Why Do Food Vending Businesses Fail?

Food Truck Food - Kitchen Food Trailers

Here are some things to avoid!  Learn from the mistakes of others and make your food vending business a success!

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Why Do Food Truck Businesses Fail? 

Mobile Cuisine

“Although the mobile food industry has been growing exponentially over the past few years, some food truck businesses fail (food carts too). Owning a restaurant on wheels in a good economy can be a challenge, but owning one in a down economy can be even more difficult.

We have put together the top 10 reasons why food truck or food cart vendors in the mobile food industry have failed (outside of local legislation which in many cases is out of your hands). Take a look at your gourmet food truck or food cart business (yes hot dog carts too) and make sure you avoid these mistakes, to maintain a flourishing business.

Why Food Truck Businesses Fail

1. Constrained by Your Vision.
A savvy food truck or food cart owner knows it’s all about the customer, not his or her personal tastes and opinions. Don’t be self-possessed. Be open to opinions other than your own. Without a vision, a food truck is like a ship without a rudder and is in danger of drifting aimlessly.

2. No Identity.
Few things are as important in the food truck industry as the way your business is perceived. Lack of identity is the opposite of being constrained by your vision. A food truck’s success depends on its ability to establish a brand and stick to it, so develop an identity and focus on perfecting it.

3. A Bad Opening.
“You never get a second chance to make a good first impression” was never truer than in the mobile food industry business. There’s a reason actors rehearse before opening night—you should too. A soft opening is a great tactic that can lead to an infinitely more successful grand opening of your new food truck.

4. Hiring & Training.
Just like a bad opening, bad service will kill your business quickly. If your vision isn’t executed properly, the damage to your current and future customers is unavoidable. Most food truck owners lack formalized training, procedural and operational processes. Learn from an experienced owner or hire a consultant for expert advice.

5. No Formal Recipes.
How can your truck or food cart kitchen staff maintain consistency without formal recipes? This step is critical to controlling costs, curtailing waste, and providing effective staff training.

6. Poor Inventory Management.
Outside of the initial capital required to purchase your truck or cart, the cost of food is a mobile bistro’s single biggest expense and, unless the financial control systems are in place, you are vulnerable to a drain on your cash. Reducing inventory means a reduction in food cost, so manage your resources carefully.

7. Undercapitalization.
Unexpected and unforeseen events happen all the time, especially in a food truck business. In many instances, incorrect budgeting is the culprit. Don’t get caught up in the dream of being profitable from Day 1. Make sure you’ve got money left in the bank to help you ride out the difficult days when your truck needs a new generator, or even a new engine or transmission.

8. Poor Ownership.
Don’t be an absentee owner. If you want to own a food truck or cart, expect to work. Otherwise, don’t expect to get paid. But, and this is a big but, if you haven’t put the systems, tools, and people in place that allow you to step away from the day-to-day operations, then you haven’t bought yourself a business; you’ve bought yourself a job with a misleading title.

9. Insufficient Market Analysis.
A thorough examination of locations you plan to sell your fare is vital to know if it is to be successful and, once it is successful, staying on top of business trends will keep it that way. This is another area where an experienced owner, marketer or consultant can help.

10. Lack of a Business Plan.
The last of our top reasons food truck businesses fail relates to the lack of a business plan. The previous nine points MUST be addressed in your business plan, and the plan MUST be right the first time. The business plan is what everything your food truck will do is based on.

Force you to plan ahead.
Think about the competition.
Formulate a marketing strategy.
Define your management structure.
Plan your financing, among other things.
Your food truck business plan is your roadmap to success. Do not proceed without a solid business plan.

The Bottom Line
The old adage “failing to plan is planning to fail” is never more critical than in the mobile food industry. Avoid these top 10 mistakes and enjoy the fruits of your labor.”

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RestaurantMBA

“Opening a food truck is much cheaper than opening a restaurant, and therefore a much more tangible goal for those wishing to serve their culinary works to their community. With a comparably low initial investment, people can see their financial freedom just a few years down the road. Once they break even and pay off any loans, as long as their food truck continues to make a profit, they will have gained financial freedom doing what they love.

However, achieving success in the food truck world is much more complex than is often perceived. Just like restaurants, food trucks have a very high rate of failure with 60% going under within three years of opening.

Various factors can contribute to food truck failure, but the main reason is likely oversimplification. People thinking with their hearts decide they can easily reach their goals by opening a food truck and overlook many important details. Dreamers believe simply offering amazing food and acquiring funds to buy a truck and cover overhead will pave the way to success.

Just because starting a food truck is less expensive than many small businesses doesn’t mean opening one is a guaranteed way to achieve financial freedom. Breaking into the food truck world requires extremely hard work, a solid financial plan, and patient, persistent pursuit.

Reasons Food Trucks Fail and How to Prevent Them

To understand more about why food trucks fail, it is best to look specifically at what areas of the business have the potential to weigh it down. The sections below discuss different reasons that food trucks typically fail and all fall under the umbrella of oversimplification. With accurate, realistic, and detailed planning, all of the following mishaps can be avoided.

Lack of Business and Financial Knowledge

A food truck is, above all else, a business. As with any business, a detailed, viable business plan needs to be developed to provide a solid foundation upon which the business can be built. It may be easy to get lost in planning innovative menu items, but food isn’t the only component needing thorough consideration before opening a food truck.

Without a specified layout of costs, operational processes, marketing and branding plans, and research into industry specific issues, any food truck may be bound to fail.

Details covering the necessary licenses, permits, and insurance to cover all food truck specific laws and regulations are sometimes overlooked by people planning to open food trucks. Every state, county, and city has its own laws regarding food trucks and not having the correct licenses and permits can lead to hefty fines.

Non-compliance with ever-changing health department standards can lead to problems. Insurance also necessitates prior planning. Some people hoping to start a food truck underestimate the cost of having insurance covering their business, as well as their physical truck.

High expenses are a common reason food trucks fail. Not only are certain costs sometimes underestimated, some can be completely overlooked. Opening a mobile business can carry many unforeseen expenses like those related to truck and equipment maintenance, fuel, and parking tickets.

Proper investigation into the worst that could possibly happen is necessary when starting a food truck. Solely basing a financial plan on a set growth timeline may not be effective. A large number of food truck owners end up spending more money on their business than they initially expected. With one too many unwanted surprises, a food truck business can fold.”

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