Article

How Catering Can Boost Food Truck Sales & Profit

Food truck popularity continues to soar. They are a seductive foodservice business model, for sure, and for a number of reasons. "Because these facilities require little initial investment and may operate with reduced fees: one or two persons, including the manager, little food stocks, no rent," says Denis Daveine, FCSI, the principal of Alma Consulting in Montreuil, France.

And as old school as food trucks seem, their success has been largely a product of new-school technology. "Many operators have developed an active fan base through social media, and keep them current with their schedule," says Chris Tripoli, FCSI, the principal of A'La Carte Foodservice Consulting Group in Houston.

Chicago-based research and consulting firm Technomic Inc. said in its recent report, "Food Trucks: an Examination of the Emerging Mobile Food Vehicle Category," that "Food truck mania is sweeping the country. While it still isn't fully understood by a great deal of consumers, for those who have incorporated it into their lifestyles, it's quickly becoming a favorite type of meal solution."

Food trucks can adapt naturally to catered events and boost sales; however, attracting and keeping clients might require a new perspective and skill set.

Suppliers, Technomic says, "are becoming interested in aligning with these new players, understanding that it might open the door for future sales and revenue growth for their own organizations."

There is acceptance of good food being offered on trucks, Tripoli says. "What was long ago looked at as just a convenient way to get 'average' food like deli sandwiches to workers became a great new way to receive kabobs, Gyro sandwiches, steamed dumplings, tacos, pulled pork, and even sushi," he says.

Check Under the Hood

There is no free lunch, goes the old saw. And food truck operators have their own challenges. And while the advantages of mobile eateries are low initial cost, limited inventory to manage, and less labor for operations, the disadvantages are that volume can also be limited.

"Regulations in many cities do not allow trucks to park wherever and whenever in order to profit," Tripoli says. Weather and lack of having a regular location can interrupt their ability to build regular trade.

Whether your restaurant is a fixed address or on the road, operators need to consider appropriate growth strategies to squeeze extra dollars out of their investment.

And for food truck operators, catered events are a natural extension of their services.

Professor Haragopal G. Parsa of the Daniels College of Business at the University of Denver also says that catering out of a truck is a good idea. "It is 'budget' catering with added convenience," Parsa says. "On campus and at family reunions I have seen food truck catering, and found that it adds flavor, fun and less work for the host. Some companies are doing this for outdoor office parties. It adds variety to the office parties."

"This is a great idea," says Chance Comstock, president of Orleans Seafood Kitchen in Katy, Texas. "You are serving a catered event with the freshest product possible."

Still, operators must begin by carefully calculating their return on investment, Parsa says. "How feasible is it? Are the guests willing to pay?" Running out of food happens, Parsa says, so operators must be sure to stock more than enough. Another frequent issue is the high expectations of the guests, as is time spent.

"Guests often expect a food truck to stay longer beyond the agreed-upon time," he says. They may also arrive late, which will affect food quality, and may well demand unique entrees that are beyond the capability of the truck.

Parsa says that running a catering operation requires "not much" in the way of additional expertise, though he says that "sometimes parking could be an issue. Often, food truck catering requires additional supplies, such as party supplies to add more 'fizz' into the catering event for a birthday party, graduation party, reunion, etc. It should be included in the price." It also takes extra staff "to meet the spontaneous needs of the guests," Parsa says.

Parsa also says that, as with anything, it takes time to build the business. "From my knowledge, food trucks are using catering as a supplementary income, not as the mainstay of their business. It is a seasonal business, and sporadic. They are using it to support their main operations and fill the slow times." Handling events, he says, is "a good idea as a 'second job' to support other sources of income."

A Learning Curve

You might have a handle on the challenges of regular food truck operation. Be advised that catering requires additional knowledge.

Operators need to know all aspects of catering, depending on the type of service they provide, Comstock says. "An operator might also need to buy or rent plateware, chafing dishes, utensils or food storage depending on the type of service," he says. Indeed, storage and transportation issues may prove to be major complications. Comstock says operators should learn as much as they can about all aspects of foodservice and catering.

"Changing the philosophy to feeding the guests all at once versus one at a time" often proves a major hurdle, says Sandy Korem, a catering coach and founder of The Festive Kitchen, a Dallas- based catering company. "This could be a huge challenge for some food truck operators. An off-site caterer is ready to feed all guests as soon as the first guests arrive. Guests do not like to wait."

