Food businesses have been changed tremendously over the last several years. Although there was a time in which owning a food business meant you needed a huge facility and a ton of equipment to succeed, times have changed. Today, food trucks are all the rage and there are many investors now betting on the industry’s success. For startups, this means easier access to funds – but before you can strike a deal, you’ll need an effective food truck business plan.
Food truck business plans share many of the same elements as a plan for a restaurant, but there are several special considerations that must be addressed. In this post, we will explain how to write a fantastic business plan for starting a food truck.
The State of the Food Truck Industry
Although still claiming only a small chunk of the $799 billion restaurant industry, the food truck industry has grown rapidly over the last decade. Food trucks, which had very little popularity outside of a few cities in 2008, have grown to generate over $2.7 billion in annual revenue (as of 2017).
Food trucks are much easier to launch than a full restaurant. However, bringing a food truck concept to life still isn’t quite as simple as many expect. These complexities need to be addressed in your food van business plan.
According to studies by Food Truck Nation, starting and maintaining a food truck for one year requires entrepreneurs to complete 45 government-mandated procedures and spend over $28,000 on legal compliance, on average.
This doesn’t include the cost of the truck itself, equipment, staffing, food costs, or marketing. All in, an entrepreneur can expect to spend upwards of $125,000 just getting to the first day of launch. It’s no surprise that so many food truck entrepreneurs seek the capital of investors to get their idea off of the ground.
Food Truck Business Plan – The Format
Download our winning food truck business plan template here!
To ensure that your food truck plan includes all the necessary information, it is best to use a standard format. The following food truck outline will ensure that you capture each area that an investor will expect to see.
Executive Summary
A food truck business plan executive summary is the most important section of your entire document. Although it appears first in the food truck business proposal, it should be written last – after every other section has been completed.
To create a strong executive summary, you must explain all the most important points of your food truck business while maintaining minimal length. An executive summary should be one page ideally, but should definitely never exceed two pages.
The goal of a food truck business plan executive summary is to persuade readers to continue reading the document. Give them enough information to build their interest, but not so much that it becomes hard to digest.
Company Details
A food truck company description should be thorough. Keep in mind that food trucks are still rather new. Some investors won’t understand the business behind food trucks while others may not even know what food trucks are!
Be sure to explain how you came up with your concept. Describe the different food products that you will serve and the experience that you will deliver to customers. Finally, showcase the key success factors – the specific elements that you must overcome to ensure that your food truck venture is a success.
Industry Analysis
While the food truck industry has grown tremendously throughout the country, many street food businesses fail. Unfortunately, the model doesn’t work for every food concept or in every city.
Don’t just assume that you’re making the right decisions. Instead, use data to prove the validity of your concept. Research your launch area to get an understanding of how many potential customers exist, how much money is spent on food truck products, and what portion of the market you can realistically capture.
Customer Analysis
Food trucks are frequented by a variety of people and different types of customers. Knowing who your customers are is important for establishing a customer advantage in your food on wheels business plan. The better that you understand your customers, the more effectively you can serve them.
Perform a customer analysis. Give your ideal customer a name and describe who they are. Where do they work? How old are they? How often do they eat out? Of the times that they eat out, how often do they frequent a food truck? What kinds of foods do they enjoy?
When you know exactly who your customers are, you can locate and sell them! By completing a customer analysis process, you can prove to investors that the locations you have chosen are best for finding and serving your customers. In a food truck or street food business plan, the customer analysis section is critical to proving your potential for success.
Operational Strategy
Even if you manage to get your food truck running and can get customers to it, bad operations can lead to quick failure. Your operational strategy should describe exactly how you will manage your business on a day-to-day basis. Here are some questions you should answer in this section:
- Where will you locate your food truck?
- How will you manage supply and inventory?
- Will you use a food commissary?
- How will you manage quality?
- How will you manage customer service, complaints, and returns?
- How much staff will you need to operate your business and how will they be trained?
Founders & Team
Operating a food truck takes knowledge and experience. Investors want to know that your team has the food experience necessary to make quality meals and the business acumen to run the truck successfully.
Provide a bio of each of the business owners, and even for the team members. Explain why their specific skills and experiences are beneficial to the launch of your food truck business.
Financial Model
The financial model is extremely important. Investors will be curious to know what the financial potential of the business is and how much return they can make on their investment.
Use all of the research you have generated and the strategies you have put in place to create a strong financial model for 3-5 years into the future. Consider things like seasonal changes, potential inflation on ingredients, and future competition as you develop your food truck financials.
Food Truck Business Plan Considerations
In general, writing a startup business plan for a food truck follows the same plan format as any other business. However, due to the specific nature of mobile food businesses, there are several specific considerations that you should make when writing your food truck business plan.
