How to prepare a Food Truck Business plan
Starting a company with food trucks is an enticing alternative to opening a restaurant. The initial costs are considerably lower than opening a conventional restaurant and the popularity of food trucks is only increasing. That does not mean, however, that the food trucks are cheap. It can cost from $5,000 to over $100,000 to open a new truck anywhere so you're going to want to make sure you understand the risks.
A business plan is a vital aspect of food truck operation. A good strategy is like getting a business recipe, and it gives you the best chance of success. It will help you through the process of getting up and running, and make sure you are prepared for all the costs and risks involved. It's worth the time, and will increase your chances of success considerably.
After all, if you are going to invest tens of thousands of dollars in a food truck, kitchen equipment, labour and permits, why not spend a little time developing a solid business plan which will be your guide to starting a profitable food truck company.
A business strategy well thought out can be the difference between success and failure. You might develop an initial financial plan, for instance, and discover that your concept is simply not viable.
Making this discovery so much better because all you've spent is just a few hours of your time in front of the screen. Instead of trying to figure it out when you are already up and running and have no money in the bank, you can take the time to go back to the drawing board during the planning process and rework the idea before you have a viable company. Before spending your (or other people's) capital, you can use the time to find out where you can cut costs so your company can be a success out of the gate, rather than a battle.
When writing your business plan for food trucks, note you 're doing this for you, not for anybody else. You will not be judged on what the design looks like so don't think about it. Make the strategy work for you so that you and the organisation will prosper.
One caveat: You might need to dress up your business plan a little if you're trying to raise money from investors or go to the bank for a loan. But concentrate on the content not how it looks, to get moving.
Fresh summons to action
Business model prototype for food trucks
A business plan for food trucks fits the same general model as a conventional business plan, although it does have a few variations that you want to pay careful attention to. Here are the parts you'll want to include in your food truck business plan:
1. Executive brief
Your executive summary is a very short overview of your business. Try to limit it to just one or two pages. Anything more than that is obviously not worthwhile.
This is an overview of your venture, which you can share with your business partners and family. It's a description that outlines the idea for your food truck, your main operating hours, your places, a description of your marketing strategy, and how much money you need to get up and running.
Last write your executive summary after you've finished your strategy. Since the executive summary is an outline of all the effort you have put into your plan, first spend the time on the rest of the plan, then come back and summarise it all on one page.
A good thumb rule is that someone should just be able to read your executive summary and get a solid overview of your business.
2. Konzept
This is an exciting part of your business strategy. Use the segment to explain your food truck's general concept. What sort of food are you going to be serving? What is it that makes you stand out?
It 's important to ponder your key differentiators and write down those here. If you open a taco truck, what is it that makes your tacos special? Why are people going to pick your taco truck instead of all the other taco trucks? Or, maybe your region does not have taco trucks. That is a "demand niche" that will fill your food truck idea.
Often worth talking about why you want to open a food truck rather than a conventional restaurant. Does your food lend itself to a gastronomic experience?
3. Menu & Expenses
You need to go about your menu and follow up on your idea. What things are you going to sell, and how much are you going to sell for? How much would it cost you to produce every single item? How long does it take to prepare and cook every item?
A crucial phase in the planning process is going about these questions and writing down the answers. You'll want to make sure that the food you 're going to serve can be served fast enough, and that your prices are set to cover the cost of food. Of course you 're going to have to pay those expenses as well, but when you do your financial plan you 're going to discuss it more.
It's worth sharing your menu with friends and family to get feedback once you've discussed what your menu and pricing looks like. Ideally you can even try to share your menu with strangers to get feedback from them. What do they think about prices? Do your explanations of things make sense?
4. Seek market
Your marketing strategy target market segment explains who are going to be the main customers. Of what age group do they belong? What are the demographics? Where they live, and where they work
The information will be used to determine the size of your target market. That's the total amount you might have of potential customers.
The information can also be used to advise the branding and marketing plan. If your target market is millennials then, for example, your branding and marketing could lean to healthy eating values.
5. Piazza(s)
Just because your company is mobile doesn't mean finding the "best place" every day would be a new adventure. You would want to have a schedule in advance so you don't waste time finding the correct spot every day.
Next, you are going to want to explore areas where your target market would be. If you're going for the crowd of "working lunch" who are looking for a fast lunch near their offices, you 're going to want to find a spot that's convenient for them.
