This article looks fairly accurate (for what I understand of the SF market) Things are a fair bit cheaper/easier in Portland. I do actually own a food truck in Portland (as well as a software company).
We made a profit on about three different days last year. The other 300 were not profitable :( It would have helped a lot if we had family members working for chips and hugs; paying staff is a huge cost particularly if you want quality gourmet-style food and hard-working employees (we have mostly 5-star yelp reviews)
Before our pod landlord decided to shut down abruptly, combined with our chef/my girlfriend getting diagnosed with brain tumors, it was costing about $3k/month (net loss) however that's the awful wet northwest winters driving people away from outdoor pods. Once the warmer weather starts back up again and we find a new pod, we should be in the black, but the business model I'm working on involves a lot of carts with a central kitchen, in clusters in a few cities. If anyone wants to chat about investing, let me know :)
We got started for about $20k total including the 'truck' which is actually a trailer that is stationary.
but the business model I'm working on involves a lot of carts with a central kitchen, in clusters in a few cities.
As someone who knows an awful lot about the food truck industry in multiple cities across the US, please, please do not proceed with this idea. Food trucks are not an economy of scale. They are boutique mom & pop businesses.
I am sorry to hear about the troubles with your truck, but I am sure that you can optimize operations to become profitable on most days.
I commented on the article to explain that Portland is pretty different due to the differences between 'trucks' and 'carts.' Obviously a cheaper trailer without high fuel costs makes getting started a little easier, and I suspect our permits are a bit cheaper as well. All that equals more carts out there competing for business.
The interesting thing that I've heard about here in Portland is that at the bigger pods, landlord tenant contracts include agreements not to allow potential competitors to lease, include restrictions on style of food, i.e. landlord not allowed to lease to a second Thai cart on the same lot.
The food in the article and your food seem quite involved and niche (Thai, vegan, Nordic). Does a cart like Potato Champion do better because the food is easier to produce and everybody likes French fries?
I just bought a food truck (literally 24 hours ago) and while I am as new as it gets in the industry what I have learned so far is in line with this article.
We looked into starting a restaurant or event just a commercial kitchen to do catering out of. After much research and searching for a location we changed direction and went with a food truck.
The food truck has several advantages to us. Overall the cost is much cheaper. Also if we were to buy or rent a building and put money into building a kitchen that would be a sunk cost that we could never get back. If we outgrow the truck or decide this isn't the business for us we can sell the truck and get our money back.
A lot of the work does go into figuring out the health department stuff. Ohio is a lot more friendly than some other states but is still an area we have to dedicate a significant amount of attention to.
I used to run my own foodtruck. I manage one now as well as a restaurant, so I have a bit of perspective from both sides of the aisle. Some of the numbers quoted don't really make sense to me, but maybe it's a location thing (I'm in LA, where the food truck industry is plateauing out). 200 orders for lunch is very, very rare here.
Our local food truck association actively addresses regulations that are unfair to foodtrucks on a city by city basis. Most have to do with the local business community trying to prevent foodtrucks from competing with b&m restaurants, usually by getting law enforcement to harass trucks with citations, tickets, whatever they can throw at you.
Do I see the foodtrucks eventually disrupting b&m's? Not likely, but I do see an impact. B&M's have had to be more nimble and creative to keep up, which ends up being a good thing for customers. I have been presented with business models that involve franchising our truck and concept across the country to different groups (ex-military most recently, from what I hear about the Grilled Cheese Truck) as a way to help develop small businesses. This is where I mostly see the similarity to startups. Foodtrucks are more accessible, financially and creatively. One can literally go from concept to launch in less than a month. Try that with a b&m restaurant. The thing is, I also see a high failure rate. (foodtrucks have been dropping like flies here in L.A., mostly during winter). Other similarities or takeaways, which also apply to most other business:
1. Know your market well. Cities have different regulations, population densities, competing restaurants, etc. If you don't have a very very very good awareness of where the bulk of your business will come from, you're doomed. I've seen trucks sprout and die within a month, clueless operators and the inability to pivot.
2. Know your product well and how to sell it. I've seen employees stutter through a dish description, with the potential sale walking away to the truck whose operator can spitfire all the ingredients of each of his dishes without looking up from the slider he's working on.
