How to Succeed in the Food Truck Business

How to Succeed in the Food Truck Business

Food Trucks are a Passion Business

Before the recent hype around food trucks and before everybody jumped on the bandwagon, starting a food truck business was a matter of passion. In the same zeal that inventors had while working out of a shed on the next ingenious creation, or that of college drop-outs while coding away the next viral mobile app, people who were in the food truck business were mainly driven by passion.

Food Truck VeteransThey knew how to cook something unique, and were able to reproduce it with consistency. They couldn’t afford to start a restaurant but they wanted to start at any cost. They knew how to keep clients happy. They procured, they prepped, they cooked, they served, and they entertained. They were the real multitaskers. Almost every food truck was a story of passion.

The food truck model was soon commercialized and more and more people were in it for the money. The gold rush of food trucks saw many success stories but they were outnumbered by failures. It’s not easy to run and scale a food truck business, and not everyone was able to endure the challenge.

Certain economic drivers contributed to the growth in demand. People were looking for less expensive options as well as exotic new concepts to try. The mobility of food trucks proved useful for events, seasonal demand, touristic hot spots, and remote communities.

The industry has been growing steadily worldwide and in the last few years it made its way to Dubai. We started seeing some home-grown brands like Salt creating a following and inspiring more people to start a food truck business.

 

Start with “Why”

Before you start a food truck business, find out your real reasons. This kind of business is tough but enjoyable. It has a lower barriers to entry than starting a restaurant but it’s not as easy as starting a food cart. It can make a decent income but it’s not one that makes millions unless you reach a franchising stage. Do you have passion for this kind of business? Or do you have passion for the food concept that you wish to serve? Is this a proof of concept to start something bigger?

Starting a food truck is not only for entrepreneurs. Established restaurants and chains can start a food truck to test the popularity of a new concept before adding it to their menus, or to market their main outlets, or to serve remote areas where they’re not present.

Starting a business for the right reasons is one of the contributing factors to its success. It helps you set your expectations right and understand what it takes to become successful.

List the top three reasons you want to start a food truck business.

 

The Concept of your Food Truck

A newly established food truck is defined by its concept more than its brand. Deciding on a concept is very crucial because it affects all the other decisions that follow, which in many cases are difficult to reverse. It determines whether you would need to store ingredients or not, and whether you would be cooking or just serving. It determines the choice of vehicle and how it should be designed and built. It determines your costs and therefore your prices. It also determines the markets and locations that you should be targeting.

Nitrogen Ice Cream

First take a look at what is already available on the food truck landscape in your city. You can see a list of the food trucks out there in Dubai at https://www.zomato.com/dubai/food-truck. Check out the votes and reviews and the pictures submitted by customers. Keep notes of their prices and the locations they serve. Identify the concepts that seem to be selling well. Visit those food trucks yourself and try them. See what customers are ordering most.

Explore new concepts that are popular elsewhere and can be imported to your city. Instagram is a good place to look for such concepts. It could be some delicacies from a certain country, or a cuisine fusion, or some fancy ideas like nitrogen ice cream, bubble tea, fruit jars, etc. Spend some time in surveying and testing the demand for new ideas.

An important distinction is to be made between gourmet food trucks and fast food trucks. Gourmet is tricky because it’ll end up becoming costly for the customer and unless they’re very intrigued by your menu they won’t order. Fast food is generally a safer option and easier to work with.

 

Feasibility Study

With a concept in mind, and before proceeding any further, the next step is to do a feasibility study. This is an exercise in numbers that will estimate revenues, operational costs, and capital expenditures over the course of a year or two. It can be done according to multiple scenarios: best case, average case, and worst case. This will help you determine the cash outflows and inflows, the required capital, and the return on investment, for each of the three different scenarios. As a result you would establish whether the business or the concept is a feasible one or not.

Based on the finding you can start putting together a business plan that you can follow throughout the journey to ensure you meet your target ROIs. It’s important to keep in mind that in the case of a food truck, the business plan has to be a dynamic work-in-progress and not something that is carved in stone. Failing to have a plan altogether is basically a plan for failure.

