To start a food truck business, you need a competitive and appealing concept, a viable business and financial plan, a fully equipped food truck, and a solid marketing strategy to build your customer base. A successful food truck can bring in over $500,000 per year, with startup costs starting at $40,000.
Some food trucks still only accept cash, but they could be losing out on sales. Many people never carry cash, so accepting credit cards is a crucial step in growing your food truck business. Chase Merchant Services has a mobile POS and payment processing solution called Chase Mobile Checkout. The mobile checkout app is easy to use and has competitive processing rates with no monthly minimums and month-to-month payments. Visit Chase to get started.
Here’s how to start a food truck business in eight steps:
1. Research Your Target Market
Restaurant MBA puts the failure rate of food truck businesses at 60% in three years. The difference between a successful food truck and a short-lived endeavor usually comes down to planning. An ounce of prevention can make a ton of difference in the profitability of your business. When starting your food truck business, it’s important to make sure you are filling a hole in the market or supplying a demand.
When doing initial research on how to start a food truck business, consider available space and cuisines:
Evaluate Available Space
Mobility is one of the key advantages of owning a food truck. You can meet your customers where they are. However, it’s also important that customers know where you are and can find you easily. Many food trucks have a go-to spot where they park with some regularity. For example, The Tasty Yolk, a breakfast sandwich food truck in Bridgeport, Connecticut, parks outside the same local coffee shop every weekday morning.
Finding a home base to park your truck is a critical part of the planning process. But, when you’re first starting out, at least get a sense of local laws and regulations around food truck parking, especially on busy streets, to see what is and isn’t possible. For example, Philadelphia is very food truck friendly, but in Boston, you must win an annual lottery for certain locations.
Check Out the Competition
Once you have a feel for the available physical space in your area, get an idea of what cuisines are available. For example, you don’t want to be the third falafel food truck in town. You want to pick a food concept that isn’t being done by other food trucks in your area. But, you also want to pick a cuisine that has widespread appeal.
Visit food trucks in your area to get a feel for what is popular and what days of the week or times of the day are busiest. For example, if a lot of people commute into your town for work, breakfast or lunch hours might be a busy time. If that’s the case, choosing a breakfast or lunch food would be a good idea. But, if you are in a tourist or college town, nights and weekends may be busier, so you might be better off opting for a dinner or dessert menu.
2. Choose a Food Truck Name & Concept
After getting an idea of what spaces and cuisines are available, you can narrow down a concept and name for your food truck. You want to consider consumer demand, but you should also choose a concept that is reflective of your interests and experiences.
Popular food truck concepts include:
- Fusion dishes: This concept combines two distinct cuisines into dishes that appeal to a wider audience, such as Tex-Mex or sushi burritos.
- Organic & health foods: Acai bowls, cold pressed juice, and interesting salad combinations are all examples of trendy health foods.
- Gourmet sandwiches: Who doesn’t love a good sandwich? To stand out, use nontraditional ingredients, or have a theme.
- Pizza: A wood-fired pizza truck has widespread appeal.
- Regional cuisine: You may find success with local specialties such as breakfast tacos in Texas or lobster rolls in New England.
Pick a Name for Your Food Truck
Our guide on naming a business gives a comprehensive overview, but here are some tips to choose a good name for your food truck:
- Make sure your food truck’s name is unique: You risk violating a trademark if there’s another restaurant or food truck with the same name. You can use the free United States Patent and Trademark Office (USPTO) online search tool to check if your name is already taken.
- Make your name descriptive: Your name should be descriptive of your food, theme, and concept so your potential customers will know immediately what to expect.
- Make the name memorable and easy to pronounce: This is especially important for food trucks because they rely on word-of-mouth for much of their business. Avoid long, confusing names ― four words or less is a good rule of thumb for your food truck’s name.
- Choose a name that can grow: Your business name should be fun and catchy, but also be able to grow with your business if you add more trucks, new menu items, or open a traditional restaurant.
“Make sure your food truck is wrapped with a design that makes a good background for Instagram photos. Creating your own short, catchy hashtag to place in the corner will help tie those photos together, which will help introduce second-degree connections to your brand, as well as your food and frequent locations by proxy.”
―Joe Goldstein, Director of SEO & Operations, Contractor Calls
Design Your Food Truck Logo
The concept and name you choose should be reflected in your business logo. You’ll need something that evokes quality food and is exciting enough to compete with other food trucks. Your logo will also be used on menus, business cards, social media, and all of your advertising efforts.
A captivating logo can make a huge difference in whether people step up to your truck or pass right by. That’s why you want to put such an important element of your marketing in the hands of a talented designer. Fiverr lets you browse portfolios from dozens of freelance graphic artists who’ve designed both simple food truck logos and full vehicle wraps. Best of all, prices start at just $5.
