It is a fact that it is cheaper to enter the mobile vending business than open a B&M restaurant. As a consequence the resulting cost savings can (and should) be reflected in lower (relative to the quality of the food produced) cost food served by Street Food vendors. The logical next question to ask is: Do restaurants receive nothing in return for the capital investments associated with opening, and running, a B&M restaurant? Of course, they absolutely get something. B&M restaurants have an ability to scale on a level that mobile vendors can never compete with. They have the ability to create more sophisticated complex foods that are simply impractical for street vendors to make. And, they have amenities (bathrooms, seating, climate control) that significantly fragment the type of customer who would choose to frequent a street vendor from one who is going to choose a sit down meal. B&M restaurants who bank on the relative value that their increased investment offers their customers may find it helpful to ask: Would those street food customers have come to your restaurant at all? In many cases, the answer is no.

Another reality of Mobile vending is that most legal street food vendors do not have the traditional overhead associated with owning a B&M restaurant. However, it is not true that they have no mandated overhead costs at all; Street Food vendors are required to pay the same benefits to their workers as any other restaurant, and pay the same sales tax as their B&M peers. In addition, in California Street Food vendors are required to operate out of a commissary (for food prep as well as cart maintenance and storage) which can add up to $50-$100 a day (depending on the amount of prep work they do), pay for annual sales permits (in addition to their seller’s permit) and are responsible for reporting sales tax for each municipality that the work in. That’s no small percentage of revenue for a business whose total daily revenue may not exceed 80-100 customers and $300 to $400. In addition, restaurants afford their owners with the opportunity to grow past a one or two man operation, an option that is not easily achieved on a mobile catering scale. So, while the added expense of the labor required to run a restaurant might seem burdensome compared to that of a street food vendor, restaurant owners can be appreciative of the fact that if they get sick, have an emergency, or have a major a mechanical issue that their primary source of income isn’t going to be shuttered.

The appeal of moving between areas of peak demand (at will) is the dream of all mobile vendors. But, more often than not, its just that: a dream. Mobile catering vehicles deal with complex permitting issues that prevent them from selling food at specific locations, specific times of day, or specific distances from their competitors. In reality, while the idea of mobility might seem a no-brainer, it has not been until recently (with the use of social media) that customers have been easily able to track the locations of their favorite mobile vendors. And while social media plays an increasingly important role in allowing people to have mobile foods as a predictable food option, getting quality locations to sell from can be just as challenging as nailing down that perfect B&M location (except the B&M vendors don’t need to worry about losing the spot the next day). As a result, that dream of mobility is in fact a necessity that allows vendors to move in order to produce stable sales.

So what threat does mobile catering actually represent to B&M restaurants? First, the average customer that stops at a mobile food vendor is not one who is likely to choose a sit down restaurant (either because of speed of service or cost). Second, the average daily sales volume that a mobile vendor can achieve is only a fraction of what a B&M restaurant can scale to. And, because of this, mobile vendors generally limit their offerings to a handful of specialties; a decision that B&M vendors do not have to make. Third, while the idea of limitless mobility is wonderful, the reality of seasonal weather, mechanical failure, local government restrictions, and competition (both from other vendors and B&M vendors) makes mobility a complex necessity, rather than a luxury. Mobile vending can directly affect two primary restaurant types: high volume take out operations and lower end quick service eateries. However, most local muncipal regulations make it highly unlikely that these businesses would face direct product competition from mobile vendors. And, while mobile vending may represent a challenge to these businesses, it is important to remember that these businesses are not without tools of their own for attracting and retaining customers. Their facilities can allow them to produce a higher volume of food, for longer hours, with amenities that mobile vendors simply cannot duplicate. It is just those B&M vendors who understand where their strengths lie who will produce stronger, cheaper and more focused food that will attract customers regardless of what competition they face.

Rather than see mobile vending as a threat, both B&M vendors and communities would do well to consider that mobile vending’s very ability to move also allows it contribute positively to communities. Mobile vending can activate spaces with few food options in locations that may not justify (or be too risky) for the type of capital investment associated with permanent B&M restaurants. So are mobile vendors a threat to Brick and Mortar restaurants? Yes, but probably less so than the ever present threat of direct competition from another B&M establishment changing format or opening close enough to compete directly with an established business. B&M businesses would therefore do well to remember rather than worrying about the vendor selling food on the street corner.