The primary challenge is "making sure there's enough supply to feed the guests and upkeep of the quality consistently," says Chef Eric Tjahyadi, the principal of Komodo in Los Angeles. Tjahyadi operates two cafes in Los Angeles and Venice, California, and a renowned food truck. For the past five years the truck has offered a simplified menu of tacos and sides, he says. In all, 60 percent of the sales he draws from truck sales are from catered events, which routinely handle from 50 to 300 guests.

Complications, of course, are part of the restaurant business, Tjahyadi says. "In L.A., traffic is always an obstacle and getting to places on time or early may be challenging. Additionally, working with difficult on-site event coordinators can affect the catering experience adversely." He tells colleagues to be prepared for the unexpected and learn how to adapt. Operating a mobile business comes with many unpredictable obstacles that require you to think outside the box, and to be resourceful and creative, Tjahyadi says.

Errors can include an inaccurate study of the market and potential locations for the installation. "Another error would be not being original enough to stand out from the others," Daveine says. "But being original is not simple, and requires a true study of the needs." Limitations relating to cuisine are linked to the size of the truck and the available power to prepare and cook on the spot. Products and production must also be simple enough to flow quickly at mealtime.

"The toughest challenge is to maintain the quality that customers associate with your operation and be able to avoid running out of product on the truck," says Ed Norman, FCSI, CSI, the principal of MVP Services Group Food Facilities Design & Hospitality Consultants in Dubuque, Iowa.

While there are many types of cuisine that can be prepared in trucks for catered events, getting the appropriate equipment into the vehicle is the biggest problem, Norman says. "Because of limited floor space it is hard to equip a truck for multiple menu items. The menu must be kept simple," he says.

Operators who have a fixed location and operate food trucks can enjoy certain advantages. Tom Bruce, founder and president of Central Coast Food & Beverage in Capitola, California, cites a restaurant client of his company who uses his fixed-location kitchen for heavy prep and finishes the products in the truck.

Bruce says that the operator takes advantage of its parking lot as an outside dining area for lunch service when business is hopping. The truck and parking offer a casual option for noontime patrons.

Operators who have experience with fixed-location restaurants have an additional advantage with their familiarity with local health codes and inspections, which also apply to mobile food operations. As the food truck movement continues to grow, health inspectors are paying close attention to their practices, and can shut down operations that don't meet regulations.

That said, there are other regulations of which to be aware that are not part of a fixed-location operator's existence. If you would consider this approach for your operation, just make sure you don't run afoul of local zoning laws or site covenants, conditions and restrictions. Bruce and his colleagues say they are finding several new challenges for their clients as the industry grows. "Several areas now have a ban or severe restrictions on trucks because of the impact on existing restaurants," Bruce says. "Santa Cruz is an example, and Modesto operators are forcing the city to do the same."

Dual-Function Vehicles

Stock Pot Malden (SPM), a commissary and food truck business in Malden, Massachusetts, works one of its catering trucks - named "Brother Trucker" - at both high-end, fine-dining events and in Boston for street vending at lunch to "establish the brand," says Francis Gouillart, CEO of SPM. The truck is designed for both kinds of service, and is 20 feet long, with a central table to allow quick distribution of dishes for high-volume catering.

Catering is the major driver of food truck profitability, Gouillart says. "Street vending builds the brand. Catering brings the money. All successful food trucks have a significant percentage of their sales in catering," he says.

The catering menu of most SPM trucks is typically an extension of their street vending menu. And it seems clever names are as important, if not more important, for food trucks as they are for fixed-address restaurants. For example, the "Stoked Pizza" truck does pizza parties, the "Sheherazad" truck provides Middle Eastern "street eats," the four "Chicken and Rice" trucks do chicken and rice, and the "Munch Mobile" truck, elevated American bistro foods.

The company's "Brother Trucker" truck serves U.S. regional cuisine, such as Cajun fare, plank salmon from the Northwest, and Boston seafood, but with an ethnic-influenced twist. The companion food trucks at Brother Trucker events will bring their own street vending food, often providing an appetizer, a main dish or a dessert.

The average ticket for street vending will be about $10 per meal, with some trucks as low as $8 for Boston's large student population and as high as $12 for the more upscale trucks. Catering tickets can be as low as $10 for volume-catering trucks that basically serve the same food as their street vending menu. Brother Trucker events are priced from $30 to $150 per guest at the high end of fine dining.

