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How to Make Food Truck Menu Prices That Ensure Profitability

No matter what the idea and industry, there are certain things that every business owner has to consider among the waves and tides of decisions, strategies, and research that goes into their business. Of these, probably the most important, and easily the first thing noticed, for all customers besides the product itself is Price. What exactly are you going to charge for your object, your service, your council, or in our case today, mobile food and drink.

This particular question, I find, finds quite the interesting pang in the Food Truck industry; for anyone with even the slightest knowledge and experience with them, it’s well known that they’re a source of low-priced edible options. In fact, it’s been the base of many a restaurant’s complaints, along with all the other lower costs they have to deal with. Despite the almost identical spirit in the roles both these businesses try to offer, the distinctive difference offered purely by their base of operations still show itself in these notably disparate fashions; now, whether they choose to use this to garner hate and grudges or as a means to work together and grow in fun and unique ways is up to them, and left for another article.

So what actually needs to be considered when figuring out your own prices? Of course one should always be aware of the other local truck menus, see if there’s a general range, don’t want to risk seeming notably more expensive for similar products. But at the end of the day this is your own food, and the retail still needs to correlate particular profit percentages compared to the costs that went into them.

This can vary depending on owner preference, but actual food costs, the only actual direct and tangible cost in a menu item, can range 22-45%; restaurants can and do often go even lower with this. With such a big profit range, it almost seems why its even an issue to knock prices low, but of course as anyone even slightly familiar with business knows, the ‘profit’ left after food is anything but. Not counting the daily costs of employee wages, permit + parking fees, gas, electricity, and every other thing needed to run restaurants and food trucks, one of course is still in possession of large loans and leases that need to be paid back every single month. Then there’s the occasional maintenance, emergency costs, etc. So what we have is an overall huge cost that needs to be divided among years and months, then applied to individual days in estimation and goals of how much profit after food costs you need to make of profit overall to break even. And the know that you will likely not making even close to this when starting out, which will likely drive up the cost goals later on when (well, if) you actually get enough business to start making a livable wage.

kg6So what was originally a somewhat-exciting range of pricing becomes a scary number that starts making us sweat and doubt our choices; do we take the risk at an attractive price and hope we’re skimming right at the point of having a few cents of gross profit over to get us through the year, or do we add an extra dollar or two to make sure, only then to worry about the price image? Menu helps determine these, but overall the final decision may come simply to confidence on whether or not you think the quality speaks for itself, or confidence that you can get enough business to have those quarters add up over time.

Though truthfully, your own final decision can be based off of anything from in-depth, complex area analysis to simply what you feel seems right, but a bit of study and understanding your costs doesn’t hurt (have to do a business plan at some point anyways right?). We looked into one truck’s experience and view on this topic, and sat down in an interview with the owner, Tom Mcnulty, to discuss the idea.

Question: Firstly, why don’t you tell us all about yourself and the truck? How did it all get started?

Tkgom: I’m a culinary graduate, graduated from GCA in San Francisco, I’ve been in the restaurant business for 25 years, essentially a country club restaurant, I opened my own restaurant up in Santa Rosa, the only reason I closed it down was the overhead costs, the overhead costs were tremendous. And that’s when I decided to get into the food truck business with low overhead and stuff like that.

The concept of my truck, Keep on Grubbin’, based off of changing the menu frequently, depending on the season, shopping at the local produce market. So that’s how I keep up with the concept of the truck. And that’s kind of where I got to today, it’s been a tough movement, you’ve got to really get your name out there, be consistant with good food to build up your truck, branding your truck.

Q: So, what was it like seeing all the costs that had to go into Keep on Grubbin’?

Tom: Well, after opening up a restaurant it was very minimal in comparison. I looked at it and, the leases were kind of high, I was leasing a truck when I first started. But basically you had to put up the first lineup and if you wanted to get your truck wrapped then you get your truck wrapped. So for under $10,000 you could get a particular food truck business up and running. And the insurance is a lot different in a food truck than in a restaurant.

kg5Q: How did you go about figuring out the profit needed every week/month in order to pay these costs, and what was the actual range?

Tom: I don’t use programs, I have my own program and spreadsheet that we used at the restaurant. So my food cost is 23%, and my overall cost is 33%.

The first couple months, when you get into the food truck, it’s very hard, you’re not making the kind of money you think you’re going to be making. So you do have to have cash, you have to have reserves to help cover that, it’s the business part. But how I determined that, I just used my original business plan with my percentages, and that was how I came up with the costs to run the business.

Q: What decisions went into deciding how much the menu items should sell for? What profit percentage compared to FOOD cost did you generally end up at?