In a perfect mobile vending world: the sun always shines, it stays light out for 18 hours a day, you can park or move wherever you want, you always make exactly the right amount of food, the health department understands that ice alone can keep things under 41 degrees just fine, and customers universally appreciate the care and love that you put into your products.

Here are ideas to help you get by until that perfect world comes along:

Take Time.
Don’t rush into something that is going to demand large amounts of your time, money and patience. Take time to perfect your product, know where you are going to source it from, understand how much your product costs, understand where and how you are going to sell, and have a clear idea of all the parts of running a food business. Why not start a website and share your efforts with the world in order to create demand for your product before it hits the streets? Why not get a part time gig in the food business that will allow you to have a steady income while you try to make this cart (or truck) thing work?* Why not finish that Business Plan so you know if you’ll ever get your money back, or be able to afford a second employee? Once you begin spending money its too late. Spend the time in the beginning to get all the information and experience you can before you jump in with your own product.

Reach Out to Other Vendors:
Go out and talk to vendors who are already selling food and ask them to sit down and talk with you; maybe offer to buy them a drink. The worst thing that can happen is that they say no. You’ll find that often mobile vendors will be very welcoming to you (as long as you’re not ripping off their idea wholesale). They are the ones with the expertise who know the lay of the land. They are the ones who can let you know what has worked for them and what hasn’t. And, lets be honest, its always good to see some friendly faces in a crowd when your doing something for the first time. Don’t be afraid to ask for help, you might be surprised how generous people are with their time and information.

Have a Cushion:
If you are thinking about doing this full time, make sure that you have some savings to help you until you have a steady stream of customers, or while you work the wrinkles out of your product. Six months living wage (at least), a year would be better. It might take you time to find a location (or route) that works for you. It might take you time to build a following for a new product, or new style of delivery. It might even take you time to figure out that you don’t want to be in the restaurant business. By having a cushion ahead of time, you’ll have the flexibility to make appropriate adjustments rather than just having to work to keep your head above water.

Don’t lock yourself in:
Before you commit yourself to something don’t unnecessarily limit yourself to one product, one service time, or one market. It takes guts to understand that something isn’t working and change it. Its a lot easier on the ego to adapt quickly if you keep your options open to multiple styles of food and service.

Be Positive:
Business is hard. Life is hard. Everyone, including your customers, knows this. I’m not suggesting that you be saccharine, but your customers don’t need you remind them of your, or their, troubles. Don’t delude yourself about what the facts are telling you about your business, but there is no need for your customers to know the details of how your business is going. Everyone’s life is hard. By paying it forward with your customers, your peers and your community you’ll be amazed by the loyalty you win in the process.

Start Small:
You will find that most everything is going to cost twice as much, and take twice as long as you previously imagined (budgeted). With this in mind, starting small is a way for you to get your feet wet without committing to a full time job, or a significant financial investment. Starting small allows you to judge the market for your product, solicit feedback from customers, build buzz and also understand the process required to scale up the batch size necessary for selling to large numbers of people. Remember: It’s ok to sell out. Possibly consider doing some catering first to really demo your product on groups of people who aren’t just your close friends.

Don’t be an ostrich:
No matter how successful, or unsuccessful, you are once you get started it is really important to regularly step away to evaluate how you are doing. Are you maintaining your core vision? Do you see ways to improve your core processes? Choose a trusted friend, a valued co-worker, or an experienced professional to sit down with regularly in order to honestly and completely assess your progress, your goals and your appropriate next steps. In addition, it is really easy to fail to keep accurate records of your sales and expenses. Avoid this trap at all costs so that you’ll have accurate information from your first day of service that will allow you to make informed business decisions. If you know that you struggle with this part of the process, make sure that you come up with a solution before you start serving.

Finally, congratulations on your decision to start a mobile catering business! You are entering this field at an amazing time. If there is anything more that I can do for you, I’d be happy to help.

*In my experience most new mobile vendors are not professional chefs themselves.

Return to Part I: Write Something Down
Return to Part II: Define your Market
Return to Part III: Set Realistic Expectations
Return to Part IV: Know How to Use Technology (Or Hire Someone Who Does)

The recent popularity of street food has, in many ways, resulted from the convergence of three different trends: Social Media, Cheap Eats and the Local Food Movement. There are over 5000 legal, licensed, mobile food vendors in Los Angeles, but who are the ones that you hear about? These guys. This isn’t to say that these “gourmet” food trucks are better than their 4950 peers who don’t appear on Twitter, but simply to say that these trucks have expanded the local street food market by grasping 5 basic truths for modern street food success.

