In the first part of Frysmith’s How to Start a Food Truck, I went over some business basics, such as identifying your product, your demographic and your locations. This post will get into the answer to the question everyone always asks me, “What are the costs?”
Buying vs. Renting
Depending on cooking equipment and the size of the kitchen, a new food truck costs in the neighborhood of $120,000, Many trucks cost a bit more and some less (for example, you’ll save a bit if you build a new kitchen in an old truck as we did with Frysmith). Conversely, renting a truck will run you in the neighborhood of $2,000 a month (this can vary a lot, too, depending on its condition). Renting has the obvious benefit of less risk and start-up capital. However, if your food can’t be made in a rental truck or a professional kitchen you rent or sublet (it’s against the law to make food at home), you’re going to need to buy or lease.
When we conceived of Frysmith, the standard rental truck was out of the question because it didn’t have enough fryers. So, we needed to find a used custom truck that fit our needs or build one from scratch. In Los Angeles County, buying a used truck can be dicey because even if it currently is health permitted, when the truck changes ownership, it has to be up to the latest code. The code changes frequently, which means the two-year-old truck you buy today might need an extensive renovation to meet current standards. To find a used truck, check out Craigslist or one of the many truck builders in Los Angeles (link here).
If you can’t find an existing truck that fits your needs, you’ll have to build from scratch. For us this turned out to be a painful, lengthy process that we only recommend if your product demands it! After investigating the workmanship of several builders and getting quotes and time estimates, we decided on one whose work we liked and who said they could deliver in 4-6 weeks. That was in April 2009. We didn’t get our truck till the end of November! Most builders will tell you it takes 4-6 weeks to build, but in reality most trucks take half a year or more to complete.
If you decide to build from scratch, use a local builder who is familiar with all the health code requirements and with the inspectors at the health department. This will help speed the plan check process and the inspection later down the line.
One of the other main expenses intrinsic to food trucking is the commissary, the lot where you’re required by law to store the truck. If you decide to rent your truck, you might rent directly from the commissary or from someone who keeps a fleet of trucks there. In Los Angeles County alone, there are over 20 commissaries (link here). At the commissary you can buy propane as well as food and supplies. Some commissaries may require that you buy a certain amount or all of your food from them. This varies from lot to lot, but all commissaries’ service fees cover water, electricity for plugging in your fridge at night, ice for cooling drinks, waste disposal and, of course, the rent for your parking space. Fees vary and are usually around $1,000 per month.
Insurance, Government Fees and Licenses
Like a brick-and-mortar food establishment, mobile food businesses need to pay the state (sales tax), county (health permit fees), and city (business license). Unlike a stationary business, the truck will also have to carry multiple city licenses if they do business in multiple cities. For example, Frysmith has licenses for five cities! That adds up fast! In addition to standard business insurance like general liability and worker’s comp, a food truck is also required to have vehicle insurance with at least $1,000,000 in liability coverage. A benefit of renting is that the rental truck owner will usually pay for insurance coverage, the health permit and the business license for at least one city.
Another food-truck related expense is the cost of traveling. Older trucks get about 10mpg, so gas bills pile up rapidly, especially if you service a large area. In addition, while going back and forth from a service, you have to pay employees to basically just sit there for up to an hour or more (not unusual if you get stuck in traffic)! Some truckers have employees meet them on location, but this is also risky as employees can be late/get lost, not find parking, or get parking tickets! Many truckers just bring employees along for the ride and cough up the extra pay rather than risk being short-handed.
While this part of How to Start a Food Truck covered the costs intrinsic to the mobile food business, the last segment will cover rules and regulations that pertain to them, as well as a few more tips to starting your own gourmet food truck.