Why do food trucks fail? – 5 Mistakes to avoid.
More than 60% of restaurants fail within a year of opening. Do you think food trucks do better? Not really. 60% of food trucks also stop operations after their first year.
As an aspiring restaurateur, you may be inclined to think food trucks are less expensive to set up and a great way to try out your concept. True, but if you’re not watchful, even food trucks could be an expensive mistake.
In 2018, I ran a food truck in Seattle. We managed to survive and become profitable within the first 3 months of our launch.
Here are the top 5 mistakes that could have put us out of business.
Your truck is way too old.
You got a truck that had been driven for 200K miles because you were getting a cheap deal. But it breaks down every other week. Each day it is at the mechanic’s shop is a day you aren’t getting revenues. You’ve spent your savings buying and fixing it, so now you’re stuck with it.
Buying a very old food truck is just an expensive mistake that is hard to fix later. Don’t make this mistake.
Trucks, may cost anywhere from $10K to $150K and while there’s never the right amount to spend on a truck, remember 3 things:
- A truck’s life is about 250-300K miles. Assume you may drive it for about 25K miles a year. Pick a truck that gives you at least 5-6 years. That means a truck with 150k miles or less mileage. To be conservative stay close to 100K miles. Remember, even if you want to stop running the truck after 2-3 years, you want to pick a truck that lasts 5-6 so you get some resale value for it.
- Make sure the truck model you pick gets serviced easily. For example – any Ford e-series from the year 2000+ is a good choice.
- Prefer buying a truck whose height is 6”.8’ feet or higher. For two reasons – 1.) you are able to hire taller people to work in your truck, 2.) You can install upright equipment if needed.
You should be able to get a second-hand food truck meeting these criteria for under $40-$50K.
Wrong kitchen build-out.
Do you buy an empty truck and install the kitchen you want or do you buy a fully-equipped, turnkey food truck? It’s tempting to buy a fully built-out truck to get to market sooner – after all you’re not a kitchen appliance expert – right?. But don’t rush.
Learn about your state’s regulations to get a food permit. For example, in the state of Washington, the food truck needs to pass additional L&I codes whereas no such rule exists in (say) Texas. So a Texas food truck owner might tell you all about how their truck was perfect but might not meet WA criteria. You will end up spending more money rewiring the electrical and plumbing. In some cases, it’s so hard to rewire that you may end up paying an additional $10K-$20K to get it done. That money was supposed to be your runway to get the business settled, but now it’s down the drain.
Your line is suboptimal.
Think through how your line will operate before purchasing a food truck or any appliances. Where is the food being cooked- driver side or back door side? Where is your fridge? How will food from the fridge be passed to the grill cook? Where is your food getting plated? Is there a space to plate? Who hands food to the cashier or customer?
These are all important questions to think about upfront and once again, extremely hard decisions to change later. Remember food trucks are expected to be fast-paced. If you’re slow, customers will simply stop coming to you. To top that, there is limited space. Ideally once a cook takes a spot in the truck, they shouldn’t need to move for the line to function.
Speed matters for the office audience that’s come out for lunch. They want to be back at their desk as soon as possible. In a market like Seattle, you want to target roughly 80 orders in between 11:30 – 1:00 – that’s 80 orders in 90 minutes – or almost an order a minute if you’re counting!
Now imagine every min that was wasted because your appliances were set up incorrectly. Here is our truck sample setup for reference. We served healthy grain bowls so you won’t see a fryer in the image. 🙂
Yet another taco truck.
Know your competition. Your customers especially the office lunch traffic are creatures of habit. Once, they’ve thought ‘Asian’, they know exactly which truck they want to go to. If you’re about to offer a cuisine that already has a lot of competition, you will have trouble attracting your audience.
Keeping your menu unique also helps attract private parties, weddings, or catering contracts – side note, these will be a big part of your income. Most people are looking for something different and unique when hiring a food truck for their private event. Before launching our healthy grain bowls truck, we studied the Greater Seattle market, and here is the break up of food trucks by cuisine. We knew that the competition for our offerings (Healthy/Global Food) was low and would be easy to gain traction.
You don’t have the right spots for the food you serve.
It is said that there are 3 things that make a restaurant successful: Location, Location, and Location. Well, it is similar for food trucks.
Let’s start with the basics. Obviously, you know that you can’t just park your truck anywhere. If the spot is on public property, you’ll need a.) the spot to be identified as a food truck spot and b.) a permit to park there. Getting the spot designated as a food truck spot could take 2-4 months. Even if you happen upon a designated food truck spot, you may encounter a long queue of food truckers vying for the same spot.
While you acquire high traffic spots, try to negotiate deals with gas stations or other private spots such as breweries to allow your truck to serve food. Most businesses will be ok offering their space in exchange for food discounts.
Now with the basics out of the way, let’s move to the advanced aspects of the location. Proximity isn’t everything. For example, during the initial days of our business, we parked our truck “just” 2 blocks away from offices in the parking lot of a grocery store. Just two blocks, and really in front of our target audience “office-going health-conscious crowd”, Yet we did miserably. Why? Did our food didn’t work? No.
We were in the opposite direction of foot traffic. People had a tendency to start walking north for food and we were south.
The spot just wasn’t right and we moved out in a month (thankfully permits to a better spot arrived just-in-time).
Another thing we experimented with in terms of spots was parking in a food festival. We knew we were a healthy food business and might not do well for food festivals. Amongst 30+ festivals happening in the Seattle area during summer, we chose one [the most popular one which has the maximum chance of having a mixed crowd].
The festival was 2 day long and we made 8K in revenue. That’s actually pretty decent for a food truck business but there were multiple businesses who served finger food and did over 12K in business. In short, if your food has some fun element/picture-worthy, then food festivals might give you a week’s worth of revenue in one day. Choose your spots wisely and register early on.
Spots for good festivals fill up quickly. We blocked our spot 5 months in advance.
We ran a bunch of food-related experiments on trucks as well and here are our top 3 things which helped generate more revenue further improving our margins.
- Today’s Specials – Specials did really well for us. Most of our customers were repeat customers who actually ate with us a couple of times a week. When they saw a special on the menu, they generally jumped at it (even though they were priced higher) since they knew they could get the regular item next week again.
- Guilty Pleasure – Even the health-conscious crowd eating at our truck felt ok indulging in bite-size or small portion desserts after a healthy lunch.
- Office Catering – Seattle is known to have a short summer and long winter full of gloomy days. Keeping our order count high during the winter months was a real challenge. We partnered up with office catering services in our area which picked orders from our kitchen. Each day we served about 60-80 portion food early in the day before heading out with the truck where we made another 50-60 orders. In essence, we made almost the same money as during summer days. We didn’t cut down on employees, we did similar prep and overall everyone was happy!
So those were a few mistakes I learned to avoid in my first year of running a food truck. Hope it was helpful and good luck with bringing your delicious flavors out on the streets! And when you are ready to hire your staff, check out www.edizeven.com