Stop Yer Bitchin’ If You’re Not In The Kitchen
I recently read a story rant in a local publication that got me thinking about the business of food trucks. The writer focused on the immaturity of Seattle’s food truck scene and complained about extensive wait times for food (10 minutes was apparently too long), the high costs, and menus too diverse to be efficient or good.
The piece went on to imply that there were good profit margins to be made by not having to pay high labor costs, reduction in prep time and the purchase of expensive equipment. It went even further by comparing the Seattle food truck scene to the hawker stalls of Singapore and Hanoi – where labor and food costs are a fraction of what is paid here in the good ol US of A. Knowing a bit about this business, I couldn’t help but poke holes in the illogical arguments. My goal – to explain the harsh realities of this difficult business model.
To help in this endeavor, I enlisted the help of three of Seattle’s pioneering food truck founders: Roz Edison of Marination and Good Bar, Josh Henderson, formerly of Skillet and now head of the Huxley Wallace Collective and Matt Lewis, of Where Ya At Matt? and Restaurant Roux.
A Day in the Life of a Food Truck Owner
A Day in the Life of a Food Truck Owner
Now if you’ve seen the movie Chef with Jon Favreau and his adorable munchkin son rolling around the South serving Cubano’s out of an un-permitted roach coach you probably have a skewed sense of reality. They roll up, open the window and bang – you have tasty food served by child labor with a side of John Leguizamo. Don’t get me wrong – it’s good entertainment and I enjoyed the movie (despite the fact that I still hate pouty-assed OCD loser Favreau from Swingers). But it’s cute – and not reality.
In order to get a better understanding of the business, I wanted to get a sense of what a typical day of running a food truck entailed from my trio of food truck masters. All agreed that the operators of the truck are essentially looking at about a nine to ten-hour day on average to support a two to three-hour service window.
A typical schedule for a food truck looks like this:
|7a – 8a||Start reheats for hot items such as soups, jambalaya, etc.|
|8a – 8:30a||Set up truck for service, maintenance, fill water tanks, generator fuel top off, etc.|
|8:30a – 9:30a||Load truck with the day’s supplies|
|9:30a – 10a||Drive to site|
|10a – 11a||Set up for service|
|11a – 1:30/2p||Service|
|2p – 2:30p||Pack Up/Break down|
|2:30p – 3p||Drive back to commissary|
|3p – 4p||Clean up, wash truck down, write prep list next day or stay|
|4p – 5p||Prep for next day or turn around and doing another event that night|
Of course, none of this includes prep time in the commissary (typically happening while the truck is out or in the evenings) or if they are doing catering events later in the day. In the latter case, the truck gets reloaded and sent back out for the evening extending the day by anywhere from 4-6 hours. Those are some long days my friends.
The Need for Speed
The Seattle food truck scene has grown up over the past 6 or 7 years. When asked about the expansion and competitive nature of the business Edison told me, “We used to operate in a space where 6 years ago – maybe there were 10 trucks of our nature that roamed around Seattle. Now, there’s over 180. What restaurant had that many direct competitors to fend off? None has seen their competitive landscape expand to that degree.”
But why are people so keen to eat food out of a truck? Growing up in New York I had easy access to street meat and roach coaches. None of which were very good but they were accessible and easy to grab a quick bite from.
Many of today’s food trucks have upped their game. People can now get a wide-variety of ‘street food’; much of which is made with locally sourced ingredients and costs less than you might pay in a traditional restaurant. Others go for the speed of service when they don’t have time to sit in a restaurant. But how fast is fast enough? Waiting 10 minutes for your lunch doesn’t seem like long but apparently for some in our instant gratification society it apparently can feel like an eternity.
I asked my food truckers about the ideal time from order to service. Lewis led the pack with a service time of “ideally two to three minutes” where Henderson was a bit longer at “seven to eight minutes”. Edison was right in the middle at 3-4 minutes and added, “we can do as many as 95 tickets in an hour and we start to get upset with ourselves if we take longer than that.”
As far as reducing the number of menu items to increase speed all parties agreed that 3-4 menu items was ideal. Lewis added that, “The speed at which people produce has nothing to do with number of items on the menu – it has to do with skill set of the people on the truck and their systems. Most trucks don’t have extensive menus but remember – it’s usually a mom and pop-type operation. Most people who run a truck don’t go to culinary school and have never been exposed to systems to produce high quality food quickly.”
A Rolling Gold Mine or Romantic Folly?
It’s already pretty well-understood that if you want to get rich you don’t get into the food business. That being said, food trucks offer an opportunity to start a business for 50-100K vs. a brick-and-mortar restaurant which can cost many multiples of that amount.
But are food trucks a highly profitable business with little overhead? Lewis said, “I can guarantee that they aren’t. We’re in Seattle where local and sustainable is on everyone’s mind whether they’re at a food truck or at Canlis. Just because the walls are smaller doesn’t mean your food or labor costs are any different.”
Plus, he said “Overhead isn’t that much cheaper than a traditional restaurant. Sure, you can buy a food truck cheaper but outside of that, some of these guys in food truck pods are paying over $100-125 a day just to sell there. If they’re running 5 days a week then that’s $2,000-$2,500 a month in rent. Add on top of that the Health Dept. requirements that all food trucks have commissary space and you’re now looking at over $3,000 a month in fixed overhead before you sell a thing.”
Edison added that “You have to maintain and insure a large, flammable kitchen on wheels. These vehicles take a beating every single day. You hit one pothole and you’re out – you miss a day. Any time taken to repair the truck is lost revenue. And it’s much more difficult to get these trucks repaired. They’re basically commercial kitchens driving around in an older vehicle on city streets.”
