How Entrepreneurs are Making Big Bucks with Food Trucks

The ability to be your own boss and make lots of money doing it is all part of the startup dream. An up and coming segment of the small business world is food concession vending. This is a form of food service that does not involve being stationary.

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Mobility is the key to the food concession industry. The ability to pick up and move whenever you have an event or want to switch locations is paramount in this business; which brings attention to the fact that there are several things needed to begin a concession business. One of the first important things is location. Another important aspect is choosing the type of food you will serve. One more vital thing to consider is advertisement.

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According to Los Angeles-based industry-research firm IBISWorld, the street-food business — including mobile food trucks and nonmechanized carts — is a $1 billion industry that has seen an 8.4 percent growth rate from 2007 to 2012. It’s very entrepreneurial: 78 percent of operators have four or fewer employees.

The true number of these businesses is difficult to count, since the mobile food industry is comprised of food trucks, food carts and kiosks, which have appeared in malls as well as at train and bus stations, airports, stadiums, conference centers, resorts, and other locations in recent years.

Location

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One of the first things to consider when starting a food concession business is the location where you will set up your vending equipment. You’re best bet is to set up in a highly trafficked area where many people live and work. One of the biggest parts of your clientele is potentially the work force around the location.

Even better would be to find a highly trafficked area that also had little choice of food. People are more tempted to think outside the box and eat from your concession trailer. Many of these workers do not have a lot of time for a lunch break. Quick, simple, cheap, and delicious food is the key to drawing people in and creating loyal customers.

Type of Food

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Another thing to consider when you start a concession business is what type of food you will serve. You must first consider the part of the country you are in. Goulash may not appeal to New Yorkers. Another thing you must consider is financial history of the area you are serving. Some people may neither desire or be able to afford sushi or caviar for lunch so be careful about offering food out of the economical means of those to whom you are planning to sell.

Food preparation

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Another thing you need to consider about your food, is how easy or difficult it may be to prepare in a mobile style kitchen and how long it will take to prepare. You definitely don’t want the items you are selling to take a long time to prepare. If so, people will be more tempted to just go into a sit-down restaurant to eat. Quickness is definitely a way to go for the food concession business.

Marketing strategy

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One other thing you may want to weigh when setting up a food vending business is advertisement. Roadside signs and billboards are a great way to go, albeit expensive. A great way to make sure you have great advertising is to have exceptional food and service. With these to attributes, your company will be advertised by one of the best and most powerful means of advertisement: word-of-mouth. Get people to enjoy your food and the friendly face you offer in the middle of a possibly hectic workday.

 

Having a great relationship with your customers is definitely a must when dealing with the food service industry. Other forms of advertisement include fliers, sale signs, and coupons. Bags, napkins, and containers with your company name and logo on them are also great ways to advertise. For the business with the larger budget, t-shirts, hats, and bumper stickers might be a way to go.

Capital and funding for your food truck business

To start with, you need money to rent, lease or purchase a truck or cart for your business. Other areas you will need funding for will be kitchen equipment, supplies, commissary fees, professional fees such as legal and accounting, as well as initial permitting in the municipalities you plan to work in. In some cases, you may also need money to pay employees. There are several places where you can get this money that your new mobile business needs, but first you need to think about which type of funding will work best for you.

In this article, we will explain the differences between the various types of capital and the stages at which they are needed.

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Capital Needs

For each stage of your mobile food business’ life, there may be financial needs that require outside funding. The funding types for the different stages are called:

  • Seed capital – Seed capital is the money you need to do your initial research and planning for your business.
  • Start-up capital – Start-up, or working capital, is the funding that will help you pay for equipment, rent, supplies, etc., for the first year of operation.
  • Mezzanine (expansion) capital – Mezzanine capital is also known as expansion capital, and is funding to help your company grow to the next level, purchase better equipment, or add additional trucks to your fleet.
  • Bridge capital – Bridge funding, as its name implies, bridges the gap between your current financing and the next level of financing.

Each of these areas will play an important part in your mobile food service company’s growth at various stages. Since most food truck operators will need start-up capital, we will focus on this area.

You are going to need funding to keep you going while your business cuts its teeth. What will this money be spent on?

  • Purchasing your food truck or cart
  • Payroll  (for you and any employees)
  • Commissary rent
  • Fees and licensing
  • Food
  • Kitchen supplies
  • Truck and equipment maintenance
  • Insurance
  • Taxes

Make sure you allow enough money for the true expenses associated with running your mobile business for at least the first year of its operation. (And don’t forget to pay yourself first.) Make sure you’ve planned for additional employees, food production increases, additional fees and licensing for new locations to sell your gourmet fare in. One of the top reasons many new businesses fail is because they don’t get enough start-up capital. (The other reason is poor management.) Realistically estimate your financial needs and leave room for the unexpected, or you may unexpectedly be out of business.

Now that you know about the different types financing for different stages of your mobile food vending business’ growth and have an idea of how much capital you will need. How does this financing work? In the next of our series we will explain it to you

In order to compile our ranking of America’s best food trucks, we started with the more than 450 food trucks from more than 40 cities that were considered for last year’s ranking and added 50 to the list, mostly new trucks and ones suggested by readers. We factored Twitter followers, Yelp reviews, and Yelp stars into a weighted algorithm, rounded out by an originality score that took into account menu innovation, overall concept, and geography.

Best food trucks in America Published in 2014 By Fox News

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A few notes from the team who complied this: Only trucks were considered. If it was a trailer or a cart, if it wasn’t on four wheels and couldn’t move on its own power from parking ticket to parking spot, it wasn’t considered. Some cities (especially much-beloved Portland, Ore.) pained us: many of their food “trucks” didn’t make the cut because they weren’t well, trucks. Also, this is a list of food trucks. Trucks that just make cupcakes or coffee are cupcake or coffee trucks, not food trucks. Dessert trucks were also not considered.

Best food trucks in America Published in 2014

1. Kogi BBQ (Los Angeles)
2. The Cinnamon Snail (New York)
3. Red Hook Lobster Pound (New York)
4. Wafels & Dinges (New York)
5. The Grilled Cheese Truck (Los Angeles)
6. The Chairman (San Francisco)
7. The Lime Truck (Los Angeles)
8. Senor Sisig (San Francisco)
9. Lobsta Truck (Los Angeles, San Francisco)
10. Grill ‘Em All (Los Angeles)

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Whatever decisions you might make about your mobile concession business, there are certain things you must consider to make having a successful company easier. In the mobile food service industry, important options include location of your vending equipment, type of food served and advertising your business in order to make it more successful. By considering these things, you will have a better chance of making a name for yourself in the food industry.

If you want to know more about starting your business by minimizing the risks, and using less cash get my Top Resources Report

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