Customers respect continuity as well. They will want to know where you will be, and when you will be there. If one day you 're in one place and you're gone the next, you may lose out on returning customers who think you 're incoherent.
If you are going to be part of a "pod" food cart that's more developed, what does it take to get a place? What are the costs, and what are the permits required? Find this out now so that parking and enabling expenses can be factored into the total expense plan.
If you prepare and work over the course of any given day from various places, think about and write down your schedule. How much are you going to move about? How long does one location break down and set up at a new location take you to?
6. Branding, PR, and Marketing
With the rise of food trucks, it's important to find out how you'll draw an audience. Luckily, you 're going to drive a mobile billboard, so you can take advantage of that and use it for promotions and ads.
Ensuring that your social media handles are part of your branding and marketing campaign is essential so that people can quickly find you online and know where you are. Just as critical is that you check your social media accounts regularly. Nothing is worse than a profile which hasn't been changed in days or weeks. Many consumers would think if you don't appear to be involved online you're locked.
In addition to social media, you'll want to make sure you're identified in Yelp and any other directories and applications for local food trucks. Having a presence in these apps and having positive feedback, particularly in the early days, is crucial.
If you can get the local papers, that's also worth hunting down. The weekly arts and culture papers will also review food trucks so it's worth announcing to them your presence. Think about your storey as you do it-what makes you unique? What is unique about the food you eat? What initially pushed you into starting a food truck business? Everybody has a storey to tell, so share yours and try to get some attention that will drive your truck customers away.
7. Management & Company
Food truck operations are typically fairly clearly organised. Typically only one or two owners are present, and the company is typically an LLC. Even though things are fairly easy, writing things down is always worthwhile, particularly if you have business partners. You 're going to want agreements on who owns what, what stakes what person has in the company and what happens if one of the partners wants to walk away.
While in the beginning everything is still optimistic and hopeful, the hard work of running a food truck company will put a strain on any relationship and you'll want to have a contingency in place in case things don't go exactly the way you think they'll. Even even the best of friends have to deal with complicated business circumstances and it's always much simpler if everything is written down and decided before the company is up and running in reality.
8. Economic Preparation
The financial plan is the most critical part of your business strategy, theoretically. Here's where you'll find out just what it takes to get your company to work, so you can make a living.
Next, you 're going to want your revenue forecasted. In an average day, how many meals do you think you should serve? How much will each customer be paying on average? What's up with seasonality? Do you sell as much when the weather is bad as when it's warm and sunny?
Second, you'll want that "cost of goods" look. This is how much it costs you to buy the food that you are eating in food and supplies. Subtract from your revenue the Cost of Production and you'll get what's considered the Gross Profit ... You would want this to be a good number, of course, but that is just the beginning.
You will then have to look at the expenses. In addition to the cost of food, you would also have labour costs including your own wage and any extra support you need. Also you would need to include insurance, city and county licences, as well as fuel and fees for event hosts. It's pretty normal for food trucks to pay a flat fee plus a percentage of sales to event organisers, so if you're going to consider taking your truck to events you 're going to need to factor in those costs too.
Other costs may include access to a shared kitchen area. You are not legally permitted to cook food in your home as a food company, so food preparation will have to be done either in your truck or in the rented kitchen room.
You'll be able to measure your profitability using your revenue forecast and cost estimate. If your company doesn't look profitable to start, you can make cost changes, theoretically lift your food price, or explore how you can serve more meals.
You would of course also need to weigh the start-up costs. It is not at all uncommon for a food truck and equipment to cost $50,000 to the north and can easily stretch to $100,000 depending on how custom you need the setup. There is of course a good demand for used food trucks, so it's also worth exploring.
Compared to many other companies, $100,000 is relatively small in terms of start-up costs and definitely considerably less costly than opening a restaurant. Many entrepreneurs in food trucks may find they can finance their startup with savings and loans from friends and family. Bank loans are also a possibility since much of the start-up expenses go to a financial asset that the bank will recover if things go south terribly.
No guesswork at LivePlan
You will be able to assemble a Profit and Loss forecast and Cash Flow forecast for all those numbers. These two financial projections will help you find out exactly what your financing needs are to get your company off the ground.
If you are struggling with the financials, it is worth investing a small sum in a business planning tool to help you get your plan completed without having to think about all the financial forecasting information in Excel.