3. Streamline your operation to deliver your most important product as fast possible and as perfect as possible. Lunch crowds can be harsh. These are people who have limited time and limited budget and (depending on location) almost unlimited choices. If you're the truck who took 20 minutes to serve a rice bowl, you can trust that person is never going back and would most likely drag all their friends to another truck the next day.
Simple 'rules' but you'd be surprised how many operators can't figure this out.
Simple 'rules' but you'd be surprised how many operators can't figure this out.
Most new food truck operators I meet have just bought their first iPhone and are "still trying to figure out this tweetering thing." A lot of techies grossly overestimate the technical capabilities of food truck operators, not to mention performing the due diligence that you mentioned.
This temptation of government to limit the number of X (be it food trucks or cabs) is one of those things I wish would get addressed. It seems more and more we need a small addition to the US Constitution dealing with economic freedom.
don't forget hotel rooms ( airbnb ). I think you're point of frustration is not really about economic freedom, but a recognition of the senescence of our society ( in the US ). As societies get older, literally and population wise, they tend to get more conservative. E.g. it's much easier to be a medical device entrepreneur in India than the US.
There are pros and cons to greater regulation. Established cities like SF, DC, and NYC, limit the number of taxis because there are literal hard limits on all the gov't provided functions around taxi's, including regulation of 'expectation of legitimacy,' and managing traffic congestion. In the case of hotels and to a lesser extent restaurants, there are zoning, housing, and infrastructure investments that cities have made from a gov't perspective and a private perspective that, AirBnB and FoodTrucks throw out of whack. Reading this article you see how much regulation FoodTrucks are now starting to come under, to try and bring their 'perceived' quality in line with that of a restaurant. It's hard to find arguments against this, other than, it is now demonstrably harder to be a new business. The same is not yet happening with airbnb style 'hotel' rooms because there is more money and the players are bigger.
I think the real problem is that the gov't is poorly organized to deal with the wisdom of crowds. I don't need a hotel regulation agency as much for an airbnb type rental because the economic interests of the 'landlord' are such that my 'review' really counts. personally, I'd prefer airbnb, food trucks, and uber to their respective old-world counterparts, precisely for the reason that it's much more difficult for regulatory capture given those de-centralized models. But there are legitimate arguments on the other side, around investment, community goals, and 'safety'. Unit economics in each of these cases make it much harder to systematically screw the customer. Now if only we could disrupt telecom this way, so I can stop dealing with Comcast.
Remember that there are many ways economic logic leaks into the the actions of governments at-large and within the institutions, but I think at the highest level this is an argument against government regulation. The principles of this argument are the same as a Keynes vs. Hayek/Friedman argument. Keynes basically pointed out that sometimes markets don't always adjust quickly, so in these cases there is an economic argument in favor to "helping" the market restore to equilibrium (a "visible" hand).
From macro issues like regulating the financial services sector to micro issues like antitrust and competition policy, consumers like you and I can be made better off via regulation. For example, competition policy is one of the most productive types of government regulation that takes place. Disregarding the DoJ's treatment of online poker [to date], the FTC and the DoJ have been doing some pretty great things over the last few years[1] (e.g. $500 million in fines issued breaking up LCD price fixing scheme; continued effort towards addressing the current and future problems of privacy on the Internet)
In the US, the goal of competition policy is to promote the economic welfare of CONSUMERS, however a good policy would be one that increases the economic welfare of both consumers and producers. Game theoretically, figuring out how to make a policy that increases the welfare of both sides of the market is a mechanism design problem.
[1] Relative to almost all the other sectors of government.
Every time I see a story like this, I'm reminded of that scene in the Fifth Element with the flying car/boat Chinese delivery and (I'm guessing) mobile restaurant.
Still bitter about not having flying cars yet, but I don't necessarily see the mobile service as anything bad. It's just the natural progression of the food cart, some of which, are exceptionally good. In New York, there's a Halal cart on 53rd and 6th and everyone from construction workers to Wall Street types wait in line... and it's all worth it!
That 53rd and 6th cart is a money factory. They charge more than any other halal cart in the city, have 4 employees at all times, and serve you an $8 plate faster than you can order it. It is really good though, although not my favorite halal cart in the city.
