Editor's note: This article was excerpted from our Food Truck startup guide, available from the Entrepreneur Bookstore.
Today, a new generation of street-food lovers is lining up at food trucks and food carts like never before. Little do they know that neither food trucks nor food carts are new to the streets of American cities. Like so many other popular trends, they are the latest version of a long-standing part of American and world culture. Yet the street-food industry has never enjoyed so much publicity or notoriety.
According to Los Angeles-based industry-research firm IBISWorld, the street-food business -- including mobile food trucks and nonmechanized carts -- is a $1 billion industry that has seen an 8.4 percent growth rate from 2007 to 2012. It's very entrepreneurial: 78 percent of operators have four or fewer employees. The true number of these businesses is difficult to count, since the mobile food industry is comprised of food trucks, food carts and kiosks, which have appeared in malls as well as at train and bus stations, airports, stadiums, conference centers, resorts, and other locations in recent years.
Food-industry observers claim that the food-truck business is increasing largely in response to the slow-growing economy. People are seeking inexpensive breakfasts and lunches. Also, employees today are often pressed for time, with more work and shorter lunch hours. These factors make the mobile-food concept more appealing than ever.
From an entrepreneurial standpoint, kiosks, carts, trailers, and food trucks have a lower overhead than restaurants and can be moved if one location does not generate enough business. Rather than having to determine where to open a restaurant and worry about the old real-estate adage "location, location, location," the owner can actually drive to a new location, location, location if business is poor.
For customers, you add the convenience of having food favorites right outside a particular location -- or inside with a kiosk -- and meet several needs by serving mobile food. First, you offer food that is cost friendly because you need not pay wait staff or bussers. You also offer the convenience of quick service. In many cases you provide food choices that can save those on a busy schedule from the need to sit down. Typically customers can eat street foods while en route to their next destination. Finally, mobile food is often fun to eat and (if it's good) great to talk about.
Goin' Mobile: Your OptionsEven before you decide what foods to sell, you'll want to consider how you want to sell them.
Clearly, your decision on how to sell your foods will depend on:
These are a few of the considerations you will consider as you proceed, but for now, let's take a look at the common mobile-food entities.
Food KiosksFood kiosks are essentially booths or food stands that are temporary or mobile facilities used to prepare and sell food. Malls and stadiums are popular locations for food kiosks, which sell anything from pretzels and ice cream to more elaborate fare.
Although kiosks may have wheels, they are not mobile under their own power and in most cases need to be assembled. Most kiosks are rectangular and have room for two people to work within or stand behind, preparing and serving the food. They also have counter space and overhead signs.
The low overhead, flexibility and ease by which a kiosk can be opened and closed are among the reasons they're so popular. They are also an excellent choice in areas where your outdoor selling season would be limited by cold or nasty weather. Of course, the size of the kiosk limits the inventory, so it's important for a kiosk owner to carry as much as possible and price accordingly so that she can make money on what is on hand each day. Because they are usually operating indoors, kiosk owners typically sign licensing agreements at malls, stadiums, movie theaters, or other locations. Many major food businesses such as Ben & Jerry's and Baskin-Robbins franchise express kiosks.
Food Carts and Concession TrailersThe food cart and the concession trailer have been around for decades and combined are a multibillion-dollar industry today. The best known have always been hot-dog and ice-cream carts. They are among the most cost-effective ways to start a mobile food business because the carts are typically pulled by your car, truck or van, or pushed by hand. Food is either prepared in advance or purchased ready to sell -- like ice-cream pops or cups of Italian ices -- and stored, and then either heated up or pulled from the freezer. Carts are also fairly easy to maintain, and in many counties and communities, require less licensing than the full-size food trucks. It is also cost-effective if you choose to own several carts and hire friends, family or other employees to help run them for you.
There are two basic types of food carts. One has room for the vendor to sit or stand inside and serve food through a window. The other uses all the space in the cart for food storage and cooking equipment, which is typically a grill. The precise type of cart you'll want should be determined largely by the food being offered.
