Female restaurant business owner delivering food to a customer

How to Start a Food Truck Business

10+ min read • Mar 23, 2020 • Mary Kate Miller

Opening a food truck can be easier, faster, and cheaper than launching a brick-and-mortar restaurant. Food trucks entrepreneurs are drawn to the industry because of its accessible entry and relatively low overhead. This complete guide will walk you through each step of the process, from nascent idea to knowing when it’s time to expand, and answer some of the most common questions about starting a food truck. 

How to Start a Food Truck

Conduct Market Research

If you want your food truck to be profitable (and we assume you do), market research is the best place to start. Market research will help you understand your customers, your competition, and the food truck business on the whole. Here are some market research resources for food trucks:

Find Your Niche

Gone are the days when you could paint “artisanal grilled cheese” on the side of a truck and make a killing. To be successful, you will need to set your food truck business apart from what already exists in your market. 

If You Already Know Your Food Truck Niche

Many food truck businesses start with the idea for a niche. “I wish there was a food truck for X food and no one is doing it.” If you fit into this category, the next step you should take is to loop back to your market research. Review the existing food trucks in your area to ensure that your idea isn’t too similar to something that already exists. You might have a great idea for spicy Thai mac and cheese (Does such a thing exist? It sounds good.), but if there are already 10 spicy Thai mac and cheese food trucks in your market, then it’s going to make success a lot harder.

If there are existing food trucks in your niche, that doesn’t necessarily mean you have to throw in the towel and start over. Instead, get specific. What makes you—or could make you—different from your future competition? Are there ways you can change your approach slightly to help differentiate yourself while staying true to your inspiration? How are existing food trucks in your market differentiating themselves? (Again, we come back to the importance of robust market research.) 

You don’t have to come up with the answers to these questions on your own. Interview friends, family members, other small business owners you respect, current food truck owners, and pretty much anyone who will talk to you. You never know who will come up with the missing ingredient for a rock-solid food truck niche. 

Helpful Questions to Find Your Food Truck Niche

If you don’t already have an idea for what your niche might be, now is the time to figure it out. Trust us, you don’t want to buy a truck and invest in cooking equipment only to realize you’re not sure what your niche—and therefore your brand—is. Here are some helpful questions to ask to get the ideas flowing: 

  • Did you grow up with a specific cuisine tradition that you could introduce to your market? (If so, you’ll want to revert to market research to ensure the market is ready for it)
  • Can you use your family or cultural cuisine traditions to put a fresh spin on something new?
  • Do people in your network know you as the person who makes a killer X food?
  • Do you know how to take something complicated to make and simplify it so that it works in a food truck?
  • When you performed your market research, were there any “no brainer” holes in the market, where you thought, “How do we not have an X food truck?”
  • Do you have an idea for a food truck that could complement an established food truck in your market? If so, would that food truck owner be interested in collaborating and/or selling in the same location?
  • Do you have an exceptional, attention-grabbing way to market something that people already know? The Big Gay Ice Cream truck in New York is a standout example. Their marketing made the ice cream truck a sensation that eventually led to a brick-and-mortar store. 
  • Have you checked social media to see what foods trend well in your area? More and more people are sharing their food on social media. Getting a sense of the pulse might give you an idea for what people get excited about in your area—or what they might be likely to share.
  • Follow up on the above: do you have an idea for really cute food (that also tastes good) that people would want to photograph?

When a Niche Doesn’t Matter

There’s always an exception to every rule. If you know for a fact you can make something better than everyone else, then it doesn’t really matter if there are already 3 vegan Indian taco trucks in town. If you can blow everyone out of the water, then your niche is being the best.

