Opening a restaurant is rather expensive for most chefs and would-be-chefs, especially with the initial investment. Moreover, the restaurant needs a lot of other aspects to woo the customers and the number of professional individuals to run the business. A food truck, on the other hand, is a good small business option for chefs to earn money for a first few years before opening their restaurant. The food truck is also a good option for those who can cook, probably learned from their grandma, but don’t have a professional education. Today, in this blog we are going to discuss the various costs involved to start your own food truck business.
The average cost of starting a food truck largely depends on the size of the truck and the equipment you have. You can start your business with under approx. $40,000 and for a more larger and brand new truck with a full-fledged kitchen, you should expect to spend around $100,000 to $170,000.
Food Truck Cost (approx. $110,000 to $180,000)
The food truck industry is a competitive business; chances are you will have to compete with other food trucks parked right next to you. The chances of winning depend on your skills and most importantly, a proper business plan. You can choose to do it yourself by doing a field survey or search on the internet; however, if you want to save time headache, you should hire a consultant, who will not only provide you with a good business plan but also lay out your expense.
The single most important aspect of your initial investment would be the food truck itself. For a used food truck, you can expect to spend between $50,000 to $100,000, which excludes the additional cost of repairing the kitchen and other vehicle parts. A used food truck with a new kitchen will cost you somewhere between $75,000 to $120,000, which excludes the cost of repairing the truck. A brand new truck with a brand new kitchen will cost you between $110,000 to $180,000.
Furthermore, you have to design and decorate the truck with your food truck branding, using truck wraps, shades and other will cost your extra, somewhere near $200,000 in total.
Other Food Truck Options
An initial investment of $200,000 on a food truck is a huge cost, especially in this saturated market. If you are unsure, you could start with a used small truck, some minor repairs, minimal design and a couple of staff at under $90,000.
Apart from the food truck, you have the option to open a food cart or a trailer. If you want to serve a specialty food such as coffee, bakeries, etc., you can have a trailer like a pop-up store with a few chairs and table for the customers to chill out. This is a much cheaper alternative as food cart is smaller and the regulations on food cart are not as strict as for a food truck.
Buying a food truck is one thing and then driving is another. If your truck is bigger and weighs more than 26,000 lbs, you will need an additional commercial driver’s license. Moreover, if you want to enroll in commercial driver lessons to pass the CDL road test, you should expect to spend between $1,200 to $3,300.
Licenses & Permits (approx. $1,000 to $2,000)
Starting any business in the USA requires more than a couple of licenses and permits. The cost of licenses and permits will vary depending on the state, country, or borough. You will have to get permits for being an employer if you need other staff, you will have to get permits from the health department, seller’s permit and others. Here are a few permits and licenses you will need to run a food truck.
EIN (Employer Identification Number) (Free)
If you are running solo, then you will not need the EIN permit, but if you are willing to hire a few staff for the food truck, you will have to apply for EIN to officially become an employer.
Business License (approx. $30 to $200 per year)
You must have a business license to run a food truck. The cost of registration is approx. $50 and the cost of license ranges between approx. $30 to $200 depending on the type of food truck setup and the services you will provide to the public. Moreover, you may have to share a small percentage of your sales and profit.
Vehicle License (approx. $20 to $60 per year)
The food truck is a restaurant on wheels, and for that, you will need a vehicle or food truck license. The vehicle license itself can cost somewhere between $20 to $60 on top of that; you will need a commercial driver’s license which will cost between $200 to $300. A commercial driver training will cost between approx. $1,000 to $3,000. So, in total, you have to spend between approx. $1,500 to $3,500.
Seller’s Permit (approx. $50 to $70 per year)
A seller’s permit enables the state to take the food truck business as a collector of sales tax. With a seller’s permit, you can purchase food and good at a wholesale price, without paying the sales tax. Applying for the seller’s permit is free, but you have to give a security deposit every year. In many states, it is called as the ‘Sales Tax’ permit or license.
Food Handler’s Permit (approx. $20 to $30 per year)
The employees need to have a food handler’s permit which costs between $10 to $30. On top of that, a couple of your employees have to take training on how to handle food, its storage, proper sanitation and other things to prevent spreading foodborne diseases. The training cost approx. $10 to $30. On top of that, the employee health permit costs between $100 to $200.
Food Service License or Health Department Permit (approx. $100 to $300 per year)
Just like for restaurants, you too have to get a health department permit which will be issued by your state health department. There will an in-person visit from the department to make sure, your food truck meets food safety regulation, and the food is prepared the right way. The food service license can vary from approx. $100 to $300 for food trucks.
Fire Permit (approx. $50 to $200 per year)
The department professionals will visit your food truck because you will be carrying an onboard fire to crowded places. They usually educate the food truck owner about the regulation and make a few visits every year. Fire permits for food truck usually cost between approx. $50 to $200, depending on your location.
