Food Trucks: Coming to a Town Near You?

Should the bricks and mortar foodservice industry and its state restaurant associations extend the “welcome wagon” to food trucks or are they really just a “Trojan Horse?” As I did my research for this article, two things became readily apparent. First, there really isn’t enough empirical data yet to answer the opening question and, second, it really depends on to whom you talk– and who you believe.
 

Over the last year, there has been an upsurge in interest in food trucks. From independents to chains, from Atlanta, GA, to Washington DC and San Francisco, CA, food truck numbers are ,growing like a tsunami. So I decided to seek answers to two of the most pressing questions.
 

Start-up costs for food trucks vary widely. I found estimates ranging from as little as $15,000 to as much as $120,000. Costs depend on whether operators lease or buy their trucks, what size vehicle is required, equipment selections and the types of food that will be served. In short, starting a food truck business is not as "cheap" as it might appear. Of course, launching a food truck is less expensive than opening a restaurant, but a large amount of capital is still needed. Profit, as a percent, seems to vary widely, from as little as 15% to some food truck operators reporting profits as high as 50%. 
 

But how does food truck revenue  compare with traditional restaurants? According the National Restaurant Association, average unit sales are $867,000 at full-service restaurants and $715,000 at quick-service restaurants.

 

A recent article on Quora.com (http://www.quora.com/Brian-Roemmele), divided food trucks into three categories: High end, middle market and entry market. The author’s research estimated that high end food trucks average around $20,000 a month in sales, with middle market trucks at $6,000, and entry-level food trucks at less than $5,000. Clearly, food trucks can be quite profitable.

Another factor that will certainly affect the future of food trucks is the wide variation in the regulatory environment from community to community and state to state. The fact is that this is still an evolving area of law and regulations. How this evolves will have a direct effect on the profitability of food trucks. Whether it will result in a level playing field for bricks and mortar restaurants is still unknown. Some cities, like San Francisco, are leading the way in establishing strict guidelines for food trucks, regarding everything from territories to food safety. The Restaurant Association of Washington DC, recently published an insightful piece on key considerations entitled Inside D.C.'s Food-Truck Wars - How some of Washington's most powerful interests are trying to curb the city's most popular new cuisine, written by Tim Carman.
 

In the article, Carmen wrote, “Now, like in Brooklyn and Los Angeles and every other city where mobile vendors represent new competition, the District’s inline businesses are turning to the legislative process to ease their pain. Thus when it comes to the street-food options, you may not have the ultimate say. Lawyers, lobbyists, social-media activists, councilmembers, and business owners are all working the levers of power to determine what rolls your way for lunch.”

Which brings me back to my opening question – “Welcome Wagon” or “Trojan Horse?” Only time will tell.