Food Truck Profit Margin: How Much Do They Make? (Calculate Margin & Sales)
Knowing how to calculate your food truck profit margin, especially if you are still new in the business, is very important. This will help you evaluate the revenue obtained from your sales.
Food trucks often earn between $250,000 and $500,000 annually, or between $20,000 and $42,000 each month.
This guide will assist you in determining the revenue and profit possibilities of your food truck because that could seem like a wide range.
You’ll learn several techniques for increasing the revenue at your restaurant along the road.
Costs to Start a Food Truck Margin
Although they are adaptable enterprises, food trucks can still have start-up expenditures of $50,000 to $250,000.
You must take into account all of the necessary components of the restaurant business, including labor, supplies, insurance, and marketing.
There are several additional costs, particularly for food trucks. All of the things you need to outfit a mobile kitchen, including the truck, licenses, and permits.
The price of a commercial kitchen and parking licenses may also need to be taken into consideration.
Food Truck Profit Margin Per Month
Generally speaking, a restaurant’s profit margin is from 3% to 5%, but some earn as low as 0% and others as much as 15%.
Use the equation below to determine your profit margin: Monthly sales times the profit margin equals profit.
If the profit margin for your food truck is 4% and monthly sales average $40,000, the profit is $1,600.
Average Food Truck Revenue
The average monthly revenue for food trucks across the country is between $20,000 and $42,000. You can calculate your food truck’s cost more precisely once you predict your sales.
Add your predicted monthly sales (which should vary taking into account KPIs) and divide that total by the number of months in your season to determine your food truck’s average monthly revenue.
Planning For Your First Year
The first year of the company is crucial, but also expensive, due to startup fees for the truck, kitchen, and licensing.
It’s critical to account for the monthly costs of your first year of operation in addition to all the initial costs. Pay close attention to the funding needs of your first year of operation.
Up until your food truck starts to turn a profit, contingency funds make the first year or two go more smoothly.
Have accessible funds in the form of savings or a personal loan to cover payroll and unforeseen costs. Murphy’s law affects even the best food trucks.
- Startup – $50,000- $275,000
- Equipment – $50,000-$200,000
- Permits/licenses – $500-1500
- Contingency Funds – $20,000 – $250,000
Average Food Truck Costs
Once the firm starts to turn a profit, the operational costs of a food truck will account for 85–90% of your monthly sales.
You might need to continue investing for the first year or longer to make up for labor, food, or marketing losses.
Although you can provide excellent cuisine and service, the long-term sustainability of your food truck depends on having the right financial planning.
- Operating Costs $13,000 – $65,000
- Commercial Kitchen – $1,500/month
- Parking – $500-$1,000/month
- Insurance – $500-$8,000/month
- Utilities – $1,000-$1,200/month
- Marketing – $500- $5,000 (3-6%) of sales
- Food Costs $5,000-$25,000 (30-35% of sales)
- Labor $2,500-$25,000 (24-40% of sales)
Forecasting Your Food Truck’s Sales
To anticipate sales for your food truck, use data on labor, food expenses, inventory, and capacity.
Predicting how your restaurant will expand from month to month in the first year without a sales history is challenging.
Think about elements such as the local seasonal peaks, your marketing reach, and other crucial performance measures (KPIs).
Determine Your Capacity
Determine your daily capacity first. Think about how many clients you can serve at a food truck, as well as how many kebabs and salads you and your team can make in a shift.
The potential earnings for a shift can then be calculated using the expenses of meals and the profits of those goods.
Of course, you won’t be working every shift at full capacity.
With the right restaurant point-of-sale technology, you can check the average sales from each of those nights and determine the average for each shift if you have sales data from a month (or even a week).
Food Truck Owner’s Salary
You can consider taking pay after the company starts to turn a profit. Owners of food trucks in the United States make between $24,000 and $153,000 a year.
For a food truck, the typical owner’s pay is less than 50% of the revenue.
In a tiny food truck, depending on how much work you put into the business, your wage may be a bigger percentage of your profit.
You’ll be able to pay yourself a higher proportion if your role is executive chef, accountant, and occasionally line cook than if you spend most of your time managing teams.
The owner will have to make difficult choices regarding how much to compensate themselves while allocating earnings to the expansion of the company.
Although the first year might be particularly challenging, increasing sales through marketing and technological advancements will put your food truck on the path to success.
Timeline for Breaking Even with Food Truck
Depending on the cost of the food and the KPIs for your company and region, the majority of food trucks can anticipate turning a profit within the first 1.5 to 2 years.
Prior to making purchases using your finance and contingency cash, you must endeavor to make your food truck profitable.
Now that you have a clear understanding of how to forecast the revenue for your food truck, you can calculate how long it will take for your company to reach break-even.
Or to experience its first profitable month after paying all startup and running expenses.
Are you going to attend any local festivals, or does July bring a lot of visitors to your town? Use these KPIs to forecast when sales will increase.
Next, determine how much you must sell in order to cover all the starting and ongoing expenses associated with your truck.
Calculate the Margin and Sales of Your Food Truck
- Add up all of your food truck’s costs for the chosen time frame for your analysis. Include any maintenance costs for trucks or other equipment, employee salaries, food and supplies, taxes, rent, expert services, and so forth
- Add up all the receipts for the specified time. Include both meal and catering sales as well as any other services your food truck company offers.
- To calculate your margin, subtract the total expenses from the total sales. For instance, your margin is $6,000 if your whole quarter expenses are $24,000 and your total quarter sales are $30,000. You are losing money if your final total is negative.
- Divide the total receipts by the gross margin to determine the margin as a percentage of sales. In this instance, the $6,000 profit margin would be calculated as $30,000 in total sales. 20, This means that 20% of your sales are profit.
Margin Formulas/ Calculation
The difference between the cost to produce a good C and the selling price or revenue R is the gross profit P.
P = R – C
The markup percentage M is the profit P divided by the cost C to make the product.
M = P / C = ( R – C ) / C
The gross margin percentage G is the profit P divided by the selling price or revenue R.
G = P / R = ( R – C ) / R
Improving Your Food Truck Sales
Business owners can enhance their sales and the time it takes to become profitable by taking specific actions.
Make rigorous food cost calculations and train staff to promote your most profitable goods. You may even plan your menu such that people can easily find certain things.
To attract clients and showcase your brand to locals, obtain permits to park your truck at events and festivals.
In today’s digital age, marketing your food truck with a website and social media accounts is essential. Make sure your truck is easy to find for your consumers by utilizing an aggressive web marketing campaign.
The Right Tech
Your food truck’s technology gives you the ability to maximize productivity and earnings.
Utilize financial, time-tracking, and inventory tools right away to set up your business for success. Invest in a POS system that consolidates everything in one location.
The correct technology keeps the company organized and your expansion on the course when you’re ready to scale up.
Your food truck business will certainly make headway if you have all this information at hand.
Building a long-lasting food truck business depends on knowing which of your product has the highest profit margins.
It aids in identifying where you should concentrate your efforts to minimize expenses or raise pricing as well as where you should concentrate your resources for future growth.