Modern-day food-cart owners have cleaned up the somewhat greasy reputation of street-food vendors. They have also expanded their menus. Kebobs and gyros came on the cart scene awhile ago, and vegetarian and Mediterranean salads have also caught on, as well as fish and chips. The Euro Trash food cart in Portland, Ore., for example, offers items like a prawn baguette with Portuguese curry prawns. And then there's Portland's Pie Lab, with slices of pie -- extra for ice cream or whipped cream on top.
Trailers, like carts, do not move under their own power, limiting their potential locations. Food trailers are often found at fairs, carnivals, sporting events, or other places where they can be unhitched and sit for awhile. Unlike most carts, trailers allow for cooking and have room for two or three people inside. Skillet Street Food in Seattle operates from an Airstream trailer with a full kitchen within. In short, a trailer can provide more options than a cart but is still less expensive than a truck.
Food TrucksThe food truck can carry any number of foods, and in some cases, more sophisticated equipment for storing, serving, cooking and preparing foods. Traditional food trucks were known for providing lunches, typically stocking sandwiches, kebobs, tacos, burgers and other standard fare for the lunch crowd. Many have expanded to include healthier vegetarian and vegan offerings, as well as not-so-healthy barbeque ribs. They do big business in corporate parks and places that have limited access to restaurants. Most food trucks are stocked from concessionaires, but there is a growing number that are associated with fast-food and midlevel restaurants. Sizzler and California Pizza Kitchen, for example, are putting together their own food trucks, as are other chains.
Larger than carts, trucks can carry more food and handle more business. However, food trucks need more space to park both when doing business and when off-duty. Essentially, there are two types of food trucks. One is the mobile food preparation vehicle (MFPV) where food is prepared as customers wait, hopefully not very long. The other is the industrial catering vehicle (ICV), which sells only prepackaged foods. An MFPV costs more than an ICV, and both cost more than a food cart. For example, a used hotdog cart may cost under $2,500, while a retrofitted used food truck would typically cost $30,000 or more. A newly designed food truck retrofitted MFPV with new all equipment could cost you upward of $100,000.
Complying with health-department rules and regulations can also drive up food-truck costs. Clearly, a smaller truck, a used truck, or a truck with limited equipment costs less. Therefore, it is up to you to determine whether you'll be cooking in the truck, preparing food somewhere else and serving from the vehicle, or selling prepared and prepackaged foods.
Gourmet Food TrucksBasically the same as a food truck, the gourmet food truck takes food quality to a higher level. They are run by ambitious young chefs who offer cuisine not typically found in food trucks, such as specialty crepes, kimchi pork-fries, osso bucco, velvet cupcakes, or the chicken marsala meatballs with cilantro chutney found in the Great Balls on Tires gourmet food truck. Like Great Balls on Tires, many gourmet trucks have specialties and themes. In addition, they let their clientele know where they'll be parked through their websites and social media sites like Twitter. While food trucks need not have kitchens, gourmet trucks are more likely to have food prepared on the spot -- and high-end food at that. At the start of the new gourmet food-truck craze, Los Angeles was clearly the place to find such high-end dining. Now, however, New York has gained its share of such fancy food vehicles, such as the Rickshaw Dumpling Bar and The Dessert Truck founded by a former Le Cirque pastry chef. And as the concept of serving fine food rolls along, other cities from Portland, Ore., to St Louis and on down to Miami's South Beach are jumping on the foodie bandwagon with their own regional favorites. Food Network chef Ingrid Hoffmann's black and pink Latin Burger and Taco Truck, for example, has become quite the rage in Miami.
