Is a food truck a good investment? 5 reasons, and the risks
Thinking about a food truck? You probably want to know whether it is profitable, what it costs and how much risk you take on. Here are five reasons food trucks can be a good investment, and the risks to weigh.
A short history of food trucks
Food trucks are newer in the Middle East, but they are not new. In 1866, a Texas cattle rancher named Charles Goodnight fitted out a wagon with a kitchen to feed his cowboys on long cattle drives. It was called the chuck wagon.
For a long time after that, trucks were about speed, not taste. That changed in 2008, when the Kogi truck started selling Korean barbecue tacos in Los Angeles and posted its location on social media. Fans followed it around the city. Since then, the best trucks compete on food, and social media is how customers find them.
5 reasons a food truck can be a good investment
1. It costs less to start
A truck usually needs far less money up front than a restaurant. You do not pay key money, a large rent deposit or a full fit-out. Your main costs are:
- The truck itself, new or used.
- Kitchen equipment: grill, fryer, fridges, extraction.
- Power and cooling: a generator and air conditioning for the team inside.
- Branding: the wrap, signs and menu boards.
- Licences, insurance and permits.
Get at least three quotes for each item. Prices change fast, so use current quotes, not old estimates.
2. It costs less to run
Two or three people can run a truck. A restaurant needs cooks, servers, cleaners and a manager. Repairs on a truck are usually smaller jobs too. Lower running costs mean you break even sooner.
3. It is easier to exit
Any new food business can fail. If a restaurant closes, most of the money spent on rent and fit-out is gone. A truck can be sold. You will not get all your money back, but you keep part of it. That makes the risk smaller.
4. You go where the customers are
Park near a university in the morning and at a sports club in the evening. Sell at festivals, beaches, offices and winter camps. A truck can trade where no restaurant can be built. A restaurant has to pick one location and live with it.
5. You can change your format
Serve from the window, set up a few tables outside, cater a wedding or run a pop-up. You can also test a new concept or a new area before you commit to a restaurant.
The risks to check first
- Permits: many cities limit where and when trucks can trade. Check with your municipality before you buy.
- Weather: summer heat in the Gulf cuts footfall at outdoor spots in the middle of the day, and the kitchen gets very hot. Plan your hours and your cooling.
- Space: a small kitchen means a short menu and limited stock. Design the menu for the truck.
- Location: the right spot can change every week. You need a way to tell customers where you are today.
- Resale: what you get back depends on the truck’s condition. Keep it well serviced.
Your next step
Plan carefully, keep the menu short and put the quality of the food first. Then give regulars one place to find you and order: a simple ordering website with your menu, today’s location and your hours.