Starting a Food Truck Business? Here’s What You Should Know

Do people love the food you prepare? Are friends and family often commenting that you should quit your day job and take up cooking full time? While opening a restaurant is too costly and risky for most of us, opening a food truck business is probably more within reach and maybe even something you have been dreaming about doing.

It’s not such a crazy dream – Canada’s food truck industry is booming. According to Statistics Canada, there are an estimated 72,233 mobile food service operators nationwide in early 2022. Being a food truck operator allows you to be your own boss in a creative and dynamic sector that is steadily growing in popularity and revenue opportunity. But before you dive right in, it’s important to understand the ins and outs and what you will need to succeed.

That involves creating a food truck business plan before you hit the road. That plan needs to take into account the different elements of getting your business up and running, and addresses the opportunities and challenges you face. Here’s a breakdown of some of the questions you’ll need to answer to position yourself for success:

How Much Does It Cost to Start a Food Truck Business?

It’s not just the cost of the truck. While food truck businesses have much lower startup and operating costs than a restaurant would have, there is still a significant investment when you are first starting out. Startup expenses can be anywhere from $40,000 to $200,000, which sounds daunting, but you may qualify for a business loan.

The truck can cost more than $100,000 if new, and a used one can cost $15,000 or more. If you buy a truck not set up for food service. It can cost another $15,000 or more to retrofit it with everything needed to operate it safely and legally as a food business. In addition to the truck itself, other startup expenses include:

• Licences, permits, insurance
• Initial inventory and ingredients
• Advertising, a website, and a design for your truck

How Much Do Food Truck Owners Make Annually in Canada?

According to federal government data from 2018, food truck businesses in Canada can expect an average revenue of about $155,000 per year. That sum is dependent on several factors, including the areas you work, how popular your product is, how successfully you advertise, the quality of food and service you provide, and other factors such as positive or negative reviews you have online. It is possible to turn a profit as early as your second year in business and recoup your startup costs if you put the research and work in to run your business successfully. Your take-home pay will depend on the number of expenses you incur while maintaining your business, but also if you have staff. 

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What Kind of Food Truck Business Should I Launch?

It’s essential to define your niche and target audience. Some of the questions you should ask yourself include:

• Are you looking to feed office workers on their lunch breaks quickly?
• Do you wish to sell higher-end “gourmet” options in the financial district or offer carnival-style food at festivals and fairs?
• Do you have a particular style of food you are good at or love to prepare?
• What types of food can be prepared quickly but still offer quality, flair, and unique twists?

Remember that the type of food offered should be portable, hand-held, and easy to eat on the run, as most customers will be visiting on foot.

How Do I Define My Food Truck Business from the Competition?

First, do some research around which food trucks are already out there in your desired area, and try to come up with something different that is not currently being offered but will still have mass appeal.

Think about your signature dishes, what will be your best sellers and anything that is specific to customer demands. For example, will you offer organic ingredients? A seasonal, farm-to-table approach? What about vegan or gluten-free options? Finding a particular twist or fusion on a popular item that may not have been seen before can help. Have a clear vision of what makes you unique. Be focused and highlight those things when you create and advertise your brand.

How Do I Promote and Market My Food Truck Business?

As mentioned above, coming up with a name, a logo, a brand, and a clear vision is an essential first step. It might be a good idea to hire a graphic designer, as you want to get this part right. Make sure you think about all the touchpoints your branding will be on, such as sandwich boards, a website, and social media.

One of your biggest sources of advertisement is your vehicle. A big part of the appeal of a food

truck is its lively and fun appearance, so it’s important to invest in an attractive truck design. Consider a vehicle wrap with bright colours that is easy to spot and recognize that features your company name, logo, and clear information and photos of signature dishes.

Once you have your branding and logo sorted out, it’s a great idea to get on social media and start the conversation with the community, especially if you change your menu often or will be in different places. Make sure you are findable online via Google and review sites like Yelp, but don’t forget to promote your food truck in the real world. Think about your target audience and where they like to eat and shop, as it is another excellent way to advertise using flyers or posters. 