"Our intent is to disrupt the traditional venue-driven catering event by offering an affordable food truck equivalent at a lower price point," Gouillart says, "while providing a hip alternative to white-cloth-and-chandelier venue events. There is strong evidence of a big latent market for food truck catering, but the profession is not organized to respond to it. This is what we do."

Food Truck Economics

SPM's most successful trucks do $500,000 to $600,000 a year, half of which is from catering sales, and which Gouillart says is comparatively low compared with San Francisco or Los Angeles because Boston does not have a developed dinner market and has bad winter weather. Struggling trucks will do as little as $200,000 per year and are barely at break-even. One of the drivers behind the Brother Trucker concept, he says, is to improve the economics of the entire food truck community "by working as a community."

The number of events being catered varies depending on trucks. Some will only do three or four events a year "because they have nothing else than a mention on their website or truck that they do catering," Gouillart says. "Others will do as much as 40 percent of their sales through catering."

Gouillart and his colleagues segment the catering market as follows:

Conventions. "These are large numbers of people assembled in one place requiring multiple trucks delivering lots of food in a short time frame," Gouillart says. "For instance, 400 people need to be fed off each truck in one hour, organized by convention staff."

• Weddings.
• Corporate events.
• Private parties organized by individuals.

Temporary foodservice alternatives. For example, the shutdown or renovation of a cafeteria or kitchen in major institutional buildings.

Catering brokers. These are gigs organized by intermediaries, such as Cater2.Me, a national company founded by two young Wharton graduates that identifies its mission as connecting companies with the local food scene, to give them a better, more wholesome sense of the small businesses around them.

Individual food trucks, Gouillart says, can't respond to catering request for proposals that involve multiple trucks, complex logistics or payment schemes, which is the largest part of the market. "This is the role that Brother Trucker/Stock Pot Malden plays as an aggregator of catering trucks," he says. "We also play a quality-control role for event planners, in effect vouching for the fact that the food trucks will indeed show up, the truck will be clean and the staff professional."

Remember, Foodservice Is About Food and Service

Front-of-the-house skills are often lacking among food truck entrepreneurs, Gouillart says. In fact, he says, this is a major source of complaint from customers. "Food truck people are uneven in their ability to act as professional, customer-facing staff," Gouillart says. "Most of them grew as chefs, not as customer service people. On the positive side, the best food truck people are a combination of hip and friendly; tattoos and smiles."

The Brother Trucker truck is geared to do classic service through the truck window like street vending, "something that all trucks can do at events as well," Gouillart says. They also provide buffet-style service with chafing dishes and table service. "This requires a larger truck, including a prep table inside the truck."

The greatest advantage of operating as a fleet of trucks is that management can focus each truck on specific dishes or courses by redistributing the roles between the trucks and creating focus. For instance, one vehicle can become the appetizer truck, while a second does main dishes and the third desserts.

This avoids having a truck that tries to be all things to all people," Gouillart says. "We can also focus each truck by prep versus cooking. The idea is that multiple trucks constitute a modular kitchen that can be reconfigured for each event, as a function of the organizing party's needs."

Front-of-house staff will remain the greatest need, Gouillart says. "One of the advantages of our collective, multi-truck approach is also to share catering staff between food trucks, which allows for personal growth and skills development of people," he says. Staff obtained from temporary agencies is typically of low quality, he says.

To be successful in catering, food truck operators might have to step up their general quality of service. Showing up late and exhibiting gruff manners can quickly turn off customers, Gouillart says.

Trucks may not be as clean as people might wish. And a skull-and-bones design on a truck may not be appropriate for a children's party. In addition, food truck people may struggle with the accelerated speed required by catering versus street vending, where people tolerate waiting a bit more than at an event.

Catering to the Future

"The idea that you can open your own 'restaurant' with so little up front is extremely appealing to young entrepreneurs," says G. Pony Boy Morrell, owner of the Blue Blaze Cafe in Damascus, Virginia.

As noted, however, it can be a rough road. In fact, Morrell says he doesn't expect to see many more food trucks in the years ahead. "I think that over the last five to eight years so many food trucks have popped up, and they will begin to thin out over the next three to four years," he says. "In my own small town of Boone, North Carolina, I have seen four trucks come and go in the last three years. One remains."

