Starting your own food truck business is exciting and most likely going to take some planning. Whether you're going in completely bootstrapped or looking for an investor, you’ll need to bring out your "A" game to plan your business the right way and get the word out on the street like wildfire.
So, where do you begin? First, it's important to undergo all nuances of a food truck business — where the industry is going, how much you can expect to invest or make, how likely it is to grow, etc. Let's look at some recent stats:
If the stakes look too high, they probably are! Having said that, if this is where your entrepreneurial heart is, we're here to help. You can download Incfile's business planning template for free to reference later.
Now, let's break a sample food truck business plan down to help you write a stellar one.
1. Executive Summary
Like most planning scenarios, this too begins with a few highlights of the business you want to start. You don’t need to go into too much detail at this point, as that will be laid out in subsequent sections. But consider this your "elevator pitch" — the first impression of your food truck business and what it entails.
If you're looking to attract investors or apply for specific food truck grants, then this should also capture the overall growth plan you foresee for your business.
Try to answer the following in this section:
Where do you plan on selling the food you’re making on the truck?
What type of food are you going to offer?
Why do you feel your business will do well?
How much is it going to cost to get your business up and running?
What do you forecast the profits looking like?
What skills do you have that can help make the food truck business successful?
While the executive summary is the first page of your food truck business plan, it would help to showcase a few points on you know your business (or business idea/plan at this point) well.
2. Business or Company Description
Here is where you start to lay out the details of your business. Talk about the types of food you will provide. How will the food be prepared? What advantage do you have with your food truck business that will separate you from all the other food trucks out there? Have you managed a successfully running food business before, like a bakery or a small pantry? Have you been a chef yourself? Have you managed chefs under you?
Provide all of the pertinent information that will lay the foundation to understanding how you plan to run your food truck business. Although setting up a food truck will cost a lot less than a traditional brick-and-mortar setup, it'll still be a hefty investment. And you'll want to ensure you have a sense of visibility into how soon you'd want to pay your loan back on any capital you might borrow.
As per the U.S. Chamber of Commerce's Food Truck Index, you might end up spending an average of $28,276 on licenses, permits and other legal compliances. It'll come in handy if you've conducted a thorough market analysis of where you plan to run your truck. Each state will have its own license and legal requirements to take into consideration before you kick off.
The market analysis part of your plan is truly the place to do your homework. While it may seem tedious, you really want to focus on having a better understanding of how your business plan fits the market. Here you'll want to understand:
The food truck industry: growth rates, trends, consumer groups, etc.
Demographic information to understand who your main consumers will be
Seasonal trends — does business slow down during the winter months?
Are there any pain points you need to address, such as different food codes and regulations at the place you intend to sell your food?
Are there any state-specific restrictions in terms of neighborhoods to avoid or timings to escape?
In your research, try to suss out who your competitors are. How exactly do you intend on stealing market share from an already saturated market? Is there anything that can get in your way or hurt your overall business? It'll be a great idea to check out the city hall website in the areas you're interested in selling. Some food for thought!
This is fairly self-explanatory. What kind of food will you be serving? But that's not all. Beyond the basics, answer these specifics in your business plan:
How easy will your food be to consume in any setting or under any scenario if someone gets their food to go?
Will your food have online delivery at all?
Are there any thoughts on expanding in the future with more, or will this be your set line of products?
Do you have a dish that no one else in your area has? Or any variation on a particular dish that can set you apart?
How will you entice people to come to your truck and try your food?
Will you offer free samples?
What is your plan for customer retention and getting them to come back, again and again, to buy from your food truck?
What, if any, problems could arise with the lineup of food choices you are introducing?
Something else you want to talk about in this section is the future of your business and how you plan on thriving. Will this ultimately be your one and only food truck, or will you purchase more and create a fleet that can go out to hit various areas in your market?
You might feel it's too soon to think about, but at some point, you'll want to incorporate your business. For that, you need to have a good understanding of different business structures or entity types. The sooner you give it a structure, the better it will be from a taxes and personal liability point of view.
Are you going to be a solopreneur with an LLC? Will you be forming a partnership? Will you be thinking about bringing on employees? How will you pay them and provide them with benefits? Discuss some of these details at this stage.