 

Your Food Truck Menu and Recipes

Once you have decided on a feasible concept, start working on the recipes that make up your menu. It’s recommended to have fewer options on the menu of a food truck.

To ensure consistency in what you’re delivering, the recipes must first be perfected and then standardized. A standardized recipe is one that holds no surprises. It will produce a product that is close to identical in taste and yield every time it is made, no matter who follows the directions. A standardized recipe usually includes:

  • A list of all ingredients including spices and herbs
  • Exact quantities of each ingredient
  • Exact brands to be used
  • Specific directions for the order of operations and types of operations (e.g., blend, fold, mix, sauté)
  • The size and number of portions the recipe will produce

 

Licenses and Permits for your Food Truck

Securing licenses and permits for your food truck business is not an easy feat. It varies from one city to another and it can involve a number of authorities, starting with the department of economic development, to the chamber of commerce, to the municipality, to the food safety authority, etc.

 

Securing a Vehicle for your Food Truck

Depending on the concept you have chosen for your food truck and whether you need a cooking facility or not, you would need to select between an industrial catering vehicle (ICV), which sells only prepackaged foods, or a mobile food preparation vehicle (MFPV) which basically includes a kitchen.

Moms CrepeYour choice of vehicle can also be used to reflect the concept. For example, a Citroën H van for a Crêperie (check out Mom’s Crêpe), or a Ford F-450 Cutaway for a burger truck.

The usual suspects for food truck vehicles have been the VW Camper Van, the Airstream Trailer, and the Citroen H Van, which are all very classic. You can also opt for a modern vehicle that hasn’t been used before to stand out from the crowd.

The design of your food truck has to look beautiful and intriguing on the outside, and at same time it has to be functional on the inside to make the best use of space and meet the requirements of serving your concept. For inspiration on food truck design inside and outside check out and follow our Pinterest board.

There are specialized food truck manufacturers out there who you can contract directly. However, the cost of designing and building your food truck is one that you need to minimize without compromising on the quality or affecting your ability to deliver your menu.

The good thing about the food truck business is that the vehicle itself as an asset that has a residual value in case of selling the business.

 

Locations for your Food Truck

The location of your food truck is extremely important. If you’re going to be fixed in one location, which is not ideal, make sure that it’s one that is busy with your target demographics. Scout for locations beforehand and don’t judge a location by one visit. Make sure you visit it multiple times on both weekends and weekdays to estimate the footfall. Some locations such as malls or public beaches can provide you with figures on their footfall around the year.

Ideal locations for food trucks include business districts, residential communities, school and college areas, tourist attractions, beaches, malls, sports venues, festivals and events venues, conference and exhibition centers.

If possible, it’s recommend not to stick to a single location and instead stay a month or two at each location’s peak season.

 

Common Mistakes and Ways to Avoid Them

Not Investing the Right Capital

The feasibility study and the business plan are done at the beginning for a good reason which is understanding how much money needs to be invested on capital expenditures and operational expenses. Many entrepreneurs make the mistake of not allocating the required capital or misallocating it by spending more on capital expenditures and not having enough capital left for operations. If the total required capital is beyond your means then consider seeking funding or not starting the food truck business at all.

Not Being Committed

The food truck business, just like the restaurant business, is extremely demanding. If you don’t put your passion and commitment into it, there’s no way it’s going to thrive. It’s not a set it and forget it kind of business. You have to be on top of it on an almost daily basis.

Not Being Prepared

Many food truck businesses fail to prepare adequately for a big event or even a lunch time rush. Proper planning of your ingredients and standardized recipes can help you avoid this mistake.

Not Treating the Staff Well

Unhappy and overworked staff are a recipe for disaster, no matter how tasty or well-priced your food is. Remember, food trucks are a lot of hard work and multitasking, often done in extreme heat. Treat your staff well, and pay them right.