Tom: I did comparisons with other trucks to see if I was in line with pricing, and looks like percentages, with my percentages, I was right in line with others. So my thing was based all on percentages, and that was 23% cost was where I set it.

Q: Have you ever found had to change the prices for particular reasons? If so, why was it; and if not, were you ever really tempted to raise them for more profit?

Tom: I’ve never raised our prices, not even for certain events. I’ve lowered them for school events, with the kids who don’t have a lot of cash, so I have to lower my prices for High School and Elementary events. But I’ve never raised my prices for an event just to make more profit.

Q: Many a restaurant has lauded against trucks for their lower and ‘easier’ costs to deal with, along with their ability to sell food for cheaper and thus steal away customers. What’s your take on this idea vs why prices are comparatively so low?

Tom: It’s basically your overhead costs, the overhead costs are much more minimal than your free-standing restaurant; labor, rent, insurance, just that alone is why these food trucks can run the prices that they can.

Q: From what you’ve seen, what Opportunities and Challenges do the generally lower-priced Food Truck menus offer?

Tom: The opportunities are to have more people to enjoy the food off your truck, gives them the opportunity to come for lunch or dinner. A lot of events we do, there’s a lot of food trucks there, and a lot of people that come like to eat off of not just one truck, but a handful of trucks that are there. So the lower prices than a restaurant gives people the opportunity to sample the different foods than a food truck.

As for challenges, sometimes you’re not making your profit margin that you need to make. That’s some of the challenges when you do have to lower your price for some of those events. But I could take stuff off the menu, my higher percentage items I took off the menu and I basically ran my car, but I still needed to run at a lower price. You’re still making your profit margins even if you’re at the lower price.

Q: What’s your take on trucks, perhaps coming from a restaurant or some other viewpoint, that start selling their items for notably higher, restaurant-level pricing on the streets in order to make a higher return on their goods?

Tom: I haven’t really run into that, I think prices are really comparable. I really haven’t seen any truck which were… except for some of the lobster trucks that can charge a little more than regular/cheaper food trucks. But they’re trying to run they’re cost and percentages, cuz it’s higher buying seafood than buying these other things. That’s the only time I’ve seen prices not comparable.

Q: Is there any last points of interest you’d like to make on the topic?

Tom: Basically just take the business plan that you have, a good business plan, try to keep costs as low as you can to be successful.

We do thank Tom for taking the time to sit with us and go over these questions with us and appreciate all the assistance he could muster. Though of course we realize that this combination of self-important opening ramblings and brief interviews can never truly cover all that you may want or need to know when deciding menu prices for yourself, so we’ve gone and found some Articles and Resources that we hope prove helpful. Good luck in your decision-making and problem solving, save something for my thin wallet!

Food Truck Income Survey – This is a survey of 300 full-time food truck owners that share their annual revenue estimates. This is a great resources for understanding the typical revenue numbers of a mobile food unit.

Pricing Methods – the ‘For Dummies’ approach to the two basic cost-to-retail pricing calculations

Mobile Cuisine Menu Pricing Article – a look at changing factors to consider, along with questions you should ask yourself.

Dealing with Food Costs and Quantities – tips to help curb those nasty figures to make sure you can scale down those scary retail prices.

Menu Display Options – Find out some of the different creative ways you can display your menu after the prices have been determined.

The Best Places to Find Blank or Unwrapped Food Trucks

Tony's Clam Chowder

Trying to find a blank food truck? A blank truck is simply a food truck that hasn’t been wrapped with graphics or painted yet. A professional wrap makes an night-and-day difference in how a food truck will look to the public. This single update can transform a tired looking 20-year old truck and make the unit look brand new.

If you’re in the market for an unwrapped food truck there are a few places you can begin your search. First, keep in mind that any food truck can be “unwrapped” so to speak. If you acquire a food truck that was preowned or used for another purpose (such as a FedEx delivery or bread truck), you can get the previous branding removed and start with a clean slate.

Don’t let a truck with that’s already wrapped or been painted discourage you from buying. Most trucks being up-fitted to a mobile kitchen require brand refresh anyway. As a result, it’s not a whole lot more work to invest in a pre-owned mobile unit with graphics you plan to update after purchase.

All the being said if you’re looking for a blank food truck some of the best places to look are for used vehicles that were at one time part of a fleet. The most common examples of this would be delivery trucks from FedEx or bread delivery trucks.

One of the best models to familiarize yourself with is the Chevrolet P30 truck. This is the most popular make / model of vehicle converted into a food truck due to it’s reliability and cab area. You can occasionally find these units for sale in your area on websites like Craigslist or eBay. Of course, at M&R Specialty Trailers and Trucks, we can also help you on your search to find the perfect unit to fit your needs. We have relationships with dealers across the United States and can likely help connect you with the right product.