You could even draw your organizational structure to show how everything flows with your business and anyone else involved in day-to-day operations. You simply want to explain who all is a part of your food truck business and how they fit into your overall vision.
6. Marketing, Sales and Communication
Once the "what" and "where" are out of the way, you can start thinking about how you'll attract customers — aka, what is your branding and marketing game?
Are you presenting something new? Do you have something exciting or innovative to market?
What are the techniques and strategies you plan on implementing to create a trial of your products?
Are you going to do advertisements in the surrounding local area, or is your plan to hit social media hard and try to grow your reach organically?
What is different about your food truck and how are you going to communicate it to someone who doesn't know you at all?
What about informing those customers of your whereabouts? Will you put up signs advertising that you'll be at a certain place on a certain day/time?
To create sales, you need marketing and stellar branding — and in order to continue marketing and branding, you need sales. They go hand in hand.
We earlier talked about how your food truck business can totally be bootstrapped and still be very successful from the get-go. But if you're keen on closing funding, and looking for investors, then they are going to pay particular attention to this section to understand where their money is going and what it will be used for.
Cover these basics:
How much funding do you really need?
How will these funds be allocated?
Do you expect to require more funding in the future? How often?
How does/do the investor(s) benefit once your business does really well?
How are you going to replay the capital?
Essentially, explain how you intend on repaying the investor and what the terms are — as well as what benefits the investor gets for giving you their money. Another route to consider would be to use GoFundMe or Kickstarter to crowdfund your startup.
You may only get one shot to get in front of an investor, so you'll want to nail this section to engage with them and hopefully have them invest in your business. If there are any loose ends in this section that can cause concern or leave questions, it could very easily make them uninterested in your plan. Make sure to clearly sell your vision to the potential investor.
8. Projections and Net Profits
This section is fairly difficult if you’ve never been in the industry before or owned your own business. Trying to figure out projections and yearly goals can seem like trying to find a needle in a haystack: You have no idea where to look...or where to even begin.
Start with doing some in-depth research into how much money you can make (realistically) over the next five years (or even 10 years) in the food truck market. Think about these questions to gather some solid thoughts:
What are others doing in the industry?
How long have they been in business?
How similar are they to your food truck business?
Can you grow your business in the same manner?
Additionally, the numbers you come up with should align with the numbers you are putting in your funding section above.
Generally, you'd expect a 30 percent profit margin with a brick-and-mortar establishment like a restaurant or a bar, but with food trucks, profits run thinner — averaging 7-8 percent. And you'll probably need to work very fast to be able to keep up with the fast food demand. But that's also good in a way since the faster your work, the more customers you can serve, and eventually the more profit you'll be left with. However, the margin might not differ so much.
Minimizing Food Truck Costs and Other Considerations
While the whole food truck business planning can be overwhelming, there are some quick ways you can minimize your overall setup cost:
1. Rent or buy second-hand equipment: Renting or buying second-hand equipment (which you'll need a lot of) can be the first step towards getting the heaviest of costs out of your way. Until you know how the business is doing and are able to project long-term profits, this is a great way to start.
2. Seasonal launch: There's a great market for seasonal foods. Nobody will want to buy something named "Santa-flake-donut" in April. Launching your food truck right when the demand is at its peak will get the wheels moving in the right direction. Of course, the menu and how the food is named need to be aligned with the season well.
3. Social media marketing: You'll not find many food trucks on social media — either they don't have the time to also do social media marketing, don't know how to do it or both. You can take advantage of this gap and show the amazing food pictures all over social media to entice customers. Make use of geo-location tagging, hashtags and user-generated content to capture most of your online presence.
4. Quick menu: It probably won't help to have a long list of everything your food truck has to offer. You might be the next Michelin-star food truck, but you'll need to narrow down your offerings and still achieve that. Food trucks are mostly for instant gratification, and if they're already lost in the long list of things they could try, they might instantly hop onto the next ride.
5. Ask for help: Feel free to not hire experienced staff right off the bat. Ask for help from family and friends for the initial phase of your business, especially if you are bootstrapped to save on staff and up-keeping.
Starting a business is never easy, but it's totally worth your entrepreneurial spark. If you need help getting started with your food truck business, take advantage of our comprehensive business startup guides.