How Much Do Coffee Trucks Make?

How Much Do Coffee Trucks Make?

According to the National Coffee Association, daily coffee consumption is currently at a 20-year high, up nearly 40% since 2004. At the same time, IBIS World reports that the food truck industry has grown 15.8% per year over the last five years.

To take advantage of both trends, you might consider launching a coffee truck!

Not only are coffee and food trucks both growing markets, but the potential net profits make this business idea even more enticing. After all, coffee typically has pretty big gross margins, especially compared to other types of food and beverage service businesses.

Additionally, starting a coffee truck can be a great way to test the waters before investing in a brick and mortar coffee shop. When asked why he launched his business in an interview with Leafbox, Thomas Newbury, co-founder of Reveille Coffee Co., said:

“We both loved coffee and starting off with a single product eliminated a lot of variables. Starting out of a coffee truck simplified that even further. We wanted to prove we could make our brand and product work on a smaller scale before fully investing in something such as a brick and mortar.”

So, how can you run a successful mobile coffee business? And how much do coffee trucks make?

Well, in this article we’ll provide a breakdown of average coffee truck revenue, profits, and expenses. Lastly, we’ll explore some strategies you can employ to boost your coffee truck’s revenue.

Key Takeaways

• Coffee trucks can be profitable, but you’ll need to effectively manage costs while maximizing revenue.

• Because they typically have lower overhead costs than brick and mortar coffee shops and food trucks, coffee trucks can achieve impressive net profit margins. Our resarch found instances of net profit margins of 55% and higher.

• One of the best ways to increase coffee truck revenue is catering events, but there are plenty of other strategies you can use as well.

Are Coffee Trucks Profitable?

Running a coffee truck can certainly be a profitable business venture. In fact, they often benefit from lower overhead costs compared to brick-and-mortar coffee shops.

However, in order to reach profitability, you’ll need to maximize revenue while minimizing expenses.

Additionally, your profitability depends on several key factors, such as:

• Effective cost management

• Choice of location

• Overall business strategy

How Much Revenue Do Coffee Trucks Make?

While coffee trucks can drive significant levels of revenue, the amount you’ll be able to generate is dependent on several factors, including:

• Location: Selecting high-traffic areas, such as business districts, tourist spots, and events, can significantly boost sales.

• Seasonality: Warmer months and holidays often drive increased foot traffic, leading to higher sales.

• Marketing and Branding: Effective marketing and a strong brand presence can attract more customers and repeat business.

• Menu and Pricing: Offering a unique and diverse menu can appeal to a broader audience, and pricing strategies can impact overall revenue.

• Event Catering: You may be able to drive more revenue if you cater specific events. Events can drive additional customers, and some organizers may even pay you just for being there.

Unfortunately, there is no data available regarding the average revenue specifically for coffee trucks. 

However, Green Joe Coffee Trucks reports that they typically average between $6,000 and $9,000 per month in revenue, with peak months driving $11,000. This is the equivalent of $72,000 to $132,000 per year in revenue.

Additionally, a survey by Food Truck Empire indicates that more than 50% of food trucks generate more than $150,000 per year, or $12,500 per month, in revenue.

How Much Profit Do Coffee Trucks Make?

Like revenue, coffee truck profit margins can vary a lot from business to business. Fortunately, coffee trucks generally have less operating expenses compared to brick and mortar shops, which typically have a 4% profit margin.

In fact, Green Joe Coffee Trucks reports that they’ve been able to achieve 55% profit margins. 

Even more impressive, they’ve generated profit margins as high as 82% by catering events, spending less than $2,000 to earn the $11,000 in revenue we mentioned in the previous section.

While not all coffee trucks will be able to reach this level of profitability, food trucks generally have a higher profit margin than your average restaurant. The average profit margin for food trucks is 3% to 8%, while the average restaurant profit margin is closer to 3% to 5%.

So, if your coffee truck generates $10,000 per month in gross revenue with a 10% profit margin, you could earn $1,000 per month, or $12,000 per year, in net profits.

