Are Food Trucks a Good Investment? What Experts Say

Are you on the hunt for low-cost business ventures you can start on your own?

If you’ve researched budget-friendly startup businesses, you’ve probably come across food trucks, which inevitably leads you to ask: Are food trucks a good investment?

Food trucks are a good investment if you have the startup capital and the time to run a successful food truck business. Food trucks have become a greater investment over the past decade as the demand for quick and convenient meals has grown.

You don’t have to take my word for food trucks being a good investment. In the rest of this article, I’ll back up my claim with supporting evidence and dive into related topics like the advantages of food truck ownership, how to start a food truck business, and some popular food truck menu items.

Food Truck Business Financial Breakdown

I can’t in good conscience claim food trucks are a good investment without breaking down the money side of food truck ownership.

I’ll compare the food truck’s startup and monthly maintenance costs against the amount of money food trucks make below.

What’s the Cost of Starting a Food Truck Business?

The cost of starting a food truck business is between $28,000 and $114,000 in the United States. The startup cost figure of $28,000 to $114,000 includes the cost of the truck, business license, insurance, inventory, a point of sales system, employees, and marketing.

Here’s a chart on the costs of starting a food truck in more detail:

Startup CostsApproximate Amount in US Dollars
Insurance$3,000 annually
Initial cost of inventory (food product, napkins, utensils, etc.)$1,500
StaffOne employee at $15 per hour = $2,400 per month per employee.
Food truck$50,000
Business license and permitsAbout $500 – varies greatly depending on location.
Basic point of sales system$1,000
Marketing (website, ads, merch, social media posts, etc.)$1,000 – $2,000

The table above shows the Costs of Starting a Food Truck Business

As you can see, the highest cost by far is the actual food truck. Experts say the average food truck will cost about $50,000, but you can find some cheaper alternatives to a food truck.

What Are Cheaper Alternatives to a Food Truck?

The cheapest alternative to a food truck is a food cart which costs about $10,000. Another cheaper alternative to a food truck is a food trailer which costs about $25,000. Unfortunately, if you go with a food trailer, you will need a vehicle strong enough to tow the trailer, increasing costs.

Food carts are by far the cheapest alternative to food trucks. Not only are food carts about one-fifth the price of a food truck, but you’ll also save a fortune on gas prices.

Food carts can be transported using fuel-free transportation like a bicycle, whereas trucks and trailers require gas to move.

How Much Does It Cost To Run a Food Truck Monthly?

The monthly cost of running a food truck varies from $3,000 per month on the low end to $10,000 on the high end.

The cost of running a food truck varies so widely because different locations have wildly different operating costs.

Here’s a detailed breakdown of the standard monthly costs of running a food truck business:

Monthly Costs of a Food TruckApproximate Amount in US Dollars
Insurance$250
Cost of inventory (food product, napkins, utensils, etc.)$1,500
StaffOne employee at $15 per hour = $2,400 per month per employee.
Truck maintenance$250
Marketing (website, ads, merch, social media posts, etc.)$1,000 – $2,000
Cooking and driving gas$600 ($300 each)
Miscellaneous (WiFi, replacing broken equipment, some POS systems charge monthly, etc.)$500 – $1,000
Parking$500 – $1,000

The table above shows the Cost of Running a Food Truck Business per Month

The biggest contributor to a large monthly food truck cost is employees. If you can run a food truck with yourself as the only employee or a business partner as the second employee, your operating costs will decrease significantly.

How Much Do Food Trucks Make?

Food trucks in high-traffic areas like New York City make between $20,000 and $50,000 in sales per month. Food trucks in smaller cities make between $5,000 and $15,000 in sales per month. However, you should also account for your income after expenses.

What is the Profitability of a Food Truck Business per Month?

An average food truck with one employee in a smaller city will make about $4,000 worth of profits per month. Food trucks in a larger city can make far more at $25,000 in profits per month, compensating for the greater cost of living.

Here’s a quick breakdown of my profitability calculations:

A reasonable monthly cost of a small town food truck is about $6,000, including the cost of one employee.

If we take the average earnings of a food truck in a smaller city, $10,000, we can calculate the profitability by following this easy formula:

Earnings Expenses = Profit
10,000 – 6,000 = 4,000

I added an additional employee to the roster for the big city food truck and bumped up the general expenses by an estimated $10,000 in monthly costs. Then I took the average of the big city earnings, which is $35,000. Let’s plug these figures into our profitability formula:

Earnings Expenses = Profit
35,000 – 10,000 = 25,000

Now that you can see how I arrived at the profitability of a food truck, you can use your local figures to find how much you’ll probably make from your food truck.

