Here Are the Costs of Starting a Food Truck (and How to Save Money)
The popularity of food trucks has exploded in the past decade. What began as a fad has transformed to mainstream as Americans have embraced mobile restaurants. As a result, aspiring chefs and restaurant-industry entrepreneurs have turned to food trucks as a lower-cost, lower-risk alternative to opening traditional restaurants.
Even if food truck owners aspire to one day open brick-and-mortar locations, starting out with a mobile operation is a smart way to try out different neighborhoods, test and tweak dishes, and build a following before taking the plunge with a physical location.
Perhaps the most attractive aspect of starting a food truck instead of (or as a precursor to) a brick-and-mortar restaurant is the idea that it’s a relative bargain. But the actual cost of a food truck, especially depending on where you live, might be greater than you expect.
So how much does a food truck cost? The answer is that it depends, but let’s take a look at some of the factors that determine startup and operating costs.
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Licenses and permit costs for a food truck
To start and operate a food truck for one year, an entrepreneur spends an average $28,276 on permits, licenses, and legal compliance, according to the U.S. Chamber of Commerce’s Food Truck Index.
The types of permits and licenses required to operate a food truck fall under these five categories: administrative, health/menu/food safety, vehicle requirements and safety/hazard prevention, employment, and zoning.
Costs vary by location, but the five cities friendliest to food trucks are Portland (Oregon), Denver, Orlando, Philadelphia, and Indianapolis. The five toughest cities for food trucks are Boston, Washington, D.C., San Francisco, Minneapolis, and Seattle.
Indianapolis has the lowest fees at $590, while Boston comes in at the comparatively staggering sum of $17,066 (Seattle has the next highest fees at $6,211). Boston is an outlier with its extra-high fees, so if you remove it from the equation and calculate the average permit and license costs of the other top-19 food truck cities, you find that the average fees paid by food truck operators are about $1,864.
In food trucks, as in real estate, location is everything. So if you’re trying to decide where to start your food truck, think critically about whether your city’s permit and licensing fees — on top of all the other costs associated with your business — are cost prohibitive.
The cost of renting vs. buying a food truck
Perhaps the biggest (and priciest) question new food truck entrepreneurs face is whether to rent or buy their vehicle. New, made-to-order trucks can cost anywhere from $75,000 to $150,000, according to Restaurant MBA, and they take months to build.
Used trucks generally cost between $40,000 and $80,000, and you should be able to start using them almost immediately. The cost of renting a food truck depends on the length of the lease, but if it’s longer than, say, six months or more, it should be around $2,000 to $3,000 per month.
Necessary kitchen equipment
The type of equipment you need depends on the type of food you serve, but common appliances are ovens, fryers, grills, and refrigerators. Other equipment may include pots and pans, storage containers and knives, serving implements, and other utensils. Appliances can cost well into the thousands, and supplies like pots, pans, and other tools can cost a few thousand dollars.
When you’re launching your business and dealing with lots of other startup costs, it might make more sense for you to lease appliances while you figure out what you really need and build up the capital to reinvest in your food truck.
(header) Inventory needed to get off the ground
The basic materials you need to launch your food truck include ingredients for your menu items and serveware like plates, cups, lids, utensils, and napkins. The startup costs for ingredients depends on your menu, but expect to spend around $1,000 to $2,000 when you take into account items like cooking oil, spices, and more. Serveware startup costs are around $300.
Operational costs of a food truck
The greatest costs associated with running a food truck have nothing to do with the food. Gas, insurance (auto liability, general liability, workers’ compensation, etc.), permits, licenses, maintenance, equipment, and supplies are all major considerations when creating a budget and figuring out how you’ll turn a profit.
As noted above, the average cost of permits and licenses in the top-19 food truck cities is $1,864. Fuel and maintenance costs vary, but average around $500 and $1,000, respectively. There’s also the cost of implementing a point-of-sale system.
There are some operational costs that you can’t control, like permits and licenses, but there are ways that you can lower your bills. For example, if you buy used equipment instead of new, or if you limit your menu items, you can save money on ingredients.
How to cut costs for your food truck business
- Build your menu around versatile, seasonal ingredients: Instead of having lots of different menu items that all require different ingredients, opt for a smaller number of dishes that use some of the same produce, proteins, and spices. Doing that, along with sticking to seasonal produce, cuts costs and reduces waste.
- Don’t go overboard at the grocery store: Before you have a strong sense of the quantity of ingredients you should buy, err on the side of underbuying. It’s better to sell out on a given day than be stuck with ingredients that spoil and go to waste. Even better, selling out builds buzz!
- Staff your loved ones: When you’re starting off, ask for help from family and friends. This isn’t meant to be a permanent situation, but it can help you work out the kinks and figure out how many staff members you need at different times.
- Rent or buy used equipment: The startup costs of a food truck business can quickly get out of control, so refrain from buying all-new, top-of-the-line tools and devices. Get by with used or rented equipment until you figure out what you really need (and you might find that you never need the most expensive stuff).
- Launch your business in a market with reasonable costs: As the Food Truck Index shows, the cost of licenses and permits varies significantly by city. So, if you aren’t constrained by location, consider launching your venture in a city with lower regulatory fees and a market that isn’t already saturated.
- Explore new revenue streams: Instead of restricting your business to, say, weekday lunch crowds, look into other potentially lucrative opportunities like weddings, graduation parties, and late-night crowds outside bars or concert venues.
- Buy in bulk with other food trucks: Bring down costs by purchasing certain ingredients or supplies in larger quantities with your fellow mobile restaurateurs.
- Embrace social media marketing: Traditional advertising can be a budget-buster for small businesses, so build an audience on social media platforms by, for example, tweeting information like your location and hours each day and posting photos of your menu items (particularly daily specials) on Instagram and Facebook.
- Take care of your truck: It sounds simple, but taking the time to get regular maintenance checks reduces the likelihood that you’ll have to deal with larger, more expensive issues in the future.
- Compare vendor prices: If you shop around for airline tickets or mobile phone service, why wouldn’t you do the same with your business’s vendors? Look around, and if you find better offers, either switch providers or give them the opportunity to match or beat that price.
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This post is for educational purposes only. For financial or legal advice related to your specific business, be sure to consult a financial or legal professional.