3. Create a Food Truck Business Plan
Like any other business, your food truck will need a well-prepared business plan if you want it to succeed. Your business plan puts your concept on paper, and requires you to map out a financial plan.
Having a plan for becoming profitable this early in the process will give you a better understanding of how long it will take for your business to turn a profit, and what funds you need to sustain your business until that point. Your food truck business plan serves as a basis of how you envision your business to start, run, and grow.
Your food truck business plan should include the following sections:
- Business description: Describe the food truck industry in your region, the present outlook and future possibilities, your concept, theme, and other markets and industries that can directly impact your business.
- Market analysis: Identify market trends in the food truck industry, your target market, and analyze competitors. For example, are there food trucks in your area that are selling the same kinds of food, or traditional restaurants that have the same target customer base?
- Organization and management: Explain how you plan to run your business including standard operating procedures, staffing, and responsibilities of each key partner and employee.
- Product line: Detail your menu, ingredients, and procedures, as well as the cost of preparing the food and how much you plan to sell it for.
- Marketing plan: Describe how you plan to market your food truck business. Important marketing channels for food trucks include word-of-mouth, influencer marketing, and social media marketing.
- Funding request and proposal: State how much funding you need to start your food truck and exactly how you plan to have it funded. If you’re applying for a business loan, specify how much money you need to borrow.
- Financial projections: Breakdown your projected expenses, profits, and losses for at least your first three to five years.
When preparing your business plan, make sure that you include all the details. For example, itemize your marketing strategy, explain how each one will reach your target consumers, how much it will cost, and how many customers it will bring in. List your product line to include all food items, how it will appear on your menu, the ingredients, how to make it, and at what price you plan on selling it.
When starting a food truck, you’ll need to set up an LLC in order to apply for vendor licenses and startup funding. You’ll also need to separate your personal finances from your business finances by opening a business bank account.
Forming an LLC can be an expensive and complicated process. So, we recommend working with a solution like Incfile to save money while registering your food truck business. With Incfile, you can register your business for free. Visit Incfile to learn more.
4. Get Licenses and Registrations for Your Food Truck
Food truck licenses and permits will cost between $100 to $500 depending on your location. There are at least two types of licenses and permits that you need. One is the business license, and the other is your food service permit.
However, depending on your location, you may need additional permits. For example, California requires the following:
- Mobile Food Facility Permit
- Health Permit
- Food Safety Certification
- Food Handler Permit for employees
- Workers’ Compensation
- Business Insurance
Different cities have different guidelines when it comes to giving food service permits so the best approach to this is to go online and reach out to your local government (particularly your local health department) to get all the necessary information on requirements that you need.
Generally speaking, your truck, your kitchen, your food, and your mode of operation will go under inspection. Make sure that your truck is fitted with an easily washable surface and following health standards which include sinks, water supply, and food storage.
For your business license, remember to get a DBA (doing business as) certificate if you are doing business under your food truck name. Depending on your state, you may also be required to register your business and apply for tax permits and make sure to get an employer identification number (EIN) if you’re hiring employees. You will also have to visit your motor vehicle department for proper vehicle registration.
“Check in with the local Chamber of Commerce in the area that your food truck will be operating out of to see what kinds of licenses and permits you’ll need to operate. Sample documents you may be expected to obtain may include a business license, health permit, mobile food facility permit, food handler permit, and food safety certification. These licenses and permits may vary depending on your city, state, and/or county, so always check in with the Chamber of Commerce to be certain you’re obtaining the proper documents.”
―Deborah Sweeney, CEO, MyCorporation.com
Parking Permits & Regulations
Food trucks can’t just park anywhere that a regular vehicle can. Every city has different regulations limiting parking opportunities. Additionally, neighborhood associations and local health departments might require you to comply with their own guidelines so it’s advisable to conduct as much research as you need before starting your food truck operations.
Here are some tips to make sure your food truck is parked in the right place:
- Ask for your county clerk for a list of places where parking is not allowed
- Contact your local motor vehicle department for lesser-known parking restrictions
- Prepare to pay for parking meters
- Find secure overnight parking for your truck
Securing a Commercial Kitchen
Depending on your state and local regulations, you may be required to use commercial kitchens to prepare your food. Research online or ask your local food truck community for their recommendations finding a commercial kitchen or commissary can be challenging. Your commercial kitchen can be a catering kitchen, brick and mortar restaurant, or a designated food truck commissary. You will primarily use this space to prep food and dump dirty water.