How To Start a Food Truck Business

Here are 6 easy steps you can follow to start a food truck business:

  1. Perform market research. Your first step in any business venture is market research. Ask yourself questions like: Are there competitors? Where are good food truck locations in my area? When in doubt, do a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis of your competitors.
  2. Pick your concept. If you don’t know the cuisine you want your food truck to offer, you can skip ahead to the “building your food truck’s menu” section of this article.
  3. Write a business plan. Your business plan should include your startup costs, projected revenue, marketing details, a SWOT analysis, etc. As its name implies, a business plan should include every important detail about your business.
  4. Fund your project. Your next step is coming up with cash. Hopefully, you already know the importance of saving and have some cash saved. If you don’t have cash saved, you can find independent investors or start saving money today with these nine easy tips.
  5. Buy your supplies. With all the details ironed out in the business plan and your startup cash secured, you can begin purchasing your essentials. Start by purchasing your licenses and permits, food truck, and supplies. Finally, you can hire employees.
  6. Market your business. Using the marketing strategy in your business plan, begin marketing your food truck. If you don’t know anything about marketing, I recommend learning how to create a winning personal brand and then using your new skills to run your food truck.

Once your marketing plan begins, you’ll start to see customers at your food truck!

The Advantages and Disadvantages of a Food Truck Business

You may be thinking, “this article is pro food trucks.” You’re not wrong! I’m a huge food truck fan, but I’m also a realistic business analyst. Every business has advantages and disadvantages, and food trucks are no exception.

What Are 3 Advantages of a Food Truck Business?

Here are three advantages of a food truck business:

  • Low startup cost. Starting a food truck isn’t cheap, but it’s far easier on the bank account than opening a restaurant. Starting a restaurant can cost up to $750,000, whereas the top end of a food truck startup is $114,000.
  • Mobility. You can easily take your food truck to different locations and find the most profitable place to set up shop. Restaurants aren’t afforded the same luxury of mobility.
  • Growing market. Pre-COVID-19, the food truck industry grew by 7.5% annually, indicating that food trucks are a booming market. 

What Are 3 Disadvantages of a Food Truck Business?

Before you drop $50,000 on a food truck, we should look at three disadvantages to balance out the pros:

  • Low success rate. It’s tough to find success within the food industry. Reports show that only 40% of restaurants last past three years of business. Therefore, you need to have a Plan B in case your business doesn’t work out as expected. 
  • Confined workspace. If you want to cut costs by working the food truck yourself, you may find yourself in a claustrophobia-inducing job. Food trucks are small, so you’ll be working long hours in a confined space.
  • Licensing is a nightmare. When you open a food truck, the licensing situation is a nightmare because you have to deal with restaurant and automotive licenses. Restaurant licensing is particularly nightmarish because you must comply with high food standards in a confined moving space — not an easy task, by any means!

What Is the Success Rate of Food Trucks?

The success rate of food trucks is about 40%. Food truck success data is estimated to be similar to the restaurant success rate. Therefore, since 60% of restaurants close within the first three years, we can assume that 40% of food trucks do not close within three years.

Where Are Food Trucks Most Successful?

Food truck experts have found the most successful cities to run a food cart are Portland, Orlando, Denver, Indianapolis, and Philadelphia.

The most successful locations within cities are nearby business districts, bars and clubs, and school campuses.

Building Your Food Truck’s Menu

The most crucial step in starting your food truck is picking your cuisine. Crafting a winning menu comes down to market research.

When you’re thinking of what kind of cuisine you want to offer, look at what your competitors have. Additionally, check out what successful restaurants in your area are selling.

Getting a feel for what kind of food sells in your local market will give you the best information for what you should include on your menu.

How Many Menu Items Should a Food Truck Have?

Most food truck menus should have between five and twelve items on their menu. A range of between five and twelve gives customers a reasonable selection while keeping your menu small enough to handle in a small kitchen.

What Is the Most Popular Food Truck Item?

The most popular food truck item is hamburgers. Hamburgers are a staple of the American food truck menu. The most popular food truck cuisine is barbecue, including food items like pulled pork, brisket, and ribs.

If selling BBQ doesn’t seem like your style, here are a few more popular food truck cuisines:

  • Desserts. Dessert items like cupcakes and cookies make great food truck items.
  • Mexican food. Taco trucks are a staple of the Los Angeles food truck scene, and the trend is beginning to spread across the country. There has never been a better time to start a Mexican cuisine food truck!
  • Indian street food. India pioneered the food truck industry. Being at the forefront of the food truck industry means there’s a wide variety of popular Indian street foods like samosas, Pani puri, and puchkas.

What Is the Most Profitable Type of Food Truck?

The most profitable type of food truck is barbecue food trucks that offer hamburgers. Hamburgers are America’s best-selling food item, so selling burgers from your food truck will attract more customers. Additionally, burgers have a strong profitability margin of 15 to 18 percent.

Final Thoughts

Food trucks are a profitable business on the whole, although running them is no easy task. Restaurants are among the most competitive business environments, making for a high food truck industry failure rate. Thankfully, if you can keep your food truck business afloat, they are a profitable long-term venture.

If you’re hoping to learn about starting a similar small business, I recommend checking out $5000 Per Month? Here’s How Much Ice Cream Trucks Make!

About topworklife.com

Hi’ my name is Simon. I am the owner of Top Work Life.

Together with a my team, I write content about income generating ideas, entreprenurship and growth as a person

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