With your business plan in hand, and a financial outlook showing you can actually run a profitable business, the next move is to start building your company.
Check out those posts for further reading:
How to operate a food truck company
10 Tactics to raise sales for your food truck
Keep your food truck company on track
A business plan is a vital aspect of food truck operation. A good strategy is like getting a business recipe, and it gives you the best chance of success. It will help you through the process of getting up and running, and make sure you are prepared for all the costs and risks involved. It's worth the time, and will increase your chances of success considerably.
After all, if you are going to invest tens of thousands of dollars in a food truck, kitchen equipment, labour and permits, why not spend a little time developing a solid business plan which will be your guide to starting a profitable food truck company.
A business strategy well thought out can be the difference between success and failure. You might develop an initial financial plan, for instance, and discover that your concept is simply not viable.
Making this discovery so much better because all you've spent is just a few hours of your time in front of the screen. Instead of trying to figure it out when you are already up and running and have no money in the bank, you can take the time to go back to the drawing board during the planning process and rework the idea before you have a viable company. Before spending your (or other people's) capital, you can use the time to find out where you can cut costs so your company can be a success out of the gate, rather than a battle.
When writing your business plan for food trucks, note you 're doing this for you, not for anybody else. You will not be judged on what the design looks like so don't think about it. Make the strategy work for you so that you and the organisation will prosper.
One caveat: You might need to dress up your business plan a little if you're trying to raise money from investors or go to the bank for a loan. But concentrate on the content not how it looks, to get moving.
Fresh summons to action
Business model prototype for food trucks
A business plan for food trucks fits the same general model as a conventional business plan, although it does have a few variations that you want to pay careful attention to. Here are the parts you'll want to include in your food truck business plan:
1. Executive brief
Your executive summary is a very short overview of your business. Try to limit it to just one or two pages. Anything more than that is obviously not worthwhile.
This is an overview of your venture, which you can share with your business partners and family. It's a description that outlines the idea for your food truck, your main operating hours, your places, a description of your marketing strategy, and how much money you need to get up and running.
Last write your executive summary after you've finished your strategy. Since the executive summary is an outline of all the effort you have put into your plan, first spend the time on the rest of the plan, then come back and summarise it all on one page.
A good thumb rule is that someone should just be able to read your executive summary and get a solid overview of your business.
2. Konzept
This is an exciting part of your business strategy. Use the segment to explain your food truck's general concept. What sort of food are you going to be serving? What is it that makes you stand out?
It 's important to ponder your key differentiators and write down those here. If you open a taco truck, what is it that makes your tacos special? Why are people going to pick your taco truck instead of all the other taco trucks? Or, maybe your region does not have taco trucks. That is a "demand niche" that will fill your food truck idea.
Often worth talking about why you want to open a food truck rather than a conventional restaurant. Does your food lend itself to a gastronomic experience?
3. Menu & Expenses
You need to go about your menu and follow up on your idea. What things are you going to sell, and how much are you going to sell for? How much would it cost you to produce every single item? How long does it take to prepare and cook every item?
A crucial phase in the planning process is going about these questions and writing down the answers. You'll want to make sure that the food you 're going to serve can be served fast enough, and that your prices are set to cover the cost of food. Of course you 're going to have to pay those expenses as well, but when you do your financial plan you 're going to discuss it more.
It's worth sharing your menu with friends and family to get feedback once you've discussed what your menu and pricing looks like. Ideally you can even try to share your menu with strangers to get feedback from them. What do they think about prices? Do your explanations of things make sense?
4. Seek market
Your marketing strategy target market segment explains who are going to be the main customers. Of what age group do they belong? What are the demographics? Where they live, and where they work
The information will be used to determine the size of your target market. That's the total amount you might have of potential customers.
The information can also be used to advise the branding and marketing plan. If your target market is millennials then, for example, your branding and marketing could lean to healthy eating values.
5. Piazza(s)
Just because your company is mobile doesn't mean finding the "best place" every day would be a new adventure. You would want to have a schedule in advance so you don't waste time finding the correct spot every day.
Next, you are going to want to explore areas where your target market would be. If you're going for the crowd of "working lunch" who are looking for a fast lunch near their offices, you 're going to want to find a spot that's convenient for them.
Customers respect continuity as well. They will want to know where you will be, and when you will be there. If one day you 're in one place and you're gone the next, you may lose out on returning customers who think you 're incoherent.
