How to Write a Food Truck Business Plan
The Food Truck Industry is a growing trend across the US for several reasons. First, food trucks often travel in caravans ranging from 15 to over 50 food trucks at a location. A large amount of food trucks usually attracts a large crowd as well.
This is because of the novelty of a trip to a food truck caravan. A second reason for the popularity of food trucks, from the perspective of restaurant entrepreneurs, is that they are often cheaper to start as compared to brick-and-mortar restaurants. However, the lower startup cost allows for more competitors. A final reason that the food truck industry is so popular is because of the quality of food. Food truck operators often specialize in a limited menu due to their confined work area. This constraint often leads to a limited menu containing food items that are well prepared using high-quality products. As a result, customers enjoy a better dining experience as compared to other quick services operators. Because of the high popularity of food trucks, food truck business plans are needed for established and startup organizations. With this said, there are a few tips and tricks to use when writing a food truck business plan (10/21).
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Executive Summary for a Food Truck Business Plan.
In the executive summary section of the Food Truck business plan, make sure to first discuss what type of business your organization will be. Food truck operators usually establish a limited liability corporation. This type of business structure often protects the business owner from personal liability if a food truck customer is hurt or otherwise. Also, in the executive summary section, make sure to discuss how your business will look and feel for customers. For example, some food trucks cooked to order their products to ensure customers have the hottest and freshest meal available. Other food truck competitors may incorporate innovative designs on their carry-out bags or containers. Regardless of which strategies are embraced to ensure differentiation and an outstanding customer experience, make sure to document them briefly in the executive summary section of your food truck business plan (10/21).
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Company Information for a Food Truck Business Plan.
The company information section of a Food Truck business plan should start by explaining the problem that the company will solve for the client, then address the “Who, what, where, when, why, and Hows.” For the who section, make sure it includes the name of your company, owner, and any consultants that you may have relied upon to start up your food truck company.
The what section of a food truck business plan should discuss your menu items. Some food trucks will specialize in pizza. Whereas other food trucks might embrace the American theme with hamburgers, hot dogs, and French fries. Regardless of the product, make sure to explain in your business plan menu items and possibly tie in how your food truck design will align with your menu item selections.
The where segment should discuss your commercial kitchen usage, possibly the storage area for your food truck, and your geographic area where your food truck may service. Our business plan writer has seen food truck service select establishments like nightclubs or bars. Other food trucks may embrace the caravan philosophy and travel to different areas for events. Still, more food trucks love to cater. In your business plan, make sure to discuss this information in detail.
The why a portion of a food truck business plan should address the problem that the food truck solves for its customers. Some food trucks offer a unique cuisine, which is high in demand for customers. Other food truck organizations seek convenience as a problem solver.
How the section should discuss your business operation in regards to business channels. For example, discuss your suppliers for products, how your products will be prepared, strategies for identifying potential food truck setup locations, and even discuss how your meals will be presented to the customer. This portion of your food truck business plan will allow the reader to envision, succinctly, the totality of your business operations.
Product Description for a Food Truck Business Plan.
Food Truck businesses generate revenues from selling menu items to customers. This segment is where you go to significant details about your food truck menu offering. Not only should you explain the different items that may be on your menu. But also include in your food truck business plan the ingredients for each menu item. Finally, after your menu is defined in the discussion, possibly offer a discussion about why you have selected these menu items and include a disclaimer stating that menu items could change based on customer feedback or product availability. Just to be on the safe side.
Competitive Advantages for a Food Truck Business Plan.
The Food Truck industry has been growing substantially over the last several years thanks to the novelty of the food truck concept. Most food truck operators differentiate themselves from competitors based on menu items. Other food truck operators will differentiate through truck design or layout. Regardless of how a competitive advantage is established, especially in this industry, your competitive advantage must be well-defined and obvious. Not only should a competitive advantage we discussed but also possibly tie in how the competitive advantage will be aligned with your mission and vision statements.