That is why some industry observers, like Tripoli, say catered events will be key to food truck success. "Many catering companies are turning to trucks as an improved way of serving events," he says. "I have two clients that have developed trucks for their catering divisions and are happy they did." Tripoli also says, "The annual company summer picnic - with a large tent, skirted tables and chafing dishes - might soon be three parked trucks, offering a variety of food and drinks."

Words of Wisdom:

Starting Up a Food Truck

Here's a short list of the top five things to do before opening a food truck.

Research your city's codes and laws regarding food trucks. Some municipalities require food truck operators to prepare foods in a central commissary before serving off the truck, as in Chicago. Others require only certain foods to be prepared that way, or none at all, but they may have stricter laws regarding permits and where to park.

Have fun with the menu. Food truck menus are creative, fun, even quirky (one Portland truck serves Spam grilled cheese sandwiches), but at the very least the food should be tasty, filling, easy to eat and portable.

Get active on Twitter and Facebook. Twitter is the method of choice for most operators looking to communicate with their customers and tell them where they'll be and when. It not only helps build sales, but also a rapport and serves as a marketing launching pad to strengthen brand identity.

Make good investments early on. Even though starting up a food truck costs significantly less than brick-and-mortar, don't be cheap. Do your research and invest in the best equipment and installation you can get to prevent breakdowns and other bad surprises while on the road and, worst, during your limited time to serve customers. Make sure you have a good generator if you'll be working in inclement weather.

Think beyond your usual drop-off points. Most truck operators have their regular routes with a few surprises thrown in, but branch out into catering and private events, sporting events, music concerts and other special gatherings for a revenue boost. Private events also offer more freedom (serving alcohol is one) because you're off city property.

Marketing Is a Challenge

"The main challenge for food truck entrepreneurs on their own is marketing," says Francis Gouillart, CEO of Stock Pot Malden and Co-Creation Ventures, which operates a pair of commissaries in Malden, Massachusetts. As of April 1, 2015, the firm will have 15 trucks operating out of them, five of which launched in 2014. In addition to its fleet of trucks, Stock Pot Malden is launching its own in-house Brother Trucker food truck this spring.

"It is hard to do any marketing when you work 80 hours a week," Gouillart says. This is where Brother Trucker and Stock Pot Malden come in. "We are able to organize tasting dinners with corporate event planners, as we recently did in Malden, which gives our food trucks an opportunity to shine in front of those important decision makers."

Event planners are generally quite intrigued by the idea of having food truck events, Gouillart says, "yet are afraid that individual food trucks will not meet their standards of professionalism, and will provide a corporate-grade quality of experience. This is where we come in. We are 'experience designers' on behalf of our trucks, with our own Brother Trucker truck acting as the 'player-coach.'"

What's It Gonna Cost Me?

Howard Seasonwein, owner and president of Vending Trucks Inc. in East Brunswick, New Jersey, which fabricates the units, says prices for a 16-foot truck, which vary based on what goes inside, begin at $50,000. "We could build one into a big tractor-trailer and you'd be looking at $1 million," he says. "It varies that much." Another company, Fast Food Truck Inc. in Fort Lauderdale, Florida, lists truck prices starting at $59,990 for a 14-foot unit truck, $65,300 for a 16-footer, and $67,800 for an 18-foot truck. Customized trucks can cost as much as an operator is willing to spend.

Forbes magazine recently reported that operators can expect to spend anywhere from $50,000 to $200,000 on a food truck. "The higher end of that range would be considered pretty outrageous for anything but a high-end establishment that might also want a food truck presence to cater to its customers," Seasonwein says. "On the lower end, anything below the $50,000 range could start to cause concerns about the reliability of the transportation or quality of the food and preparation equipment. A very reasonable range for getting a food truck off the ground is likely between $70,000 and $80,000."

Trying to nail down a return on investment, Seasonwein says, can be just as difficult since it depends completely on the cost, how much the unit will be used and for what. Will the operator be using it for soccer games? Festivals? A side street in the middle of nowhere? You can't pinpoint it that way.

"There are hustlers and weekend warriors," Seasonwein says. "You can have someone operating seven days a week who can barely make $300 a day, and others who can make thousands in a day. It depends completely on how they set themselves up."