Fun fact about that cart is that it's one of the most and best reviewed "restaurants" in all of Manhattan, which is pretty crazy.
Surprising numbers in this write-up. Still does not fully explain why most food trucks are charging restaurant-level prices for their dishes. Yes, the overhead is still expensive but at some point, the consumer has to see the reduced overhead filtered down into their prices.
If it's not faster, cheaper or more convenient than the to-go menu at a traditional restaurant, it sounds like "menu buzz" is the only thing keeping most of these trucks in business. How long can that last?
"the consumer has to see the reduced overhead filtered down into their prices."
I think lack of competition (as described in the article) causes these hyper-inflated prices. If these gourmet organic locavore so-and-so food trucks had to compete in, say, Portland[1], they would have to contend with 30-40 other single-dish trucks in the same pod/lot that provide a heaping, often exotic lunch for 5 bucks.
"If it's not faster, cheaper or more convenient than the to-go menu at a traditional restaurant"
But often it is more convenient. Hypothetically (since I work from home), I would find the food truck at the end of the block of my building to be way more convenient than getting in my car and schlepping to a restaurant (as I would do when I worked at an office).
Or, if you get it delivered, you gotta know what you want in advance, phone them up, make sure you get a drink, wait awhile, tip the driver, etc.
It's a mess. Food truck? Pop down, walk to the corner, buy Korean taco and sugar water. Lunch done.
It's been mentioned already how trucks are most likely more convenient. I mean, you're eating at that truck because it was closer to you or that you saw it and decided to eat there. I believe the reduced overhead thing is a bit misleading. The startup costs may be different, but the overhead is more than likely the same as a b&m. Apples to apples that is.
At most chef driven trucks, you will get food prepared by the chef himself/herself. Some customers perceive a value in this, hence the willingness to pay the higher prices of some trucks.
However, I do agree that the truck and its food will have to eventually provide a value that will keep a customer coming back. $9 sliders are insane. I've seen this play out time and time again at other trucks because the 'fad' and popularity gets to their heads. Some operators of trucks that have become popular really quickly become shortsighted and cater only to the yelpers who are excited about the latest new thing. They fail to realize that their long term viability is dependent on how well they are able to keep a line outside their truck once these early adopters run for another new thing. Good prices, good food, and fast service is key.
Agreed. Every food truck I've visited, from Austin to NYC, had comparable, and often higher prices than a sit-down restaurant or a takeaway place. It's a big let down, because I imagined the food truck movement to be about making good food more accessible (affordable), but now I take it to be more hype and a fad. Once the novelty dies down, I don't think people will keep paying these premium prices and many won't last.
So from your position food has no intrinsic value?
I'm trying to understand the argument. I see it that food has a number of attributes, flavor, dietary compatibility, accessibility, and quantity. And it has a cost. There is an internal 'value' evaluation that is done when the cost is compared to the other attributes which results in a buy/no-buy decision. Sometimes those things are artificially manipulated (like having to buy a $1.50 hot dog at AT&T part for $5 if you want to eat it).
But in all cases the 'cost to produce' doesn't enter into it until you aren't making enough sales to make ends meet. If the food is equivalent between a truck and a restaurant why wouldn't the truck charge a bit more to capitalize on the fact that they are here and if you want it eat it from the restaurant you have to go drive off somewhere to get it?
I don't do food trucks a lot, but when I do I don't have a problem with the price, because. . . my favorites are truly better than the middle-of-the-road traditional restaurants in their (less traditional) niche. . .they are still cheaper than the above-average traditional restaurants in their niche. . .and they are more convenient to my office than their traditional counterparts.
Adding things up it does not look like food trucks are really cheaper day to day. "The rent of their restaurant was $4,500 a month."
Bobby’s family borrows kitchen space in a friend’s restaurant, but commissaries complete with a kitchen, waste disposal, and a parking space run up to $1,000 a month. plus Another expense, for trucks that sell at places like Off The Grid, is the cut they owe to the organizers. Off The Grid charges 10% - something of an industry standard. They also expect vendors to sell a minimum of $1,000 of product over the course of a lunch or dinner period. So if a truck sells with them for lunch and dinner, 5 days a week, they will pay the organizer a minimum of $1,000 per week. which could easily be 6+k in a month.