Small restaurant business owner benefiting from a business loan

Make a Business Plan

Next, you need to make a business plan. A business plan is an outline of what you plan to do and how you plan to do it. Based on your market and niche research, you should already have a pretty strong idea of what you plan to do. Depending on your experience in food service operations, you may already have an idea how to do it. You can learn everything you need to know in our step-by-step guide to putting together the perfect business plan. As a quick overview, here are some of the essential points you’ll want to cover in your business plan:

  • The current state of your business (where you are in the process, what you have)
  • Your business goals
  • Analysis of your industry and market, which you can pull from your market research
  • A list of indirect and direct competitors
  • Your strategy for achieving your business goals
  • The costs associated with getting you up and running

Decide on Your Price Point

The price point for your food truck will be determined by 2 elements: market research and your business plan. Consider what other food trucks are charging and how well they’re doing. Then compare it to how much you’ll need to cover operational costs. Operational costs may be higher when you start your food truck, but they should level out over time. If your operational costs will remain higher than your earnings over the long haul, then you need to either adjust your price point or your strategy.

Name Your Food Truck

Every business needs a name, and there are a number of considerations that go into naming one. Taking a deep dive into the research on brand naming is a fascinating way to spend an hour… or a week. Did you know, for example, that people tend to have positive feelings toward brands that start with the same letter as their first initial? 

The best food truck names combine a mix of familiarity and novelty. Your business name should clearly indicate what it is—a food truck, and the specific food—while still distinguishing it from existing businesses. The last thing you want is for customers to confuse you with another business. 

In the food truck industry, punchiness, playfulness, and clever wordplay abound. Some standouts include Be More Pacific in Austin, TX, Bacon Me Crazy in Twin Cities, MN, and Serial Grillers in Tuscon, AZ. 

Once you’ve chosen a name, run a handful of Google searches. First, search for your business name. Then try your business name and the type of food you’ll serve. Finally, search for your business name and your market. The easier it is for people to find you, the better. If each of your searches returns results for other food trucks, that’s an indication that you’ll have more competition in marketing, specifically with search marketing. 

Establish an LLC

Before you can start selling out during lunch hour, you need to make your business a legal entity. You can hire a lawyer, file all the paperwork yourself, or use a company like LegalZoom, who will handle all of the filings for you. Companies like LegalZoom are often cheaper than lawyer fees and limit the risks of mistakes that might happen if you file the paperwork yourself. 

Acquire Necessary Licenses

Food trucks require multiple licenses and permits to operate. Once your business is an official legal entity, your next essential paperwork-heavy task is to procure all necessary licenses and permits. Some of the most common of these include:

  • Employer Identification Number
  • Business License
  • Vehicle Licence
  • Seller’s Permit
  • Food Handler’s Permit
  • Health Department Permit
  • Fire Certificates

Get Your Truck (Or Car)

You can’t run a food truck without a truck, car, or vehicle/food trailer combo. You can purchase your food truck through several different avenues. 

  • Your network: The first place to start is always within your network. If you can purchase a used truck or car from a friend or family member, you’re probably going to get the best deal, lowering the startup cost for your food truck. 
  • Used car dealerships: At a used car dealership, you may be able to find used vans or cars/trucks that can be paired with a food trailer. 
  • Food truck manufacturers: You can avoid the need for any truck modifications or labor-intensive build-outs by purchasing from a food truck manufacturer. These companies specialize in food trucks and often build custom models. The flip side of getting exactly what you need when you need it is that this will be one of the more expensive routes. 
  • Auctions: Sometimes, a food truck goes out of business. When it does, you have the opportunity to make someone else’s misfortune your well-priced gain. Look into the auctions in your area. You may be able to secure your food truck below market value. Be sure to decide what your maximum price is before you go in, so you can avoid getting swept up in the moment and inadvertently overpaying. 
  • Kitchen food trailer sellers: If the car or truck you already own is powerful enough to tow a food trailer, you can consider purchasing one from a kitchen food trailer seller. This choice will give you the customization options of a food truck manufacturer and can sometimes come at a lower cost. 

Secure Financing

When you’re just starting out, you may not qualify yet for a business term loan, but there are a variety of financing options to help you get your food truck up and running. Here are some of your best bets:

Equipment Financing

You can use an equipment loan to help purchase the truck or car you’ll use for your food truck business and any commercial cooking equipment that you need. Even your point-of-sale (POS) system can be paid for with equipment financing. Because an equipment loan is secured by the equipment itself, the loan offers lower risk to lenders. In turn, it’s easier for borrowers to qualify. 

