Starting a food truck business is an attractive alternative to opening a restaurant. The initial costs are significantly lower than opening a traditional restaurant and the popularity of food trucks only continues to grow. This doesn’t mean that food trucks are cheap, though. It can cost anywhere from $5,000 to over $100,000 to open a new truck, so you’ll want to make sure you understand the risks.
A business plan is a critical part of opening a food truck. A good plan is like having a recipe for your business and gives you the best chance of success. It will guide you through the process of getting up and running and make sure that you plan for all of the expenses and risks that will be involved. It’s worth the time and will greatly increase your chances of success.
After all, if you’re going to invest tens of thousands of dollars in a food truck, kitchen equipment, labor, and permits, why not spend a little time creating a solid business plan that will be your guide to launching a successful food truck business.
A well thought out business plan can be the difference between success and failure. For example, you might create an initial financial plan and discover that your idea simply isn’t profitable.
It’s so much better to make this discovery when all you’ve invested is a few hours of your time in front of the computer. Instead of scrambling to figure things out when you’re already up and running and you’ve got no money in the bank, you can take the time during the planning phase to go back to the drawing board and rework your concept until you have a business that is profitable. You can use the time before you invest your (or other people’s) money to figure out where you can cut costs so that your business can be a success out of the gate rather than a struggle.
As you write your food truck business plan, remember that you’re doing this for you, not for anyone else. You aren’t going to get graded on what the plan looks like so don’t worry about that. Make your plan work for you so you and your business can be successful.
One caveat: If you are going to be raising money from investors or going to the bank for a loan, you may need to dress up your business plan a little. But, to get going, focus on the content not how it looks.
Food truck business plan template
A food truck business plan follows the same general format as a traditional business plan but has a few differences that you’ll want to pay close attention to. Here are the sections that you’ll want to include in your business plan for your food truck:
1. Executive summary
Your executive summary is a very brief overview of your business. Try and keep it to just one or two pages. Anything more than that just isn’t useful.
This is an overview of your business that you’ll share with your business partners and your family. It’s a summary that describes, very briefly, the concept for your food truck, your core hours of operation, your locations, a summary of your marketing plan, and the amount of money you’ll need to get up and running.
Write your executive summary last after you’ve written your complete plan. Because the executive summary is an overview of all the work that you’ve put into your plan, spend the time on the rest of the plan first and then come back and summarize everything on one page.
A good rule of thumb is that someone should be able to just read your executive summary and get a solid overview of your business.
This is the fun part of your business plan. Use this section to describe the general concept for your food truck. What kind of food will you serve? What makes you stand out?
It’s important to think about your key differentiators and write those down here. If you’re opening a taco truck, what makes your tacos special? Why will people choose your taco truck instead of going to all the other taco trucks? Or, perhaps there are no taco trucks in your area. That’s a “gap in the market” that your food truck concept will fill.
It’s also worth discussing why you want to open a food truck instead of a traditional restaurant. Does your food lend itself to a food-truck experience?
3. Menu & Costs
Following up on your concept, you need to think through your menu. What items will you sell and how much will you sell them for? How much will it cost you to produce each item? How much time will it take you to prep and cook each item?
Thinking through these questions and writing down the answers is a critical step in the planning process. You’ll want to make sure that the food you plan on serving can be served quickly enough and that your prices are set so that you cover food costs. Of course, you’ll have to cover other costs as well, but you’ll explore that more when you do your financial plan.
Once you have explored what your menu and pricing looks like, it’s worth sharing your menu with friends and family to get input. Ideally, you should also try and share your menu with strangers as well to get their input. What do they think about your prices? Do your item descriptions make sense?
4. Target Market
Your target market section of your business plan describes who your key customers will be. What age group are they part of? What are their demographics? Where do they live and work
You’ll use this information to determine the size of your target market. This is the total number of potential customers that you could have.
You’ll also use this information to inform your branding and marketing strategy. If your target market is millennials, then your branding and marketing may lean towards the values of healthy eating, for example.
Just because your business is mobile doesn’t mean that every day will be a new adventure to find “the best spot”. You’ll want to have a plan ahead of time so you don’t waste time every day finding the right location.
First, you’ll want to consider locations where your target market is going to be. If you’re going after the “working lunch” crowd who’s looking for a quick lunch near their offices, you’ll want to have a location that’s convenient for them.
Customers also value consistency. They’ll want to know where you’re going to be and when you’re going to be there. If you’re in one location one day and gone the next, you might lose out on repeat customers who think that you’re inconsistent.