The Mobile-Catering BusinessMobile-catering trucks can be defined in a variety of ways and can overlap with mobile food trucks. Here are three differences: First, a catering truck is hired for a specific event such as a picnic, party or fair. Secondly, the person hiring the catering vehicle can select from a catering menu. Third, a catering vehicle can be used to transport the foods, which are then handed out from inside the truck or set up at the event or gathering, typically on trays or buffet style. This can mean providing the food to be served outdoors or parking and serving from the truck as the food trucks do. The differences are primarily in the manner of doing business. Nonetheless, the need for a reliable vehicle, licensing, permits, sanitary conditions, a business plan, and startup money are quite similar to the requirements of a mobile-food business.
One of the advantages of a mobile-catering business is that you are not risking as much in inventory because you are cooking and bringing food as ordered for the party. Therefore, you are covered for your food costs. You also have a specific destination, so you need not worry whether your favorite destinations will be busy. Typically, you are less dependent on good weather because many catered functions will be indoors. As long as you can get there with the food, you are usually OK. Of course, you do need to line up enough work to support your business. The difference between a mobile-catering business and other catering businesses is that you are using the mobility of the truck to show up rather than having a catering hall or venue.
Can You Handle the Heat?While it may look easy, the food-truck industry takes a lot of hard work. For Scott Baitinger and partner Steve Mai who run the famous Streetza pizza truck in Milwaukee, Wis., a typical day starts three or four hours before taking the truck out on the road. "First we'll stop at Sam's Club or Restaurant Depot and pick up fresh ingredients. Then we go to our off-site commissary kitchen where we do all the prep work, which includes rolling the dough, making sauces, cutting the vegetables, and all of the things you really can't do in a 10-by-10 truck," explains Baitinger, who still works a day job in advertising but handles the truck on nights and weekends. Mai runs the weekday shifts except at times in the winter when no one in Milwaukee wants to trek outside in three feet of snow -- not even for pizza.
Then the Streetza team, which also includes a small staff on various shifts, parks at well-selected locations and prepare and sell food. At the end of a day, which is typically when they run out of food or the crowds have dissipated, comes the cleanup. "It's a lot like a restaurant cleanup with stainless steel cleaners, scrubbing, mopping, and making sure everything is in perfect shape to start again tomorrow," adds Baitinger.
Most mobile food business owners follow a similar set routine, whether it includes running the kiosk, cart or truck themselves or having employees run it. The routine, as is the case with Streetza, may include very early morning food shopping a few days a week, if not every day. Then there is stocking the kiosk or vehicle and heading to your destination(s). There is also a need to take some time during the day for marketing, usually via Twitter or another social media. Most mobile food vendors work roughly 10 hours a day. There are also days in which a business owner needs to sit down in a quiet office space, preferably at home with his feet up, and do all of the bookkeeping: paying taxes and bills, renewing licenses, and handling other fun paperwork responsibilities. The work is tiring and the day is long.
Can you handle such a day on a regular basis?
Planning Your MenuIf you look at the food trucks, trailers, carts and kiosks on the streets and at mobile catering menus, you'll find that almost anything edible can be served up street-side. Of course the big question is: How practical is it? This may account for the lack of baked Alaska carts out there, but rest assured, someone is probably selling it on some street corner.
Determining what to serve can be fun. But there are a lot of factors to consider when it comes to menu planning in the mobile food world. Here are a few:
The Next Step: Perfecting RecipesUnless you are buying prepared foods or have a chef providing you with foods, you'll want to plan your own recipes, work on them, re-work them, and have some taste tests. Consider your family and friends as your very own guinea pigs. Have parties, make a fun time of it, but get them to taste your foods and give you honest critiques. Don't be afraid of some criticism -- better to receive it from friends and family than from food critics and customers.
Once you've found a few favorites, make sure you can master the recipes. Write them down for future reference. Next, try some variations on a theme. Most mobile food entrepreneurs spend several months, often while waiting for their truck to be retrofitted and their backers to fork over some startup money, experimenting with various menu items.
