Want to Open a Food Truck? Consider These Factors Before Starting

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Increased real-estate costs are turning many people away from the restaurant business and towards food trucks, the mobile, restaurant-to-go models in which you take the food directly to the people.

Although there have always been food trucks outside of construction work areas and other labor centers not serviced by restaurants, the new urban food truck movement gained popularity around 2010, when social media sites like Twitter and Facebook made it possible for food trucks to announce their upcoming locations and arrive to a queue of hungry people.

Depending on state laws, it is often illegal for mobile food trucks to stop unless there is already a line of people waiting; this law, designed for ice cream trucks, provided an excellent loophole for food trucks to take up space in major cities as long as it did the social-media work of drawing a crowd in advance.

Now, nearly every city and many towns have their own network of food trucks, often with pre-announced daily locations and legions of fans. The low barrier to entry of starting a food truck business makes it a popular choice for young entrepreneurs, many of whom would never be able to start a full-fledged restaurant on their own. Instead of working up from prep cook to sous chef to head chef to restaurant owner, these entrepreneurs are happily taking on all the jobs at once.

Here are some factors to consider before you open a food truck of your own:

Rules and Regulations

When opening a food truck, you need to take care of all of the appropriate business licenses as well as the licenses required to serve food in your city. If you hire an employee, you need to manage payroll and other employee-related regulations. You also need to be prepared to pay federal, state, city, business, and sales taxes on your income. Many food trucks try to keep prices as simple as possible, offering a sandwich for $5 or a combo for $7; this means you also need to post signs stating sales tax is included, and pull those sales tax numbers out of your bookkeeping come tax time.

The best way to find out the rules in your city and state is to contact your local city business office and start asking questions.

Cost

Like most new businesses, expect to pay out a lot up front, and go into debt before you begin making a profit. Some food truck owners save money by building the food truck themselves; others choose to hire builders and designers to construct the truck, design logos, and help create the brand.

Expect to pay for fryers, ovens, refrigerators, and all the other appliances involved in turning a truck into a kitchen. The licenses and permits required to legally operate your food truck also come with a cost. Don’t forget about the little things, like plastic spoons, promotional stickers, ad space in local blogs, and even the cost of gas as you drive from one location to another.

Method of payment

Food trucks generally have two choices: operate cash-only, or operate via a smartphone-based credit card reader such as Square. Each has its own benefits and disadvantages.

If you work cash only, you don’t have to pay fees to Square or PayPal. On the other hand, you do run the risk of turning away customers who don’t have cash. You also need to keep very careful records. Many cash-only food trucks rely on the handwritten¬†guest check¬†as both income tracker and receipt generator. Forget to write out the guest checks, and you could be in trouble come tax time.

If you use a credit card reader, expect to pay fees. There are a number of credit card readers available, each taking a small percentage of your income off the top in exchange for the service. On the other hand, having a credit card reader means you’re able to accept money from everyone, whether they want to pay cash, credit, or debit.

If you’re business-minded and ready to learn a lot of rules, a food truck is a great way to dip your toes into the restaurant business. If you’re in it for the love of the food, it’s better to work as a restaurant employee and build your skills that way.

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