Managing Food Truck Cash Flow and Expenditures Better
It’s a given that starting on any kind of business endeavor entails being ready to shell out money. You may already have a great plan and vision of how you want your food truck to look and operate, but the initial challenge is, how you’re going to get it to take off. Of course, this means taking a big step forward and going beyond just conceptualizing. In order for your food truck to get noticed, you need to find a way to cover startup costs.
After all, a food truck business, for all its seeming uniqueness, is still essentially a restaurant. It shouldn’t be treated as anything else, especially by its owner. It may have the ready benefit of mobility, but what ultimately matters is the food. The food industry offers enough challenges as it is, and food trucks are no exception to this. For your business to flourish and survive, you have to be willing to commit to it long-term and be dedicated in keeping it running smoothly.
One key way to avoid a lot of the hurdles that those who venture into this kind of business encounter is to be mindful of cash flow. If you’re not optimizing your pricing or trying to save as much as possible when buying supplies, you’re not making the most out of your cash flow strategy. The same can be said to those who ignore expenses.
Since everyone’s food truck idea stands on its own, it’s virtually a given that you should expect your costs to be different from other food trucks out there. More often than not, you will have requirements that are unique to your particular concept. This is why the best step to take is to invest time in making a list of all your expenses. It’s the only way for you to make precise calculations, and it’s only when you do this that you’ll gain a good overview of the costs (which quite often look like they’re ballooning).
Don’t panic, though. Keep a level head and make sure to compute the expenses required to make every dish. This is a necessary step for every food truck startup, as you need a clear picture of the money you need to support your business once it launches and starts operating normally. The expenses certainly won’t stop there, you also have to take a look at the accounting and legal aspects of it, assuming you’ve taken into account all the financial costs.
Handling Your Food Truck Operating Costs
Operating expenses is another fundamental part that you shouldn’t overlook. It’s what’s required to keep your business running in tip-top shape, after all. Monthly payments are usually included in this, most of which can be organized into subcategories (like fixed and variable expenses).
Variable expenses are usually items whose prices tend to fluctuate like ingredients, maintenance costs, fuel, permits, to cite a few. Fixed ones, on the other hand, could range from vehicle payment or rental cost, insurance, and even website costs (hosting, domain, etc.) Accuracy when calculating these expenses is nothing short of important. Even if you do get an accurate tally of these costs, you also still have to set aside money for surprise expenses that could be brought about by various emergency scenarios (e.g. engine problems from not keeping up with vehicle maintenance, potential health problems, inclement weather, etc.).
With that said, you shouldn’t expect your food truck to take off overnight. As in any budding business owner, you should be ready to invest time and money to make it grow, even if you’re not seeing any significant returns. Expect this to be regular during the starting months. The amount of time it takes for you to break-even is obviously determined by your initial investment.
Perhaps, you can comfort yourself with the fact that most food trucks have naturally lower overhead expenses. Even so, this doesn’t exempt you from making sure that you have adequate capital to ensure smooth operation for, at least, a year. According to studies, two years is often the average time it takes for a food truck to start getting gains.
Dealing with Food Truck’s Food Volume
Food volume is one other aspect that needs your consistent attention. You’ll have to know precisely how much food you’ll be buying and subsequently cooking. In turn, you’ll also have to be aware of the amount that you intend to sell. Computing food volume is no walk in the park. Most of the time, you have to get your feet wet and acquire the needed experience to make more accurate calculations and be able to always purchase and prepare the right volume regularly.
You might always encounter such scenarios as running out of food quickly, making it virtually impossible for you to figure out the amount of dishes you could have sold for a day. Most of the time, this takes guesswork but you’ll certainly gain a firm grasp on this with time.
There’s also always a stricter time limit for you because your operating hours are not as lengthy as a standard restaurant. You would have to be able to adapt when it comes to being able to increase food volume according to demand, assuming you’re already prepared to sell your items as quickly as possible.
Being able to price your menu correctly plays a direct role in volume as well. Of course, having overpriced items might mean you won’t be able to sell as much as you want. Conversely, prices that are too low might make you accrue unnecessary losses. Most food truck items have an average price range of $6-$10, but this may still vary a lot.
Attracting Loyal, Regular Customers To Your Food Truck
Who doesn’t want to get a stream of frequenters to their food trucks? Well, one strategy of building a loyal following is to have budget-friendly prices. Don’t hesitate to make price comparisons with your competitors. Again, assigning the correct prices takes experience. You’d still have to take note of other factors like portion size and location, though, as these directly affect pricing.
You need to have a solid reason for charging a particular amount for your specific food items. Most of the time, your customers will be curious why you’re charging higher. Make sure that you assure them that it’s worth every penny that they spend.
Are you, for instance, using more high-quality ingredients (e.g. organic, always fresh, imported, gluten-free, etc.)? Do you include add-ons in your dishes to make them into meals? Or are your portions simply bigger? You need to know the answers to these questions.
Anytime you end up in the red, you have to promptly make the needed adjustments. During these times, you have to try acquiring bulk discounts, cutting supply expenses, making staff adjustments or simply planning and executing better marketing strategies.
Once you have a clear picture of your overall costs, find out the exact amount of items you need to sell to break even. These kinds of problems are often what food truck owners face in the first year of operation so you’ll have to be prepared to do these adjustments often. All of these things are part of the entire process of running a food truck. You’ll definitely need all the patience and persistence you can muster to overcome these obstacles and ultimately succeed.
If you are in the planning stages of your food truck business, you need to budget for a fixed cost like a monthly food truck payment. The best way to do that is to get a free quote specific to your food truck concept needs.