Food trucks are huge in Texas. Food trucks are the fastest-growing segment of the restaurant industry. And Texas is the state with the second-largest number of food truck businesses in the US, and the number is growing every year. It’s easy to see why: they’re fun, they’re fresh, and they give customers the opportunity to have a more personal experience with their favorite foods. Whether you want tacos or burgers or hot dogs—you name it, they’ve got it.
If you’re thinking of starting a food truck business in the state of Texas, you’ve come to the right place. In this blog post, we’ll cover everything you need to know about operating a food truck in Texas, from how to register your business to how to purchase the truck and what licenses you need to operate it.
So, without any further ado, let’s get started!
9 Steps to Start a Food Truck Business in Texas
1. Create a business plan
Any successful business needs a well-crafted business plan, and a food truck business is no different. Before you can start your food truck business, you need to have a clear plan in place. This document will outline your truck’s menu, operating procedures, target market, and financial projections. It will help you to map out your expenses, choose the right location, and gauge the potential for success.
Here are some important things you need to consider when crafting the business plan for your food truck business:
Startup and ongoing costs
The biggest expense will be the cost of the truck itself, as well as the cost of outfitting it with all the necessary kitchen equipment, including an oven, grill, sink, and prep area. You will have to pay fees for licensing and permits before you can start operating legally in Texas. You will also need signs for advertising and branding purposes, so plan for this expense when setting up your budget.
Startup Costs Breakdown:
- The truck: $7,000 – $120,000
- Equipment: $3,000 – $6,000
- Insurance: $1,000 – $3,000
- Legal and consulting fees: $1,000
- Point of sale system: $1,000
- Advertising: $1,000 – $2,000
The ongoing costs of running a food truck are also pretty straightforward: You have to pay for gas, maintenance of your truck/trailer, licenses and permits renewal, insurance payments, staff payroll, packaging and disposables, food ingredients, and beverages.
Food truck concept
When it comes to deciding on a concept, it’s important to think about what will make your truck unique and that appeal to your target market. You need to decide what type of food you want to serve.
Will you offer traditional American fast food or specialize in a certain cuisine? Once you have your concept in mind, you need to develop a menu and price point that will attract customers.
Next, you need to secure a location for your truck. This is one of the most important decisions you will make, as it will affect your daily foot traffic and overhead costs.
First, you’ll want to ensure that the location is highly visible and easily accessible to potential customers. Then, you’ll need to consider the foot traffic in the area and whether there are any competing food vendors nearby.
Finally, you’ll want to make sure that there’s enough space for your truck to park and that there are no restrictions on food trucks in the area.
Finally, you need to create a marketing plan to promote your business. This can include everything from social media campaigns to print ads and street team marketing. By taking the time to develop a well-rounded business plan, you can give your food truck business the best chance for success.
Pricing your menu
Any food truck owner knows that pricing their menu is a crucial part of running a successful business. Not only do you need to make sure that your prices are competitive, but you also need to make sure that your food costs are low enough to allow you to make a profit.
Ideally, you should ensure that your food cost is low enough to target it at or below 30% of your gross sales. This means that for every dollar you take in, you should only be spending at max 30 cents on food.
This can be a tough target to hit, but it’s important to remember that even small reductions in your food cost can have a big impact on your bottom line. By keeping your food cost low, you’ll be able to maximize your profits and keep your food truck business afloat.
Here is how you price your menu items:
Menu item price = Food cost / target food cost percentage
For e.g., if ingredients to make a hotdog costs you $1.50 and your target food percentage is 30%, then you should price your hotdog at 1.5/0.30 = $5. Not all food items need to follow this rule as long as you hit the average target food percentage overall.
You should aim to have your labor costs average out at or below 30% of your total gross sales., if you want to remain profitable.
This number is important because it allows you to remain profitable while also paying your employees a fair wage. Labor costs include hourly wages, payroll taxes and benefits, and any additional labor needed to prepare your food and run your business.
