Posts tagged nycfta

Food Truck Start-up Costs - A Realistic Breakdown

At the Meetup on Monday, mobile vendors had the pleasure of speaking to Jerome Chang, owner of Cathcart & Reddy and the former DessertTruck. Chang gave us an exclusive interview last month, detailing the costs, trials, and tribulations of opening a food truck in New York City. Whether you’re purchasing a brand new food truck, hiring a t-shirt printing company to do custom apparel for your staff, or simply purchasing ingredients from local markets, it all carries a cost. Here, he provides us with a more detailed breakdown of the costs associated with the launch of a new food truck venture in the city of New York.

As some of you may know, Mobile Food Vending Unit Permits (i.e. food truck permits) have a government wait list that’s backed up by many years. While a legitimate two-year truck permit will only cost you $200, if you want to get your business started in this decade, it will cost you around $15,000 to purchase one from a secondary seller.

While it’s customary to start employee’s hourly salaries off at $12 at his brick and mortar location, the average rate for the truck was $16 due to the time it took for employees to obtain their mobile vending licenses and to consistently provide the manpower necessary to work the long hours on the truck itself.

A cost breakdown by Jerome Chang:

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  • Truck — $50,000 (purchase cost plus basic retrofitting)
  • Mobile Food Vending Unit Permit (bought on the black market) — $15,000 (2-year permit)
  • Commissary — $500 (per month); $6,000 estimate per year
  • General Liability Insurance (for the business) — $3,500  (per year)
    • "You need general liability insurance to operate in a commercial kitchen."
  • Mobile Vendors License$103 ($53 for the class, $50 for a 2-year license)
  • Truck Insurance — $2,000-$3,000 (per year; $2,500 estimate per year)
  • Commercial Kitchen — $2,000-$5,000 (per month; $36,000 estimate per year)
  • Workers Comp — $7,000  (per year for 3 employees)
    • "You’re combining two things insurance companies hate - moving vehicles and hot food.
  • Accountant — $350 (per month; $4,200 estimate per year)
    • "Most business owners are doing a million things. Having an accountant look at your books objectively is highly recommended."
  • PR professional — $1,500 (for 3 months; $6,000 estimate per year)
  • Grand total food truck start-up costs for year 1:

             =  $130,303

Please note that the expense list does not include variable costs such as gas, vehicle repairs, food and paper products, marketing materials, and a host of other possible sundries. Budget for incidentals and miscellaneous expenses accordingly.

David Weber (NYC Food Truck Association president, co-founder of Rickshaw Dumpling Truck)

David Weber is not only a co-founder of Rickshaw Dumpling Truck, he’s also the president of the NYC Food Truck Association and the author of “The Food Truck Handbook”.

Watch him give the keynote address at the AMB HQ with a Q&A to follow. The event is free.

Register to attend HERE.

The Leonard Lopate Show — Food on the Move: The Food Truck Handbook

Food trucks are expanding eating options all over New York. David Weber, founder and president of the New York City Food Truck Association (NYCFTA), Deborah Smith, owner of the Green Pirate Juice truck, and Jim Drew, owner of Phil’s Steaks truck, discuss the growing mobile food movement. Weber’s book The Food Truck Handbook: Start, Grow and Succeed in the Mobile Food Business looks at the ins and outs of navigating in the industry.

UpendED interview series: Jerome Chang of DessertTruck

"There’s nothing magical about a truck that’s going to make running it easier. It is not easier. The overhead is not necessarily lower."

In front of Cathcart & Reddy, all that remains of its mobile predecessor is an emblem of its likeness that juts out beneath the awning. Conspicuously dubbed, DessertTruck was a grandaddy in New York City’s gourmet food truck movement. Its 2007 debut came before the rise of the New York City Food Truck Association and a slew of sweet competitors. Two years later, a brick and mortar arm by the same name was introduced at 6 Clinton Street in the Lower East Side. In February 2012, the truck was retired for good, and DessertTruck’s storefront began rebranding under the name of Cathcart & Reddy. Jerome Chang, co-founder and executive chef of both enterprises, talks about the bittersweet business of running a food truck in New York City, and why parking the truck for good was one of the best decisions he could have made.

How did DessertTruck start?

My background is in fine dining. I’m 36 now. I started the truck over five years ago. I’m of a generation where we really don’t buy into pretension and status based on superficial things quite as much as the previous generation. I was working at white table cloth restaurants. I didn’t necessarily subscribe to that kind of lifestyle or culture.

My last job before I opened the truck was as a pastry sous chef at La Cirque. I just wanted to be able to bring high quality desserts to the masses in a very approachable, casual, and more affordable way. No one had done that before.

Didn’t you say that you had a law background, too?

I was a lawyer for a year.

It seems that a lot of people who have background in law end up doing food trucks.