5. Finance Your Food Truck Business
Starting a food truck business can cost anywhere from $40,000 to $200,000 depending on your location, the cooking appliances you need, and type of truck you purchase. Brand-new, custom-fitted trucks, for instance, will cost a lot more than secondhand ones. The table below, based on data from mobile-cuisine.com, gives you a rough estimate of the itemized costs involved in starting a food truck business.
Food Truck Business Estimated Startup Costs
|Food Truck Startup Item||Approximate Cost|
|Purchasing a food truck||$5,000 - $125,000|
|Vehicle inspection||$100 - $500|
|Retrofitting & bringing your truck to code||$25,000 - $50,000|
|Generator||$1,500 - $10,000|
|POS software system & hardware||$500 - $1500|
|Paint||$1,000 - $3,000|
|Truck wrap||$2,500 - $5,000|
|Initial food purchases||$500 - $2,000|
|Utensils, papers & goods||$500 - $2,000|
|Website design||$500 - $3,500|
|Initial office equipment & supplies||$200 - $1,000|
|Advertising & PR||$500 - $2,000|
|Professional, legal & consulting fees||$500 - $2,000|
|Payroll (3-4 staff members)||$1,500 - $3,500|
|Commercial kitchen/commissary rent||$500 - $3,000|
|Monthly credit card processing fees||~ 3% of sales|
|Fuel||$250 - $400|
|Permits & licensing||$50 - $10,000 depending on location|
|Total Estimated Costs||$40,000 - $200,000|
Most people don’t have immediate access to the kind of capital required for starting a food truck. Financing your business will be an important step. Most lenders require a business plan before issuing a loan, so be sure to have your thorough plan ready, along with the amount you need, and your credit history.
Here are some financing options available for aspiring food truck owners:
- Equipment loan/financing program: Some truck sellers or equipment financiers will give you a loan to purchase the truck.
- Rollover for business startups (ROBS): If you have more than $50,000 in a retirement account you can set up a ROBS which will allow you to use the funds in your retirement account to fund your business without paying early withdrawal penalties.
- Business credit cards: If you are good at paying off debt, a business credit card may be a good option.
- Personal loan: A good option if you have a good credit score and need less than $50,000.
- Microloan from Small Business Administration (SBA): Microloans are considerably smaller in size than conventional business loans, but may be sufficient to cover food truck startup costs. Check out Small Business Administration’s Microloan Program for loans under $50,000.
- Find investors: Whether it’s a friend or family member, finding investors for your food truck business requires strategy. Prepare your concept and a solid business plan to help convince investors to fund your venture.
- Crowdfunding: Options like Kickstarter are popular. Set up a campaign on Kickstarter and other crowdfunding websites. Be creative in introducing your business idea and offer incentives to entice the public to contribute.
- Leasing: Instead of purchasing your own truck, you can lease a used truck with basic equipment. You pay a monthly fee to drive the truck, and some leases give you the option to purchase the truck at the end of lease term. Read more on the pros and cons of buying versus leasing equipment.
However you plan to finance your food truck business, it’s important to map out exactly how the funds will be used (purchasing a truck, cooking equipment, employee salaries, etc.) and how you plan to repay the borrowed funds. Your financial projections should include how much gross revenue you need to bring in each month to cover expenses and any loan payments.
Once you’ve secured funding for your food truck, you’ll need a business checking account to keep your personal and business assets separate. Chase is an excellent option for small businesses. As a new customer, you get a $200 welcome bonus for opening an account, 5,000 branches and 16,000 ATMs nationwide, a mobile app, and an easy-to-use website.
6. Design Your Menu Board
A menu board that’s attached to the side of your truck is the best way to showcase your food. The layout and design should reflect your brand and theme. But, the most important thing is that your food board is very legible and appealing.
Here are some helpful tips when coming up with your food truck’s menu board:
- Make sure that your menu board design goes well with your truck’s design. A chalkboard handwritten menu often works well (shown in the image below) especially if you change your menu frequently or sell out of items quickly.
- Your menu board should be easy to read and understand.
- The text should have good contrast against the backdrop.
- The food description should be short and simple.
- Make sure to highlight your best-sellers, new items and your specials.
- If you’re using a large menu board, include photos of your dishes to help your customers make a decision, especially if they have to wait in line for a long time to order.
- If possible, consider not using the dollar sign because it tends to make customers concentrate on the cost and not on how well you describe your food.
7. Purchase, Insure & Outfit Your Food Truck
Food trucks can cost from $3,250 for a secondhand trailer to as much as $200,000 for a new truck. This price includes the cost of retrofitting and wrapping and takes into account different truck size requirements. Investing in a quality food truck from the beginning minimizes your risk of incurring repair expenses down the road. Try to look for a local food truck builder so it’s easy to ensure that all your specifications are being met.
