The mobile food industry is a hot trend right now and shows no signs of slowing down anytime soon. If you’ve dreamed of opening a restaurant, but the thought of taking on something so big is intimidating, a food trailer can be a great way to test the waters. It offers lower start-up costs and lower overhead. Once you have a feel for the food trailer business, you can decide if you are ready to make the leap to restaurant owner.
Just as in any business, there are many things you need to know before hitting the asphalt with your shiny new food trailer. Here’s a quick guide of everything you should consider before taking your next step into the mobile food business…
- Start-Up Costs
There are many factors that go into determining an accurate start-up for this type of business. There are one-time costs, recurring start-up costs, and costs that can vary by location.
One time startup costs could consist of things like purchasing your food trailer, register or point-of-sale (POS) system, trailer wrap, website design, office supplies, advertising, and legal fees. While that list is not comprehensive, it gives potential food trailer owners an idea of the things that will need to be paid for up front.
Then you’ll need to consider recurring costs such as payroll, equipment rental, credit card processing equipment and fuel. Every new food trailer business will also have to obtain proper licenses and permits, which vary depending on location.
Other startup costs to think about:
- Insurance (business and vehicle)
- Inventory (food and supplies)
- Payment processing (hardware, processing agreement, mobile data plan)
- Commissary fees (professional kitchen rental for prep work)
- Trailer appearance (paint, wraps, lighting, etc.)
- How Will You Fund Your Endeavor?
Finding funding may be the biggest hurdle you’ll need to overcome when starting a food trailer business. First, you’ll need to put together a solid business plan. You should also make sure to have good personal and business credit, as this will increase your chances of receiving a business loan.
If traditional financing is not an option for you, there are other, more creative ways, to get funding for your new food trailer business. Here are some ways to start your business with minimal funding:
- Talk with someone who already owns a food trailer and negotiate a lease or rental agreement.
- Start with a low-cost, used cart or trailer.
- Start selling at a farmer’s market, fair booth or pop-up.
- Talk to successful restaurant owners about running a food trailer for the owner’s business.
- If your trailer idea includes providing a public service or benefit to the community, look to obtain sponsors.
- How To Get Paid
Most food trailer customers have gotten used to paying cash, but credit cards and mobile pay is more popular than ever. Below are a few options for processing sales, listed from the lowest-priced option to the most advanced:
- Cash box and cash-only sales
Advantages: Low priced. You can purchase a lockable box for under $20.
Disadvantages: Doesn’t track sales or food inventory. Cannot process card payments.
Ongoing costs: None.
- Cash box + mobile card processor
Advantages: Low priced. Mobile processors can simply charge for swipe fees, but you’ll need Wi-Fi access.
Disadvantages: Most mobile processors include only a simple inventory system and limited additional features.
Ongoing costs: Credit and debit card processing fees and mobile data fees.
- Cash box + POS system + mobile processing
Advantages: Mobile credit and debit card processing plus sales and inventory tracking.
Disadvantages: An additional monthly service fee and hardware costs.
Ongoing costs: Monthly POS service fee, card processing, mobile data service and possible hardware fees.
- Permits and regulations
It is important to research and consider the necessary permits and regulations for your area. Here are a few main things to look out for:
- Food safety: You’ll need to comply with local food safety requirements, just like any other restaurant in the area. Contact the local health department to find out more information, such as if you need to prepare all your food in a professional kitchen or if you can use your own facilities.
- Zoning and parking: There may be restrictions on where you can park your trailer so make sure to do your research before setting up shop. There could be commercial versus noncommercial zoning restrictions, parking time limits or distance restrictions from other establishments. The city and local motor vehicle department will be able to help.
- Business permits and licenses: As with any business, you’ll need certain licenses to operate your food trailer, including a tax ID number, a DBA, and a state sales tax permit and an LLC. To form your business, check your home state’s requirements.
- Consider the Pros & Cons
- Food trailer advantages
Business ownership: Numerous tax advantages come with business ownership, and while it is difficult to own and run a business there is generally a bit of relief on the tax front.
Freedom: Choosing menu items, the vendors you want to purchase from, your employees and the events at which you want to vend are just some of the freedoms you will enjoy as a food trailer business owner. You’ll also have full control of your social media, marketing and schedule.
Mobility: Being able to bring your business to different locations based on demand during different periods of the day, days of the week, etc., is a huge advantage.
- Food trailer challenges
Time: Long hours are the norm when owning a food trailer business. With shopping, prep, marketing, event booking, cleaning, trailer maintenance, accounting and tax obligations, etc., this is more than a full-time job.
Competition and Market: Carefully research your market to increase the chance of success, since you will most certainly have competition with other food trailers.
Ordinances and Zoning: Every area is different in terms of where you can park your food trailer and how long you can park there. Make sure you know the rules in each location you plan on operating to prevent tickets and fines.
We have extensive knowledge of the national food service industry and will be able to guide you and even help with financing!