Be findable:
The past model for street food success was to place yourself (or your business) between a customer and the nearest possible restaurant and offer cheaper food, then move and repeat the process in the next place. This resulted in lunch trucks that serve Hamburgers, Hot Dogs, Egg Rolls and Tuna Sandwiches all on the same truck because they had to serve the largest market possible. With the rise of Twitter (and other social media) you no longer have to be dependent upon the lunch times of construction workers because you can let your customers know where you are going to be, how long you are going to be there, and what you are going to be serving when you arrive, and (importantly) ask them where they’d like you to be.

Kogi Twitter

Twitter will be the single most powerful marketing tool that you have outside of your truck and your food (and its free). Failure to use it doesn’t mean failure for your company, but it also hinders your ability to be instantly accessible, instantly interactive with your customers, and instantly communicative about your company information.

Keep it simple:
Most of the really successful modern street food vendors in any city have a clear product vision and everything that they do (the name, design of the truck, the website, the tweets and Facebook presence, the packaging, the customer interaction) reinforces their brand. This allows vendors two things: First, the a practical advantage of increasing margins through higher volumes of limited food items. Second, less worry about direct competition from other vendors. Why get a mediocre burger or egg roll at a truck when you can get the same thing at any Denny’s? By offering something that is unique and cheap –in an environment that is fun and acknowledges customer effort to get there– these vendors have changed the traditional US street food market.

Stay consistent:
One of the biggest things that mobile vendors fail to do is maintain a consistent voice across all the platforms that they use to reach out to their audience. You should have the same basic information at every point of customer contact: Business Name, Contact Information, Service Hours, Service Area, Pictures of Your Cart, and Some Basic Pricing Information (Menu and Catering). In addition, its important for you to think about the most appropriate way for you to use each technology platform that is available to you: Your Website, Facebook, Twitter, Youtube, Yelp, Open Table, LinkedIn, Flickr, MySpace, Four Square (not to mention Brightkite, Loopt, and Google Latitude). Each platform is appropriate for different things and works for different audiences. The important message about all of these is: the information to populate all these resources shouldn’t come from you, it should be generated by your social network (your customers). It is simply a matter of your encouraging, reinforcing, and controlling the information in each of these areas for you to maximize your return on the time you invest. I can’t stress enough, however, that you have to be consistent with how you use these services. Consider social media your primary PR service and treat it as such, including: be consistent with your usage to avoid leaving only outdated information available to your customers, speaking with a clear voice that reinforces the values within your business plan, leveraging the ability of many of these services to update each other, and communicating quickly with peers and customers.

Everybody loves a scene:
It is not a coincidence that the rise of Twitter has fueled the rise of niche, gourmet, food trucks. Who are the primary “power users” of Twitter? Higher income professionals who like gourmet food. Who are the early adapters who had smart phones to access mobile information first? Higher income professionals who like gourmet food. All food trucks did was fill a niche for economically priced gourmet-style unique food at an economic period when people are looking for an inexpensive way to eat. At the same time, by specializing in specific food types, vendors have lowered the competitive threat that they face from other vendors enabling them to work together to build a scene around their food. No longer does a customer say, “I really don’t feel like Korean Tacos, let’s not go to the food cart.” Instead, that same customer can now choose from the Adobo Cart, the Gumbo Cart, the Creme Brulee Cart, or the Magic Curry Kart. Heck, they might even prefer Chinese Tacos instead. It works better when you work together.

Build in flexibility:
Along with the dependability that Social Media offers to connect with your customers, it also allows you to let them know of last minute changes that might effect your plans; flat tires, weather problems, employee no shows. Be honest and clear, as much as you can, with your customers and they’ll do their best to pass along updated information for you.