Line of Credit

A line of credit allows you to borrow against a predetermined sum of money. You can borrow as much as you want (up to the total amount), repay, and repeat as many times as you need. A line of credit can be a key asset for new food trucks, as they often have changing capital needs. This financing option keeps you protected from unexpected financial hurdles, so you can keep your business finances as flexible as the location of your food truck. 

Business Credit Card

Napkins, plastic silverware, ingredients, cleaning supplies. Running a food truck means making necessary purchases. With a business credit card, those purchases work in your favor. Many business credit cards allow you to earn rewards on business spending, and if you don’t yet qualify for other forms of financing, there are ways to leverage business credit cards to meet your capital needs. 

ACH Loan

Unlike other forms of funding, ACH loan decisions are based on your daily bank balances instead of your credit, making an ACH loan an option for borrowers with less-than-ideal credit. Often referred to as a “cash flow loan,” an ACH loan provides rapid funding when you need to increase working capital. 

Bootstrapping 

Most businesses rely on bootstrapping, the practice of relying on your own resources, to grow at some point or another. Depending on how much you have saved, you may be able to self-finance and get your food truck up and running through bootstrapping. Once your food truck starts cooking with gas (metaphorically or literally), find ways to maximize your profits while minimizing your costs. This strategy will give you a cushion that you can reinvest in the business. 

Crowdfunding

Crowdfunding allows you to secure capital for your business from a large number of people. Crowdfunding also allows you to acquire funding without giving up equity or traditional repayment terms. Instead, supporters can earn different rewards depending on the price tier of their investment. Popular crowdfunding sites like Kickstarter and GoFundMe can bring your business to a larger audience, but with the growing number of projects on the platforms, it can be difficult to stand out. And remember, if you go the crowdfunding route, it’s imperative that you can follow through on the rewards as promised.

Small restaurant business owner making food for customer

Protect Your Business 

Prepare for the unexpected by protecting your food truck business with the proper insurance. There are a few different insurance policies that every food truck should have.

Food Truck Insurance

  • General commercial liability insurance: Often referred to as business liability insurance, general commercial liability insurance protects your business from a variety of claims that can be made against the food truck. It covers instances like bodily harm and property damage. 
  • Commercial property insurance: A food truck is an equipment-dependent business. Commercial property insurance protects what’s inside your food truck like stoves, food, and computer equipment in the occurrence of fire, theft, or natural disaster. 
  • Workers’ compensation insurance: There’s a chance that one of your employees may be injured on the job, and you’ll want workers’ compensation insurance if they are. Workers comp covers medical costs and a portion of compensation if one of your employees suffers an injury or becomes ill at work. 
  • Commercial auto insurance: Don’t forget to insure the truck! Commercial auto insurance protects you against vehicle- and collision-related claims, including damage to your vehicle, driver injury, injury to someone else, and damage to someone else’s property. 

Food Truck Insurance Costs

Basic food truck insurance, including each of the elements outlined above, starts around $2,000 per month. Costs go up for more comprehensive coverage. 

Find a Place to Park

All you need to do is drive around and find somewhere with an open spot in a well-trafficked area, right? We wish. Because a food truck is a commercial entity, parking is a bit more complicated than that, and food truck locations can be incredibly important to the success of a business. 

Restrictions on Where You Can Park a Food Truck

Research any local government restrictions or ordinances before you roll up to your new spot. Some cities may require you to procure a specific permit to park your food truck, and there may be some streets or areas that are off-limits to food truck entrepreneurs. 

The second, softer restriction is a social one. Before you swipe another food truck’s regular spot, assess the costs and benefits of doing so. Sure, that may be a hot spot where you’ll sell out of your desert tamales in an hour, but it may come with a heavy social cost. You don’t want to make enemies as the new truck on the block. 

Solid Food Truck Locations

According to Restaurant Engine, these are some of the best food truck locations:

  • Street parking
  • Food truck parks
  • Business districts
  • Large office buildings
  • Farmers markets
  • Bars/nightclubs
  • Festivals
  • Events
  • Sporting venues
  • Gas stations
  • College campuses

Forge Strategic Partnerships

Strategic partnerships can benefit every business—from the Instagram micro-influencer to the Fortune 500 company. Forging a strategic partnership with another food truck (or better yet a group of food trucks) can benefit all parties involved. 

