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What are the advantages and disadvantages of owning a food truck?

Advantages and disadvantages of owning a food truck
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Advantages and disadvantages of owning a food truck

Persons who want to venture into a food truck business often wonder: What are the advantages and disadvantages of owning a food truck? Well, that is a tricky question that depends on several factors. Many operators will use Google search and observations to gather information before starting. For example, while vending at the NGV in Melbourne in 2015, two Asian girls sat across from my food truck for hours to observe how I operated but left without asking any questions, which I would willingly have answered. One needs more than just an observation and Google search to understand the pros and cons of operating a food truck. This is because much of the information available online was not authored by food truck vendors, and a day’s observation of another operation may mislead as sales vary each day. This article, the first of several I will be writing about food trucks in Australia, is based purely on my personal experience and my interaction with food truckers over the past decade. If you don’t know yet, Afrofeast was the first and only African food truck established in 2013, and although it’s long since we closed shop, we have remained in the food and hospitality business and can advise you on this venture.
afrofeast in Salt Magazine
Hereunder, I share with you, for the very first time, the advantages and disadvantages of owning a food truck.

What is a food truck?

Although large commercial food trucks are relatively new in many parts of the world and Australia, mobile food carts are not. What differentiates a gourmet food truck from a mobile food cart is that the former is larger and has a more extensive operation than the latter. This article is about the large, gourmet food trucks.

Advantages of owning a food truck

1. The cost

We all agree on this. The first and most important advantage is that the cost of establishing a food truck is lower than that of a traditional restaurant. Whereas you may need between $30,000 and over $250,000 to set up a food truck, you might need up to $500,000 to start a brick-and-mortar food business. The biggest difference is the rent and outgoings, which range between $30,000 and over $100,000 annually, depending on your location and foot traffic.

In contrast, food truckers can prep food in their homes or warehouses (within the commercial kitchen), drive to a location for a few hours to set up and sell, and return to their base to wait for another opportunity. This minimises costs that brick-and-mortar stores cannot avoid.

The following is a cost breakdown of building a custom-made gourmet food truck with Bills Trailers in Australian dollars. Although time has passed, the costs remain relatively the same. This is not a recommendation of any businesses mentioned here; none has paid for this article.

YouTube video

  • Kitchen fittings: $60,000
  • Generator:$6000. Specifically, I bought a top-of-the-range quiet and environmentally friendly Cummins Onan generator from MacFarlane Generators in Clayton South.
  • Operations: $30,000 (this covers initial costs of miscellaneous equipment, Council fees, fire inspection, food, drinks and promotional fees.
  • Total: 161,000

2. Freedom

For me this is personal – my freedom comes first, everything else second. It is probably because I spent my teenage years away from home. So, when I established a food truck business in 2013 it was not because I was unskilled and unable to find work, but rather because I wanted freedom from a highly structured and controlled organisation.

When I started Afrofeast, I was working with a leading Australian Bank as a project analyst.

dennis obel national australia bank

At work in Docklands, 2013.

The food truck was a great option to get me out of Melbourne’s dull financial district – Docklands, into the messy, unpredictable, but exciting streets. I wanted action and found it, be it with some risks.

3. Popularity

Your popularity in the community will rise rapidly as a food truck vendor. When the Herald Sun first wrote about us in 2014, almost 40,000 visitors visited our website to learn about Afrofeast.

Shortly after, our Facebook page ballooned, and we started receiving vending offers and contracts with big festivals. Most importantly, we had other media agencies contact and make films and write articles about Afrofeast.

From oblivion, we grew and assumed a national status we wouldn’t have had had we not started Afrofeast.

Dennis Obel showing off an article by the Herald Sun.
Dennis Obel showing off an article by the Herald Sun.

Disadvantages of owning a food truck

Now that I have discussed the pros, are there any cons? Running a food truck business is undoubtedly one of the most challenging businesses I have ever encountered. Let me share some of the issues I faced and will most likely face, too.

