In a recent episode of The Dave Ramsey Show, the financial expert of the same name took a call from a prospective food truck business owner. True to form, Ramsey offered candid advice on the next steps the caller Isabelle in Houston should take to improve her personal finances and operate the food truck business profitably. Click the play button below to listen to the full 8-minute segment of the show.
If you’re unfamiliar with Dave Ramsey’s program, listeners call-in seeking advice on a variety of personal finance topics. Many of the callers to Dave’s program are looking for ways to get out of debt by reducing monthly expenses. Others folks call in with questions about retirement planning to dealing with finances in a relationship.
What’s Financial Expert Dave Ramsey’s Opinion on the Food Truck Industry?
Isabelle opens up the call by providing some details about her business planning process to give Dave some insight into the venture. Break even point is in 3 – 4 months after opening. This is the point where the business will begin covering all of it’s expenses. For a concession trailer this usually includes transportation, inventory (food), labor, permits, and other expenses. Once the business is up and running, Isabelle has estimated that she will have a take home or net profit of $70,000 annually for operating the business.
It should be mentioned that Dave Ramsey does not have experience operating a food truck business. That being said Dave is extremely knowledgeable about what it takes to operate a profitable business and understands the numbers. Dave begins by complimenting the caller on the initial forecasting of the business, but asks how Isabelle came to her conclusions for revenue estimates.
Isabelle shares that she surveyed what other food trucks where making in the area to estimate daily revenue. Based on Isabelle’s survey of local food trucks in her area she estimated that she could expect to generate $600 – $900 in daily sales.
Related Reading: What is the Average Food Truck Owner’s Annual Salary?
After learning that Isabelle had taken a logical approach to estimating her daily sales numbers, Dave inquired about the biggest recurring expense in the operations plan… Hiring an employee. Not only was Isabelle planning to hire an employee, but she had also planned to pay for some training and certifications.
As Dave points out in the program, hiring can quickly become the biggest recurring expense for a food business. And while it might make sense to hire in the future, if Isabella was able to operate the food truck on her own initially it would make getting in the black much easier. Isabella agrees she can operate the coffee truck business solo initially.
Finally, Isabelle asks if she should take a loan out to start the business. Dave explains that he never recommends taking out a loan to start a business in any situation. (Cutting up your credit cards and not having any debt is sort of Dave’s thing.) That being said, Dave suggests getting a sales job and living off beans and rice to cut expenses until she is able to purchase the trailer in full.
Overall Dave’s analysis of the food truck business is fascinating and after the hearing about the business model is noticeably excited for Isabelle. Dave even invites the Isabelle to return to the show after her business is launched. It’s great to see that with the appropriate business planning, research, and work ethic that a financial power house like Dave Ramsey sees the business opportunity that exist in mobile food vending.