Starting a food truck is more affordable than opening a restaurant, but it's still not cheap.
Expect to shell out six figures, says Howard Jeon, co-founder of the popular New York City-based food truck Yumpling: "If you ask a lot of food truck owners how much it costs to start a truck, a commonly quoted figure is $100,000."
Here's a general breakdown of where that money would go:
- $20,000: The truck itself
- $20,000: Food truck permit
- $45,000: Equipment and buildout of the truck
- $10,000: Working capital to cover at least three months
- $5,000: Miscellaneous expenses, including insurance and legal fees for setting up the business
"While $100,000 is generally a good figure for starting a food truck, to open a small to medium-sized restaurant in this city would require around $500,000," says Jeon. He and his co-founders, Jeffrey Fann and Christopher Yu, are in the process of doing just that: After two and a half years of selling Taiwanese fare on the streets of New York, the Yumpling team is opening a restaurant on Vernon Blvd. in Long Island City, Queens, in October 2019.
When Jeon, Fann and Yu launched Yumpling in 2017, they pulled from their own savings to cover the costs. "Luckily, the start-up cost, though high, is not prohibitively high," says Fann. "We were lucky to be able to handle that on our own."
Once the truck is up and running, there are a variety of other costs to account for. With a food truck, "you're always on the go, and because of that, you'll incur all sorts of funny expenses along the way," says Fann.
The total cost of running a food truck varies from company to company and heavily depends on a truck's location and specific needs, but here are some of the most common expenses to prepare for.
"A lot of people will say, 'Trucks are great because you don't pay rent,'" says Fann. "Well, you do — in different ways."
Food truck owners have to rent a parking space at a commissary, explains Jeon: "It's illegal to park anywhere else, even in your own home."
Commissaries are giant lots where food trucks and carts park overnight. They also offer storage facilities for food and supplies. Depending on how much storage you need, it'll cost between $1,000 and $1,500 a month for commissary space in New York City.
Yumpling's current space, where they pick up the truck before service and drop it back off afterwards, is in Long Island City.
"Some commissaries also have certain stipulations that you should watch out for," adds Jeon. "In one of our previous commissaries, we were required to buy our food supplies directly from them, which, of course, they charged a premium for." Before agreeing to rent a space, get a written contract and review the terms, he advises.
Besides renting a commissary space, you may also need to rent space to prepare your food, says Jeon. "Commissaries, in general, do not offer places to prep food or cook, so people either do it in their own trucks, at home or rent a commercial kitchen space."
The Yumpling team rents a commercial kitchen space. If you choose to do that, you can either rent the entire space or reserve time in a kitchen. If you decide to rent the entire space, it will cost about $1,500 a month for a small kitchen in NYC, plus you typically have to furnish it with your own cooking equipment.
Other kitchens rent by blocks of time, such as 8 a.m. to 4 p.m. or 4 p.m. to 12 a.m. "They will post their schedules a few weeks or a month in advance," explains Jeon, "and they go by seniority, so whoever has been renting space there the longest gets to choose which blocks and on which days they want to rent the space. A block of time can range from $200 to $300, plus extra for storage."
If you can do all of the prep at home, you can avoid this expense all together.
Between fuel for the vehicle and cooking gas, expect to spend about $600 a month ($300 for each).
"Gas cooking is way more expensive for us than it is for restaurants because we have to use portable propane tanks," says Fann.
Trucks can expect to pay a good deal in parking tickets. On a bad day, Yumpling can accumulate up to three tickets, which range from $65 to over $100. "Depending on where in the city you park and how nice the meter attendants are in your area, you can expect to pay anywhere between a few hundred to a few thousand dollars a month in tickets," says Jeon.
On average, expect to shell out $600 a month, he says. That's for regular street parking in NYC.
Yumpling also serves out of a private lot one day a week. They won't get parking tickets there, but have to pay for the privilege of parking in the lot.
Truck insurance costs about $400 a month and maintenance costs vary month-to-month.
"I think everything on the truck has probably broken at least once at this point," says Fann. "That has everything to do with the fact that we drive across a lot of potholes — it's very bumpy — and things like deep fryers and rice cookers were not created with this use in mind."
One of the more expensive pieces of equipment they've already had to replace twice is the generator, which powers all of the electricity on the truck. Each one costs over $4,000.
"Make sure you invest in good quality equipment," says Jeon. "And maintain it properly. A poorly maintained generator, for example, will die in less than a year. We learned the hard way with that one."
Every employee who works on a food truck is required to carry a mobile food handlers license.
Between taking an exam and filling out paperwork, the process of getting the license takes one to two months from start to finish and costs a little over $100. It has to be renewed every two years.
- POS system: This is the register system. Some systems charge monthly fees and others are free, says Jeon, "but everyone needs to pay credit card processing fees, which are a little under 3% per each swipe. Food trucks can save a bit on this end by accepting only cash."
- Portable Wi-Fi: about $30 per month
- Accounting expenses: about $250 per month
- Supplies: about $200 per month to replace utensils, kitchen timers, batteries, towels, hairnets and gloves
"Another significant cost that is kind of a given, but should be stated, is that you need to have a car to shop for supplies and inventory," adds Jeon. "It's impossible, and possibly illegal, to shop with your food truck every day."
Finally, there are labor costs if you hire employees.
There are a few additional features Yumpling has paid for that have been completely worth the cost. Fans for the ceiling vents are a must-have, says Jeon: "It is brutally hot in the summertime and having a good fan to exhaust some of that heat is a life saver."
You always want to keep a fully stocked first aid kit for burns and cuts, he says. Plus, "get a good security camera system. You never know if you'll ever get into an accident while driving." It may also come in handy if a thief tries breaking into the truck: "We've had a few people steal our tip jar in the past."
"Perhaps one of the biggest things that new truck owners do not anticipate is surviving for the first few months when nobody really knows you exist," says Jeon.
"Everyone goes into a new business thinking they're immediately going to make a killing," but that's rarely how it works out, including for Yumpling. In the early days, there were afternoons when "we served a whopping total of seven customers," recalls Jeon.
"It's important to have enough working capital to ride out the slow months in the beginning."
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