The Cost of Getting a New Food Truck Wrap

The cost to wrap a food truck ranges from $3,000 – $6,000.  The final price will be determined by who designs your wrap and the complexity of the design. The size of your unit will also play a role in determining the price as more vinyl will be needed to cover the vehicle.

We always recommend getting quotes from 2 – 3 graphic design companies to price compare. It’s worth comparing prices because some companies include design into their wrap fees or will provide a discount if you work with them on the design and wrap aspect of the unit.

You should always get samples of a graphic designers prior work before you work with them. A good design has a lot to do with personal taste. A design that you love someone else may dislike. Viewing the designers portfolio of past work will give you an idea of whether or not you like their style. You can often view a companies past work by browsing their website. For example, GatorWraps.com features many of their past wraps online so you can get hundreds of vehicle wrap examples from the comfort of your home.

As an added layer of protection, if the company is a 3M Certified Graphics Installation Company this can also provide an added level of comfort because you know they’ve been trained to apply the wrap correctly. We also recommend checking online reviews of the company to see what past customers are saying about the company.

A clear cab highlights the mobile kitchen interior of Triple J’s Pizzeria.

Should You Paint a Food Truck?

A food truck can be painted, but most vendors choose a vinyl wrap instead. Vinyl wraps maintain their glossy look and standup against the elements better than paint. Additionally, the details of a vinyl wrap is superior to paint.

When you receive a proposed design on a wrap, you can be confident the final product is going to closely match that design in terms of color and detail. With paint, it can be more difficult to get the detailed shades and coloring just right… even if you have an experienced and highly skilled painter.

You will be able to save some money on the exterior of your vehicle as many paint jobs cost between $1,000 – $3,000. Still, when it comes to something as important as the outside of your mobile food unit, it will pay future dividends to get a wrap that will promote your food truck professionally for years to come.

How to Create Smart Objectives for an Early-Stage Mobile Food Business

Two slices of delicious New York style pizza.

As your business grows and matures, where you invest time and energy needs to change. Too many first time vendors get overwhelmed when they find out just how many steps it takes to operate a food business.  Others get paralyzed just trying to figure out what to work to prioritize first. Don’t let this happen to you! 

The goal of this post is to help you set specific business objectives to throw your time and energy into when the time is right. You don’t need to complete the steps of starting and growing a business all at once. In fact, it’s impossible to accomplish. Instead break this task into bite sizes pieces and complete them one at a time until you’ve hit your goal.

By following the advise outlined in this post, you’ll understand where your focus needs to be when when starting a food business. All that being said, let’s begin to establish some smart objectives for your early stage mobile food business.

All aboard The Vegetable Express Food Trailer. Built by M&R Specialty Trailers and Trucks.

Stage One: Planning for Business

At first your focus should be will be on planning for the future. What menu will you offer? How will you serve food (restaurant, food truck, catering)? How do I get startup capital to actually get going? Typically, you’ll compile all of this information into your business plan document

The planning stage is an important first step in the startup process whether you’re planning to launch a restaurant, food truck, or an on the side catering business.

But after the planning is done and your business has been released into the world… You’ll need to quickly turn the focus from making plans to sales and revenue.

If you’re like me when I started the food truck, you don’t have much savings in the bank. This means you need to make money immediately after you open..

Although I started with a food truck and expanded into restaurant locations later, my advice is similar for new catering businesses or restaurants need to build immediate cash flow and market themselves on a budget in the early days.

One important caveat that needs to be mentioned. If this is your first business you probably won’t have all the time in the world to complete the planning for your business. You will need to make time for it. For many entrepreneurs that means researching and planning your business on evenings and weekends. 

Stage 2: Finding Locations

Finding profitable locations was were I spent the early days of my business. I would drive to corporate office parks in greater Austin without nearby food options and get the contact information of the property manager that was usually listed on a sign somewhere.

Then I would call or email the property manager to see if I could bring the truck at a future date. The sell wasn’t very tough since the property manager didn’t need to pay me. It was a no risk proposal on their end and something that the tenants and employees inside the buildings enjoyed too.

This is how many food carts got their start… Traveling to different office parks.

Some locations, I would generate no more than $200 for lunch service. These were tough days, but I continued to look for new more profitable locations.

My strategy was to continue vending at locations that were profitable and quickly drop the spots that weren’t.

I continue to maintain list of locations that are profitable, not profitable, and prospective locations that I can “test out” in the future if a profitable spot turns unprofitable.

Good vending spots can dry up more frequently than you might expect as different businesses enter and leave a certain business park. You always want to have your next prospect ready when this does happen.   

