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Food Trucks

November 18, 2011

Ever Wondered What It Takes To Start A Food Truck Business? Part 5

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.

Ian said that one of his first dreams was to open a restaurant, so how then did he land on the idea of starting a food truck instead?  The truth was in the numbers.

“The business side of starting this company has been a massive challenge,” he tells me.  “When you set standards and you see how much it costs you to do things that way you realize why The Big Boys can sell a similar item for $5 that will cost you a minimum of $8 just to produce.  If it will cost me twice as much to produce a similar product of higher quality then I had to figure out where I could trim budget and I realized that the answer was in trimming my overhead costs.”

Showing me his Excel spreadsheet where he’s been keeping track of all the financials for the business, Ian demonstrates how if he starts a brick-and-mortar restaurant he would have to charge, for example, $12 – $13 [for an item that sells for $5 from The Big Boys].  However, Ian soon figured out that by having a small mobile business his overhead would decrease dramatically and he would only need to charge, using the above example, $7 – $8 for the same item.  “I need to at least be competitive with The Big Boys,” Ian says.  “It’s an ongoing process though; I’m constantly searching for where I can cut expenses in overhead because I’m not willing to cut costs on the ingredient side by lowering my standards.  I had to fight my education a lot because [my finance education would say that you] it says to cut [your] variable expenses (in Ian’s case – his major variable expense is his ingredients) and I wasn’t willing to do that.”

All of this looks great on a spreadsheet but the reality is that it’s hard to start a food truck business without the actual truck.  When it came to finding that piece of his business Ian once again did what he does best and started asking questions.  “The first thing I did was drive down to Portland (where, to save money, he ‘couch surfed’ on friends’ couches) and talked to people in the food truck world.  While I was there I met the food truck guru of Portland.  He took me into his workshop and he told me about things you need to pay attention to when purchasing a truck and how those considerations are different in different parts of the country.”

Armed with that information, Ian spent about a month checking various websites looking for a used truck.  He said that it’s slim pickings for used trucks online right now.  “If you want a truck that is not 15 years old and has less than 200,000 miles on it then you’re going to need to spend at least $20,000 these days.”  Unless of course, you’re willing to put a little elbow grease into the unit.  Ian eventually found what he calls “a dilapidated trailer” on Craigslist that had all the equipment he needed for half of his original budget.

Ian, however, is not a mechanic so after he saw the trailer for the first time he called up his cousin, who happens to work for the engineering department of University of Washington, and asked him to come look at the truck as well.  “I brought him to see the trailer and asked him if we could make it work [by putting another $4,000 into it] and he said it would be no problem.  So we’ve been working on it ourselves making all the changes repairs.”

As Ian prepares to start his business in the next few weeks, he left me with this thought, “I want people to pay attention to where their food comes from.  That is how people should eat and the fact that it’s not is what motivates me.”  I’ll follow back up with Ian once his food trailer is open and get his thoughts and some of his lessons learned along this road to food truck entrepreneurship.

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