There are a few different ways to keep labor costs down, such as hiring part-time workers or automating certain tasks. However, it is also important to make sure that your employees are happy and productive.
Food trucks in Texas earn an average of 30 percent profit margin, but there are a number of factors that will affect your bottom line. Location is key – a food truck that’s situated in a busy downtown area is likely to see more customers than one that’s parked in a residential neighborhood.
Competition from other trucks and restaurants will also affect your profits, as will your efficiency in running the business. With careful planning and execution, it’s possible to achieve a healthy profit margin from your food truck business.
2. Pick a name for your food truck business
Deciding on a name for your food truck can be a daunting task. After all, the name is one of the first things potential customers will see, and it needs to make a good first impression.
You want a name that is catchy and memorable, but you also don’t want to go too far and end up with something that is tacky or OVER-the-top. Ultimately, the best name for your food truck is one that reflects the style of food that you serve.
Here are some useful tips to help you pick the right name for your food truck:
- Keep it short and memorable. Complicated names just confuse people and get them turned off from your business. Make sure the name is easy to pronounce and spell so customers don’t have any trouble finding you online or calling you up later on.
- Next, make sure that your name captures the spirit of what you do. You’ll want a name that reflects both your concept and the spirit of your brand—a name that conveys what makes your company special. Keep in mind that the name you choose will have an impact on how people perceive your business, so make sure it reflects who you are and what you want for your business moving forward!
- Don’t try too hard or get too cute with the name. It should feel natural and authentic, not forced or gimmicky.
- Make sure it doesn’t have any negative connotations associated with it—you don’t want people thinking about your food truck in terms of something else entirely!
3. Register your business as a legal entity and obtain EIN
Your food truck business needs to be registered as a legal entity in order to operate legally. There are four types of business structures: sole proprietorship, partnership, LLC, and corporation. Each has its own advantages and disadvantages, but generally, food truck businesses are registered as Limited Liability Company (LLC) in Texas.
An LLC offers a number of benefits for businesses, including personal asset protection and tax advantages. In addition, forming an LLC can help to give your business a more professional appearance, which can make it more attractive to potential customers.
Once you have registered your food truck business, you will need to obtain an Employer Identification Number (EIN) from the IRS. This nine-digit number is used to identify your business for tax purposes, and you will need it in order to open a business bank account and file your taxes. Obtaining an EIN is free and can be done online, making it a quick and easy process.
4. Purchase the truck and equipment
This is the biggest expense because it involves buying a vehicle that can be used as a commercial kitchen. You can either build it from scratch, meaning buying a truck and remodeling it to fit your needs, or you can buy a fully equipped truck that is already fitted with all cooking gear and equipment.
Trucks come in various sizes and capacities, so it’s important to know what your needs are before making a purchase. You’ll want to look for a truck that can hold all of the equipment and supplies that you need for cooking, serving, and cleaning. It should also be easy to drive and maneuver, as well as reliable.
There are a few key pieces of equipment that you will need in order to get started. First, you will need a commercial-grade oven or stovetop. This is essential for cooking your menu items to perfection. Second, you will need a fridge or freezer for storing perishable ingredients.
Third, you will need prep tables and counter space for food preparation. Finally, you will need storage containers and shelving for all of your supplies. With this basic equipment, you will be ready to start serving delicious dishes to your hungry customers.
Here is the list of equipment you’ll need to purchase:
5. Purchase the right insurance
Having the right insurance coverage can help you protect your business in the event of an accident or other unforeseen circumstances. There are a variety of insurance options available, and the best way to find the right one is to speak with an experienced insurance agent.
They can help you understand the coverage options and find a policy that meets your needs. With the right insurance in place, you can have peace of mind knowing that your business is protected. There are four types of insurance food truck businesses should consider:
General Liability Insurance: You need to get liability insurance for your business because it will protect you if someone gets hurt on your premises or if there is property damage from an accident. It protects you from claims arising from injuries or property damage caused by your food truck.