If you own a catering business you can take a similar approach something by offering to conduct pop-up events at office parks using a tent. If you own a restaurant, you can try something similar and offer a limited menu at office locations from a tent.

This is a proven way to generate sales when you have zero connections and you’re just starting out.

Booking catering and events is an important revenue stream for most mobile food business.

Stage 3: Private Catering – The End Goal

In the early days of your business, booking catering gigs, weddings, corporate events, or private parties is a game changer. One or two events per month can take you from losing money to robust profitability!  

Keep this point top of mind when you’re serving at any event or location. These smaller routine services and events are the ones that lead to highly profitable catering events or festivals.

Many small business owners only take single-day profitability into when determining whether or not to attend an event, but you also need to think about who you might meet at an event or service that could help move your business forward.  

The Final Word

This is a simple 3-step process to implement, but that doesn’t mean it will be fast and easy to accomplish. You could spend months in stage one planning to create right business plan and develop recipes for your business. This is totally normal and you shouldn’t be discouraged if it takes some time to organize this. After you get your food business up and running, it will be more difficult to find time for planning and strategy.

After you’ve built your plan, go all in on business development. Try new vending locations, apply to be in local festivals and events. In those critical first months of business it will be frustrating to see that some days you won’t bring in much money.

If you are able to accept this as part of the learning process, move forward, and continue to follow the objectives outlined in this post you can be successful in this industry. Work hard and stick to the plan.

How to Select the Best Name For Your Concession Trailer

Sprinter Van built by M&R Specialty Trailers and Trucks.

What’s in a name? It’s an age-old question posed by William Shakespeare in arguably his most popular work, Romeo and Juliette. As famously quoted from the book, “A rose by any other name would smell as sweet.”

While this question posed by Shakespeare is fascinating on a philosophical level, when it comes to selecting a business name for your concession trailer there’s not much to think about. The name you choose matters!

When you’re at any event, customers may only take a split second to understand what you serve and if it’s something they want. If you selected a name that doesn’t clearly represent what type of food you serve, you could be missing out on a lot of sales.

Bottom line, your goal as a business owner is to identify a name that peaks their interest, makes it clear the type of food you serve, and is ideally short. Sounds easy right? But the process can be easier said than done! Especially when you consider you’ll be operating and building a brand under this same name for years to come.

In this post, we offer guidance on how to pick the best name possible for your concession trailer if you’ve been struggling to find the right one. Our goal is to make this important business decision at least a little bit easier.

Tip #1: Choose a Name That Clearly Articulates What You Sell

You don’t need to be all that clever or 100% to come up with a business name that works. Examples such as Jimmy’s Gourmet Pizza Pies, Dave’s WonderBurgers, or Timmy’s Taco Truck can be simply ways to let prospective customers know exactly what you serve.

Choosing a name, can be more difficult than choosing what to eat.

Tip #2: Be Careful if You Want to Be Clever.

Being clever or funny in your business name can be tough to pull off. When it works, it’s wonderful. But more often than not you can leave people scratching their heads as to the point you’re trying to get across.

If you want to be clever with your name, try at the very least to select a name that you can in some way relate back to your food items. The examples below all do a superb job of tying in what food items they actually serve into their names…

The Dairy Godmother – The name of an ice cream shop in Alexandria, Virginia. This is a clever name that totally works!

Lord of the Fries – This name is a pun of the book / movie Lord of the Flies that explores the dark side of humanity. We wouldn’t have thought this name would work, but there are six locations across Australia so they must be doing something right!

Thai Tanic Restaurant –  This one of course is in reference to the movie Titanic starring Leonardo DiCaprio.

Finally, if your going to come up with a clever name like the one above make sure it isn’t objectionable in any way. We live in a sensitive world and you want to select a name that invites all types of people to dine at your trailer.

Tip #3: Keep it Concise

Whether you plan to open a concession trailer or restaurant, keep the name short is an important best practice. For one the shorter the name, the easier it will be to remember by guests. But there’s another important reason too, you’ve only got so much available space to publish your brand message on a concession wrap.

If you end up with a name too long, you will need to reduce the size of your font to ensure the message fits on a concession trailer. The smaller your font size the less likely you’ll be able to draw in customers from long distances like the other side of a street fair. Try to find something short to draw prospective diners closer to your vehicle so they can read the menu and get the details about your food.

Two slices of delicious New York style pizza.

Tip #4: Help Brain-Storming Food Trailer Names

As we’ve pointed out earlier in the post, choosing the right name for your concession unit is extremely important for long-term business success. But that doesn’t mean the process of discovering what to name your vehicle can’t be fun!

