Mobile Food Business 101storestreamllc
So you’re thinking of starting a mobile food business…
Good for you! But before you jump right in there are some things you’ll need to think about/do/consider.
If you think running a mobile food business is going to be
a breeze and an easy way to make the big bucks, you may want to think again.
“But self-employment and a tailored schedule sound so great. How could you go wrong with that?”
Well, yeah, those things can be great. But starting your business and making it profitable requires a lot of
patience, diligence, and time. So don’t expect a vacation anytime soon.
I’m not trying to discourage you from starting your dream business, just make sure you’re starting it for the right reasons – passion and commitment – and be ready for a lot of work that doesn’t involve cooking food and talking to customers. The hours you put into your business will always exceed your “open for business” time – you’ll have to factor in food shopping, setting up, tearing down, moving, etc.
Note: The amount of time and money you’ll need to put into your business depends largely on the type and size of business. For instance, a simple hot dog cart can be run by one or two people, unlike a full-blown food truck, which will require three to four people to operate, plus someone planning events, shopping, doing payroll, etc.
If you’re still interested in starting a mobile food business you’re a champ.
Read on to learn about the essential steps you need to take to get your business up and running.
Questions to consider before you start in-depth research:
- How well do I know the type of business I want to start? (Do I even know how to cook a hot dog?)
- How will I find the right vehicle? (What kind of vehicle will I need for my business?)
- Can I handle a start-up schedule? (How does seven days a week, 11+ hours a day sound?)
- Am I prepared to make money in small increments? (Will I be able to pay my bills on minimum wage, or less, for the first year?)
Once you’ve answered these questions, and you are satisfied that you can handle a mobile food business, you’re ready to dive into the pre-launch research.
Before anything else, make sure that the kind of food you want to sell will actually sell. Sure, you love the food you want to make, but are there enough people in your location that love it too? You’ll have to talk to a lot of people, and make some samples of your food, to figure this out.
Are you going to sell well-known classic food or extremely unique, acquired-taste food? Knowing that will help determine whether you should change your food choice. Remember, if nobody likes your food, you won’t make any money.
Consider different niches: kiosk, cart/stand, truck. The vehicle you choose will depend largely on the type and variety of food you plan on serving. The more food you plan to have, the bigger vehicle you will need. Do you plan on doing a lot of cooking on-site?
Some carts have grills on them, but these are best for simple foods like hot dogs and hamburgers. Smaller carts and kiosks don’t come with cooking appliances; they may only have steamers or warmers. Do some research and determine what would be best for your business before making a purchase.
Find out what licenses and permits you need. This is vital! If you set up shop without all the proper licensing and permits, you can get fined hundreds, if not thousands, of dollars. Contact your local government to find out exactly what paperwork you need to fill out and who you need to contact.
-Sales tax permit: obtained at the state revenue government
-Tax certificate: obtained at your local government revenue agency
-General business license: obtained through your city or county clerk
(check with the state to see if there is any additional business licensing you need
-Vendor license: obtained through city or county government
– Food license and/or permit: obtained through local health department
-Federal tax ID (EIN)
Ask around and make some phone calls to see what kind of insurance you will need. If you have a full-size truck, you will need car insurance, but you will probably need small business insurance as well. Note: Check out the Business Insurance Guide on www.sba.gov.
Look at possible places to set up your cart or park your truck. It’s best to have more than one place picked out, in case business in one location is slow.
Things to consider in a location:
-Amount of foot traffic
-Special permits or fees
-Hours of operation
The more foot traffic the better chance you have of making sales. If you’re selling in a big city, chances are there will be fees or special permits for prime locations (not to mention the competition you’ll face), so research well. Your location also depends on your hours of operation. If you already have a time frame in mind, look at the foot traffic during those times in the areas you’re considering. If you want to set up close to offices, make sure you’ll be open for lunch (breakfast time is prime as well!)
-Office parks and sidewalks
-Empty lots: parking or commercial
-Malls or shopping districts
Note: If you have a kiosk, you may be able to set up inside the mall.
-Prime tourist spots
-Major or college sports venues
-Newly opened, must-see attractions
Note: Do heavy research on the event before you promise anything. Improper planning and research often leads to a profit loss.
-Popular parks and beaches
-College campus, or just outside of a campus
-Developing business districts
Keep in mind that the majority of the above mentioned places will require special permits or fees. Check the parking regulations for your city and check with property owners to find out the specifics.
Another note: A prime location for one season (or month) may not be prime for another, so plan in advance, and keep a few new locations in mind.
Once you have some locations in mind, find out how to book a spot in each one. Some cities and locations, as previously mentioned, charge set fees or require a special permit for a mobile food business to park. Don’t be caught unaware of the rules and regulations.
Play with business names and find out if what you like is available. Be original. Your name will go into your business plan.
Business Plan & Funding
The next step, and arguably the most important step, is to draft your business plan.
According the U.S. Small Business Administration, a business plan “projects 3-5 years ahead and outlines the route a company intends to take to grow revenues.”