Make sure your truck is fitted with equipment that’s up to code, including:
- Refrigerators and ovens are working properly
- Hot and cold water are available with adequate pressure
- Fire extinguishers and first aid kits available on board
- Proper storage for food items
“I wish someone had told me not to cut corners when purchasing the truck. I wish I had gotten a newer truck. We had so many repairs the first year we were in business. We had to replace the engine, transmission, all tires etc. … if I had just taken that money and bought a better truck in the first place we would’ve been much better off.”
―Wendy Cross, WOW! Food Truck
Where to Buy a Food Truck
When purchasing your food truck, you can purchase a used truck from an individual seller on eBay or Craigslist. There are also a few directory sites specifically for food trucks that list available trucks by state. By purchasing a used truck, you can typically get a fully outfitted truck for around $50,000. Although, you will have to repaint the outside and possibly renovate the inside of the truck to match your business.
Or, you can purchase a new food truck directly from a manufacturer such as Prestige Food Trucks or Cruising Kitchens. They will make a custom food truck according to your specifications. New custom food trucks will cost around $100,000 – $200,000.
Food Truck Insurance
To have a complete food truck insurance coverage, you will need five kinds of insurance. Here is a breakdown of the insurance you need for your food truck and approximate costs:
- Commercial vehicle insurance: Required for damage and liability claims from vehicle-related accidents
- Property insurance: Recommended insurance that covers your truck and equipment in the case of theft or collision
- General liability: Recommended insurance that covers injuries and property damage that’s not vehicle-related
- Workers comp: Required in most states to cover lost wages for employees due to work-related injuries
- General auto insurance: Required insurance that varies by state but typically runs about $2,400 per year
Here are some of the factors that can affect your insurance cost:
- Your individual coverage limits
- Type of food truck
- The state and city you’re conducting business in
- The value and type of personal business property you have to insure
- How many different locations and events you attend each year
- If your equipment adheres to various commercial cooking standards
- Your hours/days of operation
- If your business is seasonal
- How much equipment is permanently installed and moved around in your truck to various events
Outfit Your Food Truck
In addition to the cooking appliances like grills, ovens, or cooktops that you are having built into your food truck, there are a few other items you will need to install in your truck. Specifics may vary depending on your food truck concept, but all food trucks require a generator. A generator is essential for powering your truck. You want something that is portable, efficient, and quiet.
You’ll also need a point-of-sale (POS) system so you can accept credit card payments. Lavu is an iOS-based POS that lets you take orders on any iOS device with an offline mode to keep you running when the Internet is down. You also get full menu customization, simple payment processing, real-time inventory management, sales reports, scheduling and time tracking, and more.
“As a food truck owner, you’ll undoubtedly need a credit card processing service that accommodates your on-the-go business style. If you expect to serve a younger or more tech-focused crowd, consider a payment processor that accommodates innovative payment methods like Apple Pay, Samsung Pay, and Google Pay, in addition to traditional debit and credit cards.”
―Sean Messier, Credit Industry Analyst, Credit Card Insider
8. Market Your Food Truck
Once you have your truck and your location all set, the final step in starting your food truck business is marketing your truck. A good food truck marketing strategy involves a combination of online and traditional marketing strategies including social media marketing, vending at local events, mailing flyers, and building a website.
Social Media Marketing
Using Facebook and Instagram is a great way to connect with your local community and help potential customers find your business. Plus, Instagram is the perfect place to show off pictures of your tasty food. For maximum impact, post regularly and be sure to use any local hashtags to help your business get discovered.
Also, be sure to post your locations and hours so that customers can easily find you. If you accept orders online or over the phone, have that information in your social media bio as well.
It can take time for enough people to discover your food truck before you start turning a steady profit. Spread the word faster by mailing postcards offering a free special or promotion that will bring curious and hungry customers your way.
Participate in Festivals & Local Events
Festivals are a great way to get more customers and gain some insight from fellow food truck owners. Especially in the spring and summer months, many towns and cities have outdoor events like fairs and farmers markets. Participating in these events are a great way to spread awareness about your business while also getting some extra sales.
There are also many festivals dedicated just to food trucks. Try to book as many events as you can. You’ll have a captive audience to market your business and are all but guaranteed to make sales. If you do participate in several events, fairs, or festivals, create an event calendar that you can hand out to customers so they know where to find you next.
Create a Website
A website is essential for any business. It helps potential customers know who you are, what kind of food you sell, and how to find your truck. Your website is also a great place to post your event calendar. Our guide on how to make a business website will walk you through the process.
