Has the food truck bubble burst?

Has the food truck bubble burst?

Just as surely as a trend emerges and slowly becomes a practice, naysayers will pop up like dandelions on the first day of spring.

Consider food trucks.

After they became all the rage in Southern California four or five years ago, then took New York City by storm, you’d be hard-pressed to find a major metro area without a handful of the rolling restaurants. But just because the newness has worn off, does it mean they’ve peaked?

The Huffington Post suggested as much with a post from late last year — "12 Reasons Why Food Trucks Have Jumped the Shark" — which includes photographic evidence to support the premise. The “Questionable Food Trucks” photo gallery reveals that big corporations are getting in on the gig, including Taco Bell, Red Robin and even food maveness Rachel Ray.

A recent poster to PizzaMarketplace opined that "Cooking in a taco truck SOUNDS attractive at first but could be costly for young/inexperienced entrepreneurs. Skilled labor will likely not want to dedicate a career to toiling away in this service sector. Facts: Food trucks are expensive, challenging to maintain, and lobbying restaurants are naturally working to get laws passed that will limit where they are able to park."

More recently, HuffPo ran a story looking at the apparent glut of second-hand food trucks for sale on eBay, and surmised that at the very least, it’s a challenging business model. But the idea that the trend has fizzled or even peaked is silly, say many who follow the industry closely.

"Anyone who says that doesn’t know what they’re talking about," said Gary Koppelman, a Philadelphia restaurant consultant who publishes the website, Mobile Food News. "We just had a symposium at the University of Pennsylvania Law School and sold 250 reserved seats. It was a six-hour workshop that included people from city hall — it was phenomenal."

Matt Geller, head of the Southern California Mobile Food Vendors Association who’s helped other local associations get off the ground in recent months, noted that food truck statistics are elusive even when numbers are kept. For example, he said, Los Angeles County counts more than 1,000 local food trucks, but those figures include the older-style, meals-on-wheels trucks that have populated work sites since the 1970s. Geller said there are 200 to 240 gourmet trucks in the county. But there are signs that trucks have grown. According the research firm IBISWorld, food trucks and carts grew 8.4 percent from 2007 to 2012 and now make up a $1 billion industry.

More wheels on the West Coast?
The trend may be stronger on the West Coast and in the Northeast, according to polling by the National Restaurant Association that showed consumers in those areas are more likely to have seen a food truck than those in the South and Midwest. The association does not track food trucks specifically, said Hudson Riehle, the NRA’s senior VP of Research, but he believes they’re part of a larger trend within the industry over the past 20 years.

"One important driver of restaurant industry sales has been and continues to be convenience," Riehle said. "When you look at restaurant industry traffic, about 70 percent of it is now off-premises. When you think of consumer needs for convenience, food trucks are a natural evolution of the growth of the off-premises market."

If you can't beat 'em, join 'em
A recent sign of food trucks' foothold has been its embrace by the bricks-and-mortar world. Though there has been and will likely continue to be some pushback, there's also an "if you can’t beat 'em, join 'em" mentality at work. Witness the corporate trucks, and also how local bricks-and-mortar businesses are seeing utility in mobile variations of their brand.

For example, Neil Parish, who runs an old-school Jewish deli in Cherry Hills, N.J., recently got a truck that he dubbed Reuben on Rye. He operates it as a separate but complementary business and has been happy with the performance over its first four-plus months.

"It gives me the opportunity to temporarily go into nice locations," he said. "In Camden, for example (part of metro Philly), there are three major courthouses and a major hospital and college. There are not lot of eating places nearby."

The truck serves many of the dishes he offers at his bricks-and-mortar site, the Kibitz Room, but in smaller portions. He broadcasts its movements through social media and his website, and beyond boosting the bottom line, he sees the truck as a great rolling advertisement for the bricks and mortar location. The truck also works for catering.

"I can pull up to house party, and we can bring deli to your house." He spent about $50,000 to buy, repair and wrap a used 22-foot truck, which he said was a bargain. (Trucks can easily sell for upwards of $100,000.) He expects to buy another truck within six months.

Associations rising
Another gauge of the craze may be the growth of food truck associations. Geller counts at least 14 now, and states less likely to embrace food trucks, such as Kentucky, Ohio and Louisiana, have them. He has helped write bylaws for several of them and is involved in helping them lobby municipalities over issues such as parking and access.

One of the associations is in Philadelphia, and Geller and Koppelman said that city provides a snapshot of the state of the industry today. Early on the trucks were met with defensiveness from political leaders, who may have been hearing complaints from bricks-and-mortar proprietors. But now they see more willingness to work through the issues. Consumers love trucks, Koppelman said, partly for the food and partly for their social component. Beyond the fellowship, a food truck confab even helped clean up a former blighted neighborhood.

Then there’s Chicago, Geller said, which took a step forward by allowing food to be cooked in trucks (the norm elsewhere), but which remains still locked in contentious fights over where trucks can set up. Geller expects such issues to continue, with regional variations, and to be worked out in varying degrees and on varying timelines as the food truck industry continues maturing.

Overcoming operations challenges
There’s also general agreement that the food truck business, while providing an affordable entree for budding entrepreneurs, is no easy way to go. Staffing, for example can be a challenge, said Parish, because it takes several hours of prep for a two-hour lunch window. Plus dealing with weather, equipment — repair and maintenance — regulatory permitting fees, insurance and gasoline will tax the pocketbook, Geller said, while dealing with vague and seemingly inconsistent regulations that vary by locality will tax the central nervous system. Geller said many early adopters fell out, possibly because they lacked the business acumen to understand the importance of having cash reserves for emergencies like blown transmissions.

But the food truck industry is not only surviving, said Geller, who believes it’s growing and here to stay. He’s seen the tone change over five years and expects that to continue.

"The difference in where it is now compared to four years ago is significant," said Geller. “In the beginning it was, 'Oh, my god, there’s a new food truck I’ve got to try.' Now consumers look at them more like restaurants — they’ll look them up on Yelp! They get no extra points for being a food truck.

"The place you will see change is, maybe there will be a lower rate of opening. But I think you will see more innovation and higher quality cuisine because the consumer’s expectations has grown, especially in mature markets. It’s a wonderful industry that is giving small entrepreneurs a great outlet to create their food. The one thing that will really slow it down and hurt the industry and the consumer in the long run is regulations that don’t make sense. It will grow as much as the public demands and the regulatory bodies allow."

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Topics: Food Trucks, Operations Management, Policy / Legislation, Trends / Statistics

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