Location Description for a Food Truck Business Plan
The location of a new food Truck facility is critical for the success of the business. For the interior of the business, every square inch of a food truck should be utilized because of the cramped quarters of the facility. Also, consider having a trailer for dry supplies. From this, business owners for food trucks should have a written layout of where different items will be and ensure their accessibility during high volume times.
As for the general location of the food Truck facility, our business plan writer has found that these types of businesses do well in locations near festivals or other gatherings. Large gatherings tend to be a great location for food trucks. Large gatherings may include Fourth of July festivities, New Year’s celebrations, and even pet-based events. Depending on the business model, the general location for a food truck may also be at large private parties or corporate events.
Target Market for a Food Truck Business Plan.
A common target market for a food truck competitor would be pre-planned city or subdivision events. Popular events may include holiday parties, block parties, or other types of gatherings. In these types of settings, a food truck competitor's target market would include visitors to the festivities as well as organizing parties. In addition, some food truck operators may also wish to also target businesses or individuals posting private parties. Regardless of which target market, make sure to follow up your target market discussions with specific strategies (12/21).
Industry research for a Food Truck Business Plan
Based on quick research from our business plan writer, the main industry in which food Truck competitors compete is the street vendor industry. The food truck industry had approximately $3.4 billion in sales last year. In the last five years, the average growth rate annually for the food truck industry was about 4%. Industry experts project that the food truck industry growth should lower to approximately 1.5% next year. This indicates that the food truck industry is entering its mature business phase cycle. Oftentimes, in the cycle, more competitors are entering the market as compared to industry growth, which leads to lower profits for all involved. Projected profits for next year in the industry are about $195 million. Wages for the industry have reached over 150 million in the last year. Food trucks in the US now exceed 66,500 entities and growing.
An important reason that food truck popularity is increasing is due to competitors' ability to accommodate customers changing needs. For example, small food truck operators may add or remove menu items continuously until their target market is optimally satisfied. This type of change is often not present in an established brick-and-mortar restaurant. A challenge for this industry would be based on regulatory initiatives. As more food trucks into the market, local and state legislative branches will continue to add laws and regulations to better regulate the industry. This will lead to more costs for food truck operators to stay compliant.
Owner and Management Section of a Food Truck Business Plan
Owning and managing a food truck business is quite different from other organizations. This is because food truck owners change rather quickly. Our business plan writer has found that when a food truck operator establishes a solid revenue stream, they often prefer to sell their operation for a significant profit. This leads to a food truck changing hands several times within a decade. From this, make sure to outline your own strategy in your business plan. If you intend to hold onto the food truck until he retired, then great, but make sure to put it in your plan.
Funding Request for a Food Truck Business Plan
Starting in the Food Truck business is actually quite expensive. Business owners need to purchase the actual food truck, outfit it with restaurant equipment, and then wrapped the truck for advertising purposes. With this said, in the funding request section for a food truck, make sure to start with the purchase of the actual food truck. Then, construct the funding section based on equipment, inventory, and fuel usage. By following the structure, a well-structured food truck funding request may be had for your business plan.
Financials for a Food Truck Business Plan.
Financial projections and financial models for a Food Truck business plan should first start with the number of food truck events that will take place in a month. Once this is identified, then a financial model should be constructed based on inventory items and associated variable costs. With this complete, a business owner may be able to determine the number of guests they will serve at each event. The last step would be to multiply the average customer ticket by the number of events to determine the monthly revenues, variable costs, and profits for the food truck. After this is complete, the business owner could then expand this financial model to include quarterly profit and losses as well as annual food truck financial projections.
Hopefully, these insightful tips and tricks for writing a business plan were helpful. As always, if you need help with a business plan or financial projections, just send us an email or give us a call.
Author: Paul Borosky, Doctoral Candidate, MBA., Author
Owner of: Quality Business Plan, Quality Business Consultant.
Date: 7/1/2022