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How To Calculate The Cost Of A Food Truck Business

How To Calculate The Cost Of A Food Truck Business

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Food trucks have become pretty popular over the years. In fact, they’ve become a common stepping stone for entry into the food industry! It’s no surprise people want to jump into the food truck business.

Nevertheless, aspiring food truck owners must know what they’re getting into; the costs and expenses, the profitability, and whether or not they’re worth owning at all.

Luckily, we’ve compiled all the information you need into this handy guide, so don’t hesitate and read on!

How Much Does A Food Truck Cost?

The cost of a food truck business is dependant on multiple factors, including the kind of truck you get, what equipment you need, the type of food you offer, and other miscellaneous expenses.

In general, a food truck business costs from $30,000 to $100,000 to start. This is because, depending on the different expenses, the cost can quickly pile up. That’s why you must always keep the major types of expenses in your mind when considering the budget.

Types of Expenses for a Food Truck

The Food Truck

How To Calculate The Cost Of A Food Truck Business 1

1.) Buy A New Food Truck

The first option for any entrepreneur is to buy a brand-new truck. You can get it fitted with any sort of equipment you need, install and furnish it yourself, and also specialize it to the type of food business you want.

While this is not as expensive as a fully renovated food truck, the mounting expense of the time taken and the equipment bought separately can add up. You’ll probably need some extra help to make sure all the electricity and piping works as well if you’re doing this.

2.) Buy A Fully Furbished Truck

This option is a great turnkey solution if you want to begin your food truck business right away. This truck comes with the equipment already installed, and you don’t have to worry about installation or maintenance costs in the beginning.

However, it’s still more expensive than other options.

3.) Lease A Food Truck

Leasing a truck can be the least costly of the above options, and throughout your business, you can pay for it in installments, too. It may not fill all your requirements, but it can serve as a good base for your business.

Be aware that leasing another person’s food truck means there’s a chance it will require more maintenance. So be sure to ask about the health of the truck when doing your research.

You can always upgrade to your own food truck once you start earning!

4.) Choose A Trailer Instead

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Photo credits: avaeats

These generally cost less than food trucks because of the lack of easy mobility and size. To move from one area to another, you’d have to rent a towing vehicle along with it. However, you can start up with this if you want a lower cost option.


Need help starting your Food Truck Business?

How To Calculate The Cost Of A Food Truck Business 3

Great! You might be like a lot of others who have a food idea for their food truck business, but feel overwhelmed and confused by what to do next. Cause there’s a TON of moving parts when it comes to starting a food truck business.

And any slight mistake could mean $10,000s down the drain…

Join me in my free masterclass where I help give you the confidence to build your food truck business!


The Equipment

1.) Buying New Equipment

Buying brand new equipment ensures efficient and premium level work since you can utilize them to their best ability. Of course, new equipment means longer shelf-life and less chance of it breaking down. Still, they are pretty expensive, so you may want to keep that in mind.

2.) Buy Used Equipment

Used tools are less expensive than new ones, and if you’re willing to work with them in the beginning, you can find multiple websites selling second-hand equipment. You can also check out Facebook Marketplace and auction sites for your options.

Do keep in mind that these may require more maintenance than new equipment. The danger of that is you may have to close up operations for a day or a week if a core piece of equipment breaks down.

3.) Visit Auction Houses

You can also head on over to your local auction houses, which sell off the equipment and items from restaurants that have recently shut down and liquidated their stock. This is another great option to get the industrial-level tools you need for your food truck.

4.) Lease Equipment

Lastly, you can also lease equipment or adopt a monthly payment schedule to buy the items you need. This may put less stress on you in the short run and allow you to gather up the required funds on a timely basis without putting off your food truck’s opening.

Other Operational Costs

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The operational cost has to be considered in addition to the vehicle and equipment. They consist of the services that you need to efficiently and successfully run a food truck. These must remain a major consideration while constructing your business’s budget to correctly account for the profit.

In addition to the cost of the inventory, the operational expenses include the ones mentioned below:

Marketing & Advertising

How will you get the word out about your food truck business? Marketing channels like website, email newsletter, social media, flyering, outreach, radio, and more do cost time and money to do and manage. Advertising is necessary to increase the number of customers and therefore your sales and profit.

Truck and Equipment Maintenance

While buying the truck and the equipment are the biggest expenses, maintaining these things is also important since keeping them in the best shape will allow you to run your food truck efficiently.

The reason why you want to keep them in tip-top shape is that if they break down, you could be out of operation for days or weeks. That means a major setback in your revenue.

Permits and Licensing

Permits and Licensing are required to run a food truck legally, and, therefore, the expenses for this are necessary to operate your business. Some permits and licenses are one time costs, whereas others may require renewal annually or in certain time intervals.

How Profitable Is A Food Truck?

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Is the food truck business profitable? Yes, of course! But like any business, this requires you to be savvy with costs, marketing, and operations. Without a good foundation and management skills, it is likely that you might fail.

And if you dig into research and statistics, you will see that the food truck industry has been growing steadily because it makes a good stepping stone for those who eventually want to open their restaurant.

However, it’s a myth that your food truck (or any business for that matter) will be profitable or that you’ll recoup your investments in just a few months. In truth, it takes at least a year before you start to generate true profit.

In the beginning, running a food truck can be tricky and challenging (like any business!). But if you can build a solid foundation and leverage the unique nuances of the business, you’ll be on the path towards a successful food truck!

Mentioned below are the two critical elements you need to master to increase your chances of running a profitable business.