Business Plan Breakdown:
Cover Page: Includes your contact information.
Executive Summary: A one to four page summary of the key points in each section of your business plan. In other words concisely describe your business: what will it do and what market need will it fill? You may consider including five reasons why your business will be successful along with your financial projections.
Business Overview: A description of your business. It will include: the legal structure, business formation history, type of business, location, and the means of doing business.
Operations Plan: A full description of how your business will operate: physical setup and responsibilities for each specific task.
Market/Industry Analysis: How large is the competitive market? What is the competitive market and how do trends affect it? How do you plan to cater to this market?
Products & Services: Describe what you plan to sell or offer customers. Classify each product and write a brief description of each.
Sales & Marketing: Provide an outline of your pricing and sales information. Include justifications for why customers will buy your products and how you plan to market your business.
Competitive Analysis: Analyze the strengths and weaknesses of your direct and indirect competitors. Describe how you will obtain a competitive edge among established competitors.
Management Team: Detail any important, concise background information on all managers and owners.
Financial Plan: This section will include ALL financial information. It should outline:
-amount necessary to start or maintain your business
-amount needed over the next two-five years
-how you plan to use your funds
-any additional funding anticipated
-ongoing business expenses (salaries, insurance costs, etc.)
Projections: Projected income statement and balance sheets for the next two-three years.
Include any other important information about your business at the end of the plan.
As you can see creating a business plan isn’t easy.
So why do you need one? The primary reason for a business plan is to obtain funding for your business. It will also help keep you on track as your grow your business.
Funding. There are several ways to obtain funding for your mobile food business. You may have some personal connections that are willing to loan you money, but chances are you’ll have to get a bank loan. This is where the business plan comes in handy; most banks require one before they’ll offer a loan.
There are other ways to get the necessary funds for your business:
Savings – live frugally and save some, or all, of the money you need; Private investors – these are easiest to come by when you’ve established working relationships with organizations or businesses who believe that your business will be successful.
Are your recipes tried and true? Make sure you have them all memorized and can produce them in large quantities. Three “musts” of mobile food: consistent taste, easy serve, well traveled.
What kind of menu will you have and how will you display it for your customers? Think about your theme and make it attention-grabbing! This goes along with branding your company: create a signature character/look/vibe and keep it consistent!
Decide what kind of payment or combination of payments you will be accepting. Cash? Check? Credit/Debit? Make sure you have the right equipment to take your desired payment types.
Consider catering options: catering events is generally a great way to boost revenue.
Set up social media accounts. Twitter is pretty much an essential for a mobile business, especially if you plan on switching locations often. Tweet out your location and the people will come!
Create set open hours and locations. These can be fluid, but if you want to establish a customer base you’ll definitely want consistency! Consider posting your hours of operation on your displayed menu. If you conducted your location research well, choosing your hours should be relatively easy.
Find a storage location for your inventory and kiosk/truck/cart in the off hours. If you have the space, you can park at your home, but if you don’t you may consider a storage facility. Note: This may be another cost you should factor into your business plan.
Consider buying all of your inventory locally. You will save on shipping and all of your ingredients will be fresh! Wholesale retailers are a great place to start your shopping.
Be prepared for the health inspector visit. The health department will send out an inspector to ensure your mobile food business is up to code before you get your food permit. You’ll probably get a yearly visit from the inspector at random, so keep it clean and safe! Check the U.S. Dept. of Agriculture’s overview of food safety inspection for more details.
Final Tips for Success:
Buy fresh ingredients daily (depending on your current supply and menu). Note: It is better to run out of food on a busy day than to sell non-fresh, crappy food and lose customers.
Make sure your food and menu are organized and visually appealing. Most people who buy from mobile vendors do so on impulse, not planning, so the more visually appealing (and delicious smelling) your business, the more traffic you’re likely to get.
Promote your business through your social media accounts and other venues – advertising, word-of-mouth, etc. Get the word out about your amazing food and customer service!
Schedule routine maintenance on your mobile, whether it’s a cart, stand, or truck. Check it regularly for anything that needs to be repaired.
Let your business plan be your guide. Of course, if you find that something else is working, go for it, but in the beginning, stick with the plan.
Have a consistent menu. Keep it fresh by offering a daily special – something new and exciting.
Establish relationships with your customers and your suppliers. Every business thrives on continued relationships – gain regular customers, excellent supplier service (with favors), and gain NEW customers. Win-win!
BE FLEXIBLE. In the mobile food business, everything is subject to change – even those laws and permits you painstakingly follow. Flexibility is critical.
Anticipate slow seasons, especially if you have really bad winters or you sell food that is primarily eaten in a specific season. Always have a plan!
Plan in advance: help your business thrive and reduce the inevitable stress levels!
Finally, have some fun! This business will be your life for years, so enjoy it!
Whew! If you’ve made it this far, congratulations!
You’re a real champ, and now you’re ready for the big launch!
Go get ‘em tiger!