You see them everywhere! Parked at festivals, near sports venues, and outside nightclubs. Food trucks are a growing business, especially for those who want the freedom and mobility to make and sell what they want, wherever they want! If the idea of owning a food truck has ‘peaked’ your interest, you may be wondering how much money you can make and whether (or not) it’s a lucrative business venture.
Are food trucks profitable? The answer is yes, provided you know how to properly streamline your operation. This means recognizing how, when, and where to minimize costs to maximize profit. As well, it takes time to be profitable. Therefore, the longer you own and operate the food truck, the more money you’re likely to make.
Now that you know owning a food truck can be a profitable business endeavor, let’s take a closer look at this in more detail below. We’ll discuss how much money the average food truck makes per year as well as what the typical profit margin is. We’ll also explore ways to start a food truck operation (with little or no money) and what cuisines are most popular. We’ll even explain why some food trucks fail and what to do to ensure success.
So, if you’re ready to learn more about food trucks and how to profit from them, buckle in and let’s get started!
How Much do Food Trucks Make a Year?
While many factors affect how much money the average food truck makes per year, the consensus appears to be around $100,000 total income. A recent survey done by FoodTruckEmpire.com back in 2017 on over 200 food vendors in the United States (mainly California, Florida, New York, Oregon, and Texas) resulted in 85% of respondents generating an annual gross revenue of over $100,000.
And, of those respondents, over half reported a full-time income of more than $150,000, after owning and operating a food truck for at least two years! Comparing these numbers to another report done by USAToday.com in 2014, whereby the average annual earning per household was less than $65,000, it appears that owning a good truck will put you well above average yearly earnings.
Can I Make Money with a Food Truck?
As mentioned above, there is money to be made by owning a food truck. When you’re first starting, you’ll undoubtedly spend more than you’ll make, as you need to get the business ‘up and running.’ If you work the truck yourself, you’ll likely see a return on your investment much quicker than if you hire someone else to cook and manage it for you.
Running a food truck includes long hours of hard work! It’s not like punching a timecard at 9:00 a.m. and then clocking out at 5:00 p.m. Typical working hours don’t apply, especially if you’re new to the business and starting at ground zero. Ultimately, the success of your venture depends upon how much time and effort you’re willing to put into it.
What is the Profit Margin on Food Trucks?
The profit margin on food trucks depends upon many factors, including labor costs, food waste, the weather, commission, or parking fees at specific events and accounting issues. On average, a typical fast-food truck can expect a margin anywhere between 6% and 9%.
What Kind of Food Truck Makes the Most Money?
A food truck that makes popular, convenient, affordable, and (above all) tasty food will often make the most money. Think of typical ‘fast food’ fare, including sandwiches, hamburgers, hot dogs, French fries, onion rings, fried chicken, tacos, and pizza.
A good ‘rule of thumb’ for any food truck owner is to carry no less than six and no more than twelve menu items at any given time. The fewer, the better as this allows you to maintain a higher standard of quality. And after all, ‘good’ food is what keeps customers coming back for more.
How to Successfully Run a Food Truck Business?
To have a profitable food truck operation, there are five things you must know (and do). These include the following:
Choose Your Niche
Research the market to see what type of food is ‘in demand’ in your specific region. Choose a food niche that appeals to both you and your community and then determine which area or location you want to focus on before you ‘set up shop.’
Purchase a Truck
You need a truck to run your business, so look for one that’s been previously owned and recently updated. It should contain a modern kitchen that complies with all health code regulations. The average cost of such a vehicle is anywhere from $40,000 used to $100,000 new.
Get Licensed and Insured
Check with your local government office to determine which (if any) type of business insurance is required. This could cost you between $500 and $3000 per year, so be prepared! You’ll likely need an additional license to serve and sell food as well as a valid parking permit.
Create Your Budget
Before launching your food truck business, you’ll need to budget for your first year of operation accurately. As you may not turn a profit until a few months or even a year into your venture, you must budget accordingly. Expenses to keep in mind include:
- Start-up fees, including the graphic design you have in mind for the exterior of the truck, as well as any additional equipment needed for the kitchen.
- Possible labor costs, if you’re not planning to run the unit yourself or if you intend to hire employees.
- Food and subsequent supplies.
- Gas and other vehicle maintenance costs.
- Annual business insurance fees.
Market Your Business
You need to promote your new business to be a success. Consider using social media, your community newspaper, or local online websites. If you don’t plan to be in just one location all the time, you must be able to advertise where you are (on any given day) and for how long.
Preparation is the key to profitability. Taking time to properly prep your venture up-front is necessary to achieve success. A thriving business requires due diligence in advance to ensure every detail is in place before your food truck hits the road.
How do You Start a Food Truck with No Money?
Profitability is directly linked to available funds when it comes to starting a food truck business. If money is an issue, try to partner with someone who already owns one. Negotiate a lease or rental agreement for a set amount of time. That way, if it doesn’t pan out or you find it’s just not the job for you, you can get out of it quicker and easier than if you owned the truck yourself.
Why do Food Trucks Fail?
The main reason why food trucks fail is due to high expense costs combined with a lack of start-up capital. Many food truck owners, especially those in the first year of operation, spend more money getting stared than they expected. They don’t budget accordingly and, therefore, cannot maintain the business.
For a food truck operation to be profitable, you must be able to manage your cash flow in such a way that you end up in the ‘black’ more months of the year than in the ‘red.’ In other words, you should produce positive earnings (after all expenses are accounted for) more often than negative earnings.
Conclusion
To conclude, owning a food truck can be a profitable venture, provided you know how to streamline your operation correctly. Recognizing how, when, and where to minimize costs to maximize profit is the key to prosperity. It could take up to 2 years (or more) for the business to flourish, so be patient. The fact is, the longer you own and operate the food truck, the more likely it is to succeed.
Good luck!