Meanwhile, if you manage your costs well with the same amount of revenue and achieve 55% profit margins, you could earn $5,500 per month, or $66,000 per year, in net profits.

Breakdown of Coffee Truck Expenses

As we just mentioned, to run a profitable business, it’s vital that you manage your expenses well. So, let’s take a look at the costs you’ll need to consider when budgeting for your coffee truck.

1. Coffee Truck Lease/Financing

One significant monthly expense of operating a coffee truck can be the cost of leasing your vehicle. 

Generally speaking, the cost of a new coffee truck can be anywhere from about $50,000 to $150,000. Meanwhile, you may be able to buy a used vehicle for as little as $20,000.

Now, if you have a lot of money to invest in your business, you could opt to purchase a truck outright. This would lessen the monthly expenses you need to budget for.

However, it’s more likely that you’ll want to lease your vehicle or take out a loan to finance it. In this case, you might expect to spend $1,000 to $3,000 each month. 

For instance, the monthly payment for a $50,000 coffee truck with a 5% interest rate over a 5-year term would be approximately $950. Meanwhile, the monthly payment for a used $20,000 coffee truck with a 5% interest rate over a 5-year term would be about $375.

• Average Monthly Cost of Coffee Truck Lease/Financing: $375 to $3,000 or more; can also be $0 per month, but you’ll need to make a large initial investment

2. Fuel and Maintenance

Of course, you’ll also need to budget for fuel and vehicle maintenance. This expense can vary quite a bit depending on several factors, including:

• The distance you need to travel

• Fluctuating gas prices

• Your coffee truck’s fuel efficiency

• The condition your vehicle is in (for example, a brand new truck will likely require less maintenance than a used one)

Generally speaking, you should try to keep these expenses at 3% to 5% of your total revenue. For a coffee truck earning $10,000 in monthly revenue, this equals $300 to $1,000 per month.

However, keep in mind that this cost can be difficult to manage due to external factors out of your control.

• Average Monthly Cost of Coffee Truck Fuel and Maintenance: 3% to 5% of total revenue

3. Insurance

There are several different types of insurance you’ll need to obtain in order to operate your food truck. According to Insureon, some of the essential types of coverage include:

• Commercial Auto Insurance: Helps protect you in the case of a driving accident

  • Median Cost: $1,620 per year

• Business Owner’s Insurance: Bundles General Liability and Property Insurance, which protect you in claims of negligence, bodily injury, advertising injury, or property damage

  • Median Cost: $1,260 per year

• Workers’ Compensation Insurance: Provides benefits to employees in the event of work-related injuries or illnesses

  • Median Cost: $1,270 per year

It’s important to note that the cost of coverage can vary significantly based on several factors, such as:

• Number of employees

• Location

• Claims history

• Value of your truck and equipment

However, based on the median costs listed above, you might expect to pay about $4,150 per year, or approximately $350 per month.

• Average Monthly Cost of Coffee Truck Insurance: 1% to 5% of total revenue

4. Licenses and Permits

In order to operate your coffee truck legally, you must obtain quite a few licenses and permits. Webstaurant Store reports that you’ll need the following types:

• Business License

• Employer Identification Number (EIN)

• Driver’s License

• Food Handler’s Permit

• Health Department Food Service License

• Seller’s Permit

• Fire Certificate

• Parking Permit (depending on location)

• Special Event Permit

Keep in mind that the specific licenses and permits you need can vary from state to state. So, be sure to conduct comprehensive research, or consider working with a legal advisor, to ensure you’re compliant.

The exact cost of licenses and permits will vary depending on your city and its legal requirements.

• Average Monthly Cost of Coffee Truck Licenses and Permits: Usually less than 1% of total revenue, but this can vary based on local regulations

5. Equipment and Maintenance

While many coffee truck owners purchase their own equipment, you can also choose to lease or finance equipment. While this results in greater monthly expenses, it may be necessary in order to keep your startup costs lower.

