Local merchants find success in food trucks

Chapel Hill’s Time-Out among those expanding into food-truck market

jsmialek@newsobserver.comNovember 12, 2012 

  • Food truck facts $60,000-$80,000: Cost of starting a food truck in many cities, according to Richard Myrick, founder of Mobile-cuisine.com and author. $5 to $10: Price point for a mobile lunch, according to Bottger. $76: Zoning permit in Raleigh. $150: Food truck permit in Raleigh. $600: Annual food truck fee in Chapel Hill. $118x2: Zoning permits in Chapel Hill; the food truck operator and property owner each have to have one. $25: Per person mobile food business license tax in Durham. $50: Per person mobile cart permit in Durham. Source: www.raleighnc.gov

— Square biscuits topped with freshly filleted chicken and real cheddar cheese have drawn customers to Eddie Williams’ Time-Out restaurants in Chapel Hill for decades.

Now, Williams has decided it’s time to bring his famous biscuits to the customers.

Following the food-truck trend, Williams is expanding the brand, which now includes Time-Out Restaurant and Time-Out Sports Bar, by buying into the meals-on-wheels format.

Time-Out’s new food truck will offer five menu items, said Ira Green, Time-Out’s director of operations, and he said he believes it will turn a profit while hooking new customers.

“I think the whole food truck market is exploding,” Green said.

The Time-Out truck, which will sport a sign reading “Taste of the South since ’78” isn’t the only mobile eatery to pair with a Triangle area brick-and-mortar restaurant. State and nationwide, business leaders are using trucks to expand established brands, even as aspiring restaurant owners use trucks to raise money to buy permanent eateries. Operated together, owners say food trucks and grounded restaurants enjoy production and marketing synergies.

“The trucks are building up brands,” said Richard Myrick, the founder of mobile-cuisine.com and author of a “For Dummies” brand book on running a successful food truck business.

Time-Out, which expects its truck to hit the road in two to three weeks, hopes to roll its products into Raleigh and Durham, and Myrick said expanded geographic reach is a benefit restaurants often seek when opening a truck. Owners also test out new items that would be tough to try in their larger-scale, brick-and-mortar establishment, Myrick said. “Restaurants are learning from the food trucks. They are seeing what’s happening and taking best practices,” Myrick said.

The money factor

Financial barriers and tough-to-come-by loans often prevent foodies from opening the restaurants they dream of, Myrick said, and food trucks can provide a low-overhead way to get companies started, or in Time-Out’s case, expand its business.

Food truck businesses cost under $100,000, Myrick said, and in many cities range between $60,000 and $80,000 to start. Green wouldn’t disclose how much Time-Out paid but said trucks cost between $30,000 and $100,000 locally. Brian Bottger, owner of Durham-based Only Burger, said his used truck cost $70,000 when he bought it.

Stephan Bayer is the German-American co-founder of Wake Forest-based Café Prost, a food truck peddling hand-twisted gourmet pretzels. While Bayer dreams of a brick-and-mortar location, he said his mobile unit is an affordable way to jumpstart the business.

“We wanted to start a café. We went to see a business advisor, and he said, ‘How much money do you have?’” Bayer said.

Time-Out will not increase its prices in the food truck to account for fuel costs or other expenses, Green said, but he does not know how that will impact profit per item yet. While advertising Time-Out’s food is the truck’s major goal, he said they aim to also turn a profit. Myrick said because food trucks pay lower rent, have fewer employees – or only employ their owners – and serve as self-advertisements, they often turn higher profit margins than brick-and-mortar restaurants.

However, volatile weather, fuel costs and kitchen wear-and-tear from jostling during travel can drive those profits downward. Food truck kitchens are often more costly to maintain than stationary kitchens. Plus, trucks operate on a smaller scale and owners don’t buy products in bulk, so they can have lower margins than larger grounded operations if they price similarly, Myrick said.

Overcoming hurdles

Only Burger, which started as a food truck in 2009, used food truck proceeds to expand into a brick-and-mortar location in 2010, Bottger said. Though he said the restaurant has a more consistent cash flow than the truck, the combination has created benefits like those Time-Out hopes to see – the permanent location provides a home base for food assembly while the truck allows Only Burger to tap into new markets.

“It’s a driving billboard, and it makes money on top of it,” Bottger said.

But opening a food truck comes with unique hurdles, Myrick said, and owners need to have a passion for what they serve, a firm understanding of their business model and a willingness to work tirelessly if they hope to make a food truck business successful.

When a truck needs repairs, that puts the entire business on hold, Myrick said.

Also, customers can have trouble finding the truck if it moves around frequently, Bottger said, and food trucks experience lulls during cold or rainy weather.

“To succeed, you have to put a tremendous amount of work into it,” Bottger said. Understanding a price point – people are usually willing to pay only $5 to $10 for a mobile lunch – and making use of neighborhood events and corporate campus partnerships also helped Only Burger’s truck, he said.

Despite the hurdles, Time-Out’s leaders are confident that the joint operation with the brick-and-mortar business will make its truck successful in its own right.

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