Guide on the Food Truck Business and How to Increase Profits
You intend to start a food truck business, correct? If you’re faint of heart, this business undertaking is not for you because it’s an ever-changing market. Many inexperienced chefs–including the intending food truck entrepreneur– and food truck operators think opening a retail location and having a say in food costs will be easier than starting a food truck business. Although the food truck business relieves some of the responsibility and worry that comes with running a brick-and-mortar restaurant, they also carry their own unique set of challenges. With the average food truck effort–small, large, or even a food truck empire–there are both advantages and disadvantages to starting and maintaining the business.
No doubt, the food truck industry statistics are encouraging. The food truck industry was valued at $856.7 million in 2015 and is projected to increase up to $140 million by 2020. So, while the food truck catering industry can be profitable, it’s still part of good business planning for intending food truck vendors and potential owners to conduct an extensive amount of research before investing in this business. Here is a quick go-to guide to help you decide on owning a food truck, and how to make a profit and increase profit margin in the food truck business.
Steps to get your food truck business on the road
If you follow the steps below, you can make your food truck business a profitable and successful one.
Know your target
Knowing your target market is crucial. If you’re in the business of selling tacos to a bunch of busy people who hate tacos, you’ll only be in business for a short period. Before you launch your company, do your homework first. If you know your customers are out there, then you can find them instead of relying on them to find you.
So, to find your customers, you also have to know where they are going to be. Don’t you think your regular customers will find you if you have a central location? Competition is just as important as knowing who you are competing against. Do you specialize in Cuban sandwiches? There is not much point in the parking next to another truck selling the same product as you.
Develop your food truck brand
You’re almost certain to have already decided on the type of food you plan to sell. For your brand, it’s important to keep things consistent. Are organic and vegan dishes available? Do you deliver gourmet pizza on wheels? The unique selling point of your food is that it is phenomenally delicious.
It is crucial that you pick a name that is absolutely original. When you find out another food truck has the same name, you don’t want to use that! Another play on words, such as things that end in “on wheels,” should be avoided. Trust us, they’re already taken. Next, you should have a logo designed that matches your overall brand image. Use anything you like, but make sure it is memorable and easily recognizable.
Have a business plan
In the first few years, 60% of food trucks end up closing. What distinguishes you from everyone else? To be able to deal with challenges, you must have a business plan. Even if you have a lot of ideas swirling around in your head, there’s nothing wrong with that. If you want to implement them, you must put them on paper.
The first step in describing your business is to describe your business in detail. Everything in your mission statement, business concept, and target market can be considered creative. A market analysis is required. The market trends, information about your competitors, and your customer base are all essential to know your sales and revenue.
Your next step is to look after the organizational aspects of your company. Who bears the responsibility for this? This part is simple if you are in charge of everything. Additionally, you should plan on creating a marketing strategy and financial records. Being organized is critical. While running a business, cooking isn’t quite the same as cooking everything.
Acquire registration and licenses
You should understand that purchasing a truck and immediately beginning to sell food out of it is a poor business decision. To make things easier in the long run, you’ll need to jump through some hoops first. You will also need a food license and a business license in order to run your business legally. Permits, for example a health permit or a food safety certificate, may be required based on your location.
You’re able to operate across state lines if you’re a food truck, but you’ll need permits to open a new location. However, you are subject to all of the same rules and regulations as brick-and-mortar restaurants.
Put your money together
To be able to begin your project, you must first obtain the funding. If you have disposable income, you can start saving. If you don’t, it may take a while. You can get a business or personal loan if you want. You could consider various options, such as crowdfunding or finding investors, to obtain the capital you require. If you are not well planned and demonstrated profitability, most banks and investors will not want to back your project.
Design your food menu
The first thing that brings customers to your food truck is your food menu. Frequent flyers know that many truckers use chalkboards or signboards to post the dishes of the day. If you’re frequently modifying your menu, this item is perfect. Keep everything clearly listed with the price and include the product features as well. Food trucks that perform best generally have simple menus, so they can hone in on only a few signature dishes.
