The Basic Costs of Operating a Food Truck

It's a lot more than the truck.

Man standing by a hot dog food truck
••• stu_spivack/Flickr/CC BY-SA 2.0

Food truck popularity has skyrocketed in some cities over the past decade, in large part due to the relatively low operating costs involved in the business. But, while far cheaper than opening a traditional brick-and-mortar restaurant, starting a food truck business typically still requires a significant investment. Purchasing and outfitting a new truck can cost anywhere from $50,000 to $200,000. As with any restaurant launch, you need to start with a good food truck business plan and a realistic budget.

Initial Costs

Food truck startup costs vary from state to state, depending on licenses, permits, and other fees. For a simple truck with a minimal mobile kitchen and storage, you could conceivably get started with as little as $30,000 to $40,000. That would cover the cost of the truck and most of the initial kitchen equipment. But, remember, you get what you pay for. A food truck is first and foremost a vehicle. Unlike a fixed building, you need this restaurant to be reliable for transportation. If it lands in the repair shop for a week, you're out of business. Have a trusted mechanic check it over any vehicle you're considering, no matter how basic or fancy.

Forbes magazine estimates that an average cost for a food truck is closer to $70,000 or $80,000 for a gently used truck with “reasonable” remodels and food-prep equipment. If you are willing to spend $100,000 or more, you can get extra bells and whistles, or an entirely new truck. Conventional wisdom applies here, however; a new vehicle is not often worth the extra premium. The type of food truck you want to run will also influence your startup costs, as prep equipment can vary significantly.

Daily Operating Costs

Food trucks are indeed relatively inexpensive to open when compared to a traditional restaurant, and the overhead is generally small. But remember, once you get the food truck on the road and ready for business, there are many costs associated with the day-to-day operations, including insurance, permits, and other fees. In cities like Portland and Los Angeles, securing permits can be a nightmare if you aren't prepared with the required paperwork on the deadline.

Those aren't the only sneaky costs. Some food trucks need to share a commercial kitchen for extra meal prep space. You also need to consider where you are going to park the truck outside business hours. If you live in a dense urban area, this may mean you need to rent a parking space. Your truck will also need the same TLC you give your normal vehicles.

Marketing your business is also essential. Will you pay someone to run your website and social media, or do it yourself? Customers need to be able to find you every day. You also may want to print fliers or consider other means of promoting your food truck.

Food and supplies costs, staff wages and payroll taxes, POS and credit card processing fees, transportation, equipment maintenance, and insurance will amount to most of your regular daily operating costs. In these areas, you should run it just like a normal restaurant.

Financing Opportunities

As with any new restaurant, financing a food truck requires a business plan. As you create yours, consider your menu, your target customers, and your marketing approach. Once you have a business plan, you can consider small business administrations, banks, private lenders, and investors for funding. If you have assets to liquidate to generate some of the startup funds, you could lower your interest payments or obligations to investors.

It's also worth considering backing from an established local restaurant that doesn't already have a food truck. You might find a local restaurateur willing to invest in your food truck as a means of extending her brand. If you are willing to partner with someone else, it allows you to enter the market with a familiar brand name and some menu items that might already be popular in the local community. You can leverage this experience toward starting your own food truck later, and the banks will be happy to see you've had hands-on experience with the business.

Do Your Homework

Food trucks are a less expensive way to get into the restaurant business. But don't go into it with rose-colored glasses. Food truck owners meet unexpected realities when they go into business, and many of them shared with FoodTruckr what they wished they’d known beforehand. A lot of them cited surprises about licensing and permits as a major issue. The process sometimes can take months. Regulations vary from state to state, and the costs often add up to much more than anticipated.

Ultimately, remember that you've got to determine what it will cost to launch a successful food truck in your city. New York City isn't Chicago, and what's working for food trucks in those two cities is probably quite different. Large markets differ considerably from smaller ones, too, so don’t assume that what works in one area will automatically work in another. Spend considerable time researching your target market to gain a better understanding of local challenges and needs within the food community. Understand the food truck climate in your area before you write that first check.