However, I suspect the available locations are far better.
Actually I read that differently, I read 10% of their sales, they expect $1000 per day in sales so $100 per day, or $500 for a 5 day week. Not a $1000. Also with the fee as a fraction of sales, if you have a slow week with the truck you're out 10% of your slow revenue. But at a restaurant you have to pay the full rent, even if nobody comes in during the week because the Hockey Players are on strike (for example).
Businesses where costs are a fixed component of revenue can price their margin to always be "profitable" but businesses where costs are fixed have to meet minimum revenue goals to make minimum margin. On the plus side in a restaurant if you do a lot more business you get to keep the extra windfall.
However as the article mentions if you are really successful the landlord can up your rent when you renew your lease.
A couple years ago I was privy to a conversation Danny Bowien (mission chinese) was having with a journalist at his restaurant. Danny had already had been getting buzz; and Mission Chinese was about to blow up.. The conversation led to food trucks. What Bowien had to say about the economics of them is that.. They really aren't worth it. You have to purchase a vehicle.. out fit it.. and then you still have to rent at a commissary for food prep + clean up. Plus if you really care about food.. You aren't able to make the best product in a van. Paying rent on a space that has already been outfitted as a restaurant will come out cheaper(depending on decore), and allow you to make a better product.
Hmm, did you read the article? The priconomics guys went into that where they said:
"The costs of running a food truck are relatively modest compared to a restaurent. Phat Thai is mostly a family affair, with only one employee from outside the family. The main expenses outside of labor are $1,000 a week for food and supplies, $200 of insurance, and $120 to fill up the truck’s enormous tank. Its engine is the same one that powered Camaros in the seventies, but even at its terrible gas mileage, a tanks suffices for the week. Bobby’s family borrows kitchen space in a friend’s restaurant, but commissaries complete with a kitchen, waste disposal, and a parking space run up to $1,000 a month. "
Not only does it cost less to start from 0 to operating food truck than it does a restaurant, there is also the fact that you (probably) own the truck so rent doesn't go up. On a tax basis you can actually depreciate the truck which you can't do for the restaurant.
The food isn't prepared "in the truck" it is actually prepared in a certified kitchen. And then moved to the truck. Granted not all meals work well like this, but a number of them do.
So I suspect Danny wasn't thinking things through.
Given the surge perhaps a good investment would be a commercial kitchen tailored to support food trucks more efficiently. Sort of a food warehouse kind of deal.
The cost of starting a high quality food truck ranges from
approximately $50,000 to $150,000 or more, and the process
takes several months.
The biggest cost is the truck itself. Bobby’s family bought
their truck used for $37,000.
As the first wave is joined by a second, and now third wave of food trucks in my area- a fast two year growth- I am now super excited to see many of these businesses go under- with hopes that those trucks can then be picked up by the next crew who think they have a good idea. There's a lot of +100k$ trucks around, I'm looking to see a lot of them again- just, reincarnated as new businesses.
One of the best articles on the topic I've read. I really love all the numbers included. I feel like I actually learned something by reading this, vs having some emotion evoked.
I wish we had better food trucks up here in Seattle. Mostly greasy Mexican food and hotdogs. Portland is the King of food trucks in the NW and I wish they would come up here more often. Fresh oysters, mean pork sandwiches, etc.
[+] [-] c3|13 years ago|reply
We made a profit on about three different days last year. The other 300 were not profitable :( It would have helped a lot if we had family members working for chips and hugs; paying staff is a huge cost particularly if you want quality gourmet-style food and hard-working employees (we have mostly 5-star yelp reviews)
Before our pod landlord decided to shut down abruptly, combined with our chef/my girlfriend getting diagnosed with brain tumors, it was costing about $3k/month (net loss) however that's the awful wet northwest winters driving people away from outdoor pods. Once the warmer weather starts back up again and we find a new pod, we should be in the black, but the business model I'm working on involves a lot of carts with a central kitchen, in clusters in a few cities. If anyone wants to chat about investing, let me know :)
We got started for about $20k total including the 'truck' which is actually a trailer that is stationary.
obligatory link, http://theheartcart.com
[+] [-] foodtruckfiesta|13 years ago|reply
As someone who knows an awful lot about the food truck industry in multiple cities across the US, please, please do not proceed with this idea. Food trucks are not an economy of scale. They are boutique mom & pop businesses.
