5 Reasons Why Food Trucks Are a Great Investment
By Ibrahim Zaghw
So, you’re thinking of getting a food truck? Well, if the thought has crossed your mind, then you are probably wrestling with countless questions:
- Are food trucks profitable?
- How difficult would it be to start a food truck business?
- How much would it cost?
- How much risk would I be taking on?
- Is it better to go for a food truck or a brick-and-mortar store?
Well, we want to help you in any way we can. So, listed below are some reasons why food trucks rock and why you should take that plunge. But first, let’s take a quick look at the history of food trucks.
The story of food trucks, from way back when till today
Even though food trucks might seem relatively new to the MENA region, they have been a staple of American life for almost two centuries.
In fact, one of the first food trucks was called the chuck wagon and was brought to life by a Texan Rancher named Charles Goodnight around 1866.
(On a quick side note, Charles Goodnight was a fascinating character, worth the Google. He would smoke 50 cigars a day, and when he was 91 years old, he married his nurse, who was 26 years old at the time.)
Anyway, the chuck wagon had all the hallmarks of today’s food trucks. It was a mobile kitchen that sheltered and fed Goodnight during his cattle drives, which would take months at a time.
A leap forward
Near the end of the 19th century, food trucks began to take over the United States. There were food stands that served rushed journalists and sausage vendors that invaded Ivy League Campuses. And these sausage vendors quickly inspired the Weiner Mobile.
And by the middle of the 20th century, there were several different types of food trucks. You had ice cream trucks for those hot summer days, taco trucks for those with a flair for Latin cuisine, and chip trucks for those in the mood for sliced potatoes tossed into boiling oil.
Taking things into the next gear
It wasn’t until the start of the new millennium that food trucks became more popular than ever.
What happened, you say?
Near the end of 2008, a truck called Kogi BBQ showed up in LA and started selling Korean barbecue tacos for $2. Kogi BBQ was sensational. Its food was flavorful (or, as the website describes it: “set off a flavor bomb.”) Additionally, Kogi was always on the move, forcing loyal customers to keep tabs on its schedule and current location.
And why was this such a big deal?
Simply put, Kogi BBQ changed our understanding of food trucks: Before Kogi, food trucks were a matter of convenience and expediency. They served rushed individuals, so the quality of their food was secondary to speed.
However, after Kogi, food trucks were forced to up their game, and the deliciousness of their food became of prime importance. No longer could a food truck get by on a subpar menu. It would either have to serve scrumptious, adventurous dishes or be forced into oblivion by younger food trucks itching to give the people what they want.
The impact of technology
It was around the same time that Kogi showed up that social media started to rise in popularity. Those were the facebook days when people would shame you if you didn’t have a profile on the fastest-growing social network at the time.
And how did this impact things?
Well, it gave food trucks and their owners one more way to connect with their customers. Now, chefs cooking inside the metallic insides of a taco truck could get direct feedback from their adoring fans. Better yet, if the truck were ever to change locations, the fans would know about it on the spot.
All of this brings us to today
Food trucks have navigated their way across the Atlantic and appeared on our Middle Eastern streets for some time now. Countless big brands have invested in food trucks, reaching customers that might have been inaccessible and expanding their reach beyond what would have been possible with brick-and-mortar stores.
So, what’s the secret? Are food trucks a good investment?
Five reasons food trucks make money
Without further ado, here is why you should follow in the footsteps of some of the biggest F&B brands out there:
1. Food trucks require less of an initial investment than brick-and-mortar stores.
When you do the math, food trucks require a smaller investment than brick-and-mortar stores, no matter how you slice it. In fact, by some estimates, you could buy and equip four food trucks with the same money that you would need to prepare and equip a single brick-and-mortar location.
To convince you, let’s do the math together.
We’ll assume that you live in Egypt and have decided to buy a brand new food truck from one of the many reputable companies that can provide them.
(Note: All the numbers depicted below are actual numbers based on our interviews with different food truck companies in Egypt. However, they might not be up to date, or the prices might have changed.
So we always recommend doing your own research before making any final decisions. Nevertheless, the numbers represented here demonstrate the point we are trying to make.)
If you were to buy a truck 5m * 2.3m, that would cost you somewhere around 220k LE to 270k LE. The truck would have no equipment in it whatsoever. It would only contain the basic lighting, electrical outlets, and perhaps outdoor shading (also known as awnings).
To make the maths easy, we will assume that the price of the bare-bones truck comes to around 250k.
Now, you will also need equipment for your truck, including a grill, a refrigeration unit, and other basic necessities to cook your delicious food. The average cost of the equipment installed in a truck hovers around 50k LE all the way to 200k LE, so let’s place that at 150k LE just to be on the more conservative side.
Over and above, your truck will need extra accessories, such as an air conditioning unit for the hard workers toiling away inside. These accessories can cost you anywhere from 50k LE to 100k LE. We will say that you will pay 100k LE.
