NAICS: 722330, SIC: 5812
By Theresa Ehrlich
Street vendors no longer just sell hot dogs, tacos and snow cones. Today you can get anything from freshly prepared sushi rolls to grass fed organic hamburgers. Street food is having a significant impact on food culture. Professional chefs are leaving their restaurants to open their own trailers. Among them are Jerome Chang, former pastry chef at Le Cirque and now co-owner of DessertTruck in New York City, and Chef Laurent Katgley, owner of Chez Spencer, an upscale French restaurant, who operates a lunch truck which sells skewers of escargot in puffed pastry.4 Even Taco Bell has joined the fad, sending out its own fleet of taco trucks to roam the streets.6
The biggest buyers of foods from mobile vendors are young adults and parents with children at home. Those aged 25 to 34 are the largest consumers of snacks from mobile vendors, spending an average of $ 44 a month.1
Source: Best Customers: Demographics of Consumer Demand. 2008
Many truck operators are experimenting with new flavors and cuisines not typical of street vendors in order to reach a new clientele. “Traditionally, taco trucks were very working class– janitors, secretaries, people on public transit—but now they’ve been adopted by the middle class as a legitimate way to buy and sell food. I think people under 30 want to bike and walk and take transit. These are privileged, middle-class kids. So taco trucks are targeting this group.”6
A new generation of clientele has spawned a new era of food trucks. Hot dog and taco trucks have long running traditions in big cities. However, they have never had the same “eliteness, the sense of being among the inner-circle of foodies” seen in the industry lately.6 According to Katy McLaughlin, “new technology has been a big game changer, allowing trucks to pick up and move to where customers are on short notice.”4 By using devices such as Facebook and Twitter, food trucks have created a sense of “being in the know.” Kogi BBQ, a food truck serving LA, currently has 28,000 followers on its Twitter page.”4 More food trucks have followed Kogi’s example, using Twitter, cell phone alerts, and Facebook to alert customers on their whereabouts.
Food trucks, a truck converted into a mobile kitchen, are gaining wide-spread popularity for the ease in which a variety of appliance can be installed to prepare an unrestrained assortment of food. Everyday new food trucks hit the streets offering something new and unique.
Some trucks represent restaurant owners trying to make up for lost wages in recent years. Jeff Blank, owner of Hudson’s on the Bend in Austin, Texas, opened a food truck last year when revenue at the restaurant was down almost 25%. Thanks to the revenue from the lunch truck, the Mighty Cone, he has more than made up for the losses.4 Other food trucks, like Van Leeuwan Artisan Ice Cream Truck of New York, have become family legacies. Van Leeuwan has been operating for over 25 years, and has become famous for its gourmet ice cream.3
The industry has a variety of mobile operators, though over 91% of revenue for street vendors come from the sale of take-away food and drink for immediate consumption.7 A traditional street vendor cart may have 2-3 wheels and is used to sell one or two items. Drive through stands, such as a drive through espresso stand, are often located in parking lots and shopping centers and offer a wider variety of goods.7
The industry is heavily concentrated in urban areas, “particularly in the central parts of large cities.“7 This industry is thriving in cities such as L.A, Portland, New York, Austin and San Francisco.5 Many of these cities now have several websites dedicated to tracking mobile food trucks. According the IBISWorld, the industry is most heavily concentrated in the Far West, the Great Lakes region, the Mid East (which includes New York), and the South East.
Major Market Segments
- Street locations/corners 55.0%
- Other locations/venues/events 18.0%
- Industrial/construction work sites 15.0%
- Shopping malls 12.0%
Source: IBISWorld, Street Vendors in the US. 2008.
Not surprisingly, the majority of revenue comes from street corners and street locations. Street locations take up 55% of market revenue. This segment sees a large number of pedestrian traffic during peak business hours. Other popular locations are parking lots, construction work sites and other venues and events.7
Cost of Business
One of the great benefits of the mobile food business is low start up costs. Operators can chose to either rent or buy new equipment. Bruce Stockberger, of Stockberger Marketing Associates, advises new business owners to first rent, before purchasing.2 A fully equipped food trailer can cost well over 150,000, and can be customized to almost any specification. However, you can easily find a used one for as little as 3,000. With only a few menu items, one person can own, drive, and manage a food truck by himself. The largest cost business owner’s face is the supply of food and beverages for resale. IBISWorld estimates these purchases should make up about 27% of all business cost. The second largest cost businesses face are primarily operating costs such as such as “insurances, telecommunications, repairs and maintenance, stationary, licenses, fuel and motor vehicle costs as well as other similar expenses.”7 These expenses make up about 26% of business costs. If help is hired, wages can cost close to 18 % of all business costs.7
Mobile kitchen and motorized mobile catering facilities have higher operating costs than push carts or trailers, but are still significantly less than that of a brick and mortar location. Given the low start up costs, low fixed and maintenance costs and low overhead costs, this industry has considerable profit potential.
There are also several advantages to the mobile food business. The work is flexible. If something is not working, if the product isn’t selling, or the location is not great, you can try something else. All you need is one great product. The majority food vendors do not boast diverse menu offerings. In fact, the majority offer one or two choices. Matt Rhodie, owner of Carpe Donut in Charlottesville, Virginia, relies on their homemade cider donuts. His advice is to “…make three items and do them well…I’m not going to have room to be Dunkin’ Donuts, so I have to stick to serving one type of doughnut, locally roasted coffee and hot mulled cider. And people love it.“5
Convenience Caterers & Food Manufacturers Association – http://www.mobilecaterers.com/index.html
National Association of Concessionaires – http://www.naconline.org/
National Restaurant Association – http://www.restaurant.org/
National Association for the Self Employed – http://www.nase.org/Home.aspx
National Association of Specialty Food Trade – http://www.specialtyfood.com/do/Home
Southern California Mobile Food Vendors – http://site.socalmfva.com/Home.html
1Best Customers: Demographics of Consumer Demand. 5th Ed. Online version. Ithaca, NY: New Strategist Publications, Inc. 2008. SBDC National Information Clearinghouse. San Antonio, TX. 2009 www.newstrategist.com
2“How to Start A Kiosk Business.” Entrepreneur. Entrepreneur Media, Web. 9 Jan 2010. http://www.entrepreneur.com/startingabusiness/startupbasics/location/article63012.html.
3Kahn, Howie. “The 10 Best Food Trucks in America.” GQ. Aug 2009. Conde Nast Digital, Web. 11 Jan 2010. http://www.gq.com/food-travel/restaurants-and-bars/200908/best-food-trucks-van-leeuwen-new-york-seattle-los-angeles.
4McLaughlin, Katy. “Food Truck Nation.” SmallBiz.com. 10 Jun 2010. Smart Money, Web. 13 Jan 2010. http://www.smsmallbiz.com/profiles/Food_Truck_Nation.html.
5Russell, Natalie. “Street Food Kicks it up a Notch.” USA Weekend. 27 Dec 2009. Gannett Co., Web. 11 Jan 2010. http://www.usaweekend.com/09_issues/091227/091227street-food.html.
6Shatkin, Elina. “The food trucks just keep rolling.” Los Angeles Times. 22 Jul 2009. Tribune, Web. 11 Jan 2010. http://www.latimes.com/features/food/la-fo-foodtrucks22-2009jul22,0,7542552.story.
7“Street Vendors in the US.” June 2008. IBISWorld. Santa Monica: CA. University of Texas at San Antonio, John Peace Library. San Antonio, TX. 12 Jan 2010. www.ibisworld.com
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