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October 22, 2012

Food Truck Owners Answer Your Questions

As I mentioned in an earlier post, I had the pleasure of being invited by the University of Washington to moderate a panel about food truck ownership at their 2012 Entrepreneur Week.  On the panel were four mobile food business owners – some who had been in the game for years and one who was literally just getting the truck’s feet wet but they all had a lot of advice to offer to aspiring food truck owners.

The panel consisted of Molly Neitzel from Molly Moon’s, Josh Henderson from Skillet, Marshall Jett from Veraci Pizza, and newcomer to the mobile food world but longtime chef and culinary expert Danielle Custer of Monte Cristo.  The panelists offered their thoughts on everything from staffing requirements to  overseeing operations and since I was trying to stay engaged and make sure I asked good questions I didn’t have a lot of chance to take notes.  I will however post a link to the video that the University took of the entire panel discussion as soon as it’s made available in case you’re interested. 

A few interesting points that jumped out at me during the panel discussion though included:

  • Numbers!  These folks may be highly creative when it comes to food but they understand that the backbone of any good business is understanding the numbers.  At any point in time they can share with you what their startup costs were, what their margins are, or even how many pizzas they make in a year.
  • Speaking of numbers – here are some interesting ones for you to consider.  The startup costs for each mobile food operator varied widely from about $4000 on the low end from Veraci Pizza who started in 2002 with a simple clay oven on wheels that they took around to farmers’ markets to $100K+ from Monte Crisco who is backed by Bon Appetit Management company.  Molly Neitzel said that her truck cost her $65,000 but acknowledged that as an ice cream truck she didn’t need to have the same type of equipment as a truck that was cooking food on site.  Josh Henderson recommended that new truck owners have at least $100,000 on hand to not only pay for the truck but to also see you through the first several months of operations.

“Be able to weather a loss for at least 6 months,” Henderson said.

  • The panelists were also candid about the fact that the food business is a tough one to get rich in.  Neitzel said that for food trucks especially it’s more akin to “buying yourself a job” rather than creating a company that will make you millions.  The panelists said that their margins varied from Molly Moon’s on the high end with 30% to less than 10%.  Henderson said that he would kill to make 30% margins on this products.
  • The #1 expense all these mobile food businesses face is not food costs or truck maintenance but the labor needed to run the truck itself.  The panelists indicated that you typically need at least two people on board the truck but that can vary widely depending on types of items sold and how busy any given day or week is.  What makes things harder on a food truck than a typical restaurant is that you can’t cut staff early (a typical way restaurants keep staffing costs in line is by “cutting” staff hours after the staff has already arrived so that you would work, for instance, a four hour shift as opposed to an eight hour shift).  Whereas in a restaurant staff can just go to their cars and go home, on a food truck you’ve taken you staff away from their transportation and as Henderson said, “you can’t just tell them to go catch the bus.”  As such, you have to be much more vigilant about staffing.
  • Depending on where you live and what it is you’re selling, seasonality can have a huge impact on your mobile food business as well.  Molly Moon was very forthright when she informed the audience that her business essentially doesn’t make money during the winter.  That being said, she’s able to make enough in the warmer Summer months to more than make up for it.
  • Another huge issue food trucks face is that while their mobility gives them the flexibility to move around unlike restaurants, it also means that people don’t know where to expect you at any given time.  Custer’s strategy as a new food truck is to have an established scheduled so that customers can know to expect her at Location A on Monday, Location B on Tuesday, and so forth.
  • Because the variability of locations can impact food truck sales so drastically, all the panelists agreed that private catering was a vital part of a successful food truck business model.  Though those events are harder to manage, oversee, and organize, the payout can be far greater.  That being said, both Neitzel and Henderson said that in order to find someone who’s willing to take all those crazed calls from brides you have to be willing to pay them very well!
  • The last point that really stuck out to me was when Marshall Jett said that in order for a food truck concept to become successful it had to “simplify, specialize, and do one thing really well.”  Don’t try to be everything to everyone – create a name for yourself doing one thing, be it ice cream, pizza, burgers, or grilled cheese – and be better than anyone else.

As I mentioned, as soon as I have a link to the video I’ll post it for everyone.  In the meantime, thank you to everyone who shared questions with me – I truly wish I’d had more time to talk with the panelists and ask even more questions!

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