Stationing Your Food Truck At The Right Place.

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The areas where you decide to station your food truck play an essential role in its profitability. You need to station your food trucks at places that tend to gather more audience at a time.

To do this, you need to know where to be at the right time to serve the right clientele. This may take a lot of effort for data collection since you need to do some trial and error at the start. But once you have the information, you’ll know which spot and time to be at to get the most revenue.

Popular truck owners who follow this technique tend to earn from $20,000 to $50,000 a month, and the sales increase when they extend their revenues by stationing near events and crowded areas like schools and offices.

Have A Good Grasp Of Your Operations And Finances.

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One of the top reasons food trucks and other food businesses fail is because the owner is NOT savvy with their operations and finances.

For many new food truck owners, operations and finances are confusing and terrifying. They ignore or mismanage them, which leads to an accumulation of problems related to these two elements. These problems eventually lead to the end of your food truck.

However, this means you must learn how to manage finances and operations, for managing everything correctly will bring you peace of mind. And every business owner knows that peace of mind is a necessity for successfully running your business.

It’s About Speed And Volume.

While running a food truck, you need to understand that speed is important. You’re playing the volume game – the more people you serve, the more money you make. You are NOT a restaurant where speed is not as big an issue.

After all, for food trucks, people stand outside waiting for their food. No one wants to wait for half an hour, especially with their hectic lives.

This means you MUST streamline the following aspects:

  • How do you take orders?
  • How do you make the food?
  • How do you interact with customers (considering service and expectations)?

If you do not maintain these as standards for your business, you risk unhappy customers and negative word of mouth.

So if you’re planning to serve food that takes a long time to make – scrap the idea. Go for speed, efficiency, and volume, because those are necessary for a good food truck.

Think About Profits First, Not Last.

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A common mistake new food business owners make is pricing their items arbitrarily. For example, you might see that your competitor’s food truck charges $16 for a lobster roll, and you’ll decide to do the same.

Unfortunately, that’s the wrong decision. After all, you don’t know their margins or why that price works for them. They could be losing money on every lobster roll they sell!

You need to be able to bake your profits into one item so that you can come out each month with profit and without loss.

And beyond everything else, you should know which items are money makers and which ones are loss leaders. It’s better to be aware of what’s making money and focusing on that rather than working 50 hours a week and realizing that you’re making nothing.

Because of that, you need to think about certain elements when pricing your items:

  • Cost of goods sold (COGS)
  • Labor costs
  • Cost of rent (truck & permits)

Additionally, when building your menu, you want to determine your average order value (AOV). After understanding that, you’ll have to figure out how to bump it up as much as you can to make more profit per customer.

One of the ways is by investing in bundle items or complimentary items and deals.

And when building out your menu, you want to think about your average order value (AOV). You want to do your best to bump it up so you can make more money from each customer.

Some ways are to bundle items or have complimentary items.

In addition, the advantage of food trucks is their small inventory space. This may seem difficult to manage since you’ll have to buy ingredients daily basis. However, it actually helps improve your management as you’ll have to evaluate and analyze the operations and finances on a day-to-day basis to make sure there is a balance between profits and losses.

Now that you know a food truck can be a profitable business, you need to understand that profit and loss are a part of any business. Anything that can make your profits long-lasting is the quality of service you provide to your customers and the tasteful food which meets their expectations from you.

Is It Worth It Owning A Food Truck?

The answer is most definitely ‘Yes’! Owning a food truck is perfect for food business owners, whether you’re a new entrepreneur who wants to step into the food industry or an experienced chef who wants to start your own business (but don’t have the capital for a storefront).

Food trucks allow you to jump in with just a small amount of investment. You can learn the ropes of the food industry, improve your skills as you go along, and utilize the low-risk, high-reward model by branding your name!

In short, this business is a stepping stone for every chef who wants to join the food industry.

It is a way to build your brand and gather loyal customers who like your food. And, of course, it’s a method of proving your capabilities so that you may get investment for a restaurant or storefront!

And we don’t say this without proof:

In Vancouver, there is an example of “The Frying Pan,” a food truck that began due to funding limitations for a physical store. A year after their conception, they gained enough traction and capital to buy a second food truck, eventually leading to an actual storefront.

Another great example is Tacofino, another food truck in Vancouver that started as a truck and expanded to multiple storefronts all over the city.

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Photo Credits: Tacofino

All in all, food trucks offer you incredible opportunities, especially if you’re looking to expand your following and move forward within the industry to finally start your restaurant.

Food trucks are worth it because they fulfill your dreams.

The Bottom Line

In a nutshell, the food truck business is becoming popular among entrepreneurs and food lovers day by day. Undoubtedly, the business has proved to be budget-friendly, profitable, and an interesting choice among entrepreneurs.

Do you know what they say about first-timers? They prove to be more successful businessmen. This is because even though they have relatively less experience, they still have more passion for performing!

As an entrepreneur, running a new business can be challenging, but consistency and hard work will bring you peace of mind with a satisfied heart.

So, what are you waiting for? If you’ve been waiting to give your entrepreneurial skills ago, this is the right time for you to start your food truck business!

Need help starting your Food Truck Business?

How To Calculate The Cost Of A Food Truck Business 3

Great! You might be like a lot of others who have a food idea for their food truck business, but feel overwhelmed and confused by what to do next. Cause there’s a TON of moving parts when it comes to starting a food truck business.

And any slight mistake could mean $10,000s down the drain…

Join me in my free masterclass where I help give you the confidence to build your food truck business!

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