How to Start a Food Truck Business

ON THIS PAGE

• How to Start a Food Truck Business
• 15 Steps To Start a Food Truck
• How Big is the Food Truck Industry?
• What are the Key Segments of the Food Truck Industry?
• What External Factors Affect the Food Truck Industry?
• What are the Key Customer Segments in the Food Truck Industry?
• What are the Key Costs in the Food Truck Industry?
• What are the Typical Startup Costs for a New Food Truck?
• Top Five Marketing Tips and Tricks for Food Truck Owners
• Food Truck Social Media Strategies
• The History of Food Trucks in America
• Food trucks across America
• Helpful Videos
• Additional resources in the food truck market

 

How to Start a Food Truck Business

If you’re looking to start a food truck business, you’ve come to the right place. Since we’re going to show you exactly how to do it.

We’ll start with key food truck industry fundamentals like how big the market is, what the key segments are, and how revenues and profits are generated.

Then we’ll discuss keys to not only starting a food truck business, but succeeding in it!

Before we continue, here’s where you can access your food truck business plan template since having a plan will be key to your success.

Download our Ultimate Food Truck Business Plan Template here

15 Steps To Start a Food Truck:

Starting a food truck can be very profitable. With proper planning, execution and hard work, you can enjoy great success. Below you will learn the keys to launching a successful food truck.

1. Choose the Name for Your Food Truck Business

The first step to starting a food truck is to choose your business’ name.

This is a very important choice since your company name is your brand and will last for the lifetime of your business. Ideally you choose a name that is meaningful and memorable. Here are some tips for choosing a name for your food truck:

1. Make sure the name is available. Check your desired name against trademark databases and your state’s list of registered business names to see if it’s available. Also, check to see if a suitable domain name is available.
2. Keep it simple. The best names are usually ones that are easy to remember, pronounce, and spell.
3. Think about marketing. Come up with a name that reflects the desired brand and/or focus of your food truck.

 

2. Determine the Type of Food Truck Business You Will Launch

When determining the type of food truck to launch, consider your interests, culinary skills, target market, and local demand.

Here are some popular types of food truck to consider:

1. Gourmet Burgers: Offer a variety of gourmet burgers with unique toppings and flavor combinations.
2. Taco Truck: Serve a range of tacos, including traditional, fusion, and specialty options.
3. Pizza Truck: Create artisanal pizzas with fresh ingredients and cook them in a mobile wood-fired oven.
4. Barbecue Truck: Specialize in smoked meats, such as pulled pork, ribs, and brisket, along with classic BBQ sides.
5. Mexican Food Truck: Offer a menu of Mexican dishes like burritos, quesadillas, and street tacos.
6. Asian Fusion Truck: Combine flavors from various Asian cuisines, offering dishes like sushi burritos or Korean BBQ tacos.
7. Sushi Truck: Serve fresh sushi rolls, sashimi, and Japanese-inspired dishes.
8. Seafood Truck: Feature a seafood-centric menu with options like fish tacos, lobster rolls, and crab cakes.
9. Mediterranean Food Truck: Provide Mediterranean cuisine, including falafel, shawarma, and gyros.
10. Vegetarian/Vegan Truck: Cater to plant-based eaters with a menu of vegan and vegetarian dishes.

 

3. Develop Your Food Truck Business Plan

One of the most important steps in starting a food truck is to develop your business plan. The process of creating your plan ensures that you fully understand your market and your business strategy. The plan also provides you with a roadmap to follow and if needed, to present to funding sources to raise capital for your business.

To enhance your planning process, incorporating insights from a sample food truck business plan can be beneficial. This can provide you with a clearer perspective on industry standards and effective strategies, helping to solidify your own business approach.