I am sorry to hear about the troubles with your truck, but I am sure that you can optimize operations to become profitable on most days.
[+] [-] mikey_p|13 years ago|reply
The interesting thing that I've heard about here in Portland is that at the bigger pods, landlord tenant contracts include agreements not to allow potential competitors to lease, include restrictions on style of food, i.e. landlord not allowed to lease to a second Thai cart on the same lot.
[+] [-] rdouble|13 years ago|reply
[+] [-] tonyb|13 years ago|reply
I just bought a food truck (literally 24 hours ago) and while I am as new as it gets in the industry what I have learned so far is in line with this article.
We looked into starting a restaurant or event just a commercial kitchen to do catering out of. After much research and searching for a location we changed direction and went with a food truck.
The food truck has several advantages to us. Overall the cost is much cheaper. Also if we were to buy or rent a building and put money into building a kitchen that would be a sunk cost that we could never get back. If we outgrow the truck or decide this isn't the business for us we can sell the truck and get our money back.
A lot of the work does go into figuring out the health department stuff. Ohio is a lot more friendly than some other states but is still an area we have to dedicate a significant amount of attention to.
[+] [-] xhrpost|13 years ago|reply
[+] [-] cjy|13 years ago|reply
[+] [-] phreanix|13 years ago|reply
Our local food truck association actively addresses regulations that are unfair to foodtrucks on a city by city basis. Most have to do with the local business community trying to prevent foodtrucks from competing with b&m restaurants, usually by getting law enforcement to harass trucks with citations, tickets, whatever they can throw at you.
Do I see the foodtrucks eventually disrupting b&m's? Not likely, but I do see an impact. B&M's have had to be more nimble and creative to keep up, which ends up being a good thing for customers. I have been presented with business models that involve franchising our truck and concept across the country to different groups (ex-military most recently, from what I hear about the Grilled Cheese Truck) as a way to help develop small businesses. This is where I mostly see the similarity to startups. Foodtrucks are more accessible, financially and creatively. One can literally go from concept to launch in less than a month. Try that with a b&m restaurant. The thing is, I also see a high failure rate. (foodtrucks have been dropping like flies here in L.A., mostly during winter). Other similarities or takeaways, which also apply to most other business:
1. Know your market well. Cities have different regulations, population densities, competing restaurants, etc. If you don't have a very very very good awareness of where the bulk of your business will come from, you're doomed. I've seen trucks sprout and die within a month, clueless operators and the inability to pivot.
2. Know your product well and how to sell it. I've seen employees stutter through a dish description, with the potential sale walking away to the truck whose operator can spitfire all the ingredients of each of his dishes without looking up from the slider he's working on.
3. Streamline your operation to deliver your most important product as fast possible and as perfect as possible. Lunch crowds can be harsh. These are people who have limited time and limited budget and (depending on location) almost unlimited choices. If you're the truck who took 20 minutes to serve a rice bowl, you can trust that person is never going back and would most likely drag all their friends to another truck the next day.
Simple 'rules' but you'd be surprised how many operators can't figure this out.
[+] [-] foodtruckfiesta|13 years ago|reply
Most new food truck operators I meet have just bought their first iPhone and are "still trying to figure out this tweetering thing." A lot of techies grossly overestimate the technical capabilities of food truck operators, not to mention performing the due diligence that you mentioned.
[+] [-] lifeisstillgood|13 years ago|reply
[+] [-] protomyth|13 years ago|reply
[edit for autocorrect of addition to edition]
[+] [-] guimarin|13 years ago|reply
There are pros and cons to greater regulation. Established cities like SF, DC, and NYC, limit the number of taxis because there are literal hard limits on all the gov't provided functions around taxi's, including regulation of 'expectation of legitimacy,' and managing traffic congestion. In the case of hotels and to a lesser extent restaurants, there are zoning, housing, and infrastructure investments that cities have made from a gov't perspective and a private perspective that, AirBnB and FoodTrucks throw out of whack. Reading this article you see how much regulation FoodTrucks are now starting to come under, to try and bring their 'perceived' quality in line with that of a restaurant. It's hard to find arguments against this, other than, it is now demonstrably harder to be a new business. The same is not yet happening with airbnb style 'hotel' rooms because there is more money and the players are bigger.
