In recent years, the food truck industry has experienced a culinary revolution, offering a diverse range of delicious and convenient options for food lovers on the go. With its low startup costs and flexibility, it’s no wonder that many aspiring entrepreneurs are considering a food truck business as their ticket to culinary success. However, the road to a thriving food truck venture begins with a well-crafted business plan.
A well-thought-out food truck business plan serves as your recipe for success. It provides a roadmap for your business, helping you define your goals, understand your market, secure funding, and ultimately, turn your passion for cooking into a profitable endeavor. In this article, we will explore the essential ingredients that make up a comprehensive food truck business plan.
In this industry, establishments prepare and serve meals from a mobile truck. Food is usually prepared, stored and cooked on the food truck. Food trucks may or may not use the same location every day, and it does not sell alcoholic beverages.
Food trucks have experienced rapid growth over the five-year period to 2021 and are one of the best-performing segments within the food service industry. A variety of cities, including Portland, OR, Los Angeles, and Austin, TX, have attempted to differentiate themselves by passing laws and establishing special zones for mobile food trucks.
The industry will continue to face challenges over the next 3 years, especially regulatory hurdles, which have slowed its growth over the past 3 years. In many cities, parking laws and other ordinances are still evolving to catch up with the industry’s rapid transformation. In spite of these factors, household income growth and consumer preference changes toward healthier and gourmet cuisine will continue to drive growth. Revenue is projected to increase by 1.6% annually over the next 3 years to $1.3 billion.
A food truck business plan follows the same structure as a traditional business plan but with a few differences that require careful attention. Here are the essential sections to include in your food truck business plan:
The executive summary provides a concise overview of your business. Aim to keep it limited to one or two pages, as anything beyond that is unnecessary.
This summary is for your business partners and family. It should briefly describe your food truck concept, operating hours, locations, marketing plan summary, and startup capital. Write the executive summary last, after completing the rest of your plan. Develop the other sections first, then summarize everything on a single page. The executive summary should provide a solid understanding of your business.
This section is where you can showcase the exciting aspects of your food truck business. Describe the overall concept or company description, highlighting what sets your food truck apart.
Consider your unique selling points and incorporate them here. If you’re opening a taco truck, what sets your tacos apart? Why would people choose your truck over others? If there are no existing taco trucks in the market, explain how your food truck concept can fill that gap. Also, discuss why you’ve chosen a food truck over a traditional restaurant. Does your food lend itself to the food truck experience?
Following the concept section, outline your menu and pricing strategy. Determine which items you will sell, their corresponding prices, and the cost of producing each item. Additionally, estimate the time required for preparation and cooking. You can refer to various food truck menu examples to help structure your own.
Consider these questions and document your answers as they are crucial for the planning process. Ensure that the food you plan to serve can be prepared and served efficiently and that your prices cover the ingredient costs. Other expenses will be explored further in your financial plan. Once you establish your menu and pricing, seek feedback from friends, family, and even strangers. Their input can help evaluate your prices and determine if your item descriptions are clear and appealing.
The target market section of your business plan outlines your key customer base. It includes their age group, demographics, and where they live and work. Understanding this information is crucial for determining the potential size of your market and shaping your branding and marketing strategies. For instance, if your target market consists of millennials, you may want to emphasize the values of healthy eating in your branding and marketing efforts.
Even though your business is mobile, it’s important to plan ahead and not rely on finding a new location every day. Consider targeting areas where your potential customers are likely to be, such as the “working lunch” crowd near office spaces. Be consistent in letting customers know where and when you’ll be available, as inconsistency may discourage repeat business. If you’re part of an established food cart “pod,” research the requirements and costs associated with securing a spot, including parking and permitting. If you plan to operate from multiple locations in a day, create a schedule that outlines how often you’ll move and the time required to set up at each new location.
With the rise in popularity of food trucks, it is crucial to devise effective strategies to attract an audience. Fortunately, your food truck serves as a mobile billboard, allowing you to leverage it for marketing and advertising purposes.
Incorporate your social media handles into your branding and marketing strategy for easy online visibility. Consistently update your profiles to avoid giving the impression of being closed. Maintaining an active online presence is crucial.
List your truck on platforms like Yelp and local food truck directories. Garner positive reviews and establish a presence on these platforms, especially in the early stages of your business.
Seek local press coverage by reaching out to weekly arts and culture papers. Pitch your unique story, highlighting what sets you apart and inspired you to start your food truck business. Share your story to secure coverage that attracts customers to your truck.
Food truck businesses are typically structured in a simple manner, often with one or two owners and as a limited liability company (LLC).
Though things may seem simple, it’s wise to document important details, especially with business partners. Create agreements that outline ownership, stakes, and contingency plans in case a partner leaves. Challenges in running a food truck can strain any relationship. Plan ahead for unexpected situations. Strong friendships can face difficult business moments. Documenting and agreeing on everything before launching helps navigate such situations much easier.
The financial plan is potentially the most important part of your business plan. Here’s where you’ll figure out exactly what it will take to make your business work so that you can make a living.
Start by forecasting your sales. Estimate the number of meals served daily, average customer spending, and consider seasonality. Will bad weather affect sales compared to warm and sunny days?
Next, analyze your “cost of goods” – the expenses for food and supplies. Subtract the cost of goods from sales to calculate the Gross Margin. Aim for a positive number, but remember, this is just the beginning.
Next, analyze your expenses. Along with food costs, consider labor costs, including your own salary and any additional help needed. Don’t forget insurance, city and county licensing, fuel, and event host commissions. Food trucks often pay a flat fee plus a percentage of revenue to event hosts, so factor those costs in if you plan to attend events.
Additional expenses may include access to a shared kitchen space. Since food prep at home is not allowed, you’ll need to prepare food in your truck or rent kitchen space.
Use your sales forecast and expense budget to calculate profitability. If your business doesn’t seem profitable initially, adjust expenses, possibly raise food prices, or find ways to serve more meals.