Your business plan should include the following sections:

1. Executive Summary: This section should summarize your entire business plan so readers can quickly understand the key details of your food truck.
2. Company Overview: This section tells the reader about the history of your food truck and what type of food truck you operate. For example, are you a taco food truck, pizza food truck, or Mexican food truck.
3. Industry Analysis: Here you will document key information about the food truck industry. Conduct market research and document how big the industry is and what trends are affecting it.
4. Customer Analysis: In this section, you will document who your ideal or target customers are and their demographics. For example, how old are they? Where do they live? What do they find important when purchasing products like the ones you will offer?
5. Competitive Analysis: Here you will document the key direct and indirect competitors you will face and how you will build a competitive advantage.
6. Marketing Plan – your marketing plan should address the 4Ps: Product, Price, Promotions and Place.
• Product: Determine and document what products/services you will offer
• Prices: Document the prices of your products/services
• Place: Where will your business be located, and how will that location help you increase sales?
• Promotions: What promotional methods will you use to attract customers to your food truck? For example, you might decide to use pay-per-click advertising, public relations, search engine optimization, and/or social media marketing.
7. Operations Plan – here you will determine the key processes you will need to run your day-to-day operations. You will also determine your staffing needs. Finally, in this section of your plan, you will create a projected growth timeline showing the milestones you hope to achieve in the coming years.
8. Management Team – this section details the background of your company’s management team.
9. Financial Plan – finally, the financial plan answers questions including the following:
• What startup costs will you incur?
• How will your food truck make money?
• What are your projected sales and expenses for the next five years?
• Do you need to raise funding to launch your business?

 

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

4. Choose the Legal Structure for Your Food Truck Business

Next you need to choose a legal structure for your food truck and register it and your business name with the Secretary of State in each state where you operate your business.

Below are the five most common legal structures:

1) Sole proprietorship

A sole proprietorship is a business entity in which the owner of the food truck and the business are the same legal person. The owner of a sole proprietorship is responsible for all debts and obligations of the business. There are no formalities required to establish a sole proprietorship, and it is easy to set up and operate. The main advantage of a sole proprietorship is that it is simple and inexpensive to establish. The main disadvantage is that the owner is liable for all debts and obligations of the business.

2) Partnerships

A partnership is a legal structure that is popular among small businesses. It is an agreement between two or more people who want to start a food truck together. The partners share in the profits and losses of the business.

The advantages of a partnership are that it is easy to set up, and the partners share in the profits and losses of the business. The disadvantages of a partnership are that the partners are jointly liable for the debts of the business, and disagreements between partners can be difficult to resolve.

3) Limited Liability Company (LLC)

A limited liability company, or LLC, is a type of business entity that provides limited liability to its owners. This means that the owners of an LLC are not personally responsible for the debts and liabilities of the business. The advantages of an LLC for a food truck include flexibility in management, pass-through taxation (avoids double taxation as explained below), and limited personal liability. The disadvantages of an LLC include lack of availability in some states and self-employment taxes.

4) C Corporation

A C Corporation is a business entity that is separate from its owners. It has its own tax ID and can have shareholders. The main advantage of a C Corporation for a food truck is that it offers limited liability to its owners. This means that the owners are not personally responsible for the debts and liabilities of the business. The disadvantage is that C Corporations are subject to double taxation. This means that the corporation pays taxes on its profits, and the shareholders also pay taxes on their dividends.

5) S Corporation

An S Corporation is a type of corporation that provides its owners with limited liability protection and allows them to pass their business income through to their personal income tax returns, thus avoiding double taxation. There are several limitations on S Corporations including the number of shareholders they can have among others.

Once you register your food truck, your state will send you your official “Articles of Incorporation.” You will need this among other documentation when establishing your banking account (see below). We recommend that you consult an attorney in determining which legal structure is best suited for your company.

5. Secure Startup Funding for Your Food Truck Business (If Needed)

In developing your food truck business plan, you might have determined that you need to raise funding to launch your business.

If so, the main sources of funding for a food truck to consider are personal savings, family and friends, credit card financing, bank loans, crowdfunding and angel investors. Angel investors are individuals who provide capital to early-stage businesses. Angel investors typically will invest in a food truck that they believe has high potential for growth.
 