I think the real problem is that the gov't is poorly organized to deal with the wisdom of crowds. I don't need a hotel regulation agency as much for an airbnb type rental because the economic interests of the 'landlord' are such that my 'review' really counts. personally, I'd prefer airbnb, food trucks, and uber to their respective old-world counterparts, precisely for the reason that it's much more difficult for regulatory capture given those de-centralized models. But there are legitimate arguments on the other side, around investment, community goals, and 'safety'. Unit economics in each of these cases make it much harder to systematically screw the customer. Now if only we could disrupt telecom this way, so I can stop dealing with Comcast.
[+] [-] littlegiantcap|13 years ago|reply
[+] [-] zissou|13 years ago|reply
From macro issues like regulating the financial services sector to micro issues like antitrust and competition policy, consumers like you and I can be made better off via regulation. For example, competition policy is one of the most productive types of government regulation that takes place. Disregarding the DoJ's treatment of online poker [to date], the FTC and the DoJ have been doing some pretty great things over the last few years[1] (e.g. $500 million in fines issued breaking up LCD price fixing scheme; continued effort towards addressing the current and future problems of privacy on the Internet)
In the US, the goal of competition policy is to promote the economic welfare of CONSUMERS, however a good policy would be one that increases the economic welfare of both consumers and producers. Game theoretically, figuring out how to make a policy that increases the welfare of both sides of the market is a mechanism design problem.
[1] Relative to almost all the other sectors of government.
[+] [-] eksith|13 years ago|reply
http://www.commons-sense.net/blog-04/files/2011/05/Picture-3...
Still bitter about not having flying cars yet, but I don't necessarily see the mobile service as anything bad. It's just the natural progression of the food cart, some of which, are exceptionally good. In New York, there's a Halal cart on 53rd and 6th and everyone from construction workers to Wall Street types wait in line... and it's all worth it!
[+] [-] habosa|13 years ago|reply
Fun fact about that cart is that it's one of the most and best reviewed "restaurants" in all of Manhattan, which is pretty crazy.
[+] [-] swang|13 years ago|reply
[+] [-] dsshimel|13 years ago|reply
[+] [-] jsmcallister|13 years ago|reply
If it's not faster, cheaper or more convenient than the to-go menu at a traditional restaurant, it sounds like "menu buzz" is the only thing keeping most of these trucks in business. How long can that last?
[+] [-] muhfuhkuh|13 years ago|reply
I think lack of competition (as described in the article) causes these hyper-inflated prices. If these gourmet organic locavore so-and-so food trucks had to compete in, say, Portland[1], they would have to contend with 30-40 other single-dish trucks in the same pod/lot that provide a heaping, often exotic lunch for 5 bucks.
"If it's not faster, cheaper or more convenient than the to-go menu at a traditional restaurant"
But often it is more convenient. Hypothetically (since I work from home), I would find the food truck at the end of the block of my building to be way more convenient than getting in my car and schlepping to a restaurant (as I would do when I worked at an office).
Or, if you get it delivered, you gotta know what you want in advance, phone them up, make sure you get a drink, wait awhile, tip the driver, etc.
It's a mess. Food truck? Pop down, walk to the corner, buy Korean taco and sugar water. Lunch done.
[1] http://www.foodcartsportland.com/
[+] [-] phreanix|13 years ago|reply
It's been mentioned already how trucks are most likely more convenient. I mean, you're eating at that truck because it was closer to you or that you saw it and decided to eat there. I believe the reduced overhead thing is a bit misleading. The startup costs may be different, but the overhead is more than likely the same as a b&m. Apples to apples that is.
At most chef driven trucks, you will get food prepared by the chef himself/herself. Some customers perceive a value in this, hence the willingness to pay the higher prices of some trucks.
