Food Truck Start Up Costs And Funding Essay

Question:

Discuss about the Food Truck Start Up Costs and Funding.

Answer:

Introduction:

Malcolm and Susan Johnson are newly married and the couple has over ten years of experience in the restaurant and hotel industry. They have been working in a restaurant together where Malcolm has been working as the head cook and his wife Susan has been working as his assistant. The couple has recently decided to start their own food business. They are in the opinion of opening a mobile food van where they can sell tasty and delicious mouthwatering snacks and refreshments. They have named their mobile restaurant as D.I.E.T (Did I Eat That). The couple feels that having a catchy name will attract more customers and that will enhance their business. They have chosen Nightcliff Jetty Darwin as their area of operation as it is seen that it is one of the busiest recreational place for people ( 2017). The area has sufficient car parking facility and has a shared path along the foreshore where people and cycle. It is a popular hangout place for people especially during the weekends and during the dry season.

The new Business proposal topic

The mobile food van business that Malcolm and Susan wants to undertake involves the preparation of a business plan that will be helpful in starting their business successfully in Nightcliff Jetty Darwin. The first step involves getting appropriate licenses from the local and the national government as it is seen that the couple cannot drive a food truck and park their van anywhere in the city and start their business ( 2017). In order to start business in Nightclif Jetty Darwin there are requirements of various licenses like the health department certificates, permits for the van and parking restrictions. Therefore it is essential for the couple to contact the local government to gain knowledge about the licensing information.

The couple have a tight budget and therefore they are in need of a Mobile Food Preparation Vehicle (MFPV). It is a truck that prepares food according to the wishes of the customers while the customers wait for fresh and quality food. These vehicles are quite expensive as there are certain rules laid down by the health departments as they are preparing food for the customers. Therefore, these vehicles are are quite expensive as they are well equipped. The couple have selected Nightcliff Jetty Darwin as their location for undertaking the business as it a busy tourist spot where tourists and people residing in the nearby areas go for walk or cycling or even take family outings during the weakened to get a feel about the scenic beauty and the cold breeze of nature. An advantage of starting a business in this location is that the parking out here is free. After the initial plan is constructed, it is essential that the couple undertake the plan of taking loan from a financial institution to start the business. They have decided to make a down payment of $25,000 and wants to take a loan of $50,000 from bank. They are in the look out of a bank who will provide the desired amount at the lowest rate of interest.

The next step of preparing the plan involves analyzing the market trend. The current situation in Australia show that people do not have sufficient time to fulfill all their desires within the stipulated time of a day and therefore, the demand for fast food has increased considerably. Nightcliff Jetty Darwin is a busy area and people often go there to relax and spend quality time with their families. It is seen that people out there often demand for snacks and refreshments while chatting with their family or after taking a walk or completing their cycling session. Snacks items are highly in demand in the area and therefore, the couple feels that they will get good money out of it (Brookfield 2017).

When it comes to mobile food van business, there are no limitations with respect to the market they can explore till the time the business runs by abiding with the rules of the government. The target market for the couple involves the location where they want to operate the business. In this respect the couple are aiming for the customers who are coming to visit Nightcliff Jetty Darwin area. The target customers involve the people of various ages who come to visit the place. The love for snacks like burritos, pan cakes and refreshment drinks like juice and smoothies are seen among all the age groups. Therefore, the main target customers involve the overall population of Nighcliff Jetty Darwin.

The couple before staring the business looks into the competitors who are operating in Nightcliff Jetty Darwin. As it is a tourist attraction, there are various restaurants that operate in the area. The most renowned restaurants in the area are Jetty and Fish, Jay’s Coffee Bar and The Foreshore Restaurant and Caf?. There are various other restaurants that operate in the area and it is seen that most of the restaurants focus on main course meals. There are hardly a few cafes that focus on snacks and beverages. There are no mobile food van outlets in this area and therefore, if they start their business in the area it will be profitable for them as they will be offering tasty snacks at an affordable rate that will attract customers.

The couple have decided for a comprehensive sales and marketing strategy that involves creating promotions through direct marketing and use of online websites to promote their business. The best method to promote their business is through face to face marketing as it is the fastest method of promoting a business.


Mobile food vans maintain their price at a cheaper rate with respect to the conventional restaurants and therefore, the couple have constructed their menu and its price by evaluating the price and the menu that is provided by the other restaurants operating in the area. The following is the menu card that is constructed by the couple with respect to the items they desire to sell.

Mouth Watering Snacks

Amount (in dollars)

Chicken Burrito

$8

Fish and Chips

$ 15

Pork-U-Pine Sandwich

$10

Montechristo Sandwich

$ 8

Meatball 3 Cheese Squeeze

$ 12

Desserts

Amount (in dollars)

Pancake

$ 15

Apple Pie

$12

Chocolate Brownie

$6

Cheesecake

$12

Refreshments

Amount (in dollars)

Water

$1

Soda

$2

Juice (Orange, Lemon, Mango, Pineapple)

$6

Crushers

$ 10

Smoothies ( All flavors)

$ 15

The couple have sufficient experience in the food and restaurant industry and therefore they have knowledge about the suppliers from whom they can purchase their inventories in order to prepare delicious items for the customers. The suppliers are the wholesalers and the couple has a good relationship with them and therefore, the suppliers have agreed to sell the items at a discount of 10% from the market price.