6. Secure a Location for Your Business

Finding the right space for your food truck is crucial for its success.

Here are some factors to consider when choosing a location:

• Foot Traffic: Look for areas with high foot traffic, such as downtown streets, business districts, and popular tourist spots. More people passing by can mean more potential customers.
• Proximity to Offices and Workplaces: Consider setting up near office complexes, industrial areas, or business parks where employees are looking for convenient lunch options.
• Colleges and Universities: Position your food truck near colleges or universities to attract students and faculty seeking quick and affordable meals.
• Events and Festivals: Participate in local events, festivals, and markets where large crowds gather. These events can provide a steady stream of hungry customers.
• Parks and Recreation Areas: Parks, especially those with recreational facilities or sports events, can be great locations for weekend business.
• Tourist Attractions: If you’re in a tourist area, park near popular attractions, as tourists often seek local cuisine.

Remember that finding the right location may require experimentation and adjustments over time as you learn more about your customer preferences and traffic patterns in different areas.

 

7. Register Your Food Truck Business with the IRS

Next, you need to register your business with the Internal Revenue Service (IRS) which will result in the IRS issuing you an Employer Identification Number (EIN).

Most banks will require you to have an EIN in order to open up an account. In addition, in order to hire employees, you will need an EIN since that is how the IRS tracks your payroll tax payments.

Note that if you are a sole proprietor without employees, you generally do not need to get an EIN. Rather, you would use your social security number (instead of your EIN) as your taxpayer identification number.
 

8. Open a Business Bank Account

It is important to establish a bank account in your food truck’s name. This process is fairly simple and involves the following steps:

1. Identify and contact the bank you want to use.
2. Gather and present the required documents (generally include your company’s Articles of Incorporation, driver’s license or passport, and proof of address).
3. Complete the bank’s application form and provide all relevant information.
4. Meet with a banker to discuss your business needs and establish a relationship with them.

 

9. Get a Business Credit Card

You should get a business credit card for your food truck to help you separate personal and business expenses.

You can either apply for a business credit card through your bank or apply for one through a credit card company.

When you’re applying for a business credit card, you’ll need to provide some information about your business. This includes the name of your business, the address of your business, and the type of business you’re running. You’ll also need to provide some information about yourself, including your name, Social Security number, and date of birth.

Once you’ve been approved for a business credit card, you’ll be able to use it to make purchases for your business. You can also use it to build your credit history which could be very important in securing loans and getting credit lines for your business in the future.
 

10. Get the Required Business Licenses and Permits

Starting a food truck involves obtaining various licenses and permits to operate legally and ensure compliance with local health and safety regulations.

Here are common licenses and permits typically required for a food truck:

• Business License: Obtain a general business license or an occupational license from your local city or county government.
• Food Service License: Apply for a food service establishment permit or food truck license from your local health department. This license ensures that your food truck meets health and safety standards.
• Mobile Food Vendor Permit: Many cities require a specific mobile food vendor permit to operate a food truck. Check with your local government for details on this permit.
• Food Handler’s Permit: If you or your employees handle food, you may need a food handler’s permit, which demonstrates knowledge of safe food handling practices. This often involves completing a food safety training course.
• Commissary Agreement: In some areas, food truck operators must have a commissary agreement, which is an agreement with a licensed commercial kitchen where you can prepare, store, and clean your equipment.
• Vehicle Permit: Depending on your location, you may need a vehicle permit or license to operate a commercial vehicle as a food truck.
• Parking Permit: Check with your local government to see if you need a special parking permit for food trucks. Some cities have designated food truck zones.

Depending on the type of food truck you launch, you will have to obtain the necessary state, county and/or city licenses.
 

11. Get Business Insurance for Your Food Truck Business

Operating a food truck involves various risks, and having the right insurance coverage is essential to protect your business, assets, and customers.