Some of the essential equipment your business might need includes:

• Espresso machine

• Grinder

• Coffee brewer

• Refrigeration

Depending on the type of gear you purchase, the cost of these items can vary significantly. Generally speaking, however, you’ll likely need about $10,000 to $20,000 worth of equipment.

If you finance your gear with an interest rate of 6% annually over a 3-year term, you could expect to pay about $300 to $600 a month. 

On the other hand, leasing is typically a little cheaper. With a .02 (2%) lease factor, you could expect to pay about $200 to $400 per month on equipment.

Regardless of whether you lease, finance, or buy equipment, it’s also important to think about the cost of maintenance. After all, breakdowns do happen, and it’s key to have some money in your budget so you can fix any problems as soon as possible.

• Average Monthly Cost of Equipment and Maintenance: 2% to 5%; however, if you buy your equipment outright, this could be less than 1% of total revenue

6. Cost of Goods Sold (COGS)

The largest monthly expense for your coffee truck will likely be your cost of goods sold (COGS). These are the direct costs involved in making your coffee, like the beans, milk, cups, and more.

Fortunately, coffee businesses typically have a lower COGS than other types of food service business for several reasons:

• Coffee is relatively inexpensive to make and you can sell it for high profit margins

• Speciality drinks and add-ons, like flavored syrups, can further increase profit margins

• Coffee and other ingredients usually have a long shelf life, resulting in less waste

For example, imagine it costs you about $1 to make a latte. If you then sell that latte for $3, your gross margin would be 65.67%. If you sell it for $5, your gross margin would be 79.40%.

In general, your coffee truck should aim for a COGS of 25% to 35% of total revenue, leaving you with 65% to 75% in gross profit margins. You’ll then need to deduct your other expenses to calculate your net profit margin.

This means that for a coffee truck generating $10,000 in monthly revenue, about $2,500 to $3,500 will go towards COGS.

• Average Monthly Coffee Truck COGS: 25% to 35% of total revenue

7. Labor Costs

While some coffee truck operators might be a one-person business, labor costs can be a significant expense for others.

Like many of the expenses in this list, these costs can vary a lot based on your location. However, since coffee trucks are generally pretty small, you likely won’t need as many employees as a traditional brick and mortar cafe.

According to Mobile Cuisine, food trucks with intensive preparation time can see labor cost percentages as high as 30% to 35% of total revenue. However, they also report that hot dog and taco trucks can achieve labor cost percentages as low as 20%.

Since coffee preparation has a relatively quick turnaround, your business will likely achieve a labor cost percentage closer to 20%.

If your coffee truck earns $10,000 in monthly revenue, this means you can expect to spend about $2,000 towards labor.

• Average Monthly Coffee Truck Labor Costs: 20% of total revenue, though this can vary based on several factors; for example, f you operate the truck yourself, this number could be closer to 0%

8. Payment Processing

Unless you plan to only accept cash payments, you’ll need to consider the cost of processing credit and debit card payments. After all, only accepting cash can significantly limit the number of customers willing to make purchases at your coffee truck.

Generally, payment processing fees amount to about 2.5% to 3.5% of each transaction. 

So, imagine your coffee truck generates $10,000 in monthly revenue and 80% of sales are processed via card payments with an average fee of 3%. This means your payment processing costs would be around $240 per month.

• Average Monthly Coffee Truck Payment Processing Costs: 2.5% to 3.5% of all non-cash purchases

9. Marketing

One more expense you’ll need to consider is marketing and advertising. After all, effective marketing can drive more customers to your business, generating more revenue.

Mobile Cuisine reports that food trucks should generally aim to spend 3% to 6% of total revenue on marketing. 

If your coffee truck earns $10,000 per month in revenue, this means you’d spend about $300 to $600 per month on marketing.

Generally, it’s a good idea to experiment with several marketing strategies to see what works best for your business. Once you start seeing some results, consider upping your spend where you’re having the most success, which should result in a higher return on investment (ROI).

• Average Monthly Coffee Truck Marketing Costs: 3% to 6% of total revenue

How To Increase Coffee Truck Revenue

While managing your expenses is key to maximizing profitability, so is boosting revenue. So, to help your coffee truck business generate more sales, consider the following strategies.

