With summer fast approaching, thousands of food truck vendors across the country are gearing up for their busiest of seasons. Our office is located in downtown Nashville, where more than 60 food trucks await to serve up a variety of food ranging from BBQ platters to Gyros. In fact, Nashville was ranked #10 by the Food Truck Nation Report finishing ahead of larger metropolitan areas such as Chicago, Seattle, and Washington, D.C. We wanted to find out why food trucks love Nashville so much.
The Benefits of Food Trucks
Mobile food vending has been part of American society for decades – hot dog carts in New York City, taco trucks in Austin, and corner coffee carts in major cities. An estimation by the U.S. Chamber of Commerce puts food trucks at roughly a $2 billion-dollar industry. The Chamber’s recent report, Food Truck Nation, highlights the entrepreneurial spirit of the food truck industry and points out that growth within the industry often benefits minority-owned small businesses. For example, roughly 80% of local food truck owners in Chicago were minority-owned businesses in 2017.
Government Regulation of the Industry
While data shows business has boomed for food trucks, so too has government regulation and the permitting process. Most food trucks in America are required to comply with about 45 separate government-mandated procedures and can expect to spend upwards of $25,000 on permits, licenses, and ongoing legal compliance. These high costs and time-consuming requirements are a huge barrier to entry for wishful food truck owners. So why is this cost so high? One reason is that most food trucks must have many of the same permits and licenses required of traditional brick and mortar restaurants, such as a business license, food safety standards, and labor law compliance. However, food trucks are required to also obtain additional permits which are not required by brick and mortar restaurants.
Despite the potential revenue for cities and municipalities, many cities and towns have prohibited food truck sales outside of specifically zoned areas and often prohibit trucks from operating within so many feet of brick and mortar locations. I don’t know about you, but I’d walk a few extra blocks for the perfect slice of pizza. Get this -- food truck operators may also be restricted from cooking onboard their trucks depending on the type of food prepared and the local fire codes.
The Future of Food Trucks
Market experts and economists fear increased regulation will put the industry on ice. IBISWorld recently estimated food truck growth at ONLY 0.4% between 2018 and 2020 with some American cities already experience zero growth.
Considering the cost barriers to entry in the business, local food trucks are appreciative of the general acceptance of food trucks in Tennessee. The State gets business revenue and you get your fresh pretzel with cheese. What’s not to like?
Our team at Collins Legal has over a decade of experience in business formation and compliance. If this blog inspired you to open your very own food truck, call Meredith at 615-610-0728.
Submitted by Eliot Blackburn, Legal Intern Spring 2018