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Takin' It to The Streets: Expanding Your Brick-and-Mortar Concept With a Food Truck

You have a successful restaurant and are ready to expand. What about taking your concept to the streets via a food truck? It's an interesting challenge that some operators have taken on. They have discovered that doing so presents both setbacks and synergies. Getting things just right in the eyes of consumers is even more of a high-stakes gamble when the potential for problems is doubled. We all love guest traffic. Cross-town traffic is another story.

Spread the Word

"Any [fixed location] restaurant that has achieved some recognition and has branding aspirations should consider doing a food truck or food trailer," says veteran restaurant consultant John Andrews-Anaguostaras, the president of Landmark Design in Las Vegas, and the former president and chief executive officer of Emerge1icy Mobile Kitchens in Chandler, Arizona.

Adding a truck creates what Andrews-Anagnostaras says is a great opportunity "for spreading the restaurant's business model franchising, and having a very short ROI, sometimes within one year. Also, for adding an opportunity to carry out some catering business and cover events."

"Food trucks can serve as an extension of your existing kitchen, staff, and fixed overhead assets that allow you to leverage those assets and talents beyond your current four walls," says David Bloom, executive vice president of business development and strategy for Synergy Restaurant Consultants in Newport Beach, California.

...this kind of business venture could be the strongest marketing avenue possible...

There are lots of good reasons to add a food truck to one's arsenal, he says, such as deployment to catered or largescale events; promotion of your brand at seasonal locals; to overcome location or seasonal challenges your current business may have; and to cross-promote your brick-and-mortar locations.

Food trucks provide flexibility of locations and added exposure to the brick-and-mortar operation, says Adam Dean, senior associate/management advisory services in Washington D.C., at global foodservice consulting firm Cini-Little International Inc.

"They give you the opportunity to sell your food and brand in areas that would traditionally be out of reach," Dean says. Food trucks are still trendy, Dean says, and when done right they project the image of a company that is successful enough to 'expand' and savvy enough to follow the latest trends."

In fact, Dean says, if done right, food trucks can make a lot of money in a short amount of time. "They are very popular and very easy to spot when parked on the street. That and long lines tend to be the big business drivers." For a brick-and-mortar restaurant, he says, this kind of business venture "could be the strongest marketing avenue possible and it should be approached as that. The truck is an interactive billboard on wheels that gives guests the opportunity to experience some of your food, and hopefully your service, before they even walk through your doors."

Paul Bartlett, principal of Kitchen Solutions Consulting in Baltimore, says that "it probably makes sense" for an existing brick-and-mortar operation to mount a food truck enterprise, "primarily for the sake of simplifying, at substantial cost, catering and festival operations." According to Andrews-Anagnostaras, costs can range from a low of $50,000 to a high of more than $200,000, he says, "depending on the bells and whistles you incorporate into it."

Bartlett is less enthusiastic about the upsides of expanding into food trucks and cautions operators to carefully analyze the potential return, and the additional problems. He says to ask yourself, "What does it buy you? A rolling advertisement, assuming you have the culinary resources to operate it in a manner that will support your brand. Next, you will spend your life looking for a parking place or looking over your shoulder when you occupy a loading zone."

While Baltimore is home to several restaurant trucks, such as Four Seasons and Kooper's Tavern, Bartlett says, I really don't see much of them. Unless you follow a specific truck, they are not highly visible. Furthermore, unless you are at a concert, the beach, a NASCAR event, or a construction site, why would you choose to eat on the street rather than a fast-casual or quick-serve restaurant?"

A New Way of Catering

"Many restaurant operators see using a food truck as the new way of catering," says Chris Tripoli, FCSI, the principal of the A 'La Carte Foodservice Consulting Group in Houston. "There has been an increase in the use of food trucks rather than the more traditional catering set up for corporate picnics, and other business and social events. It seems to be easier and more fun for event planners to have two or three trucks arrive to cater an event rather than set up a tent and provide the typical self-serve buffet."

Tripoli says he has worked with a pair of Houston operators who do both -- Fusion Taco and Eatsie Boys -- and has found that restaurants that use trucks have the advantage of additional publicity from events "that most likely carries over to their brick-and-mortar location." Trucks require fewer people to operate and serve than traditional catering does, and "provides the restaurant with a way of promoting menu items that may be available on the regular menu at the restaurant," Tripoli says.

On the other hand, food trucks that are operated by brick-and-mortar restaurant operators "can become a disadvantage to the operations of the restaurant if the truck becomes a distraction and promotes an image that is inconsistent with the restaurant. This happens when the truck offers menu items different than the restaurant, and may sometimes operate under a different name than the restaurant." In addition, food trucks may not be profitable if they are intended to replace a second unit. Many municipalities have restrictions against trucks parking and operating in most public areas, which can heavily restrict revenue.

Food trucks can provide "a great marketing outlet when selling to the public," says David Grossman, chef/owner along with Julia Sharaby of Fusion Taco restaurant and gourmet truck in Houston. "You can also increase sales through catering, and it's a great way to test new markets and locations." The restaurant, which debuted in July 2013, was built upon the success and following accrued by the Fusion Taco truck.

