Thanks to their affordable prices, unique menus, and ability to meet customers where they are, the food truck business is a vital part of the food industry.
Because of the popularity of food trucks, foodies and entrepreneurs around the country are scrambling to get their piece of the street-food pie. Starting a food truck can make good business sense: overhead is relatively low, staffing needs are minimal, and you can operate from multiple locations.
But starting a food truck business is no easy endeavor. The unique combination of sanitation, health, and transportation regulations, as well as the fierce competition for customers and parking spots, makes it a much different enterprise from any other business, including running a traditional brick-and-mortar restaurant.
Here are six key steps to opening a food truck business.
1. Business licenses and permits for food trucks
Perhaps the most challenging aspect of starting a food truck business is keeping up with the multitude of mobile vending laws and obtaining all the required credentials. Each state’s requirements are different, as are each city’s. If you plan to drive your truck from one city to another, you will need the appropriate license for each location.
Before you even think of starting a food truck business it’s important to research local general license and permit requirements to ensure it will be a practical endeavor. At the bare minimum, a city may require a basic business license, a health permit, and safety inspection. Other cities may require food safety and handling certification and additional permits.
Some cities streamline the license and permitting process by combining procedures into one step, saving applicants’ time. Others require multiple trips to government and notary public offices as well as accredited food safety training organizations. For example, in Denver it can take eight trips to obtain the right licenses and food truck permits, while in Washington, D.C. it can involve more than 20 trips!
Remember to factor licensing and permitting fees into the cost to start a food truck business. Fees also vary by city. In Raleigh, license and permitting fees can amount to $848, while in Boston, they can be as high as $17,066.
You’ll also need to look into local food truck laws regarding food handling, parking, and zoning, as well as the inspection process for vehicles and food safety. Some cities don’t have food truck laws on the books. In this scenario, be cautious before investing your time and money into a business that could be ruled illegal once the local government gets around to regulating the industry.
As your business grows, it’s prudent to continue to monitor local rules and regulations as these may change based on the vision of state and local legislators.
2. Brainstorming food truck ideas
As of 2023, there were approximately 47,033 food trucks in the U.S. With stiff competition and some regions hitting food truck saturation points, it’s important to identify a niche that will ensure your food truck business stands out from the rest of the pack.
To refine your food truck ideas and determine your niche, ask yourself the following questions:
- What is the food truck industry like in your region?
- Who is your competition and what are they doing right? What are they doing wrong?
- What kind of customer base would you like to attract? What do they like to eat, and how much are they able or willing to spend?
- What kind of foods do you want to serve?
- How can you offer customers something different than the area’s existing cuisines? (For example, you will have to make some amazing tacos if you plan on opening a taco truck in Los Angeles.)
3. Picking the best location for your food truck
Real estate isn’t the only industry to preach the benefits of “location, location, location”. In the food truck world, finding a good parking space can make or break your business.
First, you need to determine where you’re even allowed to set up shop. Tons of factors will affect this, from local laws and parking ordinances to the mercy of landowners and property managers. Then there’s the competition. Existing food trucks, as well as local restaurants, will have plenty to say if you park in what they consider their territory.
Get creative. Who owns the empty lot across the street from the new brewery? Which locations might a sports fan pass on the walk from the parking lot to the stadium? Are there any special events coming up that welcome vendors?
After figuring out your options, you have to decide which schedule will best serve potential customers. Catering to an office park will likely require a different schedule than serving late-night concert-goers.
4. Food truck start-up costs
The cost to start a food truck is typically lower than a brick-and-mortar restaurant, but they’re not exactly cheap. Depending on where you buy your truck, foodservice equipment, etc., start-up costs can range from $50,000 to $250,000. The vehicle will be the priciest item. Expect to pay between $75,000 and $200,000 for a new, made-to-order food truck or between $50,000 and $10,000 for a used truck.
Then there's the cost of staff, marketing, food, fuel, and equipment, as well as insurance, inspection, and permit and licensing fees.
A small business loan can be a big help in protecting your personal savings and your sanity. To apply, you’ll need a detailed business plan that includes market analysis, sales strategies, and financial projections.
5. Decide on a business entity structure
Your choice of business structure can affect various aspects of your business, including taxes, personal liability, and your ability to obtain funding.
Sole proprietorships are the easiest to establish, since they do not require paperwork and filing fees to form. However, the owner of a sole proprietorship is personally liable for any debts or obligations of the business, and it may be difficult to raise funding or obtain a loan.
An LLC shields the owners from personal liability for debts associated with the business and offers pass-through taxation. But LLCs do have certain ongoing requirements, such as having a registered agent and fulfilling annual report and/or franchise tax obligations.
In addition, if you decide to form an LLC or incorporate your food truck business, you may need to file a beneficial ownership information (BOI) report with FinCEN (U.S. Department of Treasury’s Financial Crimes Enforcement Network) unless you qualify for an exemption. This is a new federal requirement that applies to millions of small businesses. Learn more about filing a BOI report.
To see which business type may be right for you, use the Incorporation Wizard Tool.
6. Have a solid food truck business plan
To secure funding, you’ll need a food truck business plan. Think of it as your roadmap to success. Your plan should include your start-up costs and budget, projected yearly sales — and everything in-between.
Demonstrate that you’ve thought through your start-up strategy by including market analysis of your competition, your target market, and how you will stand out from the crowd.
It can seem like an encyclopedic task, but a best practice is to break it down into chunks and keep revisiting it over time so that it acts as a useful guide on your journey. For more steps on how to create a business plan, read: Writing your business plan.
Conclusion
Starting a food truck business can be a rewarding venture, but it has to be done correctly. It is important to obtain all the necessary licenses and permitsas well as to consider which business structure is right for you. For more information, check out BizFilings’ state guides for LLCs and corporations.