(2013-03-15) Pricenomics Food Truck Economics

On Food-Truck Economics

The food truck market may be easier to break into than the restaurant business, but it is still a major endeavor. The cost of starting a high quality food truck ranges from approximately $50,000 to $150,000 or more, and the process takes several months.

But trucks looking to tap into the foodie scenes of LA, New York, and San Francisco may need to make a big investment in a custom truck.

The other major start up expense is licensing and permits. Josh of StrEAT Food Park estimates the total cost at up to $10,000, a figure confirmed by several trucks. The various required licenses include a business license, food handler certification, health certification, and fire certification.

Food truck owners cannot run the business out of their house. They are legally obligated to prep food in a certified kitchen and dump used “gray” water in a certified space. Commissaries, kitchens that rent out space to food entrepreneurs, have begun catering to food trucks, offering places to park and re-charge the trucks in addition to cooking facilities.

A number of resources and companies now also streamline the initial process. Off The Grid, for example, offers a comprehensive “Instruktional” guide on how to start a mobile food business for around $300

The owners we spoke to averaged 2 months of effort until they served their first customer

The popping of America’s housing bubble in 2007-2008 meant a stall in new construction projects, leaving food trucks without their best customers

Bobby noted that the price of a used truck had doubled since he bought his a year ago, and found the $180,000 sticker tag of new trucks to be taking advantage of the food truck buzz. The cost of permits has also been raised several thousand dollars. Together, this doubles the startup costs of a food truck.

A food truck applying for a permit in Chicago today, Bobby noted, will receive one in 8 years.

Surveying customers at Off The Grid, we met exactly zero who cited cost as a reason to grab lunch from a food truck. A full meal averages $8 to $12

given the inconsistency of selling from a truck (bad weather can cut sales in half and around 75% of all revenue needs to be brought in during the peak season from April to October) and the reality of needing to sell alcohol to make money, they want to build on the success of their food truck to open a restaurant. Our

The second camp, in which Phat Thai plants its flag, views food trucks as the more profitable venture

Food trucks also complement their schedules with more lucrative catering gigs.

“You don’t get rich owning a food truck. But no one enters the food business to get rich. You do it because you’re passionate about the food.”