Continue to Part V: Be Flexible With Your Vision
Return to Part I: Write Something Down
Return to Part II: Define your Market
Return to Part III: Set Realistic Expectations

Serving out of a mobile unit is a balancing act: You give up some conveniences (storage, more elaborate cooking techniques, no worries about weather) for the benefit of mobility (move if its slow, cheaper to open, lower overhead, easy to re-brand). Managing this balancing act requires first setting some reasonable expectations about what is, and isn’t possible, out of a truck or cart. Here are ten things to keep in mind if you are plotting to take over the world with a food cart:

1. Commissaries are your friends (in California).
By California law you must prep, cook and store all your food at a commissary. This can be difficult when there aren’t a lot of commissaries around, so be careful to make sure you know where your commissary is before you buy your cart. The commissary requirement also means that you are probably going to have to pay for storage of your cart, your supplies, and for refrigeration space at your commissary. You can’t legally cook at home, so you probably also have to pay to cook and prep at your commissary as well. Be sure to know the rates and include them in your financial plans.

2. Beware of cooking anything other than a hot dog on a Hot Dog cart.
You can cook on a raw food at a cart, but you must have at least ventilation, a hand washing sink, a separated cooking area, a three part sink, and hot water available to you. Building a cart like this isn’t cheap, and even then there are some restrictions that could keep you from selling. Know the local requirements where you want to sell before you buy a cart. It will save you a great deal of heartache.

3. Know your limits.
If you’re business plans require you do 500 covers a day, rethink a a Hot Dog Cart. Or, if your vision demands only a Hot Dog sized cart, you are going to require a mobile support unit (which is going to cost you more money). Either way you can’t just throw 500 hot dogs in a cooler, or in the back of your car, and cart them around town in California. You will have to have a detailed food handling process for your Certificate of Sanitation. Do yourself a favor and ensure that all meats are kept below 41 degrees at all times prior to cooking and that you have clear written instructions for how to safely handle your food.

4. A Pushcart Permit doesn’t mean that you actually get to “push it” anywhere.
You have to know where you are going to sell your products before you buy your cart. If you’re in San Francisco you can’t be mobile with a cart (even though its called a pushcart permit). Most likely every single cart that you have seen someone pushing around is illegal. In addition, most likely every cart you’ve seen in the city parks aren’t legal also. Bacon dogs on the side of the street? Not legal. Right now if you want to serve from a cart you need to apply for one fixed location permit with a 3x4x5 cart where you do not cook raw hazardous (read: meat) foods. –Don’t even start with why hot dogs are exempted–. If you want to cook something more technical than this, you are either going to have to buy a bigger (non traditional) cart and serve off private property, or buy a catering truck, spend $9K on a mobile catering permit, and create a route to sell on public property. Just be careful that your route stops don’t conflict with any of the existing rules that regulate this area.

5. Do the math.
Serving 100 people a day with an average check of 7$ and a 50% food margin generates 350$ a day in gross profit. = Pretax $77,000 per year (220 Days).
Serving 50 people a day with an average check of 5$ a day and 25% food margin generates $62.50 a day in gross profit. = Pretax $13,750 per year (220 Days).
Small differences matter a great deal. Make sure that your estimated numbers are based on fact as much as you can. What the numbers above don’t include are: Commissary Costs, Insurance Costs (Health and Liability), Rent, Loan Payments, Permit Fees, Gas and Labor Costs.

If you are expecting to get rich doing this, rethink your plans. The average person doing this makes a living much closer to $30,000 a year than $70,000.

6. Its gotta be a deal.
You have to pass along some of the your business savings to your customers. Street food is supposed to be a deal. You can choose to sell only high quality ingredients and charge high quality prices, but those prices (relative to a brick and mortar business) have to be lower. You can get someone to try your food with a gimmick, but they’ll come back because the experienced the value in your product. Or, you can just give the difference to charity…

7. Taxes? Oh, yeah, taxes.
Find someone you trust to do your bookkeeping. Its very hard to have the discipline to save on your own, especially when you’re starting out and time and money are tight. Having someone (a business partner, a bookkeeper, a trust worthy friend) be on top of your sales, stay up to date with your taxes, and watch out for problems so you can concentrate on selling will save you a lot of troubles down the line.

8. A day in the life of a vendor.
How much time outside of actually selling does this require? If you are going to serve for four hours: Wake up and drive to your commissary (30 Minutes). Prep your food and condiments (Minimum 1 Hour– More if prepping raw food–). Drive to your location (30 Minutes). Setup (30 Minutes). Serve for Four Hours. Break Down, Clean Up (30 Minutes). Return to commissary (30 Minutes). Clean Truck and Restock (60 Minutes). Drive Home (30 Minutes). Total Time to serve for four hours: 9 Hours not including purchasing food and restocking supplies.