Here are types of insurance you should consider for your food truck:

• Commercial Auto Insurance: This insurance is crucial because your food truck is a commercial vehicle. It covers damage to your food truck and liability for accidents you may cause while driving. Be sure to get comprehensive coverage that includes coverage for theft, fire, and collisions.
• General Liability Insurance: General liability insurance provides coverage for third-party bodily injury and property damage claims. It’s essential for accidents that may occur on or near your food truck, such as slips and falls.
• Product Liability Insurance: This insurance protects you in case someone becomes ill or is injured due to consuming your food. It covers legal expenses and settlements related to foodborne illness or injury claims.
• Business Interruption Insurance: Business interruption insurance helps cover lost income and ongoing expenses if your food truck is unable to operate due to unexpected events like a fire or accident.
• Property Insurance: Property insurance covers damage to your food truck, equipment, and inventory caused by events like fire, theft, vandalism, or extreme weather.
• Equipment Breakdown Insurance: This coverage helps you repair or replace damaged equipment, such as cooking appliances, refrigerators, and generators, in case of unexpected breakdowns.

Find an insurance agent, tell them about your business and its needs, and they will recommend policies that fit those needs.
 

12. Buy or Lease the Right Food Truck Business Equipment

Running a food truck requires various equipment to prepare, cook, store, and serve food efficiently.

Here is a list of essential equipment you’ll need for your food truck:

• Work Tables: Stainless steel work tables provide a clean and durable surface for food prep.
• Cutting Boards: Use food-safe cutting boards for chopping, slicing, and preparing ingredients.
• Knives and Utensils: High-quality knives, spatulas, tongs, and other utensils are essential for cooking and serving.
• Food Processors and Mixers: These can help with chopping, blending, and mixing ingredients.
• Mixing Bowls: Multiple sizes of mixing bowls are handy for preparing sauces, dressings, and marinades.
• Can Opener: A commercial can opener is useful for opening canned ingredients.
• Slicers and Graters: Use these for slicing vegetables, cheese, and other ingredients.
• Cooking Appliances: Depending on your menu, you may need a combination of griddles, fryers, stove tops, ovens, and grills.
• Hood System: A ventilation hood is essential to remove cooking odors, heat, and grease from the cooking area.
• Microwave: If needed for heating or reheating dishes.
• Steamer: Useful for steaming vegetables, seafood, or other items.
• Grill: If you plan to grill items like burgers, hot dogs, or skewers.
• Deep Fryer: For frying items like French fries, chicken tenders, or donuts.

Remember that the specific equipment you need may vary based on your menu and cuisine type. Consult with a professional kitchen equipment supplier to ensure you have the necessary appliances and tools for your food truck’s unique requirements.
 

13. Develop Your Food Truck Business Marketing Materials

Marketing materials will be required to attract and retain customers to your food truck.

The key marketing materials you will need are as follows:

1. Logo: Spend some time developing a good logo for your food truck. Your logo will be printed on company stationery, business cards, marketing materials and so forth. The right logo can increase customer trust and awareness of your brand.
2. Website: Likewise, a professional food truck website provides potential customers with information about the products you offer, your company’s history, and contact information. Importantly, remember that the look and feel of your website will affect how customers perceive you.
3. Social Media Accounts: Establish social media accounts in your company’s name. Accounts on Facebook, Twitter, LinkedIn and/or other social media networks will help customers and others find and interact with your food truck.

 

14. Purchase and Setup the Software Needed to Run Your Food Truck Business

Running a food truck involves more than just cooking and serving delicious food; you also need to manage various aspects of your business efficiently.

Here are some types of software that can help you run your food truck smoothly:

• Point-of-Sale (POS) System: A POS system is essential for processing customer orders, managing payments, and keeping track of sales. It may also include inventory management features.
• Food Truck Scheduling and Management Software: Use scheduling software to manage your food truck’s calendar, plan routes, and track locations for various shifts and events.
• Accounting and Financial Software: Accounting software helps you track expenses, revenue, and profits. It simplifies tax preparation and financial planning.
• Inventory Management Software: Efficiently manage your food inventory, track stock levels, and receive alerts when it’s time to reorder ingredients or supplies.
• Recipe Management Software: Recipe management software can help you create and standardize recipes, calculate ingredient costs, and analyze recipe profitability.
• Food Safety and Compliance Software: Ensure food safety and compliance with software that helps you track temperature logs, manage food safety documentation, and stay up-to-date with local health regulations.

