How Much Does It Cost to Start a Coffee Food Truck?June 17, 2019
Food trucks are all the rage. Every day, Americans across the country line up for a quick and tasty meal of fresh, hot local cuisine. These mobile restaurants are one of the fastest-growing segments in the restaurant trade.
Today, more than 4,000 trucks employ over 14,000 workers serving hundreds of thousands of people each year. According to a survey by the National Restaurant Association, food trucks are especially hot among the coveted 18 to 34 consumer demographic.
Coffee Food Trucks Are on the Rise
Predictably, more coffee food trucks are racing to meet the growing demand for craft coffee on-the-go. For aspiring coffee shop owners, coffee food trucks offer a hip, modern way to enter the coffee business. A few advantages include:
- Potentially lower start-up costs than a large, bricks-and-mortar coffee shop. (Check out our post on How Much Does it Cost to Open a Coffee Shop for a discussion of typical bricks & mortar costs.)
- Ability to experiment to find the best location. You can take your coffee food truck to customers instead of hoping they come to you.
- Flexible operating hours. Working mornings and weekends, you can start out part-time while keeping another job.
- Lower staffing costs, since most trucks will hold only two to three workers. At minimum, coffee food trucks will need a cashier and a single barista. Larger trucks may be able to accommodate two baristas.
How Much Does it Cost to Start a Coffee Food Truck?
Coffee, Drink Ingredients and Baked Goods. Never skimp on your ingredients. Today’s coffee lovers gladly pay $3 to $5 or more for each latte or frozen mocha, depending on drink size, region of the country and other variables. They expect to receive a premium quality drink. If customers rave about your drinks, they’ll come back and recommend your truck to others, in person and via online reviews. These are critical to growing your business.
Use the best craft coffee, chocolate, syrups and other drink ingredients you can find, as well as fresh-baked pastries, muffins and other baked goods. All together, the cost of your ingredients should be no more than 40 percent of projected sales.
Payroll costs, including wages, benefits, payroll taxes, worker’s compensation and costs of payroll processing. Again, it’s best to pay a little more to hire skilled, dependable staff with good customer service skills. As a rule of thumb, payroll costs should be 35 percent or less of sales.
Training costs. Skilled baristas can always find work and often develop a following. Investing in training your staff can pays off by reducing the time it takes to make each drink and in repeat business from satisfied customers.
Supplies, including paper cups, sleeves, lids, napkins, stir sticks, etc. It’s cheapest to buy these in bulk, but this requires an off-site storage area.
Fuel and Parking. Your fuel costs can vary based on how far you drive each day and the costs of fuel. You may need to update this budget line item frequently. You may be able to park for free in a business parking lot. In other cases, you will need to pay to park your coffee food truck.
Point of Sale System.To accept payment and keep track of receipts most coffee food trucks will want a mobile point of sale system that accepts credit cards as well as cash. Most systems require an initial set-up fee plus monthly charges.
Professional fees for attorneys, accountants and business consultants. It can pay to employ experts to avoid costly mistakes down the road.
Event Fees. You may have to pay a substantial fee to set up at fairs, concerts and other events. Some events also require you to pay a percentage of sales. Weigh fees against your projected revenues from each event before you sign on the dotted line.
Principal and interest costs (if you plan to borrow money). Remember to keep payments on your coffee food truck to about 15 percent or less of projected sales.
License and Permits. These fees can vary widely based your state and city. You will most likely need a license and registration fee for your truck, a business license and a food truck license. You may also need a seller’s permit, food handler’s permit, fire, health and other permits. Your local Small Business Administration office can help in identifying needed permits.
Income taxes (usually about 35 percent of operating profit). Most business owners are required to make quarterly income tax payments.
Other expenses, including business insurance, cellular phones, office supplies, advertising, plus repairs and maintenance of your truck, espresso machines and other equipment.
Calculating Expenses for Your Coffee Food Truck
After you’ve done your homework, add up all these projected expenses. You should have cash on hand to cover your initial costs as well as projected operating expenses for the first six months. That’s what it will cost to open your coffee food truck.
Questions about Starting a Coffee Food Truck? We’re Here to Help!
Crimson Cup offers complimentary business consulting for entrepreneurs who want to start a coffee food truck and existing coffee truck owners. Give us a call at 888-800-9224 or fill out this form, and we’ll be in touch.