the account/s?
Running a business is a challenge. By preparing as much as possible, you give yourself the opportunity to research your options and make the best business decision, instead of the quickest one.
6. Troubleshoot Your Food Truck Operations.
When you set up your business operations systems early, you have a chance to optimize and troubleshoot. There’s nothing worse than encountering a problem with your payment systems while food truck customers wait outside. Here is a short list of things you should consider:
- Which credit card processor will you use? Will you accept cash?
- What are your monthly fixed (unchanging) expenses? Consider web hosting costs, payroll company costs, etc.
- What will your day-to-day operations look like?
- From where will you buy your kitchen supplies?
- How many people will be needed to run the truck? How will operations change if one person is running the truck instead of two?
- If hired to cater, will you cook the food in the truck or somewhere else?
- What will you do with leftover food?
Once again, by deciding these things ahead of time you can avoid rushed or unwise decisions. While your initial operations setup is unlikely to last the test of time, iterating your operations early will save you time and money in the long run.
7. Create a Solid Online Presence.
Being online means more than being searchable. For a food business, it also means advertising what your business does and does not do.
You have a lot to consider: Will your business cater? Will you hold special events? Private events? What about online ordering? Will you work with delivery partners, or will the online ordering be carry-out only?
Here is the minimum of what you’ll need:
- A website. These days, a website can be even more necessary than a physical place of business. It’s a great place to show customers and search engines that you’re a legitimate business. A good-looking website is also a great way to excite and delight customers before they even arrive at your truck. Take a look at the website of your favorite food service brands for inspiration. What do they do on their website that you enjoy?
You might also consider hiring a professional to help you with search engine optimization. SEO professionals help your business show up at the top of Google searches. Obviously, this helps your brand get exposure over time.
- An email. Like a website, an email is a minimum. Your email should be a public way for customers to contact you and will be necessary to register for social media accounts and other operations services.
- An Instagram or TikTok Account. As any foodie knows, half the appeal of food is its appearance. Instagram and TikTok are the predominant visual social media platforms. The purpose of using these platforms is not only to spread the word about what and from where you’ll be selling, but to learn more about your target market. Where do your customers spend their time? How do they spend their money?
Consider the explosive success of cookie franchise, Crumbl. By utilizing TikTok, they were able grow their business by more than 300 locations in less than five years. That’s crazy!
Crumbl founders understood that interacting with your customers on social media is part of your product. It’s part of your customer experience. Consider how you can invite your customers to interact with you via social media– think reviews, giveaways, and more.
- A Google Business Profile. Where do you go when you want to find a restaurant? If you’re like the majority of the world, you go to either Google search or Google Maps. You can have your business listed on both of these platforms through a Google Business Profile. This profile allows customers to leave reviews, allows you to update location and hours information, food truck menu, and more.
Ultimately, it is a vital tool to help customers discover your food truck.
8. Create a Food Truck Advertising Plan.
Before you can sell customers your food, your customers need to learn about your food. The purpose of marketing is to make them aware.
Will you advertise on social media? Physically? Using Google Ads? Each of these advertising mediums has advantages and benefits. Talk to the food truck community to learn what’s worked for other business owners.
No matter what you choose, remember that advertising is complicated enough to be its own profession. If advertising or marketing is not your strength, hire your weakness. Poorly done advertising is like burning money.
How Much Does it Cost to Start a Food Truck?
Now that you have all the necessary information about permits and licensing, it’s time to talk money. Ambiguity and misinformation abound about the average cost for mobile food vendors. Answers can and will vary. However, it’s smart to look at some of the food truck costs that are sure to come up and consider them in your total budget as you build your business plan. Here’s a summary of the most common costs for successful food truck business owners:
- Truck or Trailer. Likely the biggest ticket item you’ll purchase is the actual truck (or trailer). The median cost of the truck is around $50,000 while the range is anywhere from $20,000 to $10,000 depending on the equipment included and condition of the truck. Food trailers generally run $50,000 and down. If this expense is beyond what you’re able to finance, consider starting with a smaller food cart operation first.
- License. The cost of obtaining permits and licenses varies greatly but can cost several thousands of dollars. For example, in Boston, it costs a single business owner more than $17,000 to acquire the necessary permits and licenses. In Indianapolis, however, it’s about $600.
- Equipment. Make an extensive list of the equipment you’ll need for your truck and be sure to note down the prices. Your list should ultimately be driven by your menu. If the price of the equipment is starting to intimidate you, remember that many lenders offer generous equipment loans for exactly this purpose. Remember to include everything from countertop grills down to knives and takeout boxes.
- Point of Sale System. This system is an important food truck startup cost. You’ll need an easy, effective way for customers to pay you, so you’ll need to purchase a reliable point of sale (POS) system. Make sure that if the system requires Wi-Fi, you can easily access it from wherever you plan to park.
- Truck Design. The exterior of your food truck is important for attracting new customers, so you should plan to have a professional design and paint your truck. You can choose to either do this with the vinyl paint wrap (which is slightly more expensive but lasts longer) or to paint your truck in a more traditional method. Either way, the cost for most food truck vendors is likely to be at least a few thousand dollars. Finally, make sure your design is part of a larger food truck concept, with an engaging logo and other marketing collateral that’s part of a cohesive branding scheme.
If you have extra money in the budget, consider hiring a specialized food truck builder. Not only will they help you kit out your truck, but they can make it eyecatching, too!
- Food. Another cost that will vary depending on your menu is the actual food. Before you begin operations, you need to purchase any and all food you might need for a day of customers, including condiments, spices, napkins, etc.
- Employees. Take a moment to consider how many employees you will need, and what you will pay them. At a minimum, you need a chef and someone to run the cash register, if those aren’t you.
Other Food Truck Business Operations
Daily operations of running a food truck are sure to be a lot of fun (and a lot of work), but it’s important to remember that during the setup process, there’s a fair amount of paperwork that needs to be in place to make sure you’re operating legally. Keep your business compliant with state and local laws by completing the required paperwork.
- Food Truck Insurance. Food truck operators need both general liability insurance for their business and vehicle insurance for their trucks.
- Restrictions. Research food truck-specific restrictions for your area. For example, in Seattle, food trucks can’t operate within 50 feet of a restaurant, but must nonetheless be parked within 200 feet of a public restroom.
Endless Food Truck Benefits
You’ve spent a lot of time, money, and effort getting your food truck compliant and up and running. Now it’s time to enjoy the fruits of your labor. Here’s a variety of benefits you can expect:
- Low Startup Costs. We mentioned this at the beginning of the article, but you can start a food truck business for much less than a traditional brick-and-mortar restaurant that may require high rent, depending on your location.
- Less Risk. Not making the money you want in a particular location? Good news: You can move to find your customers! This is obviously another benefit over a traditional restaurant.
- More Flexibility. You’re your own boss! You decide your hours, your location, your menu, and more. Enjoy this stage in your life making the decisions that work for you and your life.
Fire Up Your Food Truck
It can be surprising for some hopeful small business owners to learn about the detailed paperwork and procedures involved in getting started, but once everything is in order, the fun of running a food truck begins. If you’re ready to start your food truck business, create a business plan that involves a detailed breakdown of your estimated costs, and once you have a budget in mind, you can look for financing. Find out how much small business financing from Guidant Financial is available to you by pre-qualifying online. We wish you success in your food truck venture and can’t wait to hear what you’re serving!