However, I do agree that the truck and its food will have to eventually provide a value that will keep a customer coming back. $9 sliders are insane. I've seen this play out time and time again at other trucks because the 'fad' and popularity gets to their heads. Some operators of trucks that have become popular really quickly become shortsighted and cater only to the yelpers who are excited about the latest new thing. They fail to realize that their long term viability is dependent on how well they are able to keep a line outside their truck once these early adopters run for another new thing. Good prices, good food, and fast service is key.
[+] [-] joonix|13 years ago|reply
[+] [-] ChuckMcM|13 years ago|reply
I'm trying to understand the argument. I see it that food has a number of attributes, flavor, dietary compatibility, accessibility, and quantity. And it has a cost. There is an internal 'value' evaluation that is done when the cost is compared to the other attributes which results in a buy/no-buy decision. Sometimes those things are artificially manipulated (like having to buy a $1.50 hot dog at AT&T part for $5 if you want to eat it).
But in all cases the 'cost to produce' doesn't enter into it until you aren't making enough sales to make ends meet. If the food is equivalent between a truck and a restaurant why wouldn't the truck charge a bit more to capitalize on the fact that they are here and if you want it eat it from the restaurant you have to go drive off somewhere to get it?
[+] [-] taude|13 years ago|reply
[+] [-] RougeFemme|13 years ago|reply
[+] [-] Retric|13 years ago|reply
Bobby’s family borrows kitchen space in a friend’s restaurant, but commissaries complete with a kitchen, waste disposal, and a parking space run up to $1,000 a month. plus Another expense, for trucks that sell at places like Off The Grid, is the cut they owe to the organizers. Off The Grid charges 10% - something of an industry standard. They also expect vendors to sell a minimum of $1,000 of product over the course of a lunch or dinner period. So if a truck sells with them for lunch and dinner, 5 days a week, they will pay the organizer a minimum of $1,000 per week. which could easily be 6+k in a month.
However, I suspect the available locations are far better.
[+] [-] ChuckMcM|13 years ago|reply
Businesses where costs are a fixed component of revenue can price their margin to always be "profitable" but businesses where costs are fixed have to meet minimum revenue goals to make minimum margin. On the plus side in a restaurant if you do a lot more business you get to keep the extra windfall.
However as the article mentions if you are really successful the landlord can up your rent when you renew your lease.
[+] [-] rootedbox|13 years ago|reply
[+] [-] ChuckMcM|13 years ago|reply
"The costs of running a food truck are relatively modest compared to a restaurent. Phat Thai is mostly a family affair, with only one employee from outside the family. The main expenses outside of labor are $1,000 a week for food and supplies, $200 of insurance, and $120 to fill up the truck’s enormous tank. Its engine is the same one that powered Camaros in the seventies, but even at its terrible gas mileage, a tanks suffices for the week. Bobby’s family borrows kitchen space in a friend’s restaurant, but commissaries complete with a kitchen, waste disposal, and a parking space run up to $1,000 a month. "
Not only does it cost less to start from 0 to operating food truck than it does a restaurant, there is also the fact that you (probably) own the truck so rent doesn't go up. On a tax basis you can actually depreciate the truck which you can't do for the restaurant.
The food isn't prepared "in the truck" it is actually prepared in a certified kitchen. And then moved to the truck. Granted not all meals work well like this, but a number of them do.
So I suspect Danny wasn't thinking things through.
Given the surge perhaps a good investment would be a commercial kitchen tailored to support food trucks more efficiently. Sort of a food warehouse kind of deal.
[+] [-] rektide|13 years ago|reply
[+] [-] hayksaakian|13 years ago|reply
[+] [-] lifeisstillgood|13 years ago|reply
I would like to ask if one of the (surprisingly many - gotta love HN) food truck experts could comment on
1. Stick to simple one dish in a huge wok approach as I have seen at many festivals - warm, usually tasty and easy to dole out fast.
2. Start on private Market / land with a marquee or painted shed that came in transit van.
It just seems an enormous start up cost for cooking rice and peas.
[+] [-] whather|13 years ago|reply
[+] [-] unknown|13 years ago|reply
[deleted]
[+] [-] Domenic_S|13 years ago|reply
That's like, 30 gallons. Not that big.
[+] [-] babesh|13 years ago|reply