Strategic partnerships offer an opportunity to expose food trucks to each other’s loyal customer bases and provide a more robust culinary experience, which can draw more customers. If your food truck already has an existing fan base, then you have value to offer to your potential partners, but there are ways to form these beneficial partnerships for new food trucks, too. 

Remember when we asked if there were any existing food trucks in your market that your cuisine could compliment? (It’s okay, you can scroll up if you want a refresher.) Now is the time to revisit that question. If there’s a hamburger food truck in your area, and you plan to specialize in milkshakes, parking together offers your customers the opportunity to have a decadent hamburger and milkshake lunch or dinner, merging the classic American diner experience with the modern convenience of two food trucks parked side-by-side. 

Market Yourself

Now that you’re ready to rock’ n’ roll, it’s time to focus on marketing your business. Every successful food truck relies on marketing. Social media is going to be your best friend. You can announce your upcoming locations, specials, partnerships, and any other exciting news on Twitter, Facebook, or Instagram. As you build your business, you may find that your customers tend to engage with your food truck on one of these platforms more than others, but as you start out, it’s advisable to use a combination of the 3. How else are you going to figure out which one they use the most?

Prominently display your social media accounts and whatever hashtag you’ve chosen for your business (PS. You should choose a hashtag so people can gram their lovely food truck eats) so that customers know how to find you and who to tag. 

It’s pretty simple to list your business with Google and well-worth doing. Follow the instructions for how to add your food truck to Google My Business so your customers can find you via Google search—a likely first step many will take after hearing about a business. It also allows you to start collecting reviews so you can build that word of mouth. Many regional publications, like Time Out, also have directories where businesses can apply to be listed, increasing their reach. 

Don’t forget to let local news outlets know you’re coming to town. Drafting a press release for your new business can be pretty simple, and it allows you to generate buzz. Try connecting with local publications, influential bloggers, Instagram influencers, and industry publications. 

Discuss possible co-marketing strategies with your strategic partners. Posting together, tagging each other, or even doing the occasional Instagram takeover can help you market to each other’s audiences. 

What Do You Need to Start a Food Truck?

Small restaurant business owner successfully running her business

We’ve outlined a lot of this already, but putting it in one place can make it a lot easier. Here’s a checklist to ensure you have everything you need to open your food truck:

  • A truck, car, food trailer, etc. 
  • Foodstuffs
  • Equipment to prepare your food
  • Napkins, silverware, plates, and anything else you need to serve your food/drink
  • Legal incorporation
  • Any necessary licenses and permits
  • Insurance

How Much Does it Cost to Start a Food Truck?

Startup costs for a food truck can run anywhere between $28,000 and $114,000. Factors like location, cuisine-types, what type of vehicle you decide to purchase, and your insurance coverage/liability contribute to where your food truck business will fall in this spectrum. 

How Much Does a Food Truck Make?

The average food truck grosses around $300,000 annually. Your total profits will be dependent on your operational costs, like food and labor. A food truck with employees, for example, will have higher costs than one that is business owner-operated with minimal costs. 

Expanding Your Food Truck Into an Empire

Down the line, you may find yourself asking if it’s time to expand. Signs that it’s time for your food truck to expand include customer demand, tight space, having more business than you can handle, or an opportunity that’s too good to pass up. For a food truck, that may look like opening one or more new trucks. We’re also seeing more and more food trucks leveraging their success to move into a brick-and-mortar location. You can check out our tips on how to expand your business and how to finance your business expansion for this next step in your journey toward food truck domination… and hey, congrats. 

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Mary Kate Miller

Mary Kate Miller is a writer based in Chicago, IL. She specializes in covering finance (personal and business), investing, and real estate. Her mission in life is to give readers the confidence and the knowledge needed to grow their wealth by making financial topics more accessible. When she's not writing about topics like business loans, you can find her playing armchair financial advisor to the Real Housewives.