If you read our post on how to make a food truck business plan, you may be wondering how to determine the average cost to start a food truck business. There are a lot of costs involved, and you’ll need to consider all of the aspects of owning and buying a truck.
But in this post, we’re going to do our best to provide a base cost to start a food truck business.
Variable costs do exist, so you’ll need to plug in some of the figures yourself to determine the true cost of ownership.
We're not going to include the costs of a website, social media presence or even marketing. Instead, we’ll focus on all of the costs needed to get your truck up and running.
Your first major expense will be incorporating a business. You want to incorporate your food truck business to purchase all of your items, and the incorporation will also limit your liability as an owner – a good thing.
The cost of starting a food truck business, in respect to incorporating, will be:
$100 - $250 for filing articles of incorporation
$800 - $1,000 franchise tax fee (varies widely by state with some states being much less)
$50 - $200 in government filing fees
$500 - $700 for attorney fees at a minimum
You can do much of the filing on your own, but in many cases, it’s best to use an attorney or third-party service to help you with the incorporation.
In total, you’re looking at $950 - $1,450 for incorporating on your own, depending on the franchise fee. When an attorney’s services are used, this increases expenses to $1,450 - $2,150.
You can often bypass many of these fees using an online service, and this can bring down the incorporation costs drastically. Some people can incorporate for less than $500 when all is said and done. Your state and franchise tax will determine these costs.
Once you’re past incorporating, it’s time to consider the cost of your actual food truck and the licenses that you’ll need to obtain.
Food Truck, Insurance and License Costs
The base cost of a food truck varies widely. If you purchase a new truck, you can expect to pay $50,000 - $200,000 for the truck. Used trucks can be as little as $20,000 - $35,000. There's also the option of purchasing a concession trailer, which is much cheaper, but you’ll need to outfit the trailer.
Since food trucks often don’t include the food truck equipment costs, this is just a base price for the truck.
Some companies will do all of the customization and outfitting for your truck, and that may reduce equipment costs slightly. In an ideal situation, you would purchase a truck that is almost completely outfitted to match your business’ needs.
You'll want to look for someone in the industry going out of business or someone selling their truck after upgrading.
You’ll also need to insure your business. If someone gets sick from your food, you’ll want to make sure that you have general business liability to reduce your liability in a lawsuit.
Insurance costs will be $300+ monthly, but expect to pay somewhere between $2,000 and $4,000+ per year for insurance needs.
Commissary costs may be required, depending on the city that you’re operating in, and this can cost $400 - $800 a month.
Now, you need to also worry about the cost of licensing.
Licenses and permits are required in all food truck businesses. A food truck business license will vary from state-to-state, and you’ll need the following:
Costs for these three are normally $100 - $500, but the price really depends on the location. Initial product inventory will also be needed, so you might pay somewhere between $1,000 and $2,000 for the inventory.
So, to recap, you can expect to pay:
Truck: $20,000 - $200,000, with costs normally $50,000 - $120,000
Insurance: $2,000 - $4,000+ annually
Commissary: $400 - $800 a month
License, permits and certifications: $100 - $500
Keep in mind that a commercial driver’s license is required based on weight, so if the vehicle is 26,001 pounds, a CDL is required. If the trailer is 10,000 pounds or more, a CDL is required. Otherwise, there won’t be a fee for the driver’s license other than your traditional license requirement.
Food Truck Equipment Costs
It’s very difficult to determine how much the initial equipment costs will be. It's much cheaper to start an ice cream truck than it is to run an entire mobile kitchen. A ballpark estimate for all of your equipment will be as low as $10,000 with some used equipment.
Customization and a high-end truck can push these costs up to $20,000+ in just equipment costs.
Now, you’ll also need to consider:
$200 - $1,000 for a point of sale system
$200 - $300 for your paper products
$1,000 - $2,000 for initial inventory
$500 - $1,000 for unexpected costs (menus and such)
$300 - $1,000 for all of your smallware
$500 - $2,500 for a generator
$15 - $90 for a fire extinguisher
When all of this is added up, you can spend $2,715 - $7,900 before spending $10,000 - $20,000+ on equipment and any custom outfitting that needs to be done.
Food Truck Business Profits
Now that you know how much it costs to start a food truck business, it’s time to discuss profits. Determining all of your profits depends on costs, and most of the costs we mentioned already are one-time costs.
It's the recurring costs that you need to consider before figuring out your profits. These costs include:
Fuel - $250 - $500+
Phone/Internet - $100 - $200
Commissary - $400 - $800
Insurance - $200 - $300
Of course, it’s impossible to determine the costs of the following without knowing more about your business, such as:
Paper product restock
You'll also want to set aside money for truck maintenance or repairs. The average food truck will gross $300,000 annually, and revenue has increased by 12% over the past 5 years. Employee costs can range from $10 - $30 an hour, but a lot of food trucks are paying employees $20 - $30/hour.
Let's assume that the truck makes $20,000 a month in sales.
Food costs are often between 25% and 38% of the total monthly sales, so you’ll be spending $5,000 - $7,600 in food alone. This leaves you at $12,400 - $15,000 in remaining cash. If you reduce all of the monthly fees, you’ll have profits in the range of $11,450 - $14,050 on the low end, or $10,600 - $13,200.
Wages haven’t been deducted from this, and a general percentage for employee costs to total profits is 33%, so, you may be spending $6,600 on employee costs. If you’re the only employee, then this is a major expense that can be avoided.
But if you do pay employees, you’ll have profits remaining that are between $4,000 and $7,450.
There will be other minimal costs to consider, such as:
A lot of smaller trucks will do all of their own accounting using an online service, and the cost for washing the vehicle is very minimal. Advertising costs can be zero if you’re parked in a prime location.
So, you can make $4,000 a month if you have employees, or up to $13,000 - $14,000 a month if you have minimal costs and run the entire truck on your own.
Keep in mind, you’ll also have to put money aside for taxes, so you’re not realizing a full profit.
If you took out a loan to start the operation, you can also deduct these monthly costs from your profits. But once you pay off the loan, you may find that your food truck is very profitable. A lot of owners will start to operate multiple trucks at this point.
Once the demand is high enough, operating two or three or more trucks can result in significant profits for the business owner.