Finally, you need to consider how you will brand your truck, which includes the signage, the truck painting, and any other distinguishing features. This will set you back an extra 70k LE.
With all of this in mind, the total for your food truck will come to around 570k LE, and we were being conservative with some of our estimates.
On the other hand, what is the required initial investment for a brick-and-mortar store?
When dealing with a physical store, here are some of the things you need to take into consideration:
A. Paying the rent, and, in most cases, the landlord will ask for a few months’ deposit.
B. Buying the required equipment
C. Furbishing the physical store, which includes a host of activities, be it giving the walls a new coat of paint or buying the place new tables and chairs to match the interior design.
D. Installing the accessories, such as more than one air conditioning unit and the lighting units.
E. Reworking the electrical wiring in the walls, which can be a hassle if the tenant before you wasn’t using the place as a restaurant.
There is a lot of variance in the above categories. For instance, the rent can differ according to the location. So, the rent you would have to pay for a small place in an upscale mall can be multiples of what you would pay for a much larger place in a downtrodden neighborhood.
So, instead of going over every bullet point above, we can use a lump sum estimate, assuming that you plan to serve customers in the A and B+ categories. Accordingly, a fair guess at the required initial investment would be somewhere around 2 million LE based on comparable restaurants serving the same customer segment.
Based on these numbers, a brick-and-mortar location will cost more than 3.5 times a food truck, and that is using conservative estimates.
2. Even the cost of running a food truck is cheaper.
Aside from the initial fixed costs, the running costs of a food truck are much cheaper than that of a physical location.
For one thing, the operational costs, which include the wages paid to your staff, are lower when it comes to a truck. A truck needs two or three people to run. Alternatively, a brick-and-mortar establishment needs several individuals, including servers, managers, and custodians.
Additionally, when something goes wrong with a food truck, the cost of fixing it is usually cheaper than if the same problem had happened at a dine-in establishment. For example, suppose the electrical wiring gets fried, and you need to change it. In that case, the ensuing cost is much easier to bear for the owner of a food truck than it is for a restauranteur with a brick-and-mortar place.
3. With food trucks, you can minimize your losses.
Any F&B business, whether it is a food truck or a brick-and-mortar establishment, is liable to fail, especially when it is still starting out.
In fact, studies show that 30% of all restaurants fail in their first year.
Now, nobody likes to plan for failure, but it is always nice to know that you have a backup plan just in case things do go belly up.
So, what would happen if your food truck went under?
Well, you would have to sell said truck in the resale market. And, while no one can guarantee that you will get back your initial investment (after all, food trucks are a depreciable asset), you can be certain that you will at least receive a good portion of that investment.
As a result, food trucks always provide you with an exit plan, mitigating the amount of risk you take on.
However, the same cannot be said for brick-and-mortar establishments.
If you have a physical location and it fails, you will probably lose all of your initial investment, especially if you were renting the place. And, while you might recoup some of the money sunk into the equipment, the money paid for the refurbishment and rent is as good as gone.
4. Food trucks are mobile by definition.
The fact that food trucks are mobile means that you can be present wherever the action is.
Today, you could be parked next to a university campus, serving hungry academics before they scurry off to their next exam. Tomorrow, you could be at a sports club, feeding spectators, enjoying the squash finals.
And the possibilities are endless. There are food trucks that are parked inside hospitals. I’m not saying the truck is outside of the hospital; I am saying the truck is inside the actual hospital, supplying anxious patients with food and drinks as they await test results and doctors’ appointments.
Better yet, food trucks can reach locations that would be inaccessible to restauranteurs otherwise. As a case in point, every time there is an event near the pyramids, where construction is prohibited, you will find plenty of food trucks spoiling the event’s attendees with scrumptious sandwiches and flavorful fries.
Unfortunately, brick-and-mortar stores have none of that luxury. Either you make a wise decision early on and choose a location with plenty of foot traffic, which will cost you in terms of rent, or you try your luck in a more desolate place, knowing full well how that will impact your sales.
5. Food trucks allow for so many different options.
One of the greatest things about food trucks is their versatility.
For instance, back during the heydays of the Corona pandemic, when we were all locked in our homes and restaurants had to shut their doors, food trucks could still operate. However, they mostly operated as a drive-through establishment, taking orders and serving food to customers who never had to get out of their cars.
On the other hand, seeing as life is somewhat getting back to normal these days, many food truck owners want to give their customers space to dine. That is doable: with a few chairs and tables, you could have an outdoor seating area in no time, and, voila, you have yourself a dining area.
There is also room for creativity when it comes to the design of the truck itself. You can come up with such a creative concept that customers will be drawn to you. And, no matter what you choose to sell, there is a truck out there that can satisfy your needs and get you on the road to success.
Figuring out the next step…
We hope we have given you enough reasons to take the leap and feel excited about having your very own food truck business. Just remember to put in enough planning, prioritize the quality of your food, and you'll be well on your way to owning an entire fleet of trucks in no time.