Test Your FoodDon't start out with foods you have not thoroughly tested. This means you need to perfect each recipe to be sure it has the following qualities:
Buying IngredientsSourcing, as they call it in the food business, is the process of getting your foods and other ingredients. Like a restaurant, you need to determine your potential volume and buy accordingly. You always need to be planning in advance to shop or receive orders so that you are never out of necessities. If you are cooking, make a detailed shopping list of ingredients. If you are buying food from wholesalers, know how much you need, how much you can safely keep fresh, and how much you can sell before any food goes bad. You are better running out of food on a busy day than selling something that isn't fresh. Determining the right quantities to purchase is usually trial and error. Where to source your food, can be a factor in planning your purchases, schedule and offerings. Common sources include wholesale food distributors, food manufacturers, local and regional suppliers, greenmarkets and farmers markets, food cooperatives and shopping clubs like Costco or Restaurant Depot.
Food shopping is a huge endeavor for Adria Shimada, who looks for all organic products to use when making homemade ice cream for her Seattle food truck, the Parfait Ice Cream Truck. "I get everything from a different distributor. Milk and cream come from a local certified organic dairy farm about 80 miles away, and I get eggs in another nearby town from another organic farm. All of my produce is real fresh produce, I don't use flavors or extracts. For my mint ice cream, I use real spearmint from a farm in Carnation, Wash.," explains Shimada who scouted and tasted the food from many farms before finding her sources. Some deliver to her commercial kitchen, and others are found at farmers markets in Seattle where farmers bring the wholesale quantities she needs.
Licenses and PermitsBefore you finish putting your menu together, building your perfectly retrofitted cart or truck or setting up your kiosk, you need to get your licensing in order. While that's not one of the more exciting aspects of your entrepreneurial pursuit, it's one of the most important. It is, in fact, the overall commitment to more stringent health codes and sanitary regulations that have paved the way for food vehicles to generate such a mass following. The knock against food carts and trucks has long been that they were neither clean nor sanitary. Now, as that widespread perception changes, foodies and nonfoodies alike can enjoy their fare with confidence that those running the business are doing their utmost to meet, and surpass, sanitary requirements.
It would probably take several volumes to list and explain the numerous permits and licensing requirements because each state as well as most cities and even counties have their own. However, there are many universal concerns that need to be addressed. Typically, your local department of health will have the information you need. Therefore, you can get started by looking up the local health department online or in your local Yellow Pages and calling to inquire about the necessary requirements. The state or city will have specific requirements that must be met depending on your mode of operation.
If you are selling prepackaged foods, you are not considered a food handler and may have less stringent requirements than if you are actually preparing foods or even scooping ice cream. As long as food is unwrapped, you are typically considered to be a food handler and must meet specific regulations. While your cart or truck designer will not know the nuances of each city's requirements, he or she can usually help you meet health standards. Before you can hit the road, health inspectors will inspect your vehicle. What are inspectors actually looking for? In Washington, D.C., for example, an inspection is conducted to verify the following:
Food vehicles are typically inspected at least once a year by a health department inspector, sometimes randomly. The inspector checks to see how food is stored so that it does not spoil and that it is kept at the proper temperature. All food equipment as well as sinks and water supplies are checked. Commercial kitchens and garages in which food vehicles are kept are also inspected frequently and can be given high fines if they do not meet health and fire codes. Some have been shut down because of too many violations. Likewise, trucks and carts have lost their licenses over repeated violations.
LocationsYour locations will play a major factor in your success. Your decisions on where to park for business purposes will depend on several key factors. First, you have to consider where you are allowed to park by law. Next, you want to ask yourself where in those areas can you find the customers who would like your foods and/or beverages. You also want to consider the prime hours for each potential location and, of course, the competition. Keep in mind that even if you've found the perfect lunch location on the map and you are allowed to park there, you may also find 19 other food carts and trucks lining the streets.
