Is a Food Truck a Good Investment? What Experts Say

Food trucks are a fun way to offer services in the food industry. That's not the only benefit; the starting capital investment is also low compared to one made to set up a typical restaurant. Most people invest in food trucks because of their convenience and diverse culinary offerings. They are primarily found in urban areas, near office and college buildings, special events, plus high-traffic areas. 

A lot has changed from how things were some years back. The rise of the mobile lifestyle, plus the need for food on the go, has made food trucks rise to the top as a vital and exciting business venture to invest in. If you have been looking for a budget-friendly startup, you have undoubtedly encountered food trucks and wondered whether it's a good investment. Let's find out! 

Food trucks are a good investment if you have the startup capital and the time to run the business. You must also have a great business place, favorable location, target market, etc. Most food trucks earn significant amounts of money, although that's not a guarantee to turn a profit; you must ensure you run it properly to succeed. 

Food Truck Business Financial Breakdown

The major success of food trucks lies in the money side of food truck ownership. Let's look at the food truck's startup plus monthly maintenance costs. 

The cost of starting a food truck business

Starting a food truck business can cost between $30,000-$120,000. The startup cost covers the truck, insurance, inventory, employees, business permits, marketing, and a point-of-sale system. Let me break it down further for you in the table below; 

As you can read in the table above, the highest cost is for the food truck. The price above is for an average truck, but you can find a cheaper one according to your budget. 

Cheaper alternative to a food truck?

The cheapest alternative you can get to a food truck is a food cart, which costs about $10,000, or a food trailer, which goes for about $25,000, but for a trailer, you will need an extra strong vehicle to tow the trailer, leading to more costs. Food carts, the only alternative left, will help you save on gas prices because they can be transported using fuel-free transportation such as a bicycle. 

The costs of running a food truck monthly

Running a food truck will vary from $3,000 to $10,000. Check the table below for a detailed breakdown of a month's spending of a food truck business;

The most significant percentage of a monthly food truck cost is staff. If you can run the food truck business yourself or add a business partner, the operating costs will decrease significantly. 

Reasons Why Food Trucks Are a Great Investment

There are a million and one reasons to invest in a food truck, some of which are mentioned below;

Low initial investment

When you compare a food truck with other food service businesses, it has a low start-up cost. It also has various options, like buying a used truck instead of a new one or leasing one. Again, it costs less to operate than a typical restaurant where they offer varieties on their menu. A food truck's menu is limited to a few items, hence lower inventory costs. The trucks are also smaller, meaning you only employ a few staff and don't have to worry about fixed expenses like rent.

It's mobile

You don't have to worry about starting your business in the wrong location; why? You are not entitled to stay in one place like a permanent place; you can always change location and drive around, trying different locations until you find a site that best suits you. You can also change your area according to the weather; taking your food truck to the beach in the summer will generate more sales. All you will need is a permit to operate in that area. 

Easy to expand

Unlike a typical restaurant where if you want to expand, you will have to move to a bigger room and, at times, in a new location, a truck food doesn't need that. It's cheaper to expand it; all you need to do is outfit a new vehicle—no need to change location or worry about making another considerable investment. 

Tips for Reducing Your Food Truck Investments

When starting your business, you can get over-excited and overspend beyond your budget. That won't be good for business; you need to track your costs and keep them as low as possible for greater returns. Here are tips to help you reduce your food truck investment;

Limit your ingredients

Lower your ingredient prices by reducing the ingredients used and the quantity you put in foods. It would be a good idea to focus on one type of food to fully exhaust your ingredients and avoid using different ingredients in different dishes. Most importantly, avoid waste. Don't make your portions too huge for customers; limit the food wasted in preparation. 

Rent or buy used equipment

All equipment, including the truck, which takes most of your food truck investment, can be rented or second-hand. This will help you save considerably, especially if you are getting started. However, if you have the money, you can buy new to build equity in your equipment.

Compare vendor prices

Don't buy your ingredients or equipment from the first vendor you meet in the market. Take your time to check on other vendors, get different quotations, and negotiate. Most vendors give huge discounts when buying in bulk; you can make your purchases once a week to buy in plenty. Or better still, find another business and place your orders together. However, ensure you don't overspend, as inventory can get spoiled fast. Buy enough to last you a few days. 

Conclusion

Food trucks are a profitable business. Running them might not be easy but returns are great. If you are considering investing in them, you are on the right path, as they offer a competitive business environment. Reach out for help in food truck roadmap services.