A business plan is an integral part of running a food truck. With low start-up costs, food trucks make a great alternative to opening your restaurant. It doesn’t mean that they are cheap or free to start. It costs anywhere between $50,000 to well over $100,000 or more to open a new food truck, so most entrepreneurs will need some financing when starting.
To help sell your food truck idea to investors, you’ll need a comprehensive business plan—a roadmap to success. A business plan outlines everything, from your initial start-up budget to projected yearly sales. Business plans also include a market analysis: who’s your competition, and who's your intended audience? Writing a business plan can feel a little (or a lot) like homework, but in the end, it will only benefit your food truck business, offering a well-mapped strategy for success.
The Appeal of Food Trucks
The food truck concept has been around since ancient times when street vendors in ancient Rome sold food to the public from wooden street carts. People did—and still do—appreciate the convenience of mobile food trucks. Today’s food truck menus have evolved from only serving simple street food to host various different, complicated cuisines. There are food trucks that specialize in cupcakes, waffles, Thai cuisine, Mexican food, Texas barbecue, seafood, vegetarian and vegan options. The options for a food truck menu are seemingly endless.
Food trucks have a great appeal to millennials who prize simplicity and low prices alongside delicious ingredients. Baby Boomers and Gen Xers tend to want quantity over quality (such as all-you-can-eat-buffets and Super-Sized fast food), while Millennials are more conscious of healthier food choices and love food that has a story. Food trucks often feature both these elements.
Food trucks were once confined to highly urban areas in big cities or as part of fairs and festival circuits. Places like New York, Chicago, or San Francisco have caps on the number of food truck licenses distributed each year to keep from being overrun. Today, food trucks are popping up all over the United States, including suburban and rural areas. El Torro, a Mexican-themed food truck, opened up in the sleepy town of Weld, Maine, a popular summer destination for many. Food trucks are also gaining in popularity for personal parties. Instead of hiring a restaurant or caterer to provide food, parents are renting food trucks for their child’s birthday. Brides and grooms are featuring food trucks at their wedding receptions.
Why You Need a Business Plan
At first glance, a food truck business seems pretty simple—all you need is a truck and a menu, right? Not quite. Just like any small business, a food truck requires planning. What kind of food do you want to sell? How do you know your customers will like it? Who are your customers? Opening a food truck without any planning or investigation can lead to problems. Maybe you love specialty waffles, but once you open, you realize too late that no one else in the area does. Or maybe people like your waffles, but your prices are too high. Doing a market study helps you flesh out those important details and refine your concept.
Location is one of the biggest success factors for a traditional restaurant. If people have to go out of their way to get to a restaurant, it becomes that much harder to stay in business long-term. The same principle applies to food trucks; the location is a vital component of success.
Again, it may seem like no big deal—I’ll drive around and park wherever it looks busy. This pell-mell thinking won’t work. Successful food trucks have a fairly consistent schedule of where they are going to be, and they communicate it through social media, loud and clear. Plus, not every location will allow a food truck to set up shop; public parks and school zones often prohibit commercial businesses. The same goes for downtown areas with existing restaurants – they are not going to welcome the new competition right outside their doors.
Creating a Plan
Once you’ve done your homework and studied the demand, wants, and the competition, all that information needs to be organized into a business plan for potential investors. Make sure to include where and when your food truck will be open. A business plan consists of the following parts:
Think of the executive summary as your introduction. Make it interesting to keep your readers attention.
This market analysis is sometimes referred to as a marketing strategy. Who are you going to be serving? Who is the target audience for your food truck business? And who is your biggest competition? Why are customers going to choose you over them?
What methods do you plan to use to promote your food truck? How are you going to target your core audience?
Management and Ownership
Explain who is going to do what within your business, including any potential employees who you feel will be a great benefit to your business.
Once you have a rough draft, let it sit for a day or two, then read it over, making any necessary revisions and asking for feedback from others. Most states have a small business association that offers free help to budding entrepreneurs. They can help you refine your business plan further. Print out your business plan and have several copies ready for your initial bank interview or investors meeting. Make it easy for them to review, and be ready to answer questions or provide additional information if needed. Show them that you have carefully thought about this business' ideas and are prepared to do the hard work to make it successful.
Food trucks run the gamut from simple street food to haute cuisine. With low overhead and operating costs, they are an affordable alternative to a traditional brick-and-mortar restaurant. However, food trucks are still a small business that requires financing. Creating a solid business plan that outlines the strategy, market, and budget will help secure financing for a food truck.