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.
They 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.
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.
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.
Your 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.
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.
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.