Consider Catering Events

As we mentioned earlier, Green Joe Coffee Trucks was able to generate $11,000 in revenue in one month while spending just $2,000 on overhead. One of the key reasons they were able to achieve this profit margin is that they focused on event catering.

For instance, Green Joe quoted an event planner at $499 an hour for a two-hour event. Although they only sold about 50 cups of coffee, they took home a check for $999. This means they earned nearly $20 for each cup of coffee!

Likewise, event catering can drive tons of customers to your business. In three nights, Green Joe was able to serve nearly 7,000 cups of hot chocolate. Although they only charged less than $1 per cup, this still generated almost $7,000 in revenue.

Since each cup cost 9 cents to make and the owner didn’t use any additional labor, the business earned over $6,300 in gross profits.

Refine Your Marketing Strategies

Of course, one of the best ways to drive more revenue for any type of business is through effective marketing strategies.

Although there are tons of different tactics your coffee truck can employ, consider some of this high-level advice as you develop your own marketing plan:

• Leverage Social Media: Utilize platforms like Instagram, Facebook, and Twitter to engage with customers, promote special offers, and showcase your unique offerings. Regular updates and engaging content can help build a loyal following.

• Local Partnerships: Partner with local businesses and events to increase visibility. Collaborate with local farmers' markets, festivals, and community events to reach a broader audience.

• Loyalty Programs: Implement loyalty programs to encourage repeat business. Offer discounts or free items after a certain number of purchases to incentivize return customers.

Remember, it’s a good idea to try out various strategies to figure out what resonates most with your audience. Feel free to get creative with your approach, and invest more in the best-performing tactics to improve your return on investment.

Use Technology

Incorporating technology into your coffee truck operations is crucial for improving efficiency and enhancing your customer experience.

Here are some of the key ways you can use technology to run a better business:

• POS Systems: Invest in a reliable Point of Service (POS) system to streamline transactions, track inventory, and gather customer data. Additionally, ensure your system can process various payment methods, from credit cards to mobile wallets, like Apple Pay and Venmo.

• Mobile Ordering: Offer online ordering and payment options to speed up service and reduce lines. This convenience can attract more customers, especially during peak hours.

• Inventory Management: Use technology to monitor inventory levels and optimize stock. This helps prevent overstocking or running out of popular items, ensuring consistent availability.

Ultimately, using technology is vital for helping your coffee truck stand out and keep up with the competition.

Increase Average Order Value

Another great method for driving more revenue is implementing strategies to increase the average amount of money customers spend on each visit.

However, to remain competitive with other coffee businesses, you should avoid arbitrarily raising prices. Instead, consider using these techniques:

• Premium Products: Introduce premium coffee options, such as specialty brews, organic blends, and artisanal beverages. You can sell these items at a higher price point, offering better margins.

• Upselling and Cross-Selling: Train staff to upsell by suggesting add-ons like pastries, snacks, or premium syrups. Bundling items into combo deals can also encourage customers to spend more.

• Seasonal Specials: Create seasonal or limited-time offers to entice customers to try new, higher-priced items. This not only increases the average order value but also keeps the menu exciting.

By using the strategies above, you can move more high-margin items, increasing your overall revenue and profits.

Expand from Coffee Truck to Food Truck

Depending on your coffee truck’s capabilities, you might also think about offering food items in addition to coffee. To accomplish this, be sure to keep the following ideas in mind:

• Menu Diversification: Gradually introduce food items such as breakfast sandwiches, pastries, and lunch options. Start with a few high-demand items and expand based on customer feedback.

• Culinary Partnerships: Partner with local chefs or bakers to supply fresh, high-quality food items. This can add credibility and attract a wider customer base.

• Brand Expansion: Use your established coffee truck brand to market your new food offerings. Leverage your existing customer base and social media following to promote the expanded menu.

Overall, by selling more types of products, you can encourage customers to spend more with each visit. 

Increase Customer Frequency

One more