> But the restaurant industry fights to limit food trucks. On average, food trucks must handle 45 separate regulatory procedures and spend $28,276 on associated fees.
Lets napkin-math this. If we assume a food truck has margins at the upper end of the fast-casual industry of 9%, then each $18 burger-and-fries nets 1.62 in profit.
$28,276 / 1.62 = 17,454 burgers-and-fries.
If you were open every day of the year and assume no seasonality, that means your first 49 orders every day go just to regulatory fees.
And that doesn't cover any of the other fees and expenses a food truck might have.
Those are brutal economics. I'm impressed it's only $18!
> If you were open every day of the year and assume no seasonality, that means your first 49 orders every day go just to regulatory fees.
This looks crazy because it is incorrect. In your premise, that 9% profit margin includes the regulatory costs for a brick and mortar restaurant already. The only way your logic works out is if truck regulations are on average $30k more expensive than a regular building, which they almost certainly are not.
You can’t even begin to do the calculation without knowing the breakdown underlying the profit margin you cite.
Yea, if people are thinking you can just grab a truck and park it wherever you like, they are in for a big wake up call. The last city I lived in had the brick restaurant owners lobby and fight like hell to stack up every regulation they could on food trucks.
Dude when industry wide margins are considered it's net margin. Gross margin on food is typically 70%. Of course, that margin does still get eaten up by a million things and the business is still brutal but they're definitely making gross margin of way more han $1.62 on burgers.
1. food trucks are subject to lots of regulation and fees too
2. burrito trucks sell their burritos at the market clearing price for a burrito, which is $18 because most of that burrito truck's competition is brick-and-mortar restaurants with expensive rent because of zoning laws.
A lot of the interesting food trucks around me are routinely more expensive than the brick and mortar stores around, often due to the novelty of the cuisine.
Dude, there's a million regulations for food trucks. Not only do zoning laws typically still apply to them (of course it varies a lot by municipality) there's usually extra regulations on top of that (can't park within X metres of a restaurant for example) and cities often have extortionate fees for permits. It's often tens to hundreds of thousands of dollars per year in permits...
It isn’t all zoning laws.