The phenomenon known as the gourmet food truck -- which has spawned a reality show and countless creative menu items -- is well on its way to going mainstream. Low startup costs, a slew of success stories, and the opportunity to meet the people who enjoy your food may appeal to someone searching for a new business opportunity.
Here are some reality checks:
Startup costs are only the beginning
Compared to opening a brick-and-mortar restaurant, the cost of owning a food truck is a fraction of the cost. Opening a traditional restaurant will set you back $125,000 to $550,000 according to an industry survey by RestaurantOwner.com. Depending on where you live, the cost of purchasing and fixing up a mobile restaurant could be as low as $30,000 and as high as $80,000, reported food truck owners.
The initial startup cost may be lower, but food trucks come with their own expenses. In addition to getting a truck, insurance, employees and food, you will need a vending permit. Permit rates vary based on locality: Colorado Springs charges $115, but in larger cities such as Los Angeles, a permit is $695. In New York City, a vendor needs a Mobile Food Vendor License and a vending vehicle needs to be equipped with a Mobile Food Vending Unit Permit. The permits are technically $200, but getting them can be difficult since some cities (including New York) have a cap on the number of permits that are being used for a certain period.
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There are also costs that are harder to predict, such as gas prices. Right now, gas prices are rising and will continue to climb, according to industry experts. Former Shell Oil President John Hofmeister predicted that increased worldwide demand and lack of production could cause gas prices in the United States to reach $5 per gallon by 2012, reported The New York Times. Do you really want to drive a diesel fuel guzzler if that happens?
Location is one of the most important factors in the food truck biz. As food trucks become more popular, the competition for plum spots will get even fiercer. Look out for parking tickets as well. Parking fines in New York City, a hot spot for trucks, are generally $130 or more.
Few people are willing to stand in the rain or in freezing temperatures for mini-cupcakes and artisanal hot dogs. Unless you are located in an area with temperate weather all year round, be prepared for unexpected storms and cold spells to take a chunk out of your profits.
Even if you’re cooking your food on-site, you will need space to prepare your ingredients and store whatever isn’t sold. Your home kitchen might not be equipped to meet your business needs so be prepared to rent kitchen space and possibly extra storage facilities.
Serving food straight from your truck to hungry customers can be rewarding, but only if you know what you’re getting into.