Food trucks have soared in popularity over the past decade. Food Network has promoted dozens of truck-based restauranteurs over 12 seasons of The Great Food Truck Race while mobile caterers can be found in breweries, sporting events, and weddings.
Food trucks are often considered an easier investment than restaurants. The space needed is smaller and you can go wherever the demand is. However, you still need solid financial backing and clear budgeting if you want to make this mobile restaurant a success. Follow this guide to get the financing you need and to plan for the future.
Review your restaurant financing options.
Operating a food truck is no different than running any other business. You have multiple funding options available. First, you can bootstrap your business, paying for your costs out of pocket. A new food truck starts around $50,000, but you might be able to find a used one for around $30,000. While pooling this amount of money is challenging, all of the profits are yours.
Next, you can secure funding from a bank or investor. While this allows you to get the money immediately, you will need to pay these creditors back and will likely accrue interest and fees. Determine the best way to get funding for your business and then take steps to secure it. This will help you move forward with opening your food truck.
Invest in quality equipment that lasts.
While you might be able to find a used or pre-owned food truck at a discount rate, you will want to make sure you have equipment that is up to your professional standards. You don’t know how well the previous owner maintained the equipment and you can’t guarantee that the food truck you buy will have the appliances you need.
As you budget for your food truck, consider how much you will need to completely overhaul the equipment inside. What are the dream appliances you would like to have? Then, work with a specialty financier, like Seattle restaurant equipment financing, to create a payment plan for the appliances and tools you plan to use. The restaurant equipment you use will affect the quality of your food and whether or not customers like your brand. Make sure you can operate your food truck at its best.
Don’t view your food truck as a one-time purchase.
If you are able to secure financing for your food truck, do not view the purchase as a one-and-done process. Even new vehicles will require maintenance and upkeep, which can create challenges for owners who don’t set aside funds for these repairs.
In 2019, CNBC. interviewed the founders of New York City’s popular Yumpling food truck. They estimate that gas costs around $600 per month and operating insurance costs $400. However, there are also unplanned costs and repairs that eat into their bottom line – and will affect yours.
Consider setting aside a portion of your profits for emergencies each month. These can include parking tickets, popped tires, and broken equipment. If you don’t use this emergency fund during the year, you can spend part of the money on necessary upgrades to equipment or truck performance.
Knowing these costs can help you secure the right amount of financing in the short run. Instead of taking out a $50,000 loan to cover the bare minimum, you can consider taking out $100,000 or more until you are able to turn a profit with a large fan base.
You don’t have to be a financial expert to open a food truck, but you need to have an open mind to learn about expenses and budgeting in order to pay back your credits and earn money for yourself. Use these top financial tips to get your truck on the road.