If you’re going to be part of a more established food cart “pod”, what does it take to get a spot? What is the cost and what permits are required? Figure this out now so you can factor parking and permitting costs into your overall expense plan.
If you’re planning and serving from multiple locations during any given day, think through and write down your schedule. How often will you move? How long does it take you to break down one location and set up at a new location?
6. Branding, Marketing, and PR
With the explosion of food trucks, figuring out how you’re going to attract an audience is critical. Thankfully, you’ll be driving a mobile billboard, so you can leverage that to your advantage and use that for marketing and advertising.
It’s important to ensure that your social media handles are part of your branding and marketing strategy so that people can easily find you online and know where you are. Equally important is that you religiously update your social media profiles. There’s nothing worse than a profile that hasn’t been updated in days or weeks. Many customers will think that you’re closed if you don’t appear to be active online.
Beyond social media, you’ll want to make sure that you’re listed in Yelp and any other local food truck directories and apps. Getting a presence in these apps and getting positive reviews is critical, especially in the early days.
If you can get local press, that’s worth chasing down as well. Often, the weekly arts and culture papers will review food trucks, so it’s worth announcing your presence to them. When you do, think about your story – what makes you unique? What’s special about your food? What pushed you to start a food truck business in the first place? Everyone has a story to tell, so tell yours and try and get some coverage that will drive customers to your truck.
7. Company and Management
Food truck businesses are usually structured fairly simply. There’s usually just one or two owners and the business is usually an LLC. Even if things are fairly simple, it’s always worth writing things down, especially if you have business partners. You’ll want to have agreements about who owns what, what stake in the business each person has, and what happens if one of the partners wants to walk away.
While everything is always optimistic and positive in the beginning, the hard work of running a food truck business can put a strain on any relationship and you’ll want to have a plan in place in case things don’t go exactly the way you think they will. Even the best of friends sometimes have to deal with difficult business situations and it’s always much easier if everything is written down and agreed upon before the business is actually up and running.
8. Financial Plan
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.
First, you’ll want to forecast your sales. How many meals do you think you can serve in an average day? On average how much will each customer spend? What about seasonality? When the weather is bad, will you sell as much as when it’s warm and sunny?
Next, you’ll want to look at your “cost of goods”. This is how much it costs you in food and supplies to serve the food that you are serving. Subtract your Cost of Goods from your Sales and you’ll get what’s called your Gross Margin. Of course, you’ll want this to be a positive number, but that’s just the beginning.
Next, you’ll need to look at your expenses. In addition to food costs, you’ll have labor costs including your own salary as well as any additional help you need. You’ll also need to consider insurance, licensing from the city and county, as well as fuel and commissions to event hosts. It’s fairly common for food trucks to pay a flat fee plus a percentage of revenue to event hosts, so if you’re going to consider taking your truck to events you’ll need to factor those costs in as well.
Other expenses can include access to a shared kitchen space. As a food business, you won’t be legally allowed to prep food in your home, so food prep will have to be done either in your truck or in rented kitchen space.
With your sales forecast and expense budget, you’ll be able to calculate your profitability. If your business isn’t looking profitable to start, you can make adjustments to expenses, potentially increase the price of your food, or explore how you can serve more meals.
Of course, you’ll also have to consider your startup costs. It’s not at all unusual for a food truck and equipment to cost north of $50,000 and can easily extend beyond $100,000 depending on how custom of a setup you need. Of course, there’s a healthy market for used food trucks, so that’s worth exploring as well.
In terms of startup costs, $100,000 is relatively modest compared to many other businesses and certainly substantially less expensive than opening a restaurant. Many food truck entrepreneurs may find that they can fund their startup with savings and loans from friends and family. Bank loans are also a possibility since most of your startup costs are going towards a physical asset that the bank can reclaim if things go horribly south.
With all of these numbers, you’ll be able to assemble a Profit and Loss forecast and Cash Flow forecast. These two financial forecasts will help you determine exactly what your funding needs will be to get your business off the ground.
If you’re struggling with the financials, it’s worth investing a small amount in a business planning tool to help you get your plan done without having to worry about learning the details of financial forecasting in Excel.
With your business plan in hand and a financial forecast that shows that you can indeed run a profitable business, the next step is to actually get started building your business.
For further reading, check out these articles:
- How to start a food truck business
- 10 strategies to increase your food truck revenue
- Keeping your food truck business rolling