One approach is to get yourself a note pad, chalk board, or an word document and just starting writing down a variety of flow of consciousness vending names. You can get family members involved, spouses, and business partners involved in the process too. At this point the more ideas the better.

The whole point of the brain-storming sessions is to get a bunch of ideas out there for the name of the unit. Even if you don’t like the name that someone else suggests, feel free to write it down on the word document and include it in the list of options. The whole point of using this approach is because the names are written in stone or put under the microscope to scrutinize (yet). Just have fun and see what names you come up with and see if inspiration strikes.

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Two Ways Hiring a Consultant Can Help Grow Your Food Truck Business

Should you hire a consultant to help grow your food truck or restaurant?

Today’s blog post features one food truck / restaurant owners experience deciding whether or not to hire a restaurant consultant for his business and the lessons learned. We hope you enjoy this special post!

I expected hard work when I started a food truck business. What I didn’t see coming were the mental challenges I would need to conquer to be successful.

I think of these as my “mental blocks.” These blocks are the things preventing me from reaching the next level in my business.

My first mental block was overcome when I decided the approach my business not as a hobby, but with certainty.

After I went all-in to build my business and I got a mentor… I began making major progress in my business within months. 

Within the next 6 months, I expanded to a second food truck…

Encouraged by the continued success of my second food truck, I felt it was the right time to open the doors to our first restaurant location and hire two key managers to help run the day-to-day business.

There was just one problem…  

I knew how to run a food truck, but didn’t have a clue how to run a full-scale restaurant with bar.

While the restaurant location was exciting, I stressed about how to execute making a larger menu. How was I going to manage staff and hire? What processes did we need in place to pull this off? How could I manage everything?

I had officially hit the second mental block in my business.

There are challenges when growing any food truck or restaurant.

With the food truck, I was always involved in the operations. It was a lot of work, but I could handle it with a single truck. But after expanding to a second food truck and soon a restaurant location, I realized I couldn’t be everywhere at once any longer.

I would need a support system if I was going to be able to pull this thing off. But how exactly that was actually going to happen was the million dollar question.

I was already strapped for cash trying open a restaurant when my mentor Josh recommended hiring a restaurant consultant… A major expense that I did not have budgeted at the time.   

The restaurant consultant would be able to organize the daily work process, hiring processes, train managers, and get the new restaurant ready for opening day.

It’s not easy to invest thousands of dollars in training on top of necessary items like refrigerators, prep tables, ovens, chairs and other equipment for the restaurant. I wrestled with the decision internally for days.

I figured that even though it would be a lot of work, I had been able to “figure out” the food truck business largely on my own. Maybe I could do the same and save some money with te restaurant as well?

I had nearly convinced myself to open the restaurant on my own to cut costs until I remembered the promise I made to myself only months prior…

I promised to do whatever it took to make the restaurant a success….

At that point, the decision was simple… I bit the bullet and wrote out the check…

As it turned out… hiring a consultant would be one of the best investments I’ve ever made. It’s a decision continues to yield returns for my business to this day.

Working with the consultant, we were able to develop a process for accepting orders and delivering food before the doors opened. My key managers were also trained on how to run the restaurant so we were all on the same page operationally.

I understood my role too! My managers understood their positions. All we had to do was stick to the plan and follow process.

I finally had a team in place! It was officially game on for my restaurant!  

Looking back, it’s hard to believe how close I came to giving up on the food business. I’m so thankful that I decided to overcome that first mental block by recommitting to my business, hiring a mentor, and forging ahead… even when I didn’t know what the future had in store for me.

Having a mentor can improve your odds of success in any business.

It’s unfortunate, but over the past 5-years, I’ve seen dozens of restaurants and food trucks come and go in Austin.

It hurts when I see fellow restaurant owners give up on their dreams due to the exact same challenges I faced early on… Many were probably closer to success than they knew, but like me couldn’t see the path forward.

Of the restaurant or food truck owners that don’t make it are two similarities I’ve observed…

  1. Owners that fail don’t get mentorship or consulting help to solve their problems. They think that by “working harder” they can fix the situation. This never works and leads to burnout and even depression.

I can relate to this one. I used to fall into this category and it nearly cost me my dream.

I didn’t understand that other people may already have a solutions to the exact business problems I was trying to solve. I thought I could do it all!

I’m thankful that after two years, I would eventually see the light. Today, I continue to get on-going guidance and mentorship with my business as I grow my brand even further.

For me, learning has become a joy and my business has continued to grow. It’s also become a competitive advantage.

2.) Owners that fail don’t put any effort toward marketing. People must know you exist before they can try your food. Marketing creates customers… And customers are the fuel for your business!

In my humble opinion, there is literally no better activity you could be spending time on as a business owner than by helping others discover your business and try your food.

