7 Steps to a successful business plan for your food truck
Starting a successful food truck business requires a carefully written business plan. A business plan is a document that outlines your goals, strategies and financial estimations.
One of the main reasons why food trucks fail is unexpected costs due to poor planning. However, you can make a smart food truck business plan with the right preparation. Good planning increases your chances of running a profitable business.
There isn't a single method that works for all small businesses. Following these steps will position you on the right side of the food truck success rate:
Table of Contents
1. Summarise your business plan
The best way to start your business plan is to write a summary of your goals and methods for achieving them. This is called the business plan’s executive summary and should describe the general structure of your business.
Start by writing a description of your food truck concept. Discuss what makes it unique and include information on how you can use this to earn a profit. For example, explain what kind of food you want to serve and why.
Next, describe your target market, covering its size, features and buying patterns. You should have a clear idea of your ideal customer so you can decide how to serve them best. You may want everyone to enjoy your food, but some are more likely to than others.
Finally, outline your business objectives clearly, as well as your plans for business growth. Include a brief financial summary highlighting your estimated revenue, costs and profitability.
You should also summarise the competitive advantages and strategies that sets your food truck apart from others. This shows that you have thought carefully about your plan and looked into gaps in the market you could fill.
You should not feel pressured to make the first version of your draft perfect. Executive summaries may be the first part of a business plan, but they are usually the last section to get finalised.
As you do more research, improve the executive summary for your food truck to make it as competitive as possible. It should be able to convince potential investors and financial lenders that your plan is likely to succeed.
2. Do a market analysis
The food truck market is diverse. Every region offers different food traditions and customer preferences. You’ll need to gather data and tailor your business plan to the specific market you aim to serve.
A good market analysis includes:
- industry data
- market trends
- consumer statistics
- competitor research
- options for pricing structures
When doing research for your food truck market analysis, it’s important to look at the best available data. Here are some tips for making sure you have the right research:
Find food truck industry data
You must thoroughly research your local food truck industry so that you can create a realistic market analysis. Knowing your own target region is, of course, the most important. You could try looking at different regions to see what is, or isn’t, working.
Government agencies often publish data they collect on the food service industry. These are often available online for free. Data from government sources is usually the most reliable.
You can also find information through food industry reports and trade associations. Some of these may require membership fees, but the value of learning from your peers is usually worth the cost. If you don’t want a membership, there are often summaries available at a small fee.
Another great resource is to visit any competitors in your area. Take note of what they are doing well and consider things that they could do better. Perhaps their service is lacking or waiting times are too long. This will give you an idea of what will make customers return over and over again.
If you’re willing to pay, working with a market research company takes most of the work out of analysis. Professional researchers have access to tools and resources that can provide a detailed report describing your local market.
Whatever method you decide to use, do not skip this step. Gathering information on market trends, growth rates and competition in your area will help you build a better market analysis.
Explore food truck customer demographics
It is essential that you understand your audience if you want to succeed. Research the features, preferences and eating habits of your potential customers. This will help you tailor your menu, pricing and marketing strategies to meet their needs.
You can use many of the same sources mentioned above for finding industry data. However, there are also other options for learning more about your customers.
Social media can be an excellent source of information about consumer preferences. Look at the social media accounts of other local food trucks and see what people are saying. You can even create your own online surveys and ask whatever questions you want.
You can also network with your local community by attending relevant forums and events. If you prefer in-person interaction over online research, this may be a good option for you. You should not neglect any hard data. Personal experience isn’t enough for good market analysis.
3. Plan your menu
When are you finished doing your market research, you can decide on a menu. Your menu items should fit your business theme but also provide variety to cater to more tastes. Consider using local ingredients and popular food trends to serve your customers their preferences.
You will also need to do a cost-price analysis of all your menu options. This allows you to make sure they are worth featuring. This involves calculating the expenses and profits from each recipe.
Here are the steps for doing a cost-price analysis:
- First, figure out how much of each ingredient you need for one recipe. After that, find out the price of buying each of these ingredients whole. You can use this price to calculate the cost of the amount the recipe needs.
- Once you have worked out the price of your recipe’s ingredients, it's time to add in the labour costs. Calculate how long it takes to prepare the dish from start to finish. Then, work out the price of paying an employee to work that long.
- Add your ingredient and labour costs together to get your total recipe cost. If the recipe serves more than one, divide the cost by the number of servings to find the cost per serving.
- When you know the cost of making a dish, add your markup rate to get your final price. This should be based on your profit margin goals. The price of each menu item must cover the cost of making it, plus a bit extra, to earn a profit.