The couple are in need of few employees who will serve the food and will even assist the couple while preparing the food. Malcolm has decided to employ two people and will serve the food to the customers and assist them in preparing the food. Malcolm has decided that he will be cooking the food while his wife will be sitting in the cash register and the other two will assist in serving the food to the customer and assisting Malcolm while cooking delicious food. The management duties involve providing quality food to the customers along with maintaining a healthy and hygienic environment within the firm and satisfying the employees working under them.

Estimated Costs

In order to start a mobile food van business, Malcolm and Susan requires a startup capital that will be used to construct the primary necessities of the business. The couple does not have sufficient savings to start the business and therefore, requires a loan of $50,000 to meet the startup costs. The plan prepared by Malcolm reveals that the loan will be repaid with three years with an accrued interest rate of 6%. The cost of a new fully equipped mobile food van is around $ 90,000 and as the working capital is low, the couple is in the idea of purchasing a second hand van than would cost them around $35,000. The couple in order to start their business initially needs to gain certain license issued by the local government. The permit for starting the initial business requires a trading license that costs $ 1000 and after the trading license is gained the couple needs to apply for health and safety license that is mandatory to be maintained in any food business. The health and safety license costs $2500. The other license without which the food mobile van business cannot start is the quality assurance license and that costs $1500. These are the initial permit cots for the business. The costs related to the food mobile van for D.I.E.T include direct cost of sales, marketing and sales expenses that are essential to attract customers, stationary expenses, and preliminary startup expenses (Food Revolt. 2017). There are other expenses involving maintenance and repairs of the van, raw materials for preparing the product and cooking equipment that make the process of cooking faster and easier. The estimated costs that are related to the business of Malcolm and Susan are given below:

Particulars

Amount

Start-up Fund

$75,000

Estimated Costs

Amount

Direct Cost of Sales

$12,000

Sales and Marketing Expenses

$15,000

Stationary Expenses

$2,000

Trading License

$1,000

Health and Safety Licence

$2,500

Quality Assurance License

$1,500

Start-up Expenses (Preliminary Expenses)

$35,000

Maintenance and Repairs of Van

$6,000

Total Estimated Costs

$75,000

It can therefore be said that these costs are the costs that are mandatory for the couple to forecast for operating the business and therefore, it is important that the couple make plans to generate sufficient capital to pay off these costs.

Timelines

The time that is essential to start a business depends upon the nature of the business one wants to do. In case of Malcolm and Susan, it is predicted that they are starting their business from the scratch and they want their business to be as comprehensive as possible and therefore they start their planning a year before the anticipated date of commencing the business (Surrounds and do 2017). This allows sufficient time for the couple to analyze the business idea and gain licenses and permits and organize the legal structure to operate the business.

It is seen that a year before the startup, the couple will try to uncover the things that will be essential to convert their idea into reality. The couple needs to undertake meetings with the banks and the financial institutions regarding the loan. They will even inquire about the permit and the licensing requirements for the mobile food van business and the tax implications along with the startup costs. One year before commencing the business it is necessary to decide on the location where the couple wants to operate (Forbes.com. 2017).

It is seen nine months before starting the business, the couple needs to apply for the local permits and the licenses that are appropriate for the business in the concerned city and state government. In general, it is essential to get a general business license that is gathered from the city where they will do their business. The couple is into food business and therefore they will be requiring food license and food quality and health license from the government authority (Staff, 2017).


Six months before the business commences, the couple requires applying for other permits as well. As the couple starting a sole-proprietorship business, they need to apply for a fictitious name that will be used to operate the business. The marketing plans even needs to be executed six months before starting the business and the couple needs to do a business listing in the local phone directory. They should open a bank account so and then start applying for a loan.

All the legal necessities need to be taken care of three months before commencing the business. It is the right time to purchase the equipment and the inventories and make arrangement for deliveries. The other supplies and products that is essential to undertake official activities requires to be ordered and the couple needs to create a relationship with the merchant accounts. It is essential to write out the job descriptions that need to be performed by the couple in order to operate the business effectively (Made for Food Trucks. 2017). The date of the opening of the business needs to be announced to the public through advertisements and promotional activities so that people have knowledge of their business and purchase the snacks and the refreshments they offer for sale.

The Gantt chart will provide a brief over view of the time consumed to start the business.

6 Months

3 Months

1 Month

Selection of the business

Preparation of the taking loan

Paying for the initial license to start the business

Purchasing Food Mobile van

Hire Staff

Purchase Store equipment

Promotion of the business

Opening the business

Rationale of the Proposal

The rationale of the proposal is to aid the coupe in preparing a forecasted business plan to startup their business so that they can operate their business effectively and smoothly. The proposal will act as a guide or a framework, which will path their business activity effectively. The proposal will allow them to understand the costs that they need to face in the future and understand have knowledge about the costs they will incur so that they can price their accurately to gain profit after paying off for all the costs and expenses (Mobile Cuisine | Food Truck, Pop Up & Street Food Coverage. 2017).

Malcolm and Susan will undertake all the responsibilities and will look to take loans and undertake all the activities that are essential in order to start the business.

The couple estimates that their business will reach over $120,000 in their annual sales by the end of the first year and they forecast that their business will reach $200,000 by the end of third year and the amount will be sufficient to pay off the loan, which they have decided to pay back within the third year.

Reference List

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Staff, S. (2017). The Complete Breakdown of Food Truck Operation Costs -. [online] Foodtruckempire.com. Available at: [Accessed 26 Mar. 2017].

Surrounds, D. and do, T., 2017. Nightcliff Markets | Northern Territory, Australia. [online] Northernterritory.com. Available at: < [Accessed 28 Mar. 2017].

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