Interestingly, the very two things cutout by would-be restaurateurs is mentorship and marketing.

I encourage you… Do not to let your business become a statistic by making the same mistakes of so many would-be restaurant owners that have come before you!

Stay open to learning and gaining knowledge through mentors, coaches, or friends that you trust in the food business.  

Continue to find ways to promote your business by attending events, generating press or social media exposure. Become passionate about marketing your business and sharing your food with others!

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Restaurant VS Food Truck: Which is Right For You?

All aboard The Vegetable Express Food Trailer.

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!

How to Start Vending Outside Home Improvement Stores like Home Depot

Depending on where you live, you may have noticed a concession trailer or hot dog cart serving outside of a big-box home improvement store like Home Depot and wondered… How can I get my concession business to vend there?

Home Depot’s can be desirable areas to vend because there can be foot traffic in-and-out of the store all day, seven days a week. Home improvement stores attract a wide-range of professionals including contractors, laborers, and even the weekend do-it-yourselfer. In this post, we explore how to get your business approved to vend in these locations, what the process is like, and if it’s the right decision for your business.

Getting Booked in Front of a Home Depot

Many vendors are surprised to find out that there’s more red-tape involved in serving food at a Home Depot or Lowes than one might expect. You can’t simply make a phone call to your local retailer and ask when the best time for your arrival is. You’ve got to go through an application process with a third-party that manages all of the vendors outside of Home Depot’s and other larger retailers nationally.

Young man outside of a Home Depot location.

The organization you’ll need to work with to vend at Home Depot is called Best Vendors. Best Vendors offers a variety food services for businesses including vending machine stocking, break room services, and also book third-party vendors in front of retail stores through their sub-division called Street Eats Limited.

To be considered to vend at these locations, you first need to contact the Street Eats Limited and request an application to vend. Along with the completed application, you will pay a fee associated with this. At the time of writing the fee is about $50.00, but could change in the future. It can take 4 – 8 weeks to get written approval from this company build this time frame into your expectations.

In addition to submitting the applicable keep in mind that your concession trailer or cart must be fully compliant with all local health / fire codes, meet NSF requirements, and certified in food safety courses.

After getting through the approval process, you will learn how much it will cost to vend outside your particular Home Depot or Lowe’s location from Street Eats Limited. Each location has a different set price for renting or leasing the space. The arrangement is almost like having your own rented restaurant space, where you pay a monthly lease fee in exchange for the opportunity to operate here.

Ultimately, you’ll need to determine if going through this process makes sense from a business perspective.  Many vendors determine it’s not worth the effort or expense. Still there are some businesses that find success operating with this arrangement. As with any business arrangement there are advantages and disadvantages that should be considered.

Understanding Your Target Market

Before you move forward with vending outside of a home improvement store there are some things you need to keep in mind. The most important consideration is whether or not your concession food makes sense to sell outside of these retailers.

Do you know your target market?

Monday – Friday you’ll find a lot of folks like contractors, laborers, painters, construction workers and grounds keepers shopping here for work. When these people enter a Home Depot, they usually have a clear goal in mind. Pick up a specific tool or material for the worksite and return to work. These people do not have a lot of time to spare and the faster they return to the job site the better. As a result, if these individuals decide to eat they want something that’s fast, portable, a preferably low cost.

One of the food concepts that has proven to be successful outside of Home Depot’s is the hot dog trailer. Hot dog’s can be served fast and eaten on the go if needed. They are also an affordable meal for any worker. Other menu items with the potential to work well are tacos and pizza.

Bottom line, if you plan to serve food that’s higher end or takes a long time to prepare this will not be the right venue. If you’ve got a 2-gallon can of paint in your right hand and a bag of brushes in the left, you simply aren’t going to be in the right state of mind for a sit-down gourmet lunch.

Other Location Factors

Not all Home Depot or Lowe’s allow food vendors to serve outside their location. If you happen to live in Northern states it’s unlikely you’ll find food vendors at all. Before putting too much effort into the application process, it may save you some time to ask if the store even accepts vendors in front of your location. That will give you a quick red or green light in determining if you should move forward.

Another factor you need to consider if the location will be regularly hosting charitable or other organizations outside of store. While organizations like Boy Scouts of America are wonderful their presence may not be ideal from a business perspective if they are also selling food to raise funds. This is yet another consideration to keep in mind before moving ahead with this location.

In conclusion, if you have a food concept that makes sense for a home-improvement store, vending at these locations can be a profitable option. There are some examples of hot dog vendors that are able to operate profitable businesses outside of a Home Depot for many years. Just like any other vending location, sometimes this strategy can and other times it won’t. We hope this post has given you some additional information on whether or not this spot will work for you.

