Common Food Truck Expenses and How to Business Plan for Them
Running a successful food truck can be a challenging task, requiring a lot of hard work and fiscal oversight.
In addition to the initial food truck startup costs, food truck owners have a host of ongoing monthly and annual operating expenses that impact their bottom lines. Understanding and controlling these food service expenses is essential for food truck operators to increase their profitability.
In this article, we will explore common food truck expenses and provide tips on how to optimize operating costs to improve your food truck’s financial health.
Opening a Food Truck Checklist
Understanding average food truck startup costs
When setting up a new food truck business or starting a new season, it's essential to have a business plan in place, including a breakdown of expected opening costs. These estimated costs will impact the break-even point associated with building your own food truck empire.
Here are a few considerations to keep in mind for upfront food truck startup costs.
Vehicle cost: The cost of the food truck itself can range from $50,000 to $200,000, depending on the type of truck and how much customization is required. Choosing a used food truck can lower costs significantly, but maintenance costs could be higher.
Equipment cost: A food truck requires several pieces of specialized equipment such as grills, fryers, refrigerators, and generators. Depending on the type and quality of equipment, these costs can range from $15,000 to $50,000.
Licenses and permits: Obtaining the necessary business licenses can be expensive, with some cities charging upwards of $5,000 per year. Health permit costs, insurance costs, and vehicle registration fees add to these costs as well.
Commercial kitchen space: Many food trucks take advantage of commissary kitchens for the bulk of their prep work. A commercial kitchen space will have everything you need in terms of cooking equipment — more so than what can fit on a food truck.
Taking control of ongoing food truck costs
After the initial startup costs, food truck operators must control ongoing food truck expenses to maximize profits. There are two types of ongoing expenses: fixed expenses and variable expenses.
Here’s a deep dive on both.
Food Truck Business Plan Template
Fixed food truck expenses
Fixed expenses are those that don’t fluctuate based on sales volume or customer traffic. They’re predictable, set expenses that you can plan for because they’re incurred on a regular basis.
Vehicle payments: If you financed the purchase of your food truck, your monthly vehicle payment is a fixed expense that adds up over time.
Insurance: Insurance coverage for a food truck is necessary for protecting against liability and property damage. Insurance costs can be high due to the risks associated with operating a mobile food business.
Commissary fees: Food trucks must park and restock at a commissary regularly. Monthly commissary fees are a fixed expense that must be included in the budget planning process.
Variable food truck expenses
Variable expenses are directly correlated to sales volume and customer traffic. These expenses are harder to plan for and can vary day-to-day or on a seasonal basis.
Food and drink costs: The cost of food and drink inventory is a variable expense that depends on how much you sell and what items you serve.
Labor costs: The wage and salary expenses associated with operating a food truck depend on how busy the truck is. During peak hours, you may need more labor to keep up with demand.
Marketing and promotion: Promoting your food truck to potential customers could include flyers, social media campaigns, or attending festivals and events. The costs of these vary according to the type of marketing campaign.
Propane costs: Most food trucks run on some form of propane tank, which will need to be swapped out or refilled regularly.
Food Truck Opening & Closing Checklist
Controlling food truck operating costs
Controlling food truck expenses is an essential part of running a profitable food truck business.
Here are a few tips that can help:
Budgeting: Planning detailed forecasts for your ongoing expenses can help keep costs under control and allow you to adjust when necessary.
Negotiate contracts: Negotiating contracts with suppliers, service providers, and other vendors can help you get more favorable rates and terms.
Analyze sales data: Tracking sales data can help identify trends and patterns that impact your bottom line. This analysis can help you more strategically price items and inspire promotions, discounts, and marketing campaigns.
Regular maintenance and repairs: Properly maintaining your food truck’s equipment can prevent huge sums in repair or replacement expenses. Maintaining accurate records of repairs, inspections, and maintenance can save you money and time in the long run.
Invest in technology: Implementing a food truck point-of-sale system, or POS, can increase efficiency and accuracy. These restaurant industry-specific systems can help unlock online ordering while helping optimize costs by tracking inventory and reducing food waste.
Taking control of your food truck business costs
Running a food truck requires ongoing fiscal oversight to maximize profitability.
By understanding and controlling both fixed and variable expenses and implementing cost-saving strategies, food truck operators can increase their bottom line.
With the tips outlined here, you’ll have the awareness needed to keep costs under control and run your food truck business efficiently.
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