As more food trucks appear on the streets of major cities like New York, Los Angeles and San Francisco, it becomes much more difficult to find prime locations. Add in the fact that there will be business owners who do not want you parking near their establishments, and it can be a major challenge coming up with good places to do business.
Some places to consider parking are:
You can also look for the opening of a new museum, gallery, theater, arena, visitor's center or anyplace that has just been added to the list of must-see places in your city.
Learning all about parking rules and regulations in your city and finding the best potential locations for your business takes due diligence. Even once you have found a few locations to your liking, keep on scouting around. Parking rules and regulations, as well as local ordinances, change often, so a good location one month may be gone the next. Also, note that as the seasons change, some locations become less viable, such as your great spot by the beaches on the Jersey shore, which will not be so great in the fall or winter months. So come up with other plans.
Startup CostsThere's no set formula for determining how much it costs to start a business. The field is broad, and there are too many possibilities. Clearly, a cart will typically cost less than a truck, and a prepackaged product such as ice cream, candy or cans of soda are typically cheaper than making your own foods or beverages.
For your purposes, you want to make a list of each of everything you need from the truck, cart, van, kiosk, bus and retrofitted equipment to marketing and promotion costs and home office equipment.
The range of costs varies greatly. You might spend $3,000 on a food cart, $500 on your initial food bill, $400 on permits and registrations, $200 on marketing, $300 on an attorney, and $300 for the first month to park and clean the cart. Tack on $300 in other miscellaneous costs, and you're off and running for $5,000.
On the other hand, you could spend $60,000 on a retrofitted food truck, $1,000 on initial ingredients, $2,000 on permits and licenses, $2,000 for the first month of a commercial kitchen rental, $300 for the first month of parking and maintaining the truck, $1,700 on kitchen supplies, $3,000 on marketing and promotion, $2,000 on packaging, $1,000 to set up a small home office for bookkeeping, and $500 in miscellaneous costs for a grand total of just under $75,000.
Compared to a restaurant, even $75,000 is not bad for starting a business. The point is, it varies greatly. You need to do the math before spending any money so that you do not run out before you get started.
The numbers will also vary depending on your needs. Do you need an oven? A rotisserie? Coffee pots? A grill? Hot-dog roller? The costs can range dramatically. Then, of course, you need to get and pay for all of the permits for the city or town you operate in and board of health approval. There simply is no exact number, but you can be pretty sure the vehicle is your biggest investment.
Your Concept and LookConsider your brand or the character of your vehicle or kiosk.
That means having a consistent theme from the look of the truck to the napkins, menu and other accessories to the way you present the food. You can be pink and playful, dark and mysterious, ethnic, silly, or whatever suits your fancy -- but go with the theme. The Fojol Brothers of Merlindia created an entire world of their own that has generated a lot of media attention with their food truck in Washington, D.C. Their website at fojol.com is unique and entertaining. Foodies today are into the overall ambiance and brand of their favorite mobile food vendors.
The Louisiana Territory truck in San Jose, Calif., is built around the concept of serving Louisiana-style foods, including shrimp and sausage creole over rice and Louisiana smoked sausage. The Grilled Cheese trucks in LA are big and yellow, with a yellow menu featuring the signature Cheesy Mac and Rib and an online gallery of cheesy photos. Meanwhile, Van Leeuwen Artisan Ice Cream trucks in New York City are designed to be an old-fashioned ice cream parlor on wheels with freshly made ice cream and classic sundaes.
The days of the basic food cart or truck have given way to a new brand of vehicles with concepts, or themes, that carry through from exterior design to logos, menus and of course the foods. Your concept should be a means of distinguishing you from your competition and building your niche market. You might even name some of your foods in line with your theme, such as the Yellow Submarine in Miami which also sells the Lady Madonna sandwich, named from another Beatles song, or the Big Gay Ice Cream Truck in New York, which serves the Bea Arthur. Be clever and consistent (never confusing), and you can broaden your appeal and even draw media attention.
Mobile Food Industry Information