4. Write down your organisational plan
A good organisational plan describes your business goals and steps for achieving them. Common goals include profit targets, product launches and business growth. Include both long and short-term goals and how you will measure your progress.
Organisational plans also specify the roles and responsibilities of each team member, including yourself. You may be the only employee, or you may want an operation that includes a chef, server and other staff. Explain how each employee’s daily operations help achieve your business goals.
Make sure you provide details on things you need to run your food truck. These include your vehicle, commercial kitchen equipment, food ingredients and tableware. Don't forget any necessary permits and licences.
“Make your plan very detailed and specific so that anyone can read it and understand how your business will work.”
It is normal to change organisational plans over time. You should always measure your goals and performance to find ways to improve. Updating your plan to respond to market changes is a good way to keep growing your business.
5. Research potential locations
The success of a food truck relies heavily on its location. The great advantage of a food truck is that it is mobile and not stuck in a single place. This means there can be a whole list of potential food truck locations.
As a food truck owner, foot traffic and parking availability should be your top priorities. Some of the best food truck locations are near offices, tourist attractions, city squares and public transport stations. You can also take advantage of increased traffic near local events.
Consider the best time to serve each location. For example, a public park may attract many people during the day but will likely get quiet at night. Set your schedule around peak traffic hours at your chosen location.
Potential locations that benefit from street food options include farmers' markets, sporting events and festivals. You should also consider areas that are close to schools and businesses.
Remember to research the local regulations and necessary permits for each location you plan to serve from. Many places need you to have a permit to sell there so research this online.
Common food truck requirements include:
- parking permits
- street trading licences
- mobile food vendor permits
- health department certifications
Violating legal requirements can result in fines or even business closure. Protect your business by learning the laws of any area you plan to serve food.
6. Create a marketing plan
In this section of your business plan, you should have a food truck marketing plan that explains your marketing ideas. Describe your target audience and strategies for reaching them.
A solid food truck marketing strategy pays for itself by attracting customers and increasing sales. Have a look at both online and traditional marketing strategies to see what is the most affordable to you. Traditional strategies include flyers and advertisements in local newspapers.
When planning your food truck marketing strategy, consider creating a social media presence and other digital options, like websites and newsletters. These offer good value for money and can be scaled up as needed. Social media marketing in particular is often a quick and affordable option for small businesses.
Partnerships with local businesses, attendance at food festivals and online food delivery platforms are also effective and creative options. Make sure you clearly define your unique selling points in all your marketing efforts.
7. Form your food truck financial plan
The financial plan for your food truck business should also include the business costs, estimated revenues and the potential for profits. A good financial plan will have a big impact on your cash flow.
Begin by calculating your startup costs. Include things like: your food truck, initial inventory, licences and permits, marketing expenses and your vehicle’s insurance and registration.
The tools in your kitchen can have a big impact on efficiency. Unless your food truck has a full kitchen, you’ll need to find some durable machines and appliances. Look for options that provide both quality and are affordable.
Here are some of the important items your food truck may need a:
- : that allows you to prepare multiple dishes at the same time
- : for cooking quickly, and with a small size that's easy to fit in a truck
- : for quickly toasting and grilling sandwiches and paninis
- : to defrost frozen goods quickly and speed up food preparation
After planning your start-up costs, estimate your ongoing expenses. These include food resupplies, staff wages, fuel and vehicle maintenance.
You must consider all these expenses when calculating the cost price of your menu. The cost price is the amount you must spend to make each sale. Considering ingredients and labour is not enough.
It includes the gas or electricity, and equipment maintenance. Your sales must also cover your overhead expenses – the cost of operating your business.
Understanding cost prices is the first step to deciding your selling prices. Your profit margin goals and local competition also influence how much you can charge. Your prices must be high enough to turn a profit but low enough to remain competitive.
According to business software developer Lightspeed, the average food truck profit margins are 6-9%. Consider this industry average when making your estimations.
After setting your prices, you can estimate what your earnings might be. Think about your potential customer volume and the average sale value of your menu. Based on your possible expenses and revenues, determine when your profits will equal your costs to get your “breakeven point”.
Finish your financial plan by setting realistic sales targets for becoming profitable as soon as possible.
—
Launching and running a food truck requires passion, dedication and a keen business sense. With a well-crafted business plan, you can confidently explore the challenges and opportunities that come your way. So, take the time to research, analyse and plan carefully. Set yourself up for a successful journey into the delicious world of food trucks.
Do you know if you have what it takes to run a food truck? Find out if this challenging industry is for you in “Do you have what it takes to run a food truck?”