November 17, 2011
This is a multiday article about the road a new food entrepreneur has taken to get his food truck started. Click here to read this article from the beginning.
As I mentioned yesterday, in starting up his food truck business, one of the core pieces of Ian Thackaberry’s business plan is to utilize all edible parts of the animals and produce he receives from farmers with an eye towards “respecting” the product that the farmers are giving him. To some this may sound like West Coast fluffery but it’s actually based in solid financials.
Ian showed me the spreadsheets he’s developed for his menu items that show his cost per item (based on the wholesale prices he received from talking with the farmers) and his margins based on what he plans to charge for his items. Ian’s financial education is still well ingrained in him and he’s created his menu with an eye towards efficiency in all things. “Because I’m butchering my chickens,” he explains, “I can take the breast [and leg] meat off the bird and it’s the same price as I would get buying just the breast meat that someone else has already butchered. However, [because I have the whole bird] I now also have the bones and other remains from the chicken that are actually usable. Bones for instance make incredible soup stock and that is all, essentially, ‘free’ because the cost of the chicken is in the meat.”
Ian illustrated to me how because of this concept some of his items actually cost significantly less than normal and help fund the cost of the more expensive products. Since he wants his prices to be competitive but wants to use high-quality ingredients from local vendors, the fact that he is working with whole animals and plants is a key part of his plan as the ‘free’ items from a cost standpoint will bring in a certain amount of anticipated revenue. That then enables him to lower the cost of his more expensive products. So while his more expensive products have a lower margin his ‘free’ products have an incredibly high margin and the goal is to make it all balance out into a healthy profit margin. Since I’m not going to share Ian’s spreadsheet with all of you to see you will just have to believe me when I tell you that Ian has also done a very extended Break Even Analysis and can tell you exactly how many of each product he needs to sell on a daily basis and it is surprisingly doable.
Check back tomorrow as we’ll end the week with a critical component to any mobile food business – finding the food truck itself!