You’ll find lawyers in every industry. Lawyers always dream about changing careers.

You said you wanted to be more connected with the food, but why via a truck specifically? Why not just start with a smaller restaurant?

If I had opened up a pastry café with the menu that we had for the truck, which consisted of a warm chocolate bread pudding with bacon creme anglaise or a molten chocolate cake with sea salt, olive oil, ganache and candied pistachios, or a milk chocolate mousse with a peanut butter cream center and caramel popcorn…if you walk into a coffee shop or café and then see that the primary menu is composed of these desserts, you would probably think it’s a little weird.

People still, even after we’ve opened this brick and mortar shop, and it’s been over two years, people still find it a little unusual or unique. There’s something about a truck that automatically breaks down barriers. There’s something about it that opens people’s minds. Not everyone’s open to trucks, but if you’re willing to walk up to a truck, your mind is already very open. It was easy to introduce this kind of gourmet menu at these prices through a truck. It’s not necessarily because it was cheaper. It was just more fun, the attitude of it and all that.

A lot of people have been telling me that costs for launching a truck were way higher than they ever expected. So, was it actually cheaper?

No, it wasn’t cheaper.

What were your startup costs for the truck?

Realistically, the truck itself was about 60 grand. But the startup costs, especially for our gourmet menu that requires a lot of components and probably more storage than the average truck, realistically were about $140,000.

Did you start with any staff?

It was just me and my business partner. This was back before the crash and a lot of that we were able to put on a credit card.

When did you launch it?

In 2007. It was retired in February 2012.

What came about with you deciding to transition away from the truck?

The cost of it, the headaches. This is in New York City, though. Every city is different. Running a truck is going to be different from city to city to city because every city has its own ordinances regulating trucks. But New York City is one of the worst, I think, based on what I’ve heard.

What were some of the trials and tribulations you had over that period? You had a pretty good run.

It was a great run. Trials and tribulations…again, not (being) rich, so $140,000 was already way over budget. That’s number 1. Number 2, we were using a used truck which was unreliable, so it had a lot of breakdowns. That was a big headache. And it wasn’t just the truck. You have generator issues, too, always. If you’re going to have a generator running a lot of your power, you’re constantly going to have problems.

And why is that?

Generators are not built to be running 16 hours a day or 12 hours a day, seven days a week. At least the size that we’re talking about.

So how often were you having to take the truck off the road for repairs?

I don’t know exactly, but a lot. Anybody who followed our truck definitely knows that we were out of commission on a regular basis. And then also the weather. Once the weather’s bad, we thought, okay, let’s try it the first few months. If it’s raining we’d go out and see, because we didn’t know if people would come out or not. But people are just too scared. They just don’t come out. We made very few sales (in the rain).

Did it help at all, dealing with legal problems in the city, to be a part of the New York Food Truck Association?

That came much later. That food truck association didn’t start until, I think, three years in.

As far as having the place now, what is better about having a brick and mortar establishment versus a truck?

Predictability. When you have a problem with a food truck, you don’t have a lot of service providers out there to fix the problem quickly and efficiently. So if there’s something wrong with your generator, you’re going to have to find a way to either unmount it from the truck and drive it over to a repair guy, or if you’re lucky enough — and I don’t know anybody like this — find a guy who’s going to come out to your truck wherever it’s parked to fix it, or you have to drive the truck itself to a repair guy. So that’s one tiny little example of the issues you have to deal with for a repair. But if you have a restaurant or a café and you have an oven problem, you have a gazillion different service guys competing for your business who will come out. Yeah, they’re not cheap, but still it’s going to get done probably within 24 hours.

Is it that the market hasn’t evolved yet to deal with the problems within the industry?

The market will probably never evolve because there will probably never be enough trucks to have a service provider that will make house calls for a generator issue, for example. A lot of trucks are very unique in the way they’re built out. You have to have someone who kind of knows what they’re doing with your truck.

Do you see the issues involving truck licensing regulations in the city getting any better since you started?

A lot of the licensing regulations here don’t make sense. It seems like it’s getting worse. That’s just my opinion, but I have never really been able to keep up with every single change that has been happening with food trucks. I almost feel like an outsider now. It’s worse partly because it’s so many out there. A lot of people who are not foodies who don’t read Eater every day or don’t read the food blogs every day, they’re just going to say, ‘They’re a heck of a lot of trucks now. So cool, but it’s hard to distinguish between the two. And, oh, by the way, I remember the city was really trying to crack down on them.’ It’s just a really mixed bag of public perception which is not all that great, I don’t think.

Do you think having the truck helped with marketing and getting the brand out there?

Oh yeah. Totally.

What did you think of participating in fairs and popups like Madison Square Eats and other food markets around the city?