Not Marketing

Relying solely on passive footfall to come to your food truck isn’t going to help you achieve your targets. You have to market actively and creatively. Use social media and especially Instagram and Facebook to your advantage. Create special promotions, post pictures and videos, tell stories, run photo contests, raffle draws, treasure hunts, crowdsource recipes, create crazy dishes that go viral, distribute flyers, hire promoters, invite food bloggers and influencers, list your truck in directories and city guides, etc. You have an open space to do all the crazy marketing ideas you can think of. Don’t limit yourself.

Sticking to One Bad Location

If a location doesn’t get you the customers you expected don’t stick around hoping for change to come. Keep moving until you get the demand you planned for. Negotiate better rents with early termination options. Look for events around the year that attract large audiences. Transform into a mobile catering business if you have to by designing specific menus for private or public events.

Sticking to One Menu

Food trucks are a dynamic business. If a menu isn’t working you have no reason not to turn it around. There’s more flexibility in the menu of a food truck than that of a restaurant. Nothing is off limits. You can even change the menu on a regular basis just to keep it exciting even if it’s working well. Check out our guide on Menu Engineering.

Overpricing

Burger with fries and drinks for almost a hundred Dirhams?! Many food trucks overprice for many different reasons. Either they’re using expensive and fancy ingredients, or they’re eager to break even early on, or they’re simply greedy. Food trucks are meant to be a less expensive option for the customer. As a rule of thumb, actual food cost should be around 25-30% of your selling price, and total cost with staff should be around 50-55% of your selling price, which leaves you with a 45-50% gross margin to cover for rents and other expensive.

 

Set Yourself Up for Success

At Aseel F&B we have designed a number of unique models and packages for food trucks that reduce risks and operational costs, and increase your chances of success. To find out more get in touch with us.

Restaurant Menu Engineering

Why is Menu Engineering so Important for a Restaurant?

I can bet that you are already overwhelmed with terms like “menu engineering”, and you really just want to run your restaurant business, make it profitable and enjoy the journey.

But hold on, that’s what menu engineering is all about! It’s about running a profitable restaurant business, and enjoying the process.

In this blog post I’ll explain what Menu Engineering is, why it is important, and how it can help you boost your restaurant’s sales and increase your profitability.

Menu Engineering vs. Menu Design vs. Menu Development

These three terms are already confusing and they are often used interchangeably. However, they are not the same thing.

Menu Development is basically the process of thinking through, experimenting, developing and perfecting your recipes which will eventually become dishes that you offer. It is the starting point. You can’t open a proper restaurant without developing a menu.

Menu Design is the next step following development. It’s how you represent your dishes in images and words and how you place them on the menu for your customers to take their picks.

Menu Engineering involves how you price and structure your menu in a way that your customers are happy and your business is profitable.

Menu Design and Development are both forms of art. Menu Engineering on the other hand is more of a science. You may the best dishes, and the most beautiful designs and crafted words to describe them, but if the structure is not done right you may be losing money.

Why is Menu Engineering more of a Science?

Menu Engineering involves a number of scientific disciplines including:

  • Economics: Especially the concepts of price/demand elasticity and complementary vs. substitute goods. Ever thought why bars give you peanuts for free but charge you for water? When you eat peanuts (a complementary good) you become thirsty and you drink more beer which is profitable, but when you drink water (a substitute good) you’re not thirsty anymore and you won’t drink more beer.
  • Math and Statistics: Especially models and spreadsheets that are used to analyze detailed data of restaurant sales
  • Psychology: Especially behavioral analysis and ways to manipulate it – think decoy dishes, use of negative space, limiting choices, and predicting eye movements.

 

Why is Menu Engineering so Important?

Studies have shown that 60% of restaurants don’t really do any form of menu engineering, while 30% of them do it with little effort, and around 10% put in some high quality efforts.

A well-engineered menu can make a good profitable restaurant, but a badly-engineered one (or one that is not engineered at all) can easily drive a restaurant out of business.

You can leverage menu engineering to:

  • Increase the profitability of your restaurant by getting customers to order more of your profitable dishes
  • Boost the sales of your restaurant by getting customers to order more items that they normally would
  • Delight your customers by delivering a wholesome experience and the feeling of receiving good value for money

How to do Menu Engineering?