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How To Factor For Seasonality in a Concession Business

Winter is indeed coming. For vendors operating in cooler temperature states or even Canada this inevitably means lower monthly revenue figures for the rest of the year as we move deeper into the fall and winter months.

Most food vendors anticipate this lower demand due to seasonality. In places like New York, Boston and the entire country of Canada you’ll need to be prepared for substantial revenue impacts. If you’re located in Southern California or Florida, the winter-time revenue impacts will be less pronounced.

When you’re starting your business or still in the business plan development stage, it’s important to understand and be prepared for these changes. If not, you could be in for an unpleasant surprise.

Some Trucks Menus are More Seasonal Than Others. Photo Credit: www.benjerry.com

How Will Seasonality Impact Your Revenue?

As mentioned above, seasonality could impact you a little or a lot depending on where you operate. The best way to identify how much of a revenue hit you could expect to take is to ask other street vendors in your area how much business slows down for them. If you talk to four or five veteran vendors, you should be able to get a good ballpark estimate.

If possible, try to find someone with a similar style menu to you for estimates. A shaved ice trailer is going to have a much tougher time generating sales in December compared to a coffee truck so keep menu in mind. If you have limited information, a 30% decrease in sales is a good rule of thumb.

To determine the revenue percentage decrease compare your previous months revenue you can use some mathematical formulas to determine how much you can expect to make during the slow months. Alternatively, you can use a straight forward online calculator like this one to determine what your % decrease would be.

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Built by M&R Specialty Trailers and Trucks.

Ways to Combat Seasonality Impact

Although changing seasons is outside your control there are some things within your control to bring in revenue during the winter season. Here are a few different ways many existing concession businesses we work with approach this time period.

Head South: One of the most attractive elements of operating a concession trailer is that if business isn’t good somewhere, you can simply hitch up the trailer and travel somewhere more profitable. Of course, it’s not quite that easy to differing health codes  and vending regulations. But you can make it happen with a bit of strategic planning.

Some of our previous customers operate this way by design. During the summer months, they head north to take advantage of festivals and events. When fall comes they pack up and head south to vend for the winter where it’s warm. This can be a great lifestyle if you have a desire to move around a bit.

Change Menu: If you’re selling ice cream to Eskimos in January, it’s probably not going to work out well for you. Even if you are a terrific sales person! One option you have is to adapt your menu to serving foods that customers are more accustomed to consuming during the winter.

Adding hot coffee, hot chocolate or warm soups could be ways to adapt a menu for winter. In fact, these seasonal menu changes could be a great way to keep things exciting for your customers as well. Even chain restaurants like Soup Plantation will mix up their menu to match the season.

Focus on Catering and Big Events: While it may be cold outside that doesn’t mean there aren’t plenty of catering opportunities to be had this time of year. As holidays like Christmas and New Year’s approach, businesses often reward their employees with corporate lunches or parties that are catered. These events can be quite lucrative as well!

In addition to indoor catering, most cities will have winter festivals that are held outside even during those cold winter months. Be on the look out with your cities website to keep in tune with local upcoming events. Well attended events like winter carnivals can be a great opportunity to generate a big day of sales in an otherwise down month.

Finally, we’ve worked with a lot of concession vendors that simply decide to take some time off during the winter and relax. Focusing on high-revenue months from June – August and putting lifestyle first could be the best option for you too. Many vendors work really long and hard hours during the summer then take the winters off.

Remember, you have no control over weather conditions in your area and for most vendors the winter months will be lower revenue months. You do have a lot of different options over what you can do to combat these slower months, however.

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How Much Food Storage Space is Needed on Your Concession Trailer?

How much storage space is needed on your concession trailer? This is a question frequently overlooked by first time vendors. It’s easy to get wrapped up in the type of kitchen equipment that will be installed and the wrap of the vehicle. These are important parts of the build process. But at M&R Specialty Trailers and Trucks, we also understand you need to have enough available space on the concession trailer to store your raw materials like hamburgers, tacos, or BBQ after your equipment is installed.

Within the food industry, the amount of storage space inside your food trailer is referred to as your capacity. Your capacity will determine the maximum number of customers you can serve at any given event. As an example, if you were operating a taco truck that had available on board storage to make 500 taco plates. In this scenario, if you charge $8.00 per plate of tacos your maximum revenue per day would be $4,016. In this scenario, you would have plenty of storage and being able to serve 500 customers without needing to replenish the supplies on your trailer is a great situation to be in.

rib customer

Another satisfied customer.

