Starting a food truck is becoming a trendy option for entrepreneurs who want to get into the food industry – this is no better epitomized by the fact that the food truck industry is a $2 billion-plus industry and has grown by 300% since 2014 in cities all across America. (Food Truck Nation)
The most cited reasons why people opt to open up a food truck as opposed to getting a fixed premised for their restaurant are: freedom of location and an ability to operate at popular events, increased ability to promote oneself while traveling around, and lower initial set up costs and overhead.
This final reason, namely that a food truck is cheaper to set up and run compared to starting a new restaurant business, is by far the most commonly cited reason why people enter the food truck game. This comes with a downside, however, as many people underestimate the money required to launch a food truck and make a success out of it.
Cutting corners due to an insufficient budget is a sure-fire way to lose out to the competition. With this in mind here are the costs that need to be accounted for when starting a food truck, considering the financial requirements and operational needs specific to an average food truck.
Let’s see how much you can expect to pay to start a food truck business.
Table of Contents
Initial Investment
Starting a food truck business requires a significant initial investment, but it’s often more affordable than opening a brick-and-mortar restaurant. The cost of a food truck can vary widely, typically ranging from $50,000 to $175,000.
This estimate includes the truck itself, kitchen equipment, necessary permits, and initial inventory. While the upfront costs might seem steep, they are generally lower than the expenses associated with a traditional restaurant setup. Investing wisely in a quality truck and reliable equipment can set the foundation for a successful food truck business.
The Food Truck Business
The food truck cost can vary widely, typically ranging from $50,000 to $175,000. The most obvious expense in starting a food truck, and one that applies no matter what you are serving is the truck itself.
Now, it’s always tempting to go for the cheapest truck available when your business is in its infancy. While the idea of having a “minimally viable product,” namely getting yourself out there and testing the market with as little expenditure as possible, works in some industries, you ultimately save money by spending a little more on a good quality truck.
This is for two reasons. Firstly, with all the cooking going on in the truck, wear and tear will happen faster than if you were just to use the vehicle for transport. A cheaper truck will need a lot of maintenance, which over time, will offset the initial savings and more.
Secondly, if your truck breaks down and needs to go to the garage, you have no business until it is up and running again. A better quality truck means less downtime and, therefore, more earning potential.
Although it will depend on your location and what type of food you plan to serve, a quality food truck will usually cost you around $70,000. If you buy new, expect to pay over $100,000, so it’s well worth shopping around for a high-quality second-hand truck in good condition. (See handy cost charts below).
In addition to the truck itself, you will also need to make sure that you have a dedicated account for your business so you can handle budgeting and taxes once you start trading. A good money saver when you are starting is to go for an account with a reward program so you can get money back when you make your initial business purchases.
Equipment
Once you have brought your truck, food truck costs for kitting it out will be the second significant expense to account for before you can start making money. The required spend depends on what food you are going to be serving.
Here are a few examples of the equipment you may need, and how much it is likely to cost, for various food truck businesses:
- Food Truck Selling Burgers – Equipment: Flat top grill, broiler, commercial fridge, salad crispers (Estimated cost: $8,000)
- Food Truck Selling Pizza – Equipment: Pizza oven, serving stations, dough mixer, commercial fridge (Estimated cost: $20,000)
- Food Truck Selling Grilled Sandwiches – Several sandwich presses, grill, separate storage spaces for meat and vegetables, commercial fridge (Estimated cost: $11,000)
No matter what food you serve, you will need a point of sale system (POS) so you can take card payments. This will allow more people to make purchases for you and will stop you from having to hold thousands of dollars in cash in your truck at the end of each day.
You may also benefit from investing in additional restaurant equipment such as coffee machines and drinks fridges for additional upsells. This can take the setup cost of your food truck business to well over $100,000 if you combine both the truck and equipment.
Estimated Costs to Start a Food Truck Business:
| Expense Category | Estimated Cost (USD) |
|---|---|
| Used Food Truck | $70,000 |
| New Food Truck | $100,000 |
| Equipment for Burger Truck | $8,000 |
| Equipment for Pizza Truck | $20,000 |
| Equipment for Grilled Sandwich Truck | $11,000 |
| Licenses & Insurance (Annual) | $300 |
Kitchen Equipment for Food Trucks
Outfitting your food truck with the right kitchen equipment is a crucial part of your initial investment. Depending on your menu, the cost of kitchen equipment can range from $10,000 to $50,000. This includes essential appliances like refrigerators, freezers, ovens, and fryers, which you can find at online restaurant supply stores.