1. Competition

Competition for vending opportunities is high. When we established our business, Melbourne had approximately 20 to 30 gourmet food trucks.
Moreover, brick-and-mortar businesses and real estate agencies often saw us as a threat and complained to local Councils not to issue vending permits for fear of loss of business.
Besides, many food vending agencies were unfriendly and selective in choosing food vendors. Despite several attempts, we could not break into certain festivals, markets and events.
That said, Afrofeast’s unique selling point as the first and only African food van at the time ensured we remained at the top of the game throughout the year, participating in Melbourne’s biggest events such as Soulfest, White Night Melbourne and others.
afrofeast in Salt Magazine

2. Long, long hours

If you have never worked in a food truck, you should not try to establish one. This is even worse if you have a young family that needs constant attention and support.

As a solopreneur, you will wear the following hats concurrently or at different times.

  • Owner/CEO: Planning and daily operations to ensure profitability.
  • Cleaner: Clean, clean and clean. A commercial kitchen must always be clean to attract customers and ensure proper hygiene.
  • Compliance officer: With food safety laws, Council laws and regulations, traffic laws and intellectual property laws.
  • Social media marketer: To improve the image of your business and obtain more followers and business. This is critical because most potential clients look at the strength of your social media and how they will benefit from your popularity before they can hire you. So, food trucks with a big media following will constantly have offers from festival and event organisers.
  • Cook/chef: This is the most exhausting part, as you constantly worry about a client’s satisfaction (or dissatisfaction). Any minor mistake can result in negative reviews and a loss of image and business.
  • Book-keeper: Whether you are a sole proprietor or limited liability company, you must comply with Australian taxation laws. A failure to keep proper books of accounts is not only prone to penalisation by the Australia Tax Office but is a weakness to your business as you will not be able to determine its profitability and valuation.
  • Driver: A food truck is huge – 3.7m high, 4.5-6m long (with a trailer or fridge – 6m), approximately 3m wide and weighing over 3 to 4 tonnes. You must ensure you comply with all laws, otherwise, you might be fined. You must be an excellent driver ready to tow trailers, mobile coolrooms and heavy items. You must have the skills to manoeuvre within the CBD, reverse, park in narrow alleys, and travel long distances locally and interstate. Once I drove under that 3.5m limit bridge in South Melbourne and my rangehood was damaged. Good enough no one was hurt. I hate driving in South Melbourne.

3. Seasonal factors

Advantages and disadvantages of owning a food truck
Coffeeworx cart vending in the Yarra Valley circa 2018 | Dennis Obel

In Australia and probably other parts of the world, food businesses perform best during summer and very poorly during winter. This is because most families stay indoors when it is cold and only enjoy the outdoors when is it warmer.

So, from around May to September in Melbourne and other parts of Australia, business is very slow. In fact, during that period, there is hardly any festivals apart from a few winter events.

However, from around October to April, it is jam-packed with many music festivals, markets, and events, and you can make over $30,000 – $40,000 in a single weekend event or celebration.

Unless you have a brick-and-mortar store where clients can find you during winter, you will earn less during that period.

General tips/best practices

  • Spend some time working in a food truck or busy commercial kitchen before venturing into a food truck business.
  • Keep proper books of accounts to monitor sales and profitability. Use an accounting software such as Intuit or MYOB, depending on which is affordable to you.
  • Build a strong media presence and goodwill.
  • Employ other staff to help and support your food truck business.
  • Ensure you comply with food safety, traffic and ATO reporting requirements.
  • Have both a physical and mobile business if you can afford it. A mobile business will help to promote your brick-and-mortar store. You can also share inventory between the two businesses to reduce waste.
  • Collaborate with other food truck vendors, following them on social media, shouting out, sharing food and physical space like rent.
  • Establish excellent relationships with event organisers, from local markets to big music festivals, to ensure you participate in their events yearly.

Conclusion

Owning a food truck is highly rewarding but has significant disadvantages. Do I recommend starting one? No. The amount of work, stress, compliance requirements, and cost are way too high. I would instead focus on running an online business rather than a physical one.

Do I regret founding one? NO. Afrofeast catapulted me into the messy world of the streets, forming the foundation upon which the current business is built. Without the Afrofeast food truck, I would still be stuck in the bank.

So yeah. Get out there and do it if you want to. Why not?

What are the advantages and disadvantages of owning a food truck?

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