If you discovered, however that your maximum capacity of your vehicle was only 50 taco plates, you’ll be severely limiting your upside on the concession unit. In this hypothetical, you would hit a daily revenue ceiling of just $400. If you are a solo operator with a small trailer, you could still technically be turning a small profit with this level of capacity. But why put such a low cap on your potential sales?

In the example above, you’ll likely find that during busy time periods you’ll run out of food to serve and won’t be able to take advantage of demand. This is a missed opportunity as a business owner. This is not a good situation from a customer  experience standpoint either. There’s nothing worse than waiting in line at a food trailer for 10 minutes only to find that they’ve run out of food once you get to the serving window.

How Much Capacity Do You Need?

Everyone’s storage capacity needs will be different. If you operate a coffee truck, it’s very likely you won’t need a whole lot of extra space because coffee beans, milk, cream, and small sides like pastries don’t require a whole lot of space. On the other hand if you’re operating a BBQ trailer that serves a variety of sandwiches and plates, you’re going to need room to store those smoked meats.

One good starting place for determining your trucks overall capacity is to calculate the break-even point for your truck. In other words, how many sales would you need per day to pay off all your expenses. After you determine the minimum sales needed to cover your operating costs like wages, gas, and cost-of-goods sold (COGs), you’ll be able to start playing around with the numbers to find out how much on-board storage you’ll need. Obviously, you want to do much better than breaking even on the concession trailer so make sure you create a maximum single day revenue goal that you would be happy with and go from there.

The formula for a break-even analysis is below:

Total Fixed Costs ÷ ( (Total Sales – Total Variable Costs) / Total Sales) = Break Even Point

Florida Restaurant & Lodging Show

M&R Specialty Trailers and Trucks Booth at the Florida Restaurant & Lodging Show

Quick Options For Increasing Capacity

Enlist help: If you need to restock your shelves in a pinch, having an employee or a family member that can travel off-site to get more supplies is a simple way to make sure you’ve got appropriate capacity at an event. If you have a runner, they are able to drive to the commissary, grocery store, or restaurant supply center to get more product is a simple way to ensure you’re able to maximize sales on your truck. Just make sure you’re not pulling employees from the serving window, which could reduce your throughput times.

Get a second vehicle: At a certain point, there’s only so much storage potential on a mobile concession unit. Another solution that’s been used by our customers is to get a second vehicle dedicated exclusively to food storage. Often a smaller unit like a van is sufficient for this purpose and the vehicle may have little more than some shelving and refrigeration units installed.

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Eric Silverstein: Is Food The Most Important Factor in Starting a Food Truck?

When first time restauranteurs or food truck owners are just starting out it’s logical to think that perfecting the food is the best use of their limited time. After all if you don’t make a good impression to first time customers, you might never get the opportunity to serve them a second time.

In this Q/A interview with Eric Silverstein, owner of the massively popular Austin-based restaurant  The Peached Tortilla shares why food is actually not the most important factor in determining whether or not a food business will be successful. Eric knows what he’s talking about too. Just a few years ago Eric launched The Peached Tortilla concept from a single food truck. Today Eric’s brand has grown to four food trucks, a restaurant location, and is regarded as a visionary restauranteur in the Austin area.

In this interview Eric sits down with a brand new co-founder, Quentin Cantu of Ranch Hand Food Truck to discuss some of the misconceptions about food startups and what to expect if you’re thinking about embarking on your own food startup journey. Click play on the video below to watch the full 3 minute and 12 second interview.

Interview Highlights

Question: What are the biggest misconceptions about food start-ups? What do you wish you would have known when you got started?

Answer: Your investment in human capital is extremely important. Your team will make or break you in this industry. Also, if you’re goal is to grow, you simply won’t be able to work every shift. You can’t prep and chop everything. How you cultivate and manage your team will dictate your level of success in the restaurant industry. If you’re starting a food truck, you may not realize that you will become a manager of people by embarking on this business. How you treat and lead people is a big component.

You need to have a system for operating your business. You need to have a system for ordering more product, cooking food, serving customers. When you just start out, obviously you won’t have everything figured out immediately. It will take some time to get this part right, continue to evolve and be a process that you optimize over time.

Eric points out at the conclusion of the conversation that how to cook food or what you’re serving never came up as part of this section of the interview. That’s not to say that having terrific food isn’t important. But if you want to start and grow a successful business, your energy as the owner of that business needs to be on other areas.

If you enjoyed this video Eric Silverstein is regularly publishing videos like this weekly on his YouTube Channel. Eric’s goal is to document what it takes to succeed in today’s hyper competitive restaurant industry. Whether you’re thinking about getting started or looking for ways to make your current restaurant more efficient this will be a hugely valuable behind the scenes series. Check out the series intro video below:

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