There are some prerequisites to doing any sort of menu engineering:

  • Cost Information: You will need to know the cost of each dish which then enables you to know the gross profit margin (or contribution margin) for each. For this you need to have a standardized recipe for each dish which shows all the ingredients and wastage that go into preparing it along with quantities and costs. This will allow you to know which are the least and most profitable items on your menu.
  • Sales Information: You will need to have granular back-data on your sales, especially quantities sold of each item, with the ability to sort and filter by date and time. You can pull this kind of information from your Point-of-Sale POS systems if you’re not doing so already for your periodic reports. This will allow you to know which are the least and most popular items on your menu, and also identify any patterns or trends or spot seasonality.

Menu Engineering Popularity Profitability MatrixOnce you have the data you then plot it on a two axes chart where the X axis is for profitability, and the Y axis is for popularity. Each item you offer becomes a dot on the chart. This is called the popularity / profitability matrix, and it will allow you to identify:

  • High Profitability – High Popularity items, known as Stars – These are items you should highlight and promote
  • Low Profitability – High Popularity items, known as Plow-Horses – Find ways to make these more profitable or create more profitable variations of them without losing popularity
  • High Profitability – Low Popularity items, known as Puzzles – Try to understand these dishes more, reinvent them or represent them better, or try to lower their prices
  • Low Profitability – Low Popularity items, known as Dogs – These are items you want to emphasize less and find ways to make them more profitable

Try to change on or few things at a time, then monitor and repeat the process. This way you’ll be able to identify what change is making an impact.

Enlist the help of a Restaurant Consultant

Restaurant consultants are always available to help you reengineer your menu. They have worked with hundreds of restaurants and their experience counts. They are also equipped with proven tools and processes that can help you ensure tangible results.

If you need help with your next menu engineering exercise, don’t hesitate to get in touch with us here

Catering Business HACCP

How to get HACCP Certification for your Catering Business

In the hospitality world of today, there is no higher food standard than the Hazard Analysis and Critical Control Point (HACCP) Certification, which is quickly becoming a mandatory / legal requirement to have, to serve food within the premises. The HACCP Certification is a system that identifies food businesses that have created, documented and executed systems and procedures for food safety in accordance with HACCP. It is also an indication that the certified food business has achieved the highest level of service.

 

Why is it important for a catering business to be HACCP certified?

With the growth of the food business and the increase in the appetite by the nouveau riche, it is not surprising that for the budding catering industry, the only way to get to these elite clients is to have the right qualifications and certification. Most of the high-end hotels have their in-house restaurants and cafes, however it is not uncommon to get requests from their exclusive clientele for specific food to be served at various events, and when their in-house eatery cannot comply, they look to outside caterers to deliver. However, since almost all four and five star hotels are required to be HACCP certified, one of the criteria for the certification is to only use vendors that are HACCP certified as well. Therefore, we are now seeing more and more caterers getting certified to reach a yet under-tapped part of the market.

 

How get HACCP certified?

To get the HACCP certification you need to be audited by a reputable HACCP certification provider. Any catering business that requires the certification needs to undergo an assessment of its food safety and procedures to see how it complies with HACCP policies and procedures. This assessment is required to be undertaken by a competent and qualified food safety auditor. The audit process will require an on-site inspection of the caterer’s practices and a review of both the company documentation and records.

 

What does a catering company have to undergo to get certified?

There are seven critical principles that the certification is built around:

  1. Conduct a Hazard Analysis: Requires an evaluation of your processes to identify where hazards (be it physical, chemical or biological) can be introduced. This is done in two steps, first the identification of hazards, then an evaluation of the hazard.
  2. Identify the Critical Control Points: Requires determining in your process when can controls be applied to prevent or eliminate the hazards that have been identified?
  3. Critical Control limits: Establishes what are the maximum or minimum limits for time, pH, salt level, temperature etc. It also establishes the criteria (regulatory or otherwise) to control the hazard at the critical point.
  4. Monitoring Procedures: Establishes what you will measure and how will you measure it. Since there is continuous monitoring and record keeping required during the critical control point to show the critical limits have been met, are you able to continuously monitor? If not, how frequently can you measure to show that the process is under control?
  5. Corrective Actions: Establishes what corrective actions will need to be taken if a critical limit is not met. For each CCP, the catering company will need to identify the corrective action before an out-of-control situation occurs, ensuring you are prepared to act quickly when it does occur.
  6. Record Keeping Procedures: Determines what records are needed to show that the critical limits have been met, and that the system is in control. It also addresses any regulatory requirements which may include records from the development of the system and the operation of the system.
  7. Verification Procedures: Ensures that once the plan is in place, it is effective in preventing the hazards identified. The HACCP plan must be validated, so the product needs to be tested, to verify that the controls are working as planned.

 

All this requires a qualified HACCP expert to audit and help you figure out the right places to focus on to minimize the hazards that affect food safety and hygiene. The HACCP system has proven that It is possible to systematically identify where the hazards are by setting up control limits at critical points during the food production process. What is critical is to identify the right HACCP partner to ensure that this process is done in the most methodical way, so that it creates the least disruption to your catering business.

Starting a restaurant: Be thoroughly prepared before taking the plunge

This post is cross-published with Data On a Plate.

 

A large number of entrepreneurs enter the food service industry with concepts and dreams alone, hoping that their venture will be successful because they’re offering something new to the market. It cannot be emphasized enough how critical it is for entrepreneurs to do their homework before jumping into the restaurant business. It starts with asking if the market is prepared to accept what you are offering.

Any amount of time, money, and effort spent on the groundwork for your restaurant can only benefit your business in the future. If you’re investing half a million to a million dirhams on a restaurant in the UAE, you’d rather spend the time and money initially learning from experts and getting your business strategy right than regretting it later when you start losing every single penny that you’ve invested. There are so many common mistakes we see entrepreneurs making that could have been avoided easily, and we also see them being repeated because of their carelessness.

 

Think beyond location

Nobody can argue against the importance of location for a restaurant business. If you can afford a prime location, take it only for the right reasons, such as your target customer, tenant mix, and propensity to consume.

However, the majority of new entrepreneurs face the reality of not being able to get the best locations. Furthermore, it would be unwise to spend all your capital acquiring a prime location and risking your cash flow, particularly if your brand is new to the market.

New restaurateurs must start thinking of alternative ways to get the attention of customers, such as better service and delivery. Good examples of such restaurants in Dubai that have created the wow factor include Freedom Pizza and Smiling BKK.

 

Have realistic ROI expectations

The restaurant business in the UAE is a capital intensive business, requiring from 1 million to 2 million dirhams. Don’t expect returns for at least the first two years. In the third year, you’d be lucky to recover some of your costs. If you survive up to the fourth year, you’ll start seeing a return on your investment.

It is common for restaurateurs to recruit the available talent, spend money on their training, and find out that they don’t perform up to expectations. Be prepared for hiring costs. You may need to hire and rehire until you have the best team.

 

Create a roadmap for expansion

If you want take the franchising route for expansion, take that into account in your business plan and develop your brand accordingly. The vision and commitment required for franchising a brand is different from those required for organic growth. Franchising demands the preparedness for co-ownership of the brand. It is important to have that mind-set even before you open your first outlet. This would require you to direct all your efforts to make your brand attractive to potential investors in the future.

If your restaurant is not ready for franchising after its first outlet and you need more confidence, open a few branches, test, and perfect your business models before talking to franchisees. If you’re not interested in franchising, consider launching smaller formats, which will make it easier for expansion.

 

Don’t become the barrier to growth

As captain of the ship, avoid becoming too comfortable that you forget the vision you had initially. You cannot be the jack of all trades. It’s easier to delegate responsibilities to the right people as long as you direct them towards your vision.

Avoid becoming entangled in the complexities of managing day to day operations that you start resisting change and gradually becoming part of the problem yourself. More importantly, keep the excitement of entrepreneurship alive and maintain the enthusiasm you had while starting out.