Whether it’s a brick-and-mortar restaurant or a cafe on wheels, running a coffee shop is not a business you can go into without knowing what you’re doing and failure is possible for many reasons.
We didn’t rank these in any particular order. From our research into the failures, all of the issues listed below play a role. These reasons are.
Lack of Business Plan/Knowledge
Underestimating Costs (Not Just Financial)
Overestimating the Market
Failure to Stand Out
Failing to Keep Up with Customers
Failing to Ask the Hard Questions
We will go over in detail why these businesses fail so you can make an informed decision on if you should run a coffee truck or if you should run one at all.
1. Lack of a Business Plan/Knowledge
There are TV shows that make running a food truck, coffee or otherwise, seem easier than it is. Starting a business is not something you should just do on a whim. The truth is, starting any business is hard.
Experts at FoodTruckEmpire.com say that 60% of food trucks fail within the first three years. Running any business has risks and requires knowledge. Including knowing whether or not running a coffee shop food truck is right for you. Before you invest in a truck, you need to sit down and develop a business plan.
You also need knowledge. Sometimes, trucks fail because the owners don’t know things that they should have known going in. Some didn’t know health regulations. Others didn’t know how much work goes into running a truck and often burn themselves out.
2. Underestimating Costs
At a glance, running a coffee truck can seem less costly than a brick-and-mortar cafe. Not paying for some of the things that a brick-and-mortar shop requires seems like it would make running a coffee truck easier. The truth is, you’re just trading one set of costs for another. According to shopkeep.com, a food truck can cost between $50,000 to $200,000 before you add in decorations and other things that help it stand out.
There are also certain other regulations to consider. Depending on the weight of your truck, you might need a commercial driver’s license or CDL. This can cost between $1,000 and $3,000 depending on your state.
You will still need to pay costs like products and any loans that you might need to get the truck. A food truck itself is specially modified (therefore more expensive) and requires a lot of gas. It does have the advantage of being able to go where customers are but you need to research where they are so you’re not just driving around aimlessly and wasting gas.
The costs of running a business are not only measured in nickels and dimes. The job can also be mentally taxing. While a restaurant has a reasonable amount of staff to divide labor, a food truck requires you and maybe a couple of other people to do essentially all the work of a restaurant in a short amount of time day after day. This is hard work and should be factored in.
Running a business means less personal and family time. Entrepreneurs have a slightly higher divorce rate compared to regular couples, with some having to choose between their marriages and their businesses. According to FoodTruckEmpire.com, most owners are working 70 hours a week or more. Sometimes, a spouse might have to take a second job until business picks up or to keep the family afloat during the slow season when there aren’t as many festivals and events that make up a substantial amount of a food truck’s business. Before you open a coffee food truck or any other business, you should discuss it with your family.
Learn more about coffee food trucks HERE.
3. Overestimating the Market
The food truck market is crowded. At any given time, there are food trucks selling anything a person can think of (and some things they can’t). Food trucks are popping up everywhere. Many of those food trucks that don’t exclusively focus on coffee often serve it as a beverage. If you’re focusing only on coffee and pastries, you’re in for a fight.
You can expect to be battling with the competition not just for customers, but for parking spots as well. Many major cities already have food trucks racing to prime locations every day. Many of those food truckers know more than you do about the layout and where the customers are going to be.
At the same time, the coffee market is just as crowded. Fast-food establishments and convenience stores offer coffee for people just looking for a morning caffeine jolt. With the economy recovering, some people have decided to make coffee at home to save some extra money. Brick-and-mortar coffee shops offer atmosphere and community. In short, to run a successful coffee truck, you need to be able to offer something that your competition doesn’t.
4. Failing to Stand Out
Ask yourself what you’re planning to do that makes your coffee truck stand out to customers. Saying that you’ll be serving good coffee and breakfast is not enough. Everybody says they’re serving good coffee and breakfast. Even the people at the questionable-looking gas station say their coffee is good.
You need to ask what you bring that is new to the table. You need to ask yourself what makes you different from every other place that serves coffee. What is the concept that will make customers want to visit your truck above all the others? When you’re at a festival, what will make them choose you?