At ThinkLions, we know what it takes to write a successful mobile food truck business plan – we’ve written dozens of them. Here are the three most important considerations our experts recommend when writing successful food truck business plans.
Don’t Underestimate Startup Costs
When writing a food truck business plan, research is critical. There are many variable expenses that you will face that may not be as easy to identify as some of the more obvious fixed costs.
Here are a few costs you may want to research as you write your food truck business plan:
- Commissary fees could cost up to $400-800+ per month if the city requires the use of a commissary.
- Insurance on the truck and business can cost up to $4,000 per year depending on the area of operation, amount of coverage, and etc.
- Initial product inventory including food, plastic silverware, packaging and more.
- Point of Sales (POS) systems to manage inventory and sales.
- Marketing and promotions including online, social media, offline marketing, and more.
- Related vehicle costs such as gas, upkeep, maintenance, repairs, and other related expenses.
Be Different & Memorable
As the food truck scene continues to grow, innovation becomes more common. For owners, this means that the competition is rapidly growing and more options are available for both consumers and investors.
With food truck popularity on the rise, the need to be “special” intensifies. Your lunch truck business plan doesn’t just need to describe another average and everyday street food idea. Instead, it needs to describe a one-of-a-kind opportunity with a true competitive advantage. Whether you’re writing a vegan food truck business plan or a bakery food truck business plan, you can’t succeed without a strong advantage over other food businesses operating in the same area.
Find your unique selling proposition (USP) and use your food truck business plan to showcase your advantages. Complete a thorough competitive analysis to showcase the strengths and weaknesses of your competitors. Furthermore, perform a SWOT analysis to showcase how your food truck concept will stand out among other competitors operating within the same region.
Know Your Target Market
Let’s face it, every person isn’t going to order food from a food truck, and even if they do, they may not purchase from your food truck. That’s okay!
It’s important for you to know who your target consumer is. Perform a target market analysis to figure out what challenges your customers face and what types of solutions attract them. Research deeply to find out how big the market is within the territory that you will be operating. An accurate market sizing analysis will help you make better assumptions on how many consumers you can realistically serve each day. As you’re planning, you can use this market data to minimize assumptions in your financial projections.
Investor Questions – What To Expect
The food truck landscape is still relatively new and some investors will have a ton of questions. As an entrepreneur, you’ll need to address these questions in your food truck business plan and be prepared to answer them before a deal is secured.
Here are several questions that you can expect to hear from investors as you seek funding. The more competent you are when answering these questions in your food truck business plan, the better your potential will be for raising the capital you need.
- Why Are You The Right Person for the Task? Investors want to know what makes you uniquely qualified to bring your concept to life. Consider your specific experiences, background, and skills that you have acquired that create a barrier to entry for other new food trucks.
- What Is Your Specialty and Niche Advantage? There are over 3 million food trucks currently serving a U.S. population of 350 million people. In other words. For every 117 people in the country, there is a food truck. Furthermore, your competition doesn’t only include other food trucks. You’ll also face competition from the 1 million+ restaurants that operate throughout the country. To succeed, you’ll need to show how you are special and prove that your niche is strong enough to succeed.
- What Connections Do You Have? When it comes to food trucks, it takes more than a good idea to earn a profit. Food truck success doesn’t just come from the ability to attract hungry workers out to the street during their lunch period. In many cases, food truck owners are able to build connections with corporations and organizations that contract them for events. These types of connections are extremely valuable to a food truck business and investors will want to know what type of relationships you have established to drive your business forward.
- Do You Have Traction? Having a few tasty food items may seem like enough to attract an investor, but the proof is in the pudding. Before writing your food truck business plan, test your product on real consumers. Since you’ve already performed a target market analysis, you should know exactly who your ideal consumers are. You should also know where to find them. Run focus groups and get feedback. Survey consumers and find out how often they would buy your product. Ask them how much they would be willing to spend. The more traction you can generate before seeking funding, the more attractive your food truck startup will be to potential investors.
- How Will You Expand? Having a single food truck is a very limiting investment for a capital partner. Even at maximum capacity, a single food truck has a finite sales potential each day. Investors want to know the long game. What’s next? More trucks? Franchising the idea to others? Consider what path you will take to scale your food truck concept and maximize the potential return for investors.
Putting Your Food Truck Business Plan Together
Writing a food truck business plan doesn’t have to be difficult, but it does need to be intentional. Every part of the strategy should be well-thought-out and assumptions should be replaced with real data wherever possible.
The food truck craze will continue to grow throughout the country. With the right concept and strategy, you can launch your business at this point of inflection. If you need help with your food truck business plan so you can raise the funding you need, we’d love to help. We’ve written dozens of food truck business plans, and we know exactly what it takes to attracts investors. Contact us today to speak with one of our experienced business plan consultants.