If you are going to be part of a "pod" food cart that's more developed, what does it take to get a place? What are the costs, and what are the permits required? Find this out now so that parking and enabling expenses can be factored into the total expense plan.
If you prepare and work over the course of any given day from various places, think about and write down your schedule. How much are you going to move about? How long does one location break down and set up at a new location take you to?
6. Branding, PR, and Marketing
With the rise of food trucks, it's important to find out how you'll draw an audience. Luckily, you 're going to drive a mobile billboard, so you can take advantage of that and use it for promotions and ads.
Ensuring that your social media handles are part of your branding and marketing campaign is essential so that people can quickly find you online and know where you are. Just as critical is that you check your social media accounts regularly. Nothing is worse than a profile which hasn't been changed in days or weeks. Many consumers would think if you don't appear to be involved online you're locked.
In addition to social media, you'll want to make sure you're identified in Yelp and any other directories and applications for local food trucks. Having a presence in these apps and having positive feedback, particularly in the early days, is crucial.
If you can get the local papers, that's also worth hunting down. The weekly arts and culture papers will also review food trucks so it's worth announcing to them your presence. Think about your storey as you do it-what makes you unique? What is unique about the food you eat? What initially pushed you into starting a food truck business? Everybody has a storey to tell, so share yours and try to get some attention that will drive your truck customers away.
7. Management & Company
Food truck operations are typically fairly clearly organised. Typically only one or two owners are present, and the company is typically an LLC. Even though things are fairly easy, writing things down is always worthwhile, particularly if you have business partners. You 're going to want agreements on who owns what, what stakes what person has in the company and what happens if one of the partners wants to walk away.
While in the beginning everything is still optimistic and hopeful, the hard work of running a food truck company will put a strain on any relationship and you'll want to have a contingency in place in case things don't go exactly the way you think they'll. Even even the best of friends have to deal with complicated business circumstances and it's always much simpler if everything is written down and decided before the company is up and running in reality.
8. Economic Preparation
The financial plan is the most critical part of your business strategy, theoretically. Here's where you'll find out just what it takes to get your company to work, so you can make a living.
Next, you 're going to want your revenue forecasted. In an average day, how many meals do you think you should serve? How much will each customer be paying on average? What's up with seasonality? Do you sell as much when the weather is bad as when it's warm and sunny?
Second, you'll want that "cost of goods" look. This is how much it costs you to buy the food that you are eating in food and supplies. Subtract from your revenue the Cost of Production and you'll get what's considered the Gross Profit ... You would want this to be a good number, of course, but that is just the beginning.
You will then have to look at the expenses. In addition to the cost of food, you would also have labour costs including your own wage and any extra support you need. Also you would need to include insurance, city and county licences, as well as fuel and fees for event hosts. It's pretty normal for food trucks to pay a flat fee plus a percentage of sales to event organisers, so if you're going to consider taking your truck to events you 're going to need to factor in those costs too.
Other costs may include access to a shared kitchen area. You are not legally permitted to cook food in your home as a food company, so food preparation will have to be done either in your truck or in the rented kitchen room.
You'll be able to measure your profitability using your revenue forecast and cost estimate. If your company doesn't look profitable to start, you can make cost changes, theoretically lift your food price, or explore how you can serve more meals.
You would of course also need to weigh the start-up costs. It is not at all uncommon for a food truck and equipment to cost $50,000 to the north and can easily stretch to $100,000 depending on how custom you need the setup. There is of course a good demand for used food trucks, so it's also worth exploring.
Compared to many other companies, $100,000 is relatively small in terms of start-up costs and definitely considerably less costly than opening a restaurant. Many entrepreneurs in food trucks may find they can finance their startup with savings and loans from friends and family. Bank loans are also a possibility since much of the start-up expenses go to a financial asset that the bank will recover if things go south terribly.
No guesswork at LivePlan
You will be able to assemble a Profit and Loss forecast and Cash Flow forecast for all those numbers. These two financial projections will help you find out exactly what your financing needs are to get your company off the ground.
If you are struggling with the financials, it is worth investing a small sum in a business planning tool to help you get your plan completed without having to think about all the financial forecasting information in Excel.
With your business plan in hand, and a financial outlook showing you can actually run a profitable business, the next move is to start building your company.
Check out those posts for further reading:
How to operate a food truck company
10 Tactics to raise sales for your food truck
Keep your food truck company on track
