Food Truck vs Franchise: What’s best for me?

It is often said that the only business which will continue to run when all businesses stop running is the business of food, people have to eat after all. For the young entrepreneurs, though, the choice can often be hard. A wrong decision can lead to the loss of your entire life’s savings and the right choice can lead the way to wealth and self-satisfaction.

The most common options for startups in the food industry are franchises and food trucks. We’ll dissect the benefits and shortcomings of both and see what’s better for the entrepreneurs who’re just entering the food industry.

Although every individual business has its own profits and losses depending on factors as diverse as location and the employee wages but an average of industry are available through surveys and we’ll use those figures for comparison.

Mobile vs Franchise

Franchisees have an established name so they don’t have to put in much effort in order to attract new customers, take Subway and KFC etc. as examples, whereas food-truck have to start from scratch and earn their reputation in their area of operations. According to reports, franchises get nearly 400 customers per hour where the cost of one meal is $8 in comparison with 90 on food truck where the cost is $10. Taking the cost of food out, it leaves an income of $8,17,600 for the franchise and $1,96,560 for a food truck.

All is not that simple, though, a food truck is simply a truck with not many running costs whereas a franchise stands in brick and mortar and has to pay large sums of money for rent, utilities and a portion of earnings to the franchiser. Taking these factors into account, the average annual expenses of a food truck stand at $55,536 whereas the expenses of a franchise are a staggering $642,400. Taking the difference between income and expense, we have the potential to make $141,024 for a food truck and $175,200 for a franchise annually.

Initial cost of setting up our business

One important factor we haven’t taken into account so far is the initial cost of setting up our business and the working capital required in the initial days. This figure is what is completely going to through the other one out of the competition. Food trucks require an investment of $60,272 whereas franchise requires an investment of $1,050,000 just to begin with! Unless you have a million dollars lying around, the food truck is really theideal way to enter the food business for an entrepreneur.

There’s more to it if you’re still not convinced. A food truck essentially pays for itself in less than 6 months whereas a franchise would take nearly 73 weeks to just pay for itself! The return on investment for a food truck is over 234% and to put things in perspective, the return rate on the franchise is meager 17%. It really goes without saying that food truck is the way to go if you’re getting in the food business with your own money.