Commercial Auto Insurance: Your food truck needs commercial auto insurance so that you can be covered if someone gets into an accident while driving it or if it’s stolen from your business lot. This type of insurance is required by law in Texas, so make sure you have it before you start driving around town with your new food truck!
Contents Coverage Insurance: Contents coverage insurance helps to protect the contents of your food truck – including your equipment, supplies, and inventory – in the event of an accident or theft. This type of insurance can help to give you peace of mind, knowing that your business is protected.
Workers’ Compensation: This pays for medical care for employees who suffer work-related injuries or illnesses while employed by you as well as lost wages if they can’t work due to these injuries or illnesses.
6. Apply for necessary food truck licenses and permits
Before you can start dishing out your special mobile cuisine, you’ll need to make sure that your food truck is fully licensed and permitted. The licensing process can vary depending on your location, but in general, you’ll need to obtain a Business License, a Food Handler’s Permit, Seller’s permit, Health Department Permit, and Fire Certificate Inspection Permit.
You’ll need to apply for a business license from the city or county where you’ve registered your food truck business. It can cost you anywhere between $75 to $150. Keep in mind that business licenses are renewed annually.
Food handler’s license
This license ensures that all employees of your business are properly trained in food handling techniques. If they aren’t certified in these methods and procedures, then they won’t be able to work at all! So it’s important that all staff members have their own certificates prior to hiring them or allowing them access.
A seller’s permit is an important part of any food truck operation. It allows you to collect sales tax on any and all purchases made by customers at your food truck.
Health Department Permit
Before you can open for business, you’ll need to obtain a Health Department Permit. The process includes inspection from officials that will ensure that your truck meets all of the necessary health and safety standards. Once you’ve passed the inspection, you’ll be issued a permit. This permit must be renewed on a regular basis, typically once per year. It costs between $125 to $200.
Fire Certificate Inspection Permit
This permit is required for all food trucks food truck that operates with propane gas, generators, etc. This permit is given by the Fire Department and ensures that your truck meets all fire safety standards. The process of obtaining a permit can vary depending on your location, but it generally involves passing a fire inspection and paying a fee. Once you have obtained your permit, make sure to keep it up to date by renewing it every year.
7. Open a business bank account
Before you can start serving up deliciousness on four wheels, you need to get your food truck business finances in order. That means opening a business bank account.
A business bank account will help you track your expenses, stay organized, and, most importantly, separate your personal and business finances. When it comes time to file your taxes, you’ll be glad you have a dedicated business bank account. Plus, a business bank account can give you access to helpful services like merchant services and loans.
When choosing a bank, be sure to compare fees and services to find the best fit for your needs. Once you have an account set up, make sure to deposit all of your revenue and do business expenses from that account. This will help you to keep track of your income and ensure that your business is growing.
8. Find the Right Location
A food truck’s success depends largely on its location. You’ll need to find a spot that gets good foot traffic but isn’t already saturated with other food vendors.
You’ll also need to make sure there’s room for your truck to park and that it won’t be in violation of any parking regulations. Also, you don’t want to park in an area where there are few parking spots, or you’ll likely lose customers who can’t find a place to park their cars.
Make sure your truck is easily visible and that your branding is clear and eye-catching. You want potential customers to be able to spot your truck from a distance.
With these factors in mind, take some time to scout out potential locations for your food truck business. Once you’ve found the perfect spot, be sure to get the proper permits from your city so that you can legally park there.
9. Promote your food truck
Even the best food won’t sell itself – you need to let people know your truck exists! Use social media, word-of-mouth, and traditional marketing techniques like flyers and billboards to get the word out.
Create social media profiles for your food truck and post regularly. Use hashtags and geotags to reach a wider audience. Start posting short videos on Instagram, Tiktok, and Youtube. Use attractive photos and videos with descriptions to make your truck stand out from the competition. Be sure to include your contact information and hours of operation.
Also, get involved in local events and festivals – this is a great way to let people know about your truck and generate some buzz. You can also set up at fairs and festivals, which are great places to make some good money.