Is owning a food truck in India still a lucrative idea

Back in 2017, food trucks were a big trend in India. Customers who were looking for varied flavours and options found food trucks to be an uncommon and interesting concept of serving food. Their love for street food rekindled with this format, which is why food trucks were being preferred to dine-in ambiences. The cheap and cost-effective solution to starting a restaurant generated a lot of revenue for the industry. 

Opening a food truck is much cheaper than opening a restaurant, and therefore a much more tangible goal for those wishing to serve their community. With a comparably low initial investment, people can see their financial freedom just a few years down the road. Once they break even and pay off any loans, as long as their food truck continues to make a profit, they will have gained financial freedom doing what they love. This is one of the major reasons why people enter this domain.

However, after a phase of prolonged growth, food trucks, just like the other restaurant formats, had to bear the brunt of Covid-19. There was a sharp decline in the restaurant industry in Q2 of 2020. Today, even though the dine-in restaurants and QSR chains have restarted reopening, the future of food trucks is still to be thought about. Many unfortunately have closed their services forever. 

The question that now stands is, are food trucks still a viable option after the struggling restaurant industry in India. It is pretty obvious what impact Covid-19 has had on the food trucks in India. Since it’s a business that literally operates on the road, it became all the more unsafe and unhygienic for the customers to visit the food trucks and enjoy their meals in crowds.

With a nationwide lockdown to contain the virus, the streets went empty. People on their way to offices and colleges were no longer there to grab a quick bite off the food trucks. There was no chance of any food or music festivals happening either. All the events or sites where food trucks could make their sales were put on hold or had negligible footfall. The vehicles thus stayed empty and stationary.

Challenges that existed before pandemic

For the food truck business to flourish, some challenges always existed. One can control the food quality and the business plan but can’t control the weather. And in India weather is a huge challenge for the operators. To continue the flow, there should be a proper selection of a location in order to attract the right set of customers / most trafficked areas just at the right time. Thus location always imposed uncertainties. 

Dealing with the local municipality and government officials is another challenge in this field and one should have all his/her contacts handy to upkeep the truck on road. Though licensing is not defined for food trucks in India, licenses like FDA license, NOC from traffic police, fire license for kitchen, police NOC, etc are required to be taken which is a tedious process. In India there is no association or regulatory body assigned by the government for establishing a food truck business. Licensing for food trucks in India is highly unorganised and is the most time consuming and burdensome task.

Sagar, Owner of Amigo Food Trucks said, “The food truck business has a huge potential which will be unlocked only when the government comes out with some regulations. This business is much unorganised and the owners of the business face a lot of challenges, due to lack of any regulation, even the municipal corporations and police of cities have no authority to formulate any rules or guidelines.”

Lastly, parking space is a major issue and there is no clarity on rules and regulations pertaining to food truck parking. The food truck owners feel that no designated parking space often affects their business.

Is different from running a restaurant

“We are approaching our three year anniversary in March, in my opinion, I believe that many people that decide to get in the food truck business do not appreciate the amount of work involved, which is the number one reason why they fail. They are not prepared to work so hard, therefore, throwing in the towel within the first year. It is very different from running a restaurant,” Karan Marwar, Owner of a Food Truck in Dehradun stated. 

In a restaurant, there are staff for all the different positions required to run the business along with the fact that it is open in the am and close in the pm. With a food truck, the owner may be the Chef, prep cook, line cook, dishwasher, cleaning crew, etc. “If you are running a lunch service along with a dinner service, the truck has to be turned over for each service and then travel to each venue. As you can see it is double if not triple the work,” Marwar added.

However, food trucks fail for the same reasons as restaurants. Owners often lack operating capital, a true understanding of cash flow versus profit and lack an executable plan. And the low barrier of entry attracts a high number of operators that may not be prepared for small business ownership.

Mechanical Failures

“We run expensive businesses. The cost of gas, propane, storage, commercial kitchen rental, employee, not to mention food costs. There are a lot of expenses running a food truck. One expense often gone unnoticed or accounted for is maintenance on your vehicle. Trucks breaks down! Equipment breaks down! Lots of the food truck owners are buying old trucks, they put a new wrap on it and then hit the road. Then a transmission blows, the gas leaks, the radiator breaks, the list can go on and on. Before you know it you have spent thousands of additional dollars that you did not budget for. You have a new truck and have a hard time making ends meet regardless. The cost is too great, and you go under,” Deepika Rao of The Food Truck Company in Pondicherry added.

The food trucks are customised commercial vehicles which come in different sizes. The cost of a vehicle depends on numerous factors. Entrepreneurs often opt for pre-owned vehicles. The cost of customising a truck lies between INR 1 lakh to INR 5 lakh depending on the type of vehicle. 

Is there hope? 

Even though the impact of Covid-19 has weakened the food truck market, there is still hope left for the same. The convenience that lured customers to visit food trucks means that they are still relevant in the post-pandemic era. However, some extra efforts need to be put in by the food truck owners to attract customers once again. 

Food delivery services and takeaways have saved the restaurant industry from draining out. They seem to be the only practical solution for every restaurant format to keep the cash coming in. Many food trucks like the Bombay Food Truck have turned to deliveries looking at the number of customers craving for the food and experience that they offer.

Not just this, many food truck owners have started providing meal kits to keep their business afloat during the crisis by creating a new revenue stream. One can also drive the food truck to small community gatherings and make sales there via catering.

Tapping on the flexibility factor

From the business perspective, food trucks seem to be more survivable than dine-in restaurants, given their operational attributes. The flexibility and freedom to drive the food truck around the city help to attract more customers and visit more places. Unlike dine-in restaurants, where it is impossible to change locations, food trucks can explore more places and gather more customers.

However, if one is looking to open a food truck business amidst the pandemic, one needs to be wary of customer safety. Following social distancing norms should not be forgotten while serving a throng of customers. Food trucks lack dining spaces and ambiences and this bodes well for them. Social distancing can be followed more efficiently in open spaces than a queue limited to the back wall of the restaurant. The absence of dining spaces minimizes the touchpoints responsible for the spread of the virus. Customers can either take away their orders or eat them in their own space, like a car, without having to worry about getting infected by the virus.

Can low overhead costs attract more investors?

One of the chief aims of restaurateurs, amidst the pandemic, is to save their capital and utilize it in the best possible way. No format is as cost-efficient as food trucks, which is why they have high hopes of surviving the pandemic and a great potential for the future. 

A food truck business consists of just two staff members, one truck, inventory and one delivery personnel if required. There is no dining space which further cuts the labour and maintenance cost of the ambience. Moreover, a one-time investment in an appropriate truck eliminates the monthly rental costs too. 

Even though one might think that, out of all restaurant formats, food trucks might suffer the most losses due to Covid-19 as they are out there on the street, this might not actually be true. The way they operate, in fact, keeps them on the safer side in both safety and financial aspects, thereby making them more viable than other restaurant formats.

In India, food trucks stand a chance because people want good food at reasonable prices available near to them especially in these times when Covid-19 has shaken the economy and business of big and small restaurants. Also, with more people coming into this business scope of finding regional dishes on food trucks is high, giving yet again another area to introspect.