Passive Income With a Food Truck


In order for your food truck business to be passive, you need to build it to become passive. You may be actively involved in the business before being able to delegate, outsource and automate the

One profitable business idea that can be made passive is a food truck business. The food truck industry is expected to reach close to $1 billion in value by 2020 in the US alone (source). With the right niche, a strong business plan, a popular product, and loyal clientele, a food truck can make between $4,000-$16,000 gross income per month (source).

Can a food truck business be passive? In order for your food truck business to be passive, you need to build it to become passive. You may be actively involved in the business before being able to delegate, outsource and automate the work to employees. This needs to be your end goal, or you will always remain actively involved in your food truck business.

In this guide, we have a look at the food truck business, what it takes to start one, and ways of turning it into a highly profitable and passive income idea. Let’s dive right in.

1. Deciding if This Business Can Work for You

As far as passive income business ideas, a food truck is definitely not the cheapest to start. Some online passive income ideas can cost nothing to start but his physical ideas is moderately expensive. According to Forbes, “a food truck business could cost anywhere between $50,000 and $200,000 and anything below the $50,000 range could start to cause concerns about the reliability of the transportation or quality of the food and preparation equipment.” The average food truck cost is $85,000 (source). The overall cost of starting a food truck business will be determined by the size of your truck, type of equipment, and your products, among others. Having catering experience is also an important factor as preparing food for others is very regulated. So, it’s important to decide if the business is right for you before getting started.

2. Identify a Niche

The food truck industry is booming. For example, there are over 5k food trucks in the US alone (source). With that in mind, one thing is clear – nowadays, there’s almost always a food truck around the corner in large cities like LA, Denver, Dallas and New York (source). So if you want your food truck business to be profitable, you have to stand out from the crowd. Although some people believe that offering just about anything to everyone can help you build a customer base. But specialization makes most stand out from the crowd in the foodservice market. You can only do that by identifying and tapping into a niche idea.

Food Truck Niche Ideas

Some niche food truck ideas include the following.

Regional Foods

  • Mexican
  • Middle-Eastern
  • American
  • Korean
  • Cajun

Trends

  • New cuts of meat
  • Artisinal fare
  • Unique condiments
  • Unique spices
  • Fish & seafood

Natural & Organic Ingredients
Deserts

  • Waffles
  • Cakes

How to Identify a Niche for Your Location?

You need to ask yourself some questions like what food is already available in your area? What food is missing? What are customers looking for from food trucks? Who is your target market? What are people willing to spend on a hand made meal or drink from a food truck? What ethnicities and age groups are present? What is the competition doing (right or wrong) in your area? etc.

You can answer these questions by researching your target audience and learning from established food truck businesses in your area. Look at how other businesses operate, customer preferences, food prices, services offered, etc. Through this, you will be able to identify where you might fit without directly competing with anyone. Some profitable food truck niches include vegan food trucks, organic, all-natural food trucks, ethnic offerings, desserts, comfort foods, healthy options for children etc. However, these are just ideas. The ideal niche is what works where you are now, what you and your target market is interested in.

3. Budgeting for a Passive Income Food Truck

Having spent lots of money on starting your food truck business, you’ll definitely be concerned and anxious about its chances of success. Learn from the most successful trucks in your area and replicate the results with your business. What are the starting and running costs? The best equipment? Are there any applicable fees? Our ideas in this guide are general, but the answers to your questions will vary with your location. Here are some general expenses associated with this business.

Registering your Business

Just like any other business, you have to decide where yours falls. Is it a sole proprietorship? Partnership? or the company? The cost of registering a business varies with the type and location of the business. This might cost you because you have to consult a lawyer, accountant, and tax specialist to set up and maintain your books. You will also need to register your business name at the Patent and Trademark office in our area to prevent anyone else from using it. In most cases, a lawyer will help you with all this (source).

Buying Equipment

The cost of equipment depends on your location and the brand you choose.

Getting a Food Truck

It’s important to take time choosing the ideal truck for your business. There are three types of food truck vehicles (food truck which is from 14 feet to 34 feet long, food cart, and food trailer) and they all vary in price. For example, in the bay area, a food truck costs $50,000 on the cheap end and up to $200,000 for a “totally customized, “pimped-out”, brand new construction vehicle. To choose the right vehicle for your business, consider questions like what’s on the menu? How many people will you serve in a day? How many people will work in the truck? For example, if you intend to serve a large number of customers, hire a few people to work in your truck, or offer a variety of dishes, a larger food truck is more ideal.

Other Equipment

Most food trucks will come with in-built basic kitchenware and equipment, but you may have to buy more equipment depending on your business needs. To identify what you need for your truck, think about your menu and the preparation method of every dish. List out the tools and supplies you need and how you can store all items (tools, ingredients etc.).

Insurance, Fees, and Permits

You will need to take out insurance for your business as well as cater for license fees and permits. The total costs of fees depend on your location. To operate a food truck in New York, for example, you may need a Mobile Food Vendor License, Mobile Food Vending Unit Permit, to complete the food protection course for mobile food vendors etc. Most of these permits need to be renewed periodically and reviewed by the local health department. Check with your local authorities and lawyer to make sure you get all the permits and licenses you need to run your business.

