It is no secret that many small businesses fail, especially those in the food service industry, and food trucks are no exception. But it doesn’t have to be that way. Read through the main reasons why I think most food trucks fail to help you know what to avoid when starting your food truck business.
7 Reasons Why Food Trucks Fail
Menu is too large
It may sound counterintuitive to say that having too many menu options is what can cause a food truck to fail, but having a larger menu does not necessarily mean more sales. Now, I am not saying that having one menu item is the right approach either, but a handful of quality entrees are better from a profitability standpoint than a huge menu, and I’ll explain why.
One reason that having a large menu can be harmful to your food truck business is that there is more time needed to buy ingredients, prep them, and cook them. With that, the larger the menu is the more time you’ll have to allocate to training new employees.
A larger menu is also likely to be more complicated, and that can result in errors and dissatisfied customers.
Having a large menu can result in more food waste because there are more prepped ingredients that may need to be discarded daily or every few days for freshness and food safety. A high level of food waste can drive up food costs, and high food costs are one of the reasons why food trucks fail.
One way to offer more diversity to your customers without adding more menu items is to add a few sides, drinks, and desserts. Also, you can have toppings that can be added to your core menu items to give your customers more unique options, like adding a spicy sauce or extra cheese.
Low (or no) emergency fund
A good rule of thumb for any new business is to have 3-6 months of operating expenses on hand in case of emergency. After spending tens of thousands (or hundreds of thousands) on opening a food truck, many food truck owners may not have enough of an emergency fund set aside for slow periods. You never know when a big expense will hit your food truck, and owners with no emergency fund may not be able to pay future overhead costs, causing their food truck to fail.
I needed to dip into my emergency fund just a few weeks after opening my food truck. My area was hit with a huge week-long ice storm (which was not normal for my area at all) and my food truck’s water heater broke. Because of how intense the storm was, replacement heaters that would fit my food truck setup couldn’t arrive until a week after the freeze ended. Even then, I had to pay the plumber overtime because of how much demand there was for plumbers. In all, the broken heater cost me an extra $4,000 plus not being able to open for a week. Luckily I had extra money set aside, but if I hadn’t my food truck may have been doomed from the start.
Wrong location
I live in an area where there are dozens of food truck pods, and not all of them are created equal. I have seen food truck pods that don’t insist on diversity when allowing new food trucks to enter the pod. For example, I have seen pods where there are two taco trucks, two gyro trucks, or even something more obscure like crepe food trucks. Allowing similar food trucks to operate in the same pod is a red flag in my opinion. It signals that the pod owner is more concerned with getting paid rent than ensuring the success of the food trucks in the pod.
This is just one example of a food truck location that may not be ideal. A food truck may fail if it is in an area with incompatible demographics. For example, a snow cone trailer may be more successful in California in the summer versus Alaska in the winter.
My food truck has a high-cost ingredient that goes into our main menu items, and because of that I have to have my menu prices set a little higher than average. The reason this works, though, is that my food truck is in an area with a high median household income (compared to the surrounding areas) so the slightly higher cost does not influence their decision on whether or not to order as it may in a part of town with a lower median household income.
Consider what types of customers and demographics may be most interested in the type of food and experience you’ll offer at your food truck, and make sure your location aligns with that.
Poor quality food or service
I actually think that a food truck with poor service will fail faster than one with poor-quality food. People are much more likely to give a food truck or restaurant a bad review because of rude service than they are about poor quality food. Think about it this way, if a customer tries something on your menu that they don’t like, they may come back to try something else. On the other hand, if a customer feels like the workers were rude, they probably won’t give the food truck the benefit of the doubt and they won’t return.
Ultimately, both bad food or bad service can result in a loss of customers and fewer sales, and at the end of the day, sales are what food trucks need to survive.
High costs
Food and labor costs are always going to be something that plagues the restaurant and food service industry, but they have gotten worse since the pandemic. There were both labor and food shortages which have not fully recovered. That, coupled with the war in Ukraine which has put a strain on both fertilizer and fuel supplies, has resulted in high food costs that restaurants and food trucks must contend with.
One benefit that food trucks have is that they usually have lower overhead than restaurants, so the rule of thumb that restaurants follow of keeping food costs between 25% and 40% may be more flexible in a food truck environment (especially if labor costs can be kept low as well). Despite this, customers tend to believe that food truck prices should be lower than restaurant pricing because of the environmental change.
Rent prices for food trucks are also increasing as demand for spaces goes up. With more food trucks than ever popping up around cities and towns, there are less and less places for them to go. The high demand means that food truck pod owners can raise their rent prices and make more profit, while the food truck owners have to shell out more and more each year.
With typical profit margins for food trucks between 5% and 10%, it can be challenging to make enough to survive as a food truck owner. For example, a food truck that sells $200,000 worth of food in one year may only net the owner 10 to 20 thousand dollars, much lower than a W2 job despite likely involving a lot more work.
It is tiring
I think that many people end up selling their food trucks because it can be exhausting. It can also totally be worth it, but it is a relentless job. There are the physically tiring aspects of the job like getting groceries, prepping food, cooking food, serving customers, and cleaning up – and there are mentally tiring aspects of the job, like talking all day to employees and customers, doing administrative work like payroll and taxes.
People just get worn out, and I believe that is why a lot of food trucks fail. I have personally known multiple food truck owners who have sold their food trucks after just a few years because the profit didn’t outweigh the stress and the work. They were tired and wanted to go back to a more consistent job that didn’t follow them home.
Not adapting
I think the main reason that food trucks fail is because of food truck owners who are unwilling to adapt. Food truck businesses are great because they can be changed. You can change the location, the menu, the hours, the staff until you get the right combination that is profitable. Of course, this takes work and some food truck owners may not want to change what their vision initially was.
I used to work in a food truck that kept its menu the same despite it generating tons of expensive food waste (it was BBQ and having to throw away meat gets expensive). To me, it seemed like the owner (who rarely actually worked in the food truck) thought that his ideas were amazing, and because of that, he wouldn’t adapt when the sales reports indicated otherwise. If he had just put his ego aside and prioritized the menu items that were selling and getting good customer feedback, then I think he could have had a profitable business. Instead, he kept having his cooks spend time making expensive menu items that had to get thrown out each night if they weren’t sold, resulting in the business losing money.
The bottom line
Many food trucks do end up failing, but I don’t think it has to be that way. I think it is important for people interested in starting a food truck to do their research before starting a food truck so that they don’t set themselves up for failure before even starting. For more food truck advice, check out this blog.