Additionally, you’ll need smaller items such as prep equipment, janitorial supplies, and cookware. Investing in high-quality equipment is vital for ensuring efficient operations and maintaining food quality, which are key to the success of your food truck business.
Food Service Licenses and Insurance
To legally sell food in a public place, you will need a food truck permit, the necessary licenses and insurance, and permission to trade in whatever location you choose to set up your truck.
Insurance to sell food in a public place will start at around $300 a year, but you can expect this to rise if you start hiring staff or operating in multiple locations.
The permits required to sell food (or anything else for that matter) can vary from state to state and even city to city. It’s worth speaking to your local government official, or a lawyer specializing in this type of business to determine what you need. Score has a nice guide on the licenses and permits required to operate.
In general, it is more expensive to trade in areas that are more densely populated. This can, of course, mean more business in the long run, so it could be a wise investment to make.
Necessary Licenses and Permits for Food Trucks
To legally operate your food truck, you must obtain the necessary licenses and permits. Depending on your location, these can cost from $5,000 to $20,000 or more. This includes a food service license, health permits, and parking permits.
The specific requirements and costs can vary widely from city to city and state to state, so it’s important to research local regulations thoroughly. Ensuring you have all the necessary permits not only keeps you compliant with the law but also helps build trust with your customers.
Estimated License and Permit Costs for Starting a Food Truck:
| License/Permit Category | Estimated Cost (USD) |
|---|---|
| Business License | $50 – $500 |
| Food Truck Permit | $100 – $1,000 |
| Health Permit | $100 – $1,000 |
| Fire Safety Permit | $100 – $1,500 |
| Parking Permit | $200 – $2,000 |
| Vendor/Hawker’s Permit | $100 |
Operational Costs
Running a food truck business involves various ongoing operational costs that can fluctuate based on several factors, including the size of your truck, your menu, and your location.
On average, you can expect to spend between $5,000 and $20,000 per month on operational expenses. These costs encompass everything from food and fuel to labor and marketing. Understanding and managing these expenses is crucial for maintaining profitability and ensuring the long-term success of your food truck business.
Food and Fuel Costs for Food Truck Operations
Food and fuel are two of the most significant operational expenses for food truck operators. The cost of ingredients can range from $500 to $2,000 per week, depending on your menu and the volume of business.
Fuel costs can vary from $100 to $500 per week, influenced by your truck’s fuel efficiency and the distances you travel. Additionally, labor costs are a major consideration, typically accounting for 25% to 35% of your operating expenses. This includes hiring and training staff to help run your food truck efficiently.
Marketing and branding are also essential operational expenses. Allocating 10% to 20% of your revenue for marketing efforts, such as advertising, social media, and promotions, can help attract and retain customers. By carefully planning and managing these costs, you can create a successful and profitable food truck business that stands out in the competitive food industry.
Cost-Saving Ideas
When trying to save money in your own food truck business, it’s vital that you save money in areas that do not compromise the quality of the food itself. With so much competition, your product needs to be exceptionally good for you to stand any chance of success.
That being said, you can save money by buying second-hand equipment. Some restaurants buy equipment to test out new items on the menu. If these items are not a hit, then the equipment can sit there, be almost as good as new, and provide no value to their original owners. This is where you can take it off their hands at a very reduced cost.
You will also want to find an affordable food truck POS system with the restaurant management system features you need to operate a food truck. A reliable point of sale system with restaurant management features helps keep your inventory, sales, and taxes in order.
As your truck is your most significant initial expense, you can save money by maintaining it properly and, therefore, making sure that you squeeze every ounce of value out of it as possible. Get your truck serviced regularly (at least once a year) and ensure that seemingly minor issues are seen as soon as they are noticed. If you do this, then your truck could last you decades, making the initial outlay seem a lot more reasonable.
Estimated Total Costs for Starting a Food Truck Business:
| Expense Category | Estimated Cost (USD) |
|---|---|
| Used Food Truck | $70,000 |
| New Food Truck | $100,000 |
| Burger Truck Equipment | $8,000 |
| Pizza Truck Equipment | $20,000 |
| Grilled Sandwich Equipment | $11,000 |
| Business License | $50 – $500 |
| Food Truck Permit | $100 – $1,000 |
| Health Permit | $100 – $1,000 |
| Fire Safety Permit | $100 – $1,500 |
| Parking Permit | $200 – $2,000 |
| Vendor/Hawker’s Permit | $100 |
Total Estimated Startup Costs:
- Lower Estimate: Around $90,550 (Used truck and lower-end costs for permits/equipment).
- Higher Estimate: Around $137,000 or more (New truck and higher-end permits/equipment).
Get Your Food Truck Rolling—Find the Best POS System Now!