Promoting Your Business

One effective way of promoting your food truck business is by creating hype before it opens. You can create hype on social media, on local papers, radio, etc. You can also hang posters in the various locations you intend to operate in. Within the first few months, be motivated by learning about your customers and not your profit margins. Offer your dishes at discounted prices and offer free services like deliveries, coupons, free meals, etc. Being active on social media will help you grow your audience and sales. Open accounts on Facebook, Instagram, YouTube and share your experiences, products etc with your customers. Create your own hashtag and invite people to share their foodie experiences with your business with their friends.

Maintenance and Ongoing Costs

Like any typical restaurant, your food truck will accrue maintenance costs that you shouldn’t forget to consider. You will have to cater to costs like plumbing costs, stock replenishment costs, truck maintenance costs, parking fees, garbage disposal costs, gas, internet etc.

Making the Business Passive

If you find your niche in the industry, ideal locations to set up shop, and loyal customers, and reliable employees, this business can make an excellent passive income source. You don’t have to show up and cook in your food truck. You can hire assistants and chefs to do the work for you and make the business passive. The best part? The more food trucks you invest in, the more passive and profitable your business becomes. Make sure to clearly document your processes with written manuals, videos. and other resources to make hiring or replacing employees very easy. 

Everything should run as smoothly as possible without your being physically present. From supply chain management to inventory to human resources. Take McDonalds as a business case example. Almost any teen can work there, after following short training. Working in your food truck should be as simple, clear and as documented as working at Mc Donalds (source). Make sure your processes are efficient and repeatable and do not have too many redundant tasks. If food should be cooked at a specific temperature for a specific amount of time, make sure that information is easily accessible to new employees. A well-trained, trusted manager can help make this part of the business passive for you once the processes are in place.

4. Enjoy Your Passive Income

Your break-even point will depend on your sales, expenses and profit margins. In the beginning, the business will not be passive and you will often be engaged in daily operations. Once you pass the break-even point, document and outsource your processes, you will start to enjoy passive income. You can leave your employees to run the business on your behalf.

How Passive is a Food Truck Business?

If you intend to work on the truck, the idea is not passive and will require your constant supervision. But if you hire employees to run the truck for you, the idea can become more passive. Although the business may require frequent supervision, you can do it remotely with a good manager. If you hire the right employees, they can make crucial decisions on your behalf making the business even more passive.

Scalability

A food truck business is scalable by location. Your loyal customers are the main promoters of your products and can help you grow your customer base fast. With proceeds from your truck, you can buy another truck and boost your passive income streams.

Start-Up Costs

Starting a food truck business can be expensive – a food truck alone costs over $50,000. 0ther costs like equipment and fees run into thousands of dollars. However, if run efficiently, you can recoup these costs within several months or years of starting your business.

Difficulty

You will experience a few difficulties at the beginning of your venture. You will need to research the niche, identify the best business model, choose the ideal truck for your business, hire the right employees, etc. But, these are difficulties you will experience with other business ideas as well. Once the business is up and running, some of these challenges will cease to exist. Others will transform into ongoing issues you could outsource (human resources, marketing etc).

Time

The business might take a couple of months before it is popular and profitable. However, once you establish a large and reliable customer base, your sales should grow steadily until you break even and start earning passive income.

Risk

To start and run a successful food truck business, you need a large financial investment so take note of this risk. The risk is heightened by the fact that you have to hire someone to run the business to make it passive. Be sure to hire qualified staff that relates to your products and vision. Also, ensure you buy high-quality equipment and tools to prevent damage and unforeseen costs. There are many risks involved with food trucks such as the risk of fire or risks related to catering food (allergy breakouts etc). All businesses carry some risk so do due diligence and make sure you are confident that this idea works well in your location. In case of any challenges or mishaps, make sure your insurance would take care of them during the course of business.

Seasonality

Food trucks can be seasonal depending on what you sell, your type of clientele and the weather. You can always set shop with your truck in densely populated areas, gatherings, festivals, beaches etc. But if you rely on tourism, there may be dips in sales when there are fewer tourists. Be attentive to these factors in your specific location. So long there’s a group of people that consume your products, you are good to go. In places with favorable weather all year long, seasonal dips should not worry you.

Return On Investment

A popular, successful food truck business can be very profitable and provide a very high ROI. A well-run food truck generally make between $4,000 to over $16,000 every month (source). Assuming the initial startup cost of $100,000 and a food truck making at least $10,000/month, you can break even and start earning passive income in 10 months.

Related Questions

What is the average food truck income? Assuming your product is popular, you are ideally located, and your customer base grows, you can make between $4,000 to over $16,000 every month (source). If a food truck makes $10,000/month with expenses at about $2-4K per month, the net profit can be about $6-8K every single month.

How much does it cost to start a food truck business? Purchasing a truck, equipment, fees, employing people, maintenance costs etc. can vary in some places. This makes the initial starting capital vary per location. As a general idea, a food truck business should expect to spend at least $50,000 on the truck, $10,000 on equipment, $5,000 upwards on fees and permits and $10,000 upwards on other costs.

How can I make my food truck business more passive? A food truck business can be made more passive by employing the right people to run it on your behalf and investing in new trucks. Documenting processes and making hiring and training as easy as possible is key. Also, the more trucks you have, the more the income and the higher the passive levels of your business.


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