Trying to decide between starting a restaurant or food truck? You’re not the first culinary entrepreneur that’s faced this difficult decision. In fact, many current food truck owners originally planned to start restaurants, but after realizing they would need $500,000 (at least) to get their concept open decided to explore a more affordable mobile food unit instead.
Bottom line, when it comes to deciding whether or open a restaurant versus a food truck there’s no one sized fits correct choice. There are distinct advantages and disadvantages to each business model that we will explore in today’s post. You’ll need to take your unique financial and personal situation into account before choosing the path that’s right for you.
Finally, it’s important to remember that longterm in your business it’s not an either or decision between starting a food truck or restaurant. There are many examples of businesses that have started as food trucks and after seeing success expanded into a restaurant location. The Peached Tortilla in Austin, Texas, did exactly that. For the first 3 years the business operated as a food truck only. Later a restaurant location was added after the business revenues grew.
On the other hand plenty of restaurants have decided to invest in a food truck to add an additional stream of income from events and catering in addition to additional marketing for the food concept. One example of this path is our friend and customer, M Shack that sells burgers, shakes, and more. M Shack has four restaurant locations in Florida, but decided to invest in a food trailer to capitalize on event sales and grow awareness for their brand.
As M Shack’s managing partner Steve Schaefer stated, their business was able to generate an additional $300,000 in sales within their first 12 months by acquiring a food trailer. You can view a tour of M Shack’s food trailer by watching the video below.
Restaurant VS Food Truck: Which is right for you?
As you can see from the examples above, you don’t need to choose between a food truck and restaurant longterm. If you have a food concept that’s growing, by all means take advantage of both business models. In the short-term, we hope the information below helps you make the right decision for starting or expanding your business as a next step.
The Case for Food Trucks
Cost: The low-cost of entering the food truck business is why so many entrepreneurs decide to go mobile when starting their business. It’s simply not realistic to expect that everyone that has a good restaurant idea will be able to come up with the $500,000 – $1,000,000 required to go brick and mortar.
By choosing to go mobile, you can immediately bring your total startup costs down to well under $100,000. While it’s still a considerable investment, it’s more attainable to first time business owners and independent startups.
The other major cost consideration is that you won’t need to sign a longterm monthly lease like a restaurant will need to do. Restaurant locations, even in lower cost strip malls will typically set you back at least $1,500 – $2,000 monthly in the most affordable locations. In a high-traffic area, the monthly rental cost will be much higher. One example of a higher rent cost would be in San Francisco where monthly rent could be $8,333.00 per month or $100,000 per year. That’s a lot of risk for someone just getting started!
Location: One of the biggest risks associated with starting a restaurant is finding the right location. An average restaurant in a prime location with plenty of foot traffic will often succeed. Alternatively, a great restaurant can flounder in the wrong location.
With a food truck or trailer, the fate of your entire business isn’t determined by a single location. If you discover that your vending location isn’t working, you simply pick up and vend somewhere more profitable.
The Case for Restaurants
Larger Menu: On a food truck, you need to pair down your menu. Due to size limitations, a menu that serves 3 – 5 food items is generally recommended. With a restaurant, you have a lot more space and can install a wider range of kitchen equipment. Deserts, appetizers, main courses, and a wider variety of beverages can all be served meaning you’ll have the opportunity to get a larger average ticket per table.
Fixed Location: There’s something to be said about having a single location where people know they can find you. There’s no need to visit a website or Twitter as is often needed to figure out where your favorite food truck will be located for the day. People know exactly where to go when they’re craving your food with a restaurant. Not having a fixed location with consistent hours can make developing those important regular customers more of a challenge for mobile food vendors too.
Permits: Getting the appropriate permits and licenses for a food truck can be complex. Often the inspectors and government officials in charge of explaining what permits and licenses you need will not be clear. With a restaurant, getting direction of what you’ll need to get started is more straight forward. The restaurant industry is a mature business model in any part of the United States and around the world. As a result, the process for establishing such a business is more straight forward too.
We hope this post has given you some food for thought when determining whether or not a food truck or restaurant is the right next step for your situation. We wish you success no matter what choice is right for you!