Restaurant vs. Food Truck: Which is Better to Start?
Restaurant versus food truck, talk about a big decision. Both require hard work yet allow you to follow your passions in the food and beverage industry. Although all small businesses experienced a downturn in 2020, customers crave out of home experiences like grabbing a bite from a food truck or dining inside a full-service restaurant.
Between 2015 and 2020, food trucks averaged a 7.5% growth rate, whereas experts forecasted a 4% rise in restaurants’ sales in 2020. Both businesses give you a direct connection to your local community, yet vast differences exist. Explore your options by comparing restaurants to food trucks, then decide which type of business is right for you.
How are food trucks and restaurants alike?
Although a mobile food business is quite different from a sit-down restaurant, both include much of the same legwork. Entrepreneurs need a mix of business skills and restaurant experience to navigate a restaurant or food truck’s launch. Be prepared to:
- Flesh out your concept and brand. Restaurants and food trucks need a unique selling proposition (USP) and a well-formed brand.
- Develop a business plan. A necessity for any business, the more information you begin with, the better you can strategize your every move.
- Find a site or truck. Location is vital for restaurants, just like buying the right truck and finding a profitable route matters to food truck owners.
- Handle licensing and fees. Whether you choose a restaurant or food truck, you’ll need to jump through some hoops, including licensing and inspections.
- Secure funding to set up your business. Food startups require an initial investment and enough money to cover six to 12 months without a profit.
- Navigate accounting, payroll, and tax. Business owners crunch numbers for restaurants and food trucks, making financial systems essential for both.
- Design a marketing plan. A cohesive strategy sets a path for communicating with new and existing customers.
- Build a digital footprint. Both stationary and mobile restaurants need a website and a complete online presence for marketing and communication purposes.
- Add technology. You’ll want to accept credit card payments and track inventory, so a point of sale (POS) system is necessary for both types of businesses.
Key differentiators: Restaurant vs. food truck
Although there are many similarities for companies in the food and beverage industry, stark differences exist. Of course, most notably, one is on wheels while the other stays at a set location. However, with both, you’re making a lifestyle choice. Before making a decision, consider how startup costs, risks, flexibility, and mobility affect your decision.
In nearly all cases, food trucks require smaller startup investments. It comes down to the cost of real estate versus the price of a food truck. Compare the Market reports that initial costs are $67,318 for restaurants compared to $20,600 for food trucks.
Yet, these numbers are on the low end, with many in the industry paying over $100,000 to get a food truck running, whereas a restaurant can quickly run up a million-dollar bill. Since your restaurant truck is small, you need less inventory, employees, and supplies at startup.
Yet, when comparing the two, you may notice that licenses and recurring costs aren’t that much different. The same study shows that recurring costs are $13,292 for restaurants versus $12,922 for food trucks. You may even pay more for licensing, with food truck businesses averaging $9,050 versus $8,662 for restaurants.
Smaller investments decrease your risk. With both restaurants and food trucks, you can sell your building, truck, or business later. However, selling an automobile is generally easier than unloading real estate.
Furthermore, food trucks require less equipment and inventory, meaning fewer appliances to break or stock to spoil. Although any business is a risk, the smaller your footprint, the quicker you can pivot during a downturn.
Both restaurants and food trucks require the owner’s presence. But, food trucks provide a bit more flexibility to adjust your business hours, take time off, or deal with an emergency. Your customers still expect you to keep a schedule, but a food truck’s mobility means you can take some liberties.
Restaurants can’t close their doors for a few weeks without severe consequences. It’s a full-time investment. However, many mobile entrepreneurs start a food truck as a side business and work weekend events only.
A food truck also gives you more menu flexibility. You don’t keep much inventory, so it’s easy to refresh your menu on a daily or weekly basis. This differs from a restaurant where owners must carefully calculate changes based on existing stock and menu options.
Once you’re locked into a restaurant location, there isn’t much room to turn back. So if you discover hidden issues, you have to deal with them. With a mobile truck, you can go anywhere, and if one location doesn’t work, you can move on. Being mobile also means you can set up for large events, community festivals, or catering events.
Reasons for starting a food truck business
In many ways, food trucks symbolize entrepreneurship. You have the ultimate freedom to head anywhere, secure a license, and cater to a new audience. While people found food businesses for many purposes, food truck owners report reasons like:
- Make a lifestyle decision. The mobility of a food truck is far different from heading to the same restaurant every day. Many food truck operators crave the excitement and flexibility of hitting the road.
- Get proof of concept. Starting a food truck is an excellent way to test the waters and decide if you want to try out your good idea on a larger scale or test several ideas before picking one.
- Pursue a passion. Operators head into the food truck business to feed people, but many maintain a day job by operating their food truck at weekend events or festivals.
- Low barrier to startup. Low entry costs mean it’s easier to get into business with a smaller investment and recoup your funds quicker.
Motivations for opening a restaurant
As an independent owner-operator, you’ll face challenges and incredible rewards. Since foodservice businesses come in all sizes, you can set up any concept you can dream of, from a coffee cafe to a sports bar. Restaurant ownership is great for people who want to:
- Follow a dream. Many restaurant founders feel drawn to hospitality at a young age. Opening a restaurant allows them to make a difference in the industry while exploring their passions.
- Serve a community. Restaurants, diners, and bars often become familiar landmarks. You can support local sports teams, participate in events, and curate goodwill.
- Explore a concept. From bringing a big city idea to a small town to supporting local producers with a farm-to-table concept, a restaurant allows you to put your idea into play.
Restaurant vs. food truck: FAQs
There are plenty of questions surrounding the food truck versus restaurant debate. While many people run both a food truck and a restaurant or start with a food truck and move into a restaurant business, it’s hard to know which choice is best for you in the beginning.
Are food trucks cheaper than restaurants?
Although food trucks are initially cheaper, the average cost differences between the two narrow when you get into licenses and recurring costs. If you run your business as a solo entrepreneur or with just a small amount of staff, then you can save quite a bit more compared to a full-service restaurant.
Which is better for a beginner?
Food trucks tend to be better for beginners because it involves less risk and experience. A full-fledged restaurant has a ton of moving parts, and if you’re not already familiar with the restaurant industry, then it’ll be tough to catch up. Starting with a food truck allows you to learn on a smaller scale.
Are restaurants or food trucks more profitable?
There’s no one answer to this because of so many variables. For instance, it’s difficult in colder regions to run a food truck during sub-zero temperatures. With a restaurant, you can stay open year-round. Plus, you’re limited by inventory space with a food truck, while a restaurant gives you plenty of seating and storage.
However, both restaurants and food trucks are only as successful as your dedication to planning, marketing, and efficiently operating your business. Regardless of your decision, you can build a profitable company by taking strategic actions.
Restaurant or food truck: Figure out your pros and cons
So why do you want to own a food truck or restaurant? Do your reasons cross over? Or do you feel pulled in one direction or another? Write down your list of pros and cons, then make a plan to follow your passion.