One of the first and most important steps in building a website is choosing a hosting service and buying a domain name. Bluehost has plans that let you register your domain name, host your website, access a WordPress web builder, and get a business email address for just $2.95 per month. Visit Bluehost to get started.
Tips for Creating a Food Truck Business Plan
Creating a business plan and starting your food truck business is no small feat. There are many different steps, and the process will look a little different for everyone depending on your location. Here are some tips to help your business launch run smoothly:
Supplement sales by catering events
Many food truck businesses supplement sales by letting people reserve their business for special events such as weddings and employee appreciation days. Booking events like this is a great way to earn extra income while also meeting many new potential customers.
Accept online orders
Accepting online orders through your website, via an online ordering service, or even over text message is a great way to make your food a more convenient option for people on the go. Accepting online orders may be especially beneficial if you have a lot of commuter customers or people who purchase your food during their limited lunch breaks.
Pros & Cons of Starting a Food Truck
As you now know, there are several layers of planning to start a food truck. Like any other business venture, the food truck industry offers both advantages and disadvantages, including:
Advantages of Starting a Food Truck
- Startup costs: While a food truck still requires a decent amount of startup capital, it’s generally less than what would be needed to start a restaurant
- Long-term profits: A successful food truck business can have greater profit margins than a traditional restaurant because there are fewer overhead expenses
- Mobility: Mobility means being able to reach a large customer base regularly by going where there are large or predictable crowds
- Large customer base: Many regions are now hosting food truck festivals and similar events which offer a steady flow of customers. Food trucks have also exploded in popularity.
- Ability to scale: Compared to a traditional restaurant, you have more flexibility with a food truck in terms of hours of operation, menu items, and other financial and operational decisions.
Disadvantages of Starting a Food Truck
- Heavy competition: Dozens of food trucks often gather in the same area to serve customers. While this means a large supply of customers, it also means competition from other food truck owners within the same area.
- Legal restrictions: Most localities have special permitting and licensing requirements for food trucks. Parking limitations can also make it difficult for you to maximize sales. Of course, food trucks also need to follow the same requirements that apply to other businesses, such as business taxes and hiring regulations.
- External forces: Food truck owners have to battle with snow, rain, and other weather conditions which can cause a decline in customers.
- Pricing expectations: Food truck customers expect affordable food, so you’re limited in how much you can charge for menu items.
- Long hours: All small businesses are time-consuming, but this is especially true for the food truck industry. Be prepared to work nights and weekends to attract the largest crowds.
“Before I got into the food truck business, I wish I knew how time consuming it was to get all my product. It is difficult for food trucks to receive product deliveries, because a last minute event may pop up and you won’t be able to stay there to receive it. Now, I spend extra time in the mornings just driving around in my cars, shopping for ingredients. My advice: Engineer your menus to be simple and don’t use too many ingredients or specialty items.”
―Christina Meyer, Son of a Bun
Frequently Asked Questions Ask the Experts
Why do food trucks fail?
Many food trucks fail within their first three years of operation due to poor planning or poor marketing. Difficulties can range from unexciting concepts, tough regulations, poor supply choices, truck breakdowns, poor marketing, etc. Some of the biggest reasons food trucks fail include:
- Difficult regulations designed to protect traditional restaurants
- Poor operating and financial planning
- Underestimating daily number of hours needed
- Not taking your truck to the right events
- Poor choice of food truck
- Failing to understand the importance of good marketing
“If you haven’t worked in the food truck industry before, there’s often this misconception that you get to spend all day creating the food you love and serving it to folks ― sounds like fun! The reality is that running a food truck means you’re going to spend the majority of the day on your feet in a very physical profession. This is not a career path for people who don’t like to get their hands dirty or don’t want to be doing the heavy lifting ― literally! ― in their business. You’ll be on your feet, covered in sweat, and utterly exhausted ― and then you need to head back to your kitchen to clean your dishes, clean out the truck, and do your accounting books and marketing. The hours can be really long, but if this is where your passion lies, it is so worth it.”
―Jennifer Lewis, Founder of Small Food Business
If you’ve been dreaming of how to start a food truck business, it’s a fun yet time-consuming process with plenty of opportunity for growth and profit. The food truck business is demanding, but ultimately, rewarding if you take the time to create a careful business plan with market research and a solid marketing strategy.
An affordable and reliable payment processing solution is critical to any successful food truck business. Chase Merchant Services has a mobile payment processing app called Chase Mobile Checkout. The mobile checkout app is easy to use and has competitive processing rates with no monthly minimums and month-to-month payments. Visit Chase to get started.