Setting up your food truck
To make sure that you have everything you need on your food truck, your food truck builder will work with you. Consider what type of food you’ll be serving, and how that will influence your restaurant’s cooking appliances. A dipping case is needed if you intend to serve ice cream. To have an espresso machine on board is a must if you’re opening a mobile coffee shop. Additionally, you’ll want to buy insurance for your truck. Insurance comes in many varieties. Checking every box is important to ensure your food truck business is legitimate.
Promote your food truck business
The fact that your food truck is your primary means of advertisement is true. You can boost your company’s presence by advertising on the side of your truck with an eye-catching display. But you must also consider other options to raise your food truck’s profile. It incorporates social media as well. You should make an effort to become an active social media promoter. You can use Twitter to talk about your latest menu, and you can post pictures of your delicious dishes on Instagram. Investing in flyers may also be useful for advertising on community boards.
How to Increase your food truck profit margin
A food truck is likely to have similar food costs as a brick-and-mortar restaurant, but they save on costs like rent, insurance, staff, and utilities because they have lower overhead. On the other hand, bad weather may reduce the number of sales on certain days, but this can be made up for by renting the venue for events. Gross profit margins for food trucks range from 6 to 9 percent. Following are ways to increase the profit margin for your food truck business:
Add online ordering to your operations
You need to get started with online ordering if you have not yet implemented it for take-out and delivery orders. in 2014, there was a 300% increase in online orders compared to diners, and 60% of diners order at least once a week. Using an online ordering service other than your own boosts your profile to new customers, but you should use your own online ordering system as well. making the transaction process more seamless. A post COVID world will rely on online ordering even more than before.
Create a loyalty program
A well-implemented loyalty program can encourage guests to return more often, encourage them to spend more money, and even boost the likelihood that customers will promote your business to their friends. It is essential that your program is designed to be simple to use and doesn’t frustrate guests, as this could yield the opposite effect.
Evaluate your menu design
If you have a dish on your menu that is loved by your customers, but which brings in very little profit, what can you do to improve it? To sell more units of that dish, changing the menu placement or the description could do the trick. Leveraging data pulled from your point of sale will allow you to make adjustments to your menu based on what items are selling or are cost-drivers, and which menu items boost profits or lead to losses.
Reduce the cost of goods sold
You should balance your desire to serve high-quality food with keeping costs low by lowering your costs of goods sold. However, you can do this in a few different ways, such as comparing suppliers, better inventory, preparing for food waste, and so on.
Reduce waste and theft
Unfortunately, food waste and employee theft are very common in the restaurant industry. However, an inventory management system may be able to more accurately track it compared to using spreadsheets or a pen-and-paper system.
Advantages of owning a food truck
For food vendors, the freedom to go wherever you want and the potential to be your own boss when you set up your own food truck business far exceed the limited opportunities for building a restaurant in a brick-and-mortar building that involves the potential to wait for customers to come to you. Instead of limiting you to one location like a traditional restaurant, food trucks let you go where you want. When you order food from a food truck, you travel to the customer to establish whether the location is dry, then you move on to the next location. You’re the ultimate decision-maker in your life. You have the freedom to determine where you’ll be every week or month by setting up a weekly or monthly schedule. You can plan and strategize your truck’s parking to save time, save money, and help the environment. You also won’t need to train many people on equipment functions and equipment maintenance.
Culinary rules are much more forgiving in the food truck industry. Food trucks serving traditional entrees are rare, but they are out there. Customers will buy food if it tastes good because their stomachs will tell them they are hungry. Truck owners can have a little more creativity in terms of branding, menu price, menu design, acquisition of additional equipment such as an efficient cooking machine. They can offer the current menu and realize a bunch of money just for doing that alone.
Food truck owners have to rely on more savvy marketing practices to stay relevant and boost sales by observing customer preferences and ensuring customer satisfaction. Contacting local organizations, event organizers, having a feel of a community event, bunk event, and partnering with businesses is a great way to connect your food truck catering business with the community, to increase awareness for the entire food truck community. This is one of the ways to create a path to increase daily sales and the biggest profits available to you.