written by | April 15, 2022

Comprehensive Guide to Starting a Food Truck Business

The food truck model has witnessed an explosion in popularity among Indians due to several trends – food on the go, a mobile lifestyle, consumerism and growing disposable incomes among the middle class in the country. A food truck business is a low-investment and low-risk venture. It is quickly becoming the business of choice for first-time entrepreneurs in the restaurant space. So dive in and examine whether this business suits you.

Did you know?

The global food truck market was valued at $3.93 billion in 2020 and is anticipated to witness a compound annual growth rate of 6.8% from 2021 to 2028.

Costs Associated with a Food Truck Business

When you are working on your food truck business plan, note that you will incur costs of ₹8 lakhs to ₹10 lakhs is the food truck price, especially if you are opting for a mediocre one. The cost incurred will significantly increase and become close to ₹20 lakhs if you are planning for going for a well-equipped food truck. Here is a brief breakdown of the upfront and operational costs you will incur when establishing and running a food truck business:

Sr. No.

Heads

Budget

1

Vehicle

₹5 lakhs

2

Equipment

₹2 lakhs

3

POS (CRM, Analytics and Inventory)

₹25,000-₹30,000/month

4

Marketing

₹20,000/month

5

Staff

₹15,000/month per person

6

Raw Material (Food)

₹20,000-₹30,000/month.

Crafting a Food Truck Business Plan

Before you enter the food truck business, you should take the time to develop a business plan that will help you get a loan or funding from investors. A business plan should feature the following sections: 

Executive Summary

This section is introductory and offers readers an outline of the business plan. The executive summary is a brief overview and should not get into minute details, as other business plan sections have to provide in-depth insight. 

Also Read: Making Money from Instant & Precooked Food Mixes

Description of the Business

This section defines the business and details your professional experience. You need to explain which segment your business is targeting and why consumers/customers/clients will buy your product over that of your competitors.

Management and Organisation

This section details the company's ownership and explains what type of business you are setting up, i.e. limited partnership or sole proprietorship, etc. You will also have to provide an introduction to the key personnel within the organisation.

Analysis of the Market

This section defines the customers you are targeting, their location, their needs and the steps you plan to take to get them to use your product. You will have to showcase your know-how about the market and describe how the market will change due to your entry. 

Description of the Product

This section will detail the menu and how you intend to gain new customers. You will also have to address how your company will expand, grow or evolve to meet the market's evolving needs.

Marketing

This section will explain the strategies you will use to market your product. Describe how you aim to promote the business in the area, the marketing platforms (social media) you intend to use and how you plan to beat the competition.

Detail your sales strategy, the impact of seasonal trends, the minimum revenue figure to ensure you are afloat and menu prices.

Financial Forecasts

Though it is not easy for a new business entity to offer financial forecasts, present the revenue the company will generate over a two-to-five-year period.

Request for Financing

You can use this section to detail your financing requirements for the growth and operation of the business. State explicitly the amount of money you require and provide a detailed explanation on how the money will be used to expand the business.

Licenses Required to Operate a Food Truck 

A food truck business requires certain licenses just as any other restaurant or business. The government in India has begun shuttering food truck operations that do not have the requisite licenses. Here are the four licenses you will require for your food truck business:

Vehicle License

You will need the RTO of commercial vehicles to issue you a license as you will work out of a truck.

NOC Certificate from Chief Fire Officer

The Chief Fire Officer will have to issue you a NOC Certificate as the food truck will house gas appliances.

Permission from Municipal Authority

The local municipal authority will have to issue you a permission letter as your business premises falls under their jurisdiction.

FSSAI License

Any food business with gross revenue of over ₹12 lakhs requires an FSSAI license, which is a 14-digit number.

Also Read: Ultimate Guide to Opening a Cloud Kitchen Business in India

Impact of the COVID-19 Pandemic

The onset of the Covid-19 pandemic hurt the dining and restaurant industry worldwide, with even food trucks bearing the brunt of lockdowns and social distancing. 

Footfall reduced considerably, and one of the key clients of food trucks – events, parties, musical festivals, etc. – were not allowed to run their businesses as usual.

However, as health experts and governments have deemed Covid endemic in the post-pandemic era, business in the restaurant sector is returning to pre-pandemic levels. Today, restaurants and food trucks can function albeit with protocols such as social distancing and face covering in place.

Food Trucking: Advantages and Challenges

Sr. No.

Advantages

Challenges

1.

Being a Business Owner: Registered as a business, you can pay a lower tax rate.

Long Hours: With the many caps you have to wear, you will spend long hours on the job – cooking, marketing, procuring, maintenance, accounting, etc.

2.

Mobility: You can shift your food truck to different places based on demand – at different times of the day or on different days of the week.

Rules in Different Locations: Every location has different rules concerning how long you can use the area or where you can set up your truck. Make sure you follow the rules.

3.

Freedom: It’s all your call! You choose your customers, employees, vendors and menu items.

Competition: Food trucking as a choice of business is on the rise, so that you will face a lot of competition. Ensure you get your research right.

Conclusion

One could argue that the food truck business democratises the dining and restaurant business world as people with lower capital get to play restaurateurs. Though this might seem true, do not forget that you will also face growing pains. So it might take time for you to break even. Be patient and factor this into your financial planning. And as Henry David Thoreau said, “Success usually comes to those who are too busy to be looking for it.”
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FAQs

Q: Who are the customers I need to target with a food truck business?

Ans:

The food truck clientele includes private-event catering and street service. Your choice of location will dictate the customers you gain in street service. But food trucks are also ideal for private and public events. So ensure you craft a menu that can meet the requirements of off-premise catering.

Q: Do I need experience in the food industry before starting my food truck business?

Ans:

Yes and no. The restaurant industry will prepare you with the mentality required to keep customers happy in the food business. But remember that the food truck industry comes with its flavour. A customer will be ready to spend 15 to 20 minutes waiting for their dish at a restaurant. It is unheard of in the food truck business as customers here require a dish in under five minutes. You have to produce a menu keeping this in mind and guide your team to meet these requirements.

Q: Does a food truck business add value to the community?

Ans:

A food truck business, which brings more foot traffic, builds up the neighbourhood's economy as other consumer-facing businesses in the area benefit. There is a direct link between street food and tourism. But the biggest benefit is that of diversity in the neighbourhood, especially when a new cuisine or culture is introduced.

Q: What kind of equipment does a food truck require?

Ans:

The food truck will require equipment for serving and cooking food. They include fryers, toasters, microwaves and grills, though these tools will depend on the cuisine being prepared. You will require a stove and utensils such as blenders, skillets, pans, plates, and cups. You will also need supplies for janitorial and cleaning tasks.

Q: Why do certain food trucks go out of business?

Ans:

The primary reason certain food trucks go out of business is insufficient planning and research. Remember that brand and location go hand in hand. Sometimes food truck businesses begin operating in crowded markets. It leads to failure. Remember that your product must offer a cuisine unlike that of your competitor.

Q: How do I start a successful food truck business?

Ans:

You need to prepare well before you start a food truck business. Survey the area that you plan to work in. Check whether the location is ideal for a food truck. Place your food truck in an area with high foot traffic. Is your product (the food on the menu) similar to that of other restaurants or food trucks in the area? You need to offer a different product from other restaurants and food trucks in the area. Plan well before you start the business.

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