brick and mortar

A Breakdown of the Costs of Opening a Food Truck Business

If you aspire to be a restaurateur, opening a food truck is a great way to test your cuisine and build a customer base without committing to the upkeep of a brick and mortar restaurant and managing a large number of employees.

For starters, working from a truck offers lower startup costs and monthly payments. In addition to the lower investments, this small business venture also provides flexibility that does not come with owning and operating a brick and mortar restaurant. With a food truck, working hours can be fitted around the schedule of the owner (you!), and the location of the truck can be adjusted as quickly as it takes to turn the engine on.

While the total costs of setting up and running a food truck are by no means inexpensive, they certainly are a lower cost alternative to entrepreneurial chefs who want to test their products before committing to a full restaurant space.

We’ve calculated the total cost of setting up and running a food truck, versus a full comparison to the price of opening a restaurant. Let’s take a closer look:

The upfront costs

To start your business, you need to budget for the upfront cost of the fully-functioning catering vehicle itself. This is likely to cost an average of $17,600, and it is likely to be the biggest investment to your business.

You will then need to purchase insurance, which will cover the owner, passengers, members of the public, and your property in any case of emergency or if your vehicle gets stolen or vandalized. This coverage typically costs $3,000.

Total upfront costs: $20,600

Related: Mobile Startups: Food Truck Entrepreneurs Share How They Drive Their Business

The legal costs and licenses

Before you open your truck for business, the correct documentation must be completed, including licenses, business registration, and a premises approval. There are multiple licenses to acquire, and the lot will set you back about $9,050.

You may notice that the licensing required for a brick and mortar restaurant is a little bit less costly in this department, because you’re not paying for things like vehicle registration or a food truck application. However, the upfront and overall costs far outweigh these extra licensing fees.

Total legal and licensing costs: $9,050

The monthly recurring costs

Maintaining a food truck business is a costly task, with recurring costs totaling around $12,922. This includes a yearly $673 charge for public liability insurance, which covers you in the event of any financial liabilities resulting from accidents for which you are legally liable (i.e. illness from food, a customer being burned by hot food).

Monthly costs for a mobile point of sale system software, fuel for your van, disposable silverware, parking, and renting a section of a commercial kitchen add up to $2,456. The average food truck owner spends $2,602 a week on general stock including food, drinks and oil.

Total monthly recurring costs: $12,922

Why not open a restaurant?

The average cost of setting up and running a food truck through its first month is approximately $42,572, which is about $46,700 less than the cost of starting up a restaurant. This disparity is mostly caused by the lower upfront costs of starting up a truck business.

Restaurant owners invest nearly $50,000 on cooking equipment alone, while food trucks are able to cook and store food in a commercial kitchen, which includes cooking equipment within its estimated $850 monthly fee.

Similarly, renting a brick and mortar restaurant space costs an average of $1,597 a month, whereas the upfront costs of a truck (approximately $20,600) means you don’t have to budget for this monthly expense. The drastic reduction in staffing from a restaurant to a food truck is also likely to save you money, as no traditional waiters or waitresses are necessary.

The nature of the casual dining experience also means there is no need to purchase seating for customers, which the average restaurant owner pays $14,080 for (and that’s for a restaurant that seats just 80 people).

Food truck entrepreneurship provides greater benefits beyond the lower financial investment, as working from a truck means you can experiment more with the dishes you offer, as you can adjust flavors and ingredients depending on what is popular with your customers, without having to change a full menu.

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Possible future opportunities

If you plan on using a food truck business as a stepping stone toward opening a brick and mortar restaurant, this could be a great opportunity to build up a customer base before signing a contract for a restaurant space.

Before being tied to one location, running a restaurant on wheels gives you complete control of your business and its location. Planning where you’re going to sell your food is crucial to your startup’s success, and if your sales aren’t reaching what you’d hope in one area, you can simply drive to a different destination to find the perfect location for your business.

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