So I dug deeper into the business model of running a food truck to understand the economics of the business. I wanted to know how much it really costs to run one of these things and how profitable they can be. I collected advice from the trio and compiled the following mini-P&L:
|Food Truck Economics 101|
|Daily Average||Annual Totals||Working Assumptions|
|150 covers/day||$ 1,500||$ 375,000||250 Working Days/Year
|Total Income||$ 1,500||$ 375,000|
|Food||$ 450||$ 112,500||30% of revenue|
|Labor||$ 255||$ 63,750||27% of revenue
$15/hr for 2.5 staff
Plus Payroll Taxes
|Operating Costs||$ 345||$ 86,250||23% of revenue
Equipment, ‘Compostable’ Packaging
|Advertising||$ 150||$ 37,500||Discretionary|
|Commissary Rental||$ 48||$ 12,000||$1000/month on average|
|Pod Rental||$ 100||$ 25,000||Can be as high as $125/day|
|Seattle City B&O Tax||$ 3.23||$ 806.25||Based on .215% Tax Rate|
|Total Expenses||$ 1,351.23||$ 337,806.25|
|Net Income (Loss)||$ 148.78||$ 37,193.8||Total Income minus Expenses|
*This does not include the owner’s labor.
These numbers do not paint a pretty picture – nor do they support the notion that there’s a ton of savings to be passed on to the consumer because they run out of a truck. Essentially, after you sink 50-100 grand into your truck/kitchen/home you now work 10+ hour days and hope to hell that you can turn 150 covers in 3 hours or less of service. You read that right – 150 covers in 180 minutes or 1 cover every 1.2 minutes every day for 250 days a year. If you’re lucky enough to average that level of business every day of the year (including those dreary days in winter); then you may just walk home with enough profit to pay yourself minimum wage.
One common theme among the trio was the limited flexibility food truck with respect to labor costs. Henderson lamented that, “If you are having a slow day you can’t just cut labor like you would in a traditional restaurant and send people home. In a food truck, you are stuck – it’s completely unpredictable.”
All three food truck owners agreed that most of the successful trucks are also doing catering. Henderson added that, “Its guaranteed money and the margins are much higher – the same with the festival circuit.” Edison also pointed out that some owners have evolved their businesses into brick and mortar spaces due to the profit constraints presented by the truck model. “There’s not a single truck from the ‘old guard’ that hasn’t expanded to brick and mortar. Why? If we could sit back and retire on a single truck we’d roll with that but it’s just not possible. It’s a pretty honest way to make a dollar – but nobody’s getting rich off a single truck.”
On the Road Again
For all the kitsch, charm and personality that food trucks bring to the masses; they are, by and large, businesses with limited upside. Owners work long hours and are constrained by the capacity of the truck, equipment, makeshift utilities, labor and overhead costs and short operating hours. Plus, they face further hurdles by having to prepare all their food in licensed commissary kitchens while many pay rent to sell food at designated sites. These are things that other street food vendors in other parts of the world are much less encumbered by. Do you really think the guy selling prawns farmed raised in raw sewage by slave labor on the streets of Bangkok has that kind of overhead? I don’t.
The fact is that here in Seattle we have a much more discerning food buying public than in other places where street food is cheap, abundant and, often, unregulated. We want our farm-to-table this and our organic that – and we should be willing to pay for it. As much as I love my street meat when travelling to faraway lands – I have zero expectations (or desire) that it will be duplicated here. Why? Because I’m realistic about the costs of quality food sourcing, labor and regulation. I know that cutting corners would mean lower quality ingredients and poorly paid employees which always leads to an inferior product and experience.
So Seattle, please don’t lament the embarrassment of riches we have on the food truck scene for it didn’t even exist a few short years ago. Remember back in the day when we bitched about not being as hip as PDX and their abundance of food trucks? Don’t start complaining about a 10 minute wait for a $10 lunch. And please don’t try to compare us to places where people make less than a dollar a day. Remember – you all wanted $15/hour right? Enjoy the fact that you’re supporting a small business, eating some damned tasty food from the region, and that you have a few minutes to relax and enjoy dining al fresco.
* Portions of this story originally appeared in Seattle Weekly
So you’re telling me my idea for a corn dog truck with different flavored corn batters is not going to get me rich?
Sadly, probably not. Unless you sell about 500 of them a day.
I’m sure most of the numbers are accurate, but are we supposed to believe food trucks spend 35,000$ on advertising????
Yeah – I get this question a lot. You have to figure in time/pay for someone to manage social media, website Dev and hosting, PR, etc. Then there are events, competitions, comps for media, etc. It adds up quickly though it is discretionary. But spending less may mean less revenue and then you are relying on word of mouth and location.
Jason, you are right on! As brick and mortar restaurant owners who are about to launch a food truck in the next few weeks, we can tell you, “it ain’t easy”. It’s a constant struggle dealing with employee issues, taxes, and escalating costs, not to mention the looong hours and few, if any, days off. You definitely have to have a passion for it. As you said, you don’t get rich by going into the food business.
Thanks Kim! I wanted to do this story justice by talking to the experts. I wish you great success!
I am guessing they are spending many items on a weekly and not a daily basis ie. 52 vs 250 times a year basis. This changes the bottom line quite a bit. I would guess food would have been a higher ratio of the costs.
It’s broken down this way for illustrative purposes. However, it doesn’t change the bottom line. Only cash flow.
i run a food truck business and i can honestly say it isn’t as easy as i thought. The expenses are honestly there, PR, restocking,time etc… but if you want to make money out of this, you need gigs and you need traffic coming through the truck. But, hey! good luck out there