Research the software that best suits your needs, purchase it, and set it up.
 

15. Open for Business

You are now ready to open your food truck. If you followed the steps above, you should be in a great position to build a successful business. Below are answers to frequently asked questions that might further help you.
 

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

How Big is the Food Truck Industry?

There are approximately 4,042 food truck businesses in the US, and $856.7 million in revenue has been generated by the food truck industry in 2015. Over the past 5 years, its annual growth rate has reached a remarkable 9.3%.

 

What are the Key Segments of the Food Truck Industry?

Food trucks product offerings are generally segmented by the cuisines and types of food it serves. The main segments for the industry are American, Latin, Asian and Desserts

What External Factors Affect the Food Truck Industry?

A number of factors affect the performance of the food truck industry. These drivers include:

• Consumer spending: An increase in consumer spending means that consumers are more inclined to eat outside – restaurants, fast food chains, and even food trucks.
• Consumer Confidence Index: A low consumer confidence index would increase the consumer’s discretionary spending, shying them away from spending money on things that are not immediately needed which may include a bite at food trucks.
• Healthy eating index: A high healthy eating index indicates a low preference of consumers to buy fast food and affects the revenue of the food truck businesses.
• Urban population: An increase of the urban population where a food truck is located, indicates an increase of potential customers.
• Agricultural price index: When there is an increase of prices of ingredients, operating costs increase and profit decreases.

 

What are the Key Customer Segments in the Food Truck Industry?

The key customer segment for food truck operators are those aged 15 to 44, followed by those 25 and under.

Finish Your Business Plan Today!

If you’d like to quickly and easily complete your business plan, download Growthink’s Ultimate Business Plan Template and complete your plan and financial model in hours.

What are the Key Costs in the Food Truck Industry?

Wages-Reprsenting over 1/3, Employee wages and benefits is a significant part of the cost of a food truck business.

Purchases-The second largest cost in the food truck industry is purchases of raw materials and ingredients from suppliers, usually wholesalers.

Other-Other costs include liability, fuel, truck insurance, repairs, and licensing fees. These costs vary on the city where the food truck is situated since there are different regulatory laws and ordinances for the food truck industry in different cities.
 

What are the typical startup costs for a new food truck?

The startup cost for a new food truck could range from $50,000 to $200,000.

One-time start-up costs include the following:

• Purchase or lease of food truck
• Permits and license
• Professional, legal, and consulting fees
• Initial food purchases
• Kitchen supplies and equipment
• Advertising costs

Recurring start-up costs include the following:

• Insurance
• Commercial rent
• Salaries
• Truck and equipment maintenance

 

Top Five Marketing Tips and Tricks for Food Truck Owners

Food Truck Social Media Strategies

Food trucks across America

Burger and Beer Joint at Bayfront Park

Wilma’s at Lenexa City Center

Small food trucks in front of the Metropolitan Art Museum in New York City

Food trucks at the Crown Plaza hotel parking lot next to LAX
 

Helpful Videos

The Food Truck Business – Tips to Start Your Own Business

 
How Much Do Food Truck Owners Earn? More than you think!

 
Food Truck Laws & Regulations

 
Food Truck Commissaries

 

Food Truck Business Plan Example PDF

Download our food truck business plan PDF here. This is a free food truck business plan example to help you get started on your own food truck plan.
 

Additional resources in the food truck market

For additional information on the food truck market, consider these industry resources:

• Food Truck Business Plan Template
• Mobile Food Vendors Association
• Nation’s Restaurant News
• Restaurant Association
• Mobile Cuisine Magazine
• Food Truck Mavericks