9. Startup costs.
A legal food cart (Hot Dog Cart) is going to cost anywhere from $5000-$15000 dollars to serve in California (new). A legal food truck is going to cost you from $35,000- $150,000 dollars to serve in California. If you want to serve on public property, that permit is going to cost $9,000 in San Francisco. If you want to serve on private property, you’ll still have to pay $600-$1000 in permit fees to various Health Departments. In addition, don’t forget out the costs for Marketing supplies; you’ll at least need a sign($200) and a website and logo ($50-$500 Minimum). Additional costs: You’ll need to pay for Insurance ($250-$1200 per year), commissary costs/ kitchen rentals ($20-$60 per hour) and possibly an initiation fee, you’ll need money for inventory ($500-$1000), Cart/Truck maintenance, and if you are quiting your job you’ll also need some savings to live on.

10. Have Fun.
Its easy to get lost in the details of getting your business started and forget why you decided to start a mobile food business in the first place. Don’t.

Continue to Part IV: Know How to Use Technology (or Hire Someone Who Does)
Continue to Part V: Be Flexible With Your Vision
Return to Part I: Write Something Down
Return to Part II: Define your Market

If you decided to build a house, you’d have some architectural plans right? If you’re going to cook a great recipe over and over again, makes sense to write down some ingredient measurements, no? Well, the same thing goes for starting a mobile food business. There are a lot of parts of this business that you are not going to be able to keep in your head and know at a moments notice: Startup costs, Insurance rates, Food Costs, Cart/Truck Maintanance, Marketing Costs, Division of Labor, and Company Philosophy (to name a few). So with that in mind here are the three biggest reasons (from my experience) most entrepreneurs use for failing to complete a business plan:

1) Intimidation
2) “We’re not raising money for a loan, so we don’t need a business plan.”
3) Reasonable Entry Cost Doesn’t Justify It

1. Intimidation.
In my experience the words “Business Plan” make entrepreneurs shudder; it must go against the freewheeling spirit required to “go it alone” and starting your own venture. Or maybe its that most entrepreuers are optimists and struggle with the frustrations that result from solving contradictions in their plan. But here a fact: If you want a business that is going to be sustainable you are going to need some sort of business plan. Is it possible to make something work without one? Yes. Do businesses without plans fail at a higher rate than those with them? Yes, no question.

What’s important to remember is that the first version of your BP doesn’t need to be enough for you to issue stock on the Stock Exchange. The first version of your business plan should simply be a few sections about 1) What you are going to do, and 2) How you are going to do it. I would also encourage you to add a third section, “Why are you doing this?” What you want to do is establish clear reasons and expectations about what you are going to create, what the values of that creation are going to be, and where you have a reasonable expectation about how this is going to allow you to continue living. At that point you can choose to stop, but I also imagine that once you have a working document you’ll want to keep adding to it because you’ll value it. But, even if you don’t keep revising and improving it, you will have established a benchmark set of expectations for you to return later in order to evaluate your progress and assess your successes (or failures).

2. “We’re not raising money from a bank, so why do we need a Business Plan?”

What if you flip that around? Would you spend your own money, and risk your own future, on something that a Bank would turn down flat? Don’t you want to know why they’d turn your down? Or how about another way of looking at it: Do you want to purposely ignore the possibility of raising some money in the future? The basic truth is: Regardless of whether you are going to a bank or not, you deserve to be honest with yourself (and your friends and family who might contribute) about your assumptions for this business you are creating, and how you are going to make money.

3. Low Entry Cost = Less Need for A Business Plan
Many small entrepreneurs simply feel that if the entry costs are low enough, that the business qualifies as a hobby and doesn’t require planning. While it may be true that the latest, greatest, road bike for Triathlons might cost the same as your new food cart (around $8000), what you also need to remember is all the hours of training and planning that go into successful participation in a marathon or triathlon. Its not simply a matter of getting on the bike and riding for 100 miles. There are hundreds (maybe thousands of hours) that go into preparing for a race. The same goes for any food business (and especially the mobile food business). Your time is valuable, even if the upfront investment isn’t that great. If this is a hobby, consider a solid business plan your training period. You owe it to yourself to put in the time.

Continue to Part II: Define your Market
Continue to Part III: Set Realistic Expectations
Continue to Part IV: Know How to Use Technology (or Hire Someone Who Does)
Continue to Part V: Be Flexible With Your Vision