5. Bad Food/Coffee
It should go without saying that if you want a successful coffee truck, you need to have a good product. People can make coffee at home. The point of running a restaurant or a food/coffee truck is to provide an experience that your customer can’t get from their home or the drive-through. Providing such an experience is a necessity for a truck owner. Your coffee will most likely be more expensive and to keep the customers coming back, you must serve up something that warrants the higher price tag.
You must also be consistent. A customer’s tenth cup of coffee or pastry from your truck should be as good as their first. If there is too much variance between visits, customers will go to other trucks or restaurants. When people are in a rush, they tend to choose places that they already know serve up a consistently good product.
Your food should also be good according to the standards of your local health department. That means keeping your truck clean and sanitary. Fines and mandated shut-downs will harm your business substantially. As will be known as the food truck that serves up food that gets people sick. Things like that will spread through your community like wildfire.
6. Not Keeping Up with Customers
In addition to the other responsibilities of running a truck, a food trucker has to keep in contact with their customers. Most successful truckers keep in contact with their customers by actively engaging with them on social media. Customers must know where you’re going to be. They’re not going to run around looking for you.
You also need to know where the customers are going to be. This means keeping up with the events in your community. Luckily, most major event holders post their events on social media.
7. Failing to Ask the Hard Questions
To go along with failing to have a proper business plan, some food truck owners don’t take the time to ask questions that may result in answers they don’t like. In our view, this is one of the biggest reasons for failure. People don’t want to admit that the million-dollar idea they had may not be as good as they think and will stubbornly plow ahead only to hit an insurmountable obstacle. However, asking these questions is as necessary as any other business essential.
An example of one of these questions is whether or not the local market will support a coffee truck. As we said, the coffee market is tough and crowded. If you don’t ask questions like this before going in, you will have spent a substantial amount of money on a failed project. Asking these hard questions is necessary and you should ask them frequently so you can adapt to your circumstances.
We don’t want to discourage you. We want to help you start a business but we also want to give you information that will help you decide with a clear head. Sometimes the information is fun. Sometimes this information is hard to take. But with this information, you will know whether or not starting a coffee truck or any other business is right for you.
Frequently Asked Questions
There are a lot of factors involved so it’s not easy to give a definitive answer. On average, it may take a year.
Some sites rent or lease them out. One such site is Roaminghunger.com where people often put their used food trucks or sell ones that they’ve built. The site will allow you to search for available trucks based on your location.
It is also possible to build your truck but this will require technical and trade skills. You should only attempt this if you have these skills.
Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Hi! I’m Shawn Chun
My adventure in coffee began when I first launched my first coffee shop back in the early 2000s. I had to figure out so many things on my own and to make it worse within 2 years of opening two large corporate coffee chains moved in just blocks away from me!
As I saw smaller and even some larger coffee shops in the neighborhood slowly lose customers to these giant coffee chains and slowly close up shop, I knew that I had to start getting creative…or go out of business.
I (like you may be) knew the coffee industry well. I could make the best latte art around and the foam on my caps was the fluffiest you have ever seen. I even had the best state-of-the-art 2 group digital Nuova Simonelli machine money could buy. But I knew that these things alone would not be enough to lure customers away from the name brand established coffee shops.
Eventually, through lots of trial and error as well as perseverance and creativity I did find a way to not only survive but also thrive in the coffee/espresso industry even while those corporate coffee chains stayed put. During those years I learned to adapt and always faced new challenges. It was not always easy, however, in the end, I was the sole survivor independent coffee shop within a 10-mile radius of my location. Just two corporate coffee chains and I were left after that year. All told the corporate coffee chains took down over 15 small independent coffee shops and kiosks and I was the last one standing and thriving.
Along the years I meet others with the same passion for coffee and I quickly learned that it is not only “how good a barista is” that makes a coffee shop successful, but the business side of coffee as well.
Hence why I started this website you are on now. To provide the tools and resources for up and coming coffee shop owners to gain that vital insight and knowledge on how to start a coffee shop successfully.
Stick around, browse through my helpful blog and resources and enjoy your stay! With lots of LATTE LOVE!