Other Permits You May Need
- Business certificate – approx. $70 to $200
- Hawker and Peddler permit – approx. $50 to $150
- GPS contract – approx. $100 to $300
- Food truck permits – approx. $500 to $1200
- Vendor Identification badge – approx. $5 to $20
- Sign permit – approx. $30 to $60
- Music license (optional) – approx. $200 to $500
- Resale permit – approx. $50 to $70
The total cost of licenses and permits can range between approx. $1,000 to $2,000.
Food and Supplies (approx. $500 to $2,000)
The initial food and supplies cost to start your business are going to range between approx. $500 to over $2,000, depending on the size and operation of your food truck. According to experts, the actual cost of food should be 30% to 35% of the selling price. So, with the budget mentioned above, you should be making a sales of approx. $1,400 to $5,500.
Insurance Cost (approx. $4,000, to $9,000 annual premium)
Food truck insurance cost largely depends on the sales you make per year. In average, the insurance for a commercial vehicle is between approx. $1200 to $3000 per year. General liability insurance can cost between $500 to $600 per year. Property coverage will cost between approx. $500 to $1200 per year. Workers compensation insurance will cost you between approx. $1500 to $2500.
Food Truck Accessories and Fitting (approx. $40,000, to $150,000)
- Electrical wiring
- Interior reinforcement
- Service windows and A/C
- Interior finish with fireproof material
- Gas tank installation
- Interior hood
- Cooking equipment
- Setup generator
Kitchen Space and Parking (approx. $600 to $1200 per month)
Many food truck owners don’t prepare meal onboard the truck. Sometimes, when you have a wide range of menu and larger customer base or just for the sake of convenience, food truck owners rent kitchen space to prepare and store food. This commissary is essential for a food truck operation, and many cities even demand the proof of commissary to operate a food truck. Renting a commissary space can cost over approx. $1000 to $1200 per month. However, you can also avail spaces with annual or hourly rates. Usually, the commissary space is an important location where others also prepare their meals, which makes finding a space quick difficult. For this, you could hire a broker who will arrange your space. Furthermore, you need to park your food truck at a secure location when it’s close, and it can cost you several hundreds of dollars.
Here’s a Typical Cost Breakdown of a Food Truck Operation in the USA
One-Time Costs (approx. $61,000 to $260,400)
- The truck – approx. $15,000 to $100,000
- Permits – approx. $1000 to $2000
- Initial inventory – approx. $1000 to $2000
- Food truck accessory and fittings – approx. $40,000 to $150,000
- POS system – approx. $500 to $1000
- Tools – approx. $2000 to $2500
- Uniforms – approx. $500 to $1000
- Paper products – approx. $300 to $500
- Fire extinguisher – approx. $200 to $300
- Miscellaneous – approx. $500 to $2000
Recurring Costs (approx. $108,200 or $130,400 per annum)
- Kitchen space – approx. $500 to $1200 per month
- Insurance – approx. $4000 to $9000 per annum
- Food and beverage supplies – approx. $2000 per month
- Paper products – approx. $300 per month
- Gas and Propane – approx. $200 to $500 per month
- Social media marketing – approx. $1000 per month paid campaigns
- Website – approx. $1000 and $50 per month
- Phone and internet – approx. $100 to $200 per month
- Salary – approx. $40,000 per annum
- Repairs – approx. $1500 per month
Food Truck Marketing
For any business, irrespective of the industry, marketing, and advertising are one of the most important aspects of operating your business. For a food truck, it may take some time to gain that rapport, especially if you frequently travel to multiple locations. A rather faster and smarter way to reach today’s people is through social media such as Facebook and Twitter. You can also use Instagram and Pinterest as your medium to showcase your menu. Although having a social media profile is free, you may have to run some paid social media campaigns to reach a larger audience.
Many would also like to have a website with menu and pricing information. Some would join food finder apps such as Zomato, Yelp, Zagat, etc. All this will have an initial cost of approx. $1000 and then a recurring approx. $200 per month to keep the website running and deploy paid campaigns.
It doesn’t cost anything to train your employees except for patience and some business skills. They should be hired and trained well before you open your food truck business. It is advisable to start your hiring process while you are preparing your food truck. In the meantime, give them food handler’s license, keep them motivated, and always follow strict ethics even when your customers are a jerk.
Setting up a food truck in the USA is no easy task, and it’s even more difficult to thrive in this saturated market. That said, food will never go out of business, and people love to try out new dishes at new places. The food industry is one of the most lucrative business; you can make a fortune out of your food truck if you have skilled cooks and you know how to market your business. Moreover, you shouldn’t expect to make any profits for the first few months. Today, the food truck business is a $1.3 billion industry, and you can certainly make your mark.