In our first year and a half, we used to do that all the time and we used to be really excited about it and it was a lot of fun to go to these different events, whether it was a fundraiser or a booth at a fair or a truck fair. In the end, it just seemed like more work than it was worth looking back on it. It didn’t seem to strengthen our brand and…I don’t know what it was. It just didn’t seem worth it. We definitely didn’t seem to be making any money from it, or a lot.

You’re rebranding the restaurant as Cathcart & Reddy. Just curious, but what is that about? Why the name change?

Because we don’t have a truck anymore. And again, even recently, just doing a catering event under our old name, people got us confused with other trucks. You can blame our name. That’s fine. I understand. Partly we started with a not very strong brand name, but people still get confused despite all the press that we’ve gotten. [Side note: Cathcart & Reddy are the surnames of Susanna Cathcart-Garcia, Chang’s business partner, and Sandesh Reddy, a pastry chef and supporter of the enterprise.]

Do you think it’s hard to break into the industry, especially in New York City, as far as competition goes and maybe cliques and getting a good space? 

No, but we were lucky. We were on the front end and we were able to find a really busy corner that no one had claimed. And our business was always at night. We were very different from a lot of other trucks in that 85% of our revenue came around dinner or afterwards. It’s not lunch. We were never trying to fight for Midtown, although we tried Midtown occasionally. We never really had to fight for spots or wanted to fight for spots.

What advice would you give to someone who wants to open a truck? Honest advice.

The honest advice is really, everything that a business mentor, or the SBA, or the SBDC tells you about what you need to think about when opening any business, you gotta think about it and apply it to your truck business, too. The same principles apply. Ultimately, at the end of the day, it is running a business. There’s nothing magical about a truck that’s going to make it easier. Especially in New York City, it is counterintuitive. It is not easier. The overhead is not necessarily lower.

You can find a way, but it’s going to take a lot of legwork, a lot of research, and a lot of hard work, thinking, sitting down, and managing what your day is going to be like every single day. Please, please, please, if you haven’t been in the food business before, volunteer or something for at least six months just to see what it’s like. That’s one thing that helped us, I think. I’d been trained as a chef, worked in restaurants for a long time. That helped a lot in dealing with a lot of the nuances of running any hospitality business. Know your city’s rules and regulations and don’t assume that because you’re a truck you can get away without paying taxes.

I remember when we first started, we got an angry e-mail because we’d been getting a lot of press, and I guess this was a business owner pissed as hell at us: ‘We don’t like you because you don’t have to pay taxes, blah, blah, blah.’ I’m like, dude, we collect sales tax. I don’t know why you think we don’t have to collect sales tax. There are a lot of weird ideas and myths about trucks out there. Please don’t think it’s easy, at all.

Would you expect someone who’s just starting a new, small operation to be in the red in the beginning way more often than they’re in the black?

Oh yeah. Again, a lot of the same business principles apply. Expect to be in the red. You might get lucky, but don’t rely on luck. You’ve got to rely on preparation. If you’re lucky, that’s icing on the cake. We were lucky. Take it from me. We took for granted the kind of success that we had. We’ve been doing it for over five years. It’s been in people’s consciousness for over five years now, so don’t expect to automatically get a lot of press anymore, anywhere I think.

Are there good resources that people can use to find out what to do and where to source, or is it really about networking?

I’m one of the worst people to ask about that. When I started, there were no other gourmet food trucks out there. I just did a lot of embarrassing question asking, pounding the pavement, asking street vendors who were mostly reluctant to say anything to me. It was a lot of luck and a lot of asking embarrassing questions for me and a lot of it was also experience from restaurants. I knew who the vendors were, too, just based on the restaurants where I’d worked.

Did your law background help at all?

 Not really.

Where do you see this restaurant going?

I want to see if we can do more catering and retail.

Would you ever go back to a truck later?

Only if someone else ran it and they had a crapload of money, and it was just sort of a side project or hobby for them, and they just wanted to have their kicks for shits and giggles.

You mean, you’d franchise it out for someone else to run?

Yeah, something like that, or just have me consult. I would never want to do day-to-day management of a truck again. No way.

New Yorks Hottest Food Trucks Deliver for Elderly

We’re on wheels and they’re on wheels. Now we are working together to help elderly homebound New Yorkers. Joining forces never tasted so good! For the first two weeks in May, New Yorkers will be able to do good by satisfying their appetite for street food through a new partnership between Citymeals-on-Wheels and the New York City Food Truck Association. 

Gourmet Food Trucks Fight Inspectors’ Perceptions

Porc Mobile was born when Josh Saltzman pooled money to buy a white mail truck and convert it into a roving kitchen, dishing out barbecue and baguettes topped with goat cheese on Washington’s city streets.

While customers flock, so has the health department: six times since beginning operations last year, Saltzman said. Inspectors often arrive unannounced during the lunch rush, targeting food trucks because they’re so visible, he said.

Following