It is estimated that close to 60 percent of all food truck businesses fail. Clearly, successfully running a mobile food business involves a great deal more than just being a good cook. Learn how cash flow difficulties can cripple your company and keep you from the prosperity you deserve.
Difficulty Getting Off the Ground
It isn’t enough to have a truck, some yummy recipes, startup capital and a business plan. Believe it or not, one of your biggest initial hurdles will probably be bureaucratic red tape courtesy of your town or city. One of the first things you should do is to contact officials in your municipality to learn what permits, certifications and licenses you need to obtain. They vary widely from place to place, so don’t go by the experience of a friend in another city or state. Among other things, you may need:
- A seller’s permit
- Food safety training and proof that you received it
- Health department certification
- Documentation for your truck “licenses, registration and inspection
- Liability insurance
- Securing a parking place (you can’t just park anywhere)
Lack of Customers
It stands to reason that if people don’t know who you are, they won’t go out of their way to patronize your food truck. Lack of income is the ultimate cash flow problem, and solving it requires savvy marketing. Although your business is not connected to a brick-and-mortar storefront, that doesn’t mean you are unable to interact with the public to advertise yourself in many forums.
The most necessary and efficient way to get the word out about your food truck is through the Internet. You absolutely need a website as well as a dynamic social media presence if you want to capture the fleeting attention of today’s busy consumers. Also be sure to take advantage of loyalty and other marketing programs offered with some payment solutions. If long days of food preparation make you too tired to take on the task of setting up a web page and launching your Facebook and Instagram footprints, you might consider hiring someone to help you.
Cash Is Not King
A few years back, you could definitely make it a policy to accept only cash from your customers. Checks were too unreliable, and who could possibly figure out how to have a clunky credit card terminal in the confined environs of a food truck? That was then and this is now.
Today’s mobile payment platforms make accepting credit and debit cards inexpensive, fast and essential. Mobile credit card readers are often given to merchants from payment processors at no cost. Some can be used with your smartphone via a downloaded app, and others are standalone devices. With today’s modern technology, you can even get full POS systems which are fully mobile. Look for solutions that are both EMV and NFC enabled so you can accept all payment types including chip cards and mobile/digital wallets like Apple Pay. It’s estimated that mobile wallet payments could catapult to over $808 billion by 2019, so you’ll want to take advantage of this growth – even in your mobile food truck.
Poor Budgeting and Payroll Strategies
Any business owner should realize that if you don’t have your finger on the pulse of your income and expenditures, you are in danger of falling into financial chaos. One of the most important things you can do is to take stock of your customers’ buying history and the fluctuations in your revenue. Many mobile payment devices, particularly full POS systems (and, to a smaller degree, mPOS solutions) include inventory management and order history reporting to make keeping up with your business easier. See what is working and what is not, and begin to incorporate your findings into your budget for next year starting in June or July.
If that seems premature, it’s not. You might not come up with a perfect prediction, but it will serve as a workable starting point. When changes in sales numbers, fuel costs or employees come (as they inevitably will), you will be in a better position to be flexible.
Rising Food Prices
While you cannot singlehandedly stop rising food prices, you can take some steps to cushion the sticker shock for your customers. First, thank them for their loyalty by instituting a valued customer program. After a set number of purchases, offer a free soft drink or low-priced item that won’t break the bank for you. Second, consider purchasing locally grown or organic ingredients and make people aware that you are using them via your marketing strategies. People are often attracted to merchants who support their local communities and farmers. Finally, you can get creative about food items. Offer smaller side dishes at reduced prices, for example, if you have no choice but to raise the price of a main entrée.
The brick-and-mortar restaurant business is notoriously brutal, and successfully operating a food truck is no different. With every passing day, more enthusiastic entrepreneurs with a skillet, a vehicle and a dream are setting up shop in towns and cities across the country. For yours to stand out, you must make your customers’ eating and payment experiences as pleasant as possible. Doing so means running a tight ship administratively, treating people in a friendly and fair way throughout their visit to your truck, and, most importantly, preparing delicious food that rises above what your competitors are selling.