How Do I Find Suppliers for My Food Truck Business?

“Supplies” doesn’t just mean food. They are everything from paper plates, napkins, and cutlery to uniforms. Spend some time researching the types of things you want to have available and what they cost.

You won’t want to buy food from grocery stores as you do at home. It’s essential to buy things in bulk from a reliable source with competitive prices, good reviews and a robust supply chain. Developing farm-to-table relationships is a popular approach for sourcing food, and with good reason. It allows you to support local, but also ensures you are using fresh seasonal ingredients, which can be a huge selling feature for your business.

Ask around, find out where your favourite restaurant sources its supplies, and read testimonials. Visit some food trucks and note the types of plates or boxes they offer their food in, the condiment containers they have, and ask them for advice.

What Payment Options Should I Provide Customers at My Food Truck?

These days most people expect to be able to pay with contactless point-of-sale (POS) options such as credit cards, debit cards and e-wallets. Ensure you have that POS technology set up or you will likely be turning a lot of people away. In addition, it’s always great if you can accept cash sales as well, but remember to always have small bills and change on hand and be able to lock it up safely. 

What Licenses or Certifications Does a Food Truck Business Need?

A municipal business licence is required for businesses that offer mobile food services. Food trucks can operate on either public or private property, but municipalities typically have restrictions on what the vehicle’s maximum dimensions are (so double check what those dimensions are in every city or region you operate). Other requirements typically include having a full kitchen onboard, and whatever food you prepare, it must be sold directly to the public. You will also require:

• A commercial licence plate and a motorized refreshment vehicle owner licence
• A mobile food vending permit
• Commercial auto insurance and, if operating on city streets, a general liability insurance policy
• An inspection from a certified food safety technician
• Propane tank inspections
• Any applicable parking permits
• GST/HST registration

All food trucks are subject to federal regulations for food safety. In addition to those, each province and territory also have laws governing fire regulations, food safety and disposal of wastewater and grease. Do your research to find out what those laws are in your area before starting.

What Are the Pros and Cons of Running a Food Truck Business?

As with any small business, each venture has potential upsides and downsides. The same applies to a food truck business.

Pros:

• Flexibility
• Creative freedom
• Being an entrepreneur
• Doing what you love
• A booming sector with revenue growth potential
• Being an active part of the community

Cons:

• High startup costs
• Long hours (including paperwork and buying supplies)
• A lot of hard work in a hot, cramped space
• Hard to anticipate supply and demand (you may run out or throw out a lot)
• Stressful, busy periods and slow days
• Dealing with permits, traffic, maintenance, gas prices, supply chain

What Insurance Do I Need to Protect My Food Truck Business?

Having the right food truck insurance is crucial for your protection. It’s also required by law. Here’s a quick rundown of the types of insurance your food truck business may need:

• Commercial auto insurance: A necessity for any vehicle used for business purposes (private-passenger auto insurance is not designed to cover business vehicles or any vehicle used to conduct business).
• Commercial general liability (CGL) insurance: A must-have for any small business. CGL protects you against third-party bodily injury or property damage claims. For instance, if one of your customers suffers food poisoning and sues you, CGL may pay for their medical expenses and your legal defence fees. Product liability insurance is usually included in a CGL policy, and it is recommended for anyone who sells or distributes a product, including food.
• Commercial property insurance: You might not think you need this type of coverage since you’re driving a food truck, but if you store inventory and supplies at a physical property, commercial property coverage is necessary to protect that property and your inventory from fire, flood, severe weather, vandalism, and theft.
• Equipment breakdown insurance: Your food truck will contain expensive equipment such as a grill, grease fryer, and refrigerators. If any of your equipment malfunctions or breaks down because of an electrical or mechanical issue, equipment breakdown insurance is designed to cover the cost to repair or replace them.
• Legal expense insurance: If you ever need to hire and retain a lawyer, the cost will skyrocket quickly. Legal expense coverage takes care of that, plus it provides you with access to an experienced attorney when seeking legal advice on a set of common business topics.