"If your concept is conducive to service from a mobile food unit, it can be a great way to increase your catering sales," Grossman says, "as well as market your restaurant."

Not Easy and Not Cheap

"Anyone that has ever been inside of a well-constructed food truck quickly realizes several things," Bloom says. Well-made mobile food service vehicles can be very expensive, and low-cost used options can be highly unreliable. "Either way, the vehicles require significant upkeep, cleaning and day-to-day maintenance for both the kitchen equipment and the vehicle itself."

Foul weather conditions in some parts of the country can make operating these high-profile vehicles risky, and accidents are a fact of life. Successful food truck operators "work long and hard, in often uncomfortable environments, to make their businesses hum," Bloom says, "and it is more challenging than some people realize before venturing into the business."

Most of the brick-and-mortar restaurant/food truck operators he is aware of use their trucks for catering, brand awareness and promotional purposes only, Bloom says. "They are not out on the street stopping at construction sites or parked curbside around town each day. There are certainly exceptions to every rule. The Halal guys, Roi Choi, LudoBird in La, Mexicue in New York City, and Franklin BBQ in Austin are just a few of the well-known names of chefs and entrepreneurs that have extended their brand and created significant business success by deploying food truck operations."

The one thing all of these operators had in common, Bloom says, was "incredibly great food and specialty dishes that worked well in a food truck/mobile environment. That may sound simple to do, but it is a lot easier said than done."

"Unlike stationary restaurants, a food truck allows you the flexibility of traveling to new parts of the area and widen your audiences," says Carolina Escobar, the owner of Captain Poncho's Food Truck, which was recently expanded into a restaurant in Southern Village in Chapel Hill, North Carolina. "It becomes a very interactive and genuine experience."

On the downside, Escobar says, the unpredictability of schedules can make it difficult to cultivate loyal, repeat customers. "There's also the added dependency on reliable transportation, good weather, good event marketing and low competition," she says.

Escobar, whose restaurant retains the truck's trademark Loco Burrito and award-winning Nutella Burrito, has found that her combined restaurant and food truck can give her the best of both worlds. "You continually expand your audience reach while keeping a home base," she says. Understandably, it can prove overwhelming to coordinate "and it seems as though the food truck industry is only getting more competitive," she says. Restaurant health inspections she says, are "a lot more strict" than those of the truck. "There's a lot more equipment and people involved."

Escobar recommends expanding into a truck, if feasible. "You can kind of guarantee a more unique experience with your customers and gain word-of-mouth advertising," she says. "It involves a lot more maintenance than restaurant upkeep and requires more factors to stay afloat, but I believe it's worth it."

A Way to Test New Menu Items

The truck cannot offer everything that the restaurant does, Dean says. "and it shouldn't. Its purpose should be to give added exposure to entice guests to get the full experience at your brick-and-mortar." Further synergy between the two operations includes being able to offer some of your most popular dishes on the truck. "The truck is an excellent litmus test for new menu items, too," Dean says. "It gives you the opportunity to really experiment with your menu with very little risk since food truck menus tend to change on a daily basis." Food truck patrons tend to be much more open in sharing their thoughts directly with operators, Dean says. "It's an excellent way to get instant feedback," he says.

According to Dean, two major issues need to be considered before investing in a food truck. The first is that the food needs to be "street friendly," meaning easy to eat on the go. "Very few trucks offer food that requires a fork and knife, and of the ones that do few survive," Dean says, "So it would not be recommended to invest in a truck if you cannot parlay this approach with your menu."

The second problem, Dean says is consistency. Since the truck is also a moving billboard and promotional vehicle, in every sense of the word, operators need to consider whether they can provide the level of service and the quality of food "the way you would in your B&M," Dean says. "The guest-to-truck employee interaction time typically lasts between two and five minutes. Ask yourself if you can create a similar experience that they would receive at your B&M in that time." He says that it is "fine if you can't deliver on that. Maybe the purpose of the truck is to experience the food and the differentiation between the two operations."

The next question to ask is whether you can offer the same caliber of food on the truck. "Remember," Dean says, "the guest interaction time with a truck. That means that it takes between two and five minutes for the guest to get his food from the time he places h.is order. Can your menu sustain these times? Are you able to deliver the same consistency of your food and menu in this time?" Since trucks are a different animal, guests have a different expectation. Time and concept are the priorities.

"If it's a long line, that is usually a good sign for a guest," Dean says. "But their question will be whether it's a long line that's moving fast or a long line because it's not moving at all? Most will not be patient enough to wait no matter how good the food is. So, a major issue for a B&M trying to translate their concept into a food truck is consistency in your product and whether or not it can be executed on a truck."

There are still ways to create a union between the two that works. The most important thing is not to force the concept on the truck; if it fails it could also hurt your established brand image.

"I wouldn't say (health department regulations) are more or less demanding," Dean says. "The expectations are the same for the most part." For example, the truck must have a hand sink and a three-compartment sink, and there must be potable water available. 'The truck is essentially treated like a restaurant," Dean says. "Surprise inspections still occur. Where regulations differ, though, is usually through locations."

For example, in Washington, D.C., before the latest round of regulations, trucks could not park in an area that had less than 11 or 12 feet of sidewalk space without obstructions. Also, many trucks park illegally for the best access to pedestrians, which often results in fines. "Most trucks would write this off as a necessary expense," Dean says. Nowadays, D.C. has a lottery system that self-regulates the number of locations and trucks.

While noting that government regulations "only increase with time," Dean nonetheless does not foresee any harsher scrutiny being applied to trucks than to restaurants. "Thankfully the food truck industry has been quite responsible in terms of vending safe foods," he says. "That significantly helped establish the industry. I think that food trucks will continue to be held to the same level of expectation as restaurants."

What may end up negatively affecting food trucks is if local governments decide that they are a nuisance, Dean says and pass regulations that limit the number of street vendors. "Something to that effect would eliminate the opportunity for the industry to continue to grow," he says.

Putting It In Reverse

A downside of adding a food truck is that it requires a substantial level of skill and commitment to do it successfully, Bloom says. Operating a mobile kitchen "requires expertise in areas you may not possess, and can take away the focus from your core business. Additionally, the type of food/cuisine you provide in your restaurant may not play so well in the food truck environment."

Successful food truck foods need to travel well, and may need to offer menu items at a price point substantially different from what is typically charged. This can result in "significant brand confusion and therefore might actually hurt your core business," Bloom says.

Food truck "sales can potentially eat into revenues from the brick-and-mortar restaurant," says Anne Mills manager of consumer insights for Chicago-based research and consulting firm Technomic Inc. "but operating in a different area can help to minimize this. Food trucks may also do harm to a brand's reputation if the service and menu items do not live up to a brand's reputation."

Adding a mobile unit "may detract from the brand if you are trying to build a high-line brand," says John P. Napolitano CFP®, CPA, PFS, MST, RLP chairman and CEO of U.S. Wealth Management in Braintree, Massachusetts. "It may also distract operators from doing what they need to do to make their traditional store better." Synergies include use of the facilities at a higher capacity, Napolitano says. "Revenue potential is OK, but it will require a huge awareness and PR campaign to have excellent results."

"It was a great idea, but it did not work for us," says Tom Martin, the principal of TS&S Eateries in Clovis New Mexico. "Our food truck was branded differently from our fast-food taco stand. We did street tacos out of the truck and fast-food tacos out of the brick-and-mortar. We lost our ass."

In retrospect, Martin says the biggest problem was that his town was not ready for food trucks on the scale that he was preparing for. "We did our 'market research' in Austin and tried to translate that to Clovis, New Mexico," he says. "We bought a fairly expensive truck and hired a chef and a staff to operate it." Beyond that, the town's zoning restrictions were not food truck friendly. "We had to find private land to park on, and we could not find land in the good sections of town "he says. "We have an Air Force base just nearby and, although we did park there for a while the rent charged doubled our break-even point."

Depending on the municipality the regulations can be "a night and day's difference to your brick-and-mortar," Dean says. "Often the basic requirements are that you have to have a brick-and-mortar kitchen to receive food and prep and a place to house the truck," he says. Food trucks require extra staff that need to have the ability to drive the truck, and so commercial driver's licenses are usually required. Insurance for food trucks can also be expensive.

"There are also only a few reliable companies nationwide that can build out a custom food truck," Dean says. He calls it important that whoever is building the truck has plenty of experience. "A poor job can result in your investment further sinking toward repairs and replacement parts instead of toward expanding business," he says. "It is seldom that the trucks are new, which is an additional risk to take on." Another major negative, in his view, is that food trucks are almost always seasonal.

Grossman says the challenges include maintaining consistency and food safety which he says "in a mobile unit can be difficult unless a manager is present. Adding a mobile unit will also add additional cost for maintenance."

Your Reputation Is Now All Over Town

A mobile unit "is a restaurant on wheels, and it comes with almost all of the potential problems of a restaurant," Grossman says. Health department regulations and inspections "are almost identical. A mobile kitchen must be fully functioning in the same ways as a restaurant kitchen. Food safety and sanitation regulations are identical," he says.

"If the investor is not ready to commit to the same standards of service as the restaurant and provide proper management for the food truck," says Andrews-Anagnostaras, "he should not do it." Potential problem areas include financial controls and "potential bad management, which could have a negative effect on the restaurants' image," he says.

Bear in mind that any time you expand your restaurant's brand, whether it be a new day-part, new unit or a food truck, you can risk killing the proverbial goose that laid the golden egg. You need to ensure that your food truck doesn't confuse your brand or drag down your image.

SPEED BUMPS

BE SURE TO ADDRESS LIABILITY CONCERNS

Operating a food truck presents its own set of liability issues, with the obvious ones related to traffic incidents. Before you get very far in your plans to expand your restaurant with a food truck, you should sit down with your attorney and insurer to discuss ways to minimize your risk. For example, you might be well-served to create a separate entity (e.g., limited liability company or corporation) that is licensed to use your restaurant's name, to operate your food truck business. A good business attorney can help structure your new food truck enterprise so that your restaurant is shielded from claims against your mobile operations.