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We’ve come a long way from the days of being unsure of street food, with the popularity and diversity of food trucks exploding to become one of the most successful small business ideas over the past decade. Many aspiring business owners in the food and drink industry have turned to them as a lower cost, lower risk alternative to opening a traditional restaurant. And the trend doesn’t seem to be slowing.
Many food truck owners dream that starting a small business can lead to opening their own brick-and-mortar location. A mobile setup is a smart way to try out different locations, test and tweak dishes, and build a loyal following before taking the plunge for real.
Mobile catering often beats its brick-and-mortar equivalent hands down on price. But how much money do you actually need to start a food truck and what are the factors to consider when starting a small business?
Licenses, permits and certificates for a food truck
As with non-mobile restaurants, there are a number of licences and permits included in the food truck startup costs that businesses need to secure before they can start selling. When it comes to the important questions to ask when starting a small business, finding the right permits will save you a lot of future nuisance:
Register your business
Before starting any business, you need to apply for an ABN so that you can legally operate in Australia.
Apply for any patents
If your products are a “first”, you might want to apply for patents so that no one else can use your recipes.
Health & Hygiene
The following are required when operating in Australia:
- Food hygiene certifications are required for anyone preparing food in Australia.
- Registration with Environmental Health as a food trader is necessary. Different states have different websites where you need to register so check locally.
- Street trading licences
- Liability insurance for employees and the public
- Risk Assessment / HACCP completion
- Gas safety certificates are required for any gas-running appliances
- Electrical certificates are required for any electrical appliances
Always consult with a lawyer to make sure your licences are in line with legal requirements and that your food truck is compliant with other applicable laws and regulations.
The cost of renting vs buying a food truck
The biggest question on your mind is probably how much of your food truck startup costs should you spend on the vehicle itself. This is by far the biggest outlay, but with the right choice and regular maintenance, it could last you for years to come.
Buying
How much does it cost to buy a food truck? According to Nisbets, you’ll pay up to $100,000 for a brand new food truck, or you might be able to pick up a second hand one for around $15,000.
Research the lifespan of models you’re considering before you start a food truck and always take your potential purchase for a test drive.
Renting
How much does it cost to rent a food truck? Finding out the rental cost for a food truck is somewhat harder. Most sites don’t list prices, offering quotes instead. A Google search for “food truck lease” followed by your location will give you some options to choose from.
Think of your long-term plans with regards to buying or renting. If this is a several-year venture, do you want to be tied to someone else’s restrictions? Plus, you will probably find that buying outright can be cheaper than renting over the long haul. Similarly, if this is a short-term means to an end, is the process of buying and kitting out your own food truck worth it?
Kitchen and serving equipment
If you’re planning to update existing kitchen appliances or equip your truck from scratch, these food truck costs will need to be factored in. For most, equipment to start a food truck should include:
- Sinks for hygiene and dishwashing (with draining board)
- Grills, fryers, a stove or electric oven
- Catering urn (for boiling water)
- Extractor fan
- Waste disposal
- Lighting
- Fire safety equipment
- Protective screen at the ordering window
- Utensils and cookware
- Fridge and/or freezer
- Food preparation area
- Disposable napkins, cups, cutlery and plates or serving boxes
- Hygienic clothing, like aprons and plastic gloves
- Storage
Many food trucks come with the basics, such as plumbed-in sinks — the rest is then up to you. When you’re launching your business and dealing with lots of other food truck startup costs, it might make more sense for you to rent appliances while you figure out what equipment you need.
Startup food inventory
The startup costs for ingredients depend on your menu. You probably have a good idea of the cuisine and menu items you plan to sell already. But gauging demand — and therefore inventory — in your earliest days is going to be part of your overall learning experience as a business owner.
Plan your startup menu with these considerations:
- How much is needed to eventually cover your other food truck startup costs?
- How long do you intend to trade for (each day and long-term)?
- How many people will be cooking and serving food at any one time?
- How much space do you have to store ingredients and prepare food?
- How will your potential locations affect demand and therefore the speed at which you need to serve?
Your answers will hopefully give you an idea of which menu items are suitable and how they should be priced to cover your running costs, reach the break-even point and eventually make a profit.
As with your kitchen equipment, it’s always best to start small and scale-up. Design just a handful of dishes, refine those recipes, research where you can get the cheapest ingredients and practice preparing them without any wastage.
Running costs of a food truck
As well as the set costs of licences, there are other essentials to cover when you start a food truck business. These are the main ones:
- Gas and electricity: the cost of these depends on the size of your setup and the appliances you work with.
- Fuel: if you set up shop locally, it will be easier to keep this cost down.
- Wages: as well as paying staff at least the national minimum wage, you’ll also need to work out how much to pay yourself.
- Vehicle insurance: you can check whether or not your food truck is already insured with your state’s register.
- Business insurance: there are many types of business insurance to choose from, from personal liability to stock cover. Some, such as Workers’ compensation insurance are compulsory (if you employ other people in this case).
- Vehicle registration must be paid on your food truck annually.
- Marketing costs: depending on how big you want to go — from a full vehicle wrap to a simple sandwich board — there will most likely be an outlay for some form of marketing.
- Maintenance: equipment in a food truck will age quickly, so the cost of replacements and repairs should be factored into your budget.
- Payment system: with more people paying by card, it’s essential that you have a card reader or full Square Terminal to ensure you never turn down a sale. Square also has free food truck POS software you can easily customise to help you run your food truck.
- Website: You should not neglect your web presence as an integral part of your business strategy. Starting your own online business begins with having an attractive and easy-to-use site where potential customers can access your menu, find your locations and learn about events and other relevant information. The site can also be used for e-commerce to sell merchandise like T-shirts and hats, bottled sauces, and more. Starting an online store may feel overwhelming, but a Square online store is free and easy to set up.
How to cut costs for your food truck business
There are so many benefits to starting a food truck business: no more office work, you’ll make a tonne of new connections, you’re out in the open air and you get to cook to your heart’s content.
Worrying over how much starting a small business costs can feel discouraging. But before you cast the dream aside, remember that many small businesses receive some kind of funding to get off the ground — it doesn’t have to all come down to you and your savings. Also, there are ways to push those costs down so that in the long run it’s easier to reach the break-even point.
1. Use versatile, seasonal ingredients.
Instead of having lots of menu items that require different ingredients, opt for a smaller number of dishes that use similar, long-life and seasonal produce. Many food truck businesses opt for variations of one idea. As well as keeping your costs down, you’ll become a low-waste, greener company.
2. Don’t go overboard.
When you’re starting out, err on the side of caution with bought ingredients — it’s better to sell out than watch your money go down the drain. Selling out can even build buzz.
3. Keep it in the family.
Ask for help from family and friends. This won’t be a permanent situation, but it will help you work out a long-term staffing plan and keep initial food truck startup costs down. It can help with your word-of-mouth marketing and there’s free food in it for them.
4. Choose your location wisely.
The cost of a street trading licence varies from state to state and also is different for local councils. Research your options before applying and contact your local council to find out what their rates are. It might be worth driving an hour or two into the next region to save money.
5. Buy in bulk with other food trucks.
Purchasing certain ingredients or supplies in larger quantities with your fellow mobile restaurateur’s pools resources and brings costs down for everyone.
6. Embrace social media marketing.
Websites, online advertising, brochures and advertorials aren’t necessarily expensive, but they do come at a cost. Social media for small businesses on the other hand can be run entirely for free and managed easily during quieter periods.
7. DIY.
If you don’t have design skills yourself, you most probably know someone who does. Use their (free) help to embellish your truck, paint signs and design flyers.
8. Take care of your truck.
Though it may sound simple, regular deep cleans and maintenance checks help avoid major, expensive issues down the line.
9. Compare suppliers.
Whether with your energy supplier or your go-to wholesale food shop, keep your eyes peeled for better deals. By switching or asking providers to match someone else’s prices, you ensure you’re never paying more than you need to.
10. Manage inventory with care.
According to the Food Waste Australian Household Attitudes and Behaviours National Benchmarking Study by the Australian Government, Australians throw away 4.9 kilograms of food each week, per household. For a small business selling food, that’s a huge amount of wastage so you want to make sure you’re only providing customers with what they will eat, and what you can afford. With a Square inventory management system, however, you get a better idea of what’s in stock and when you need to refill so you’re not relying on your gut.
This post is for guidance only and is not intended as legal advice. For financial or legal advice related to your specific business, be sure to consult an independent financial or legal professional.
COVID-19 tips and best practices
Even the most successful small business ideas in Australia falter, especially during a global pandemic. Here are some ways to make sure your business is following safety measures and remaining prosperous post-lockdown:
- Contactless payment: new terms may have you wondering things like, what is contactless payment? Simply put, it’s a way of paying that offers no contact between the seller and the customer through the use of a contactless card reader. You can also opt to accept online payments for prepaid orders from your site.
- Takeaway: luckily, the nature of food trucks makes offering takeaway and delivery easier. There are still some specific COVID-19 rules to consider, however, so make sure to read up on any changes to the procedure.
- Safety: working safely during COVID-19 is a top concern, and there are important guidelines to become familiar with. Cleaning and hygiene procedures particularly need to be established, and there are a lot of management tips available to help you practice safety.
- Support: there is small business support available — from online resources and information to government-led coronavirus support.
Though it’s not easy to pin down the exact total cost of starting a food truck, this list of necessities is a resource to kick off your research. Few ventures are “cheap”, but there are always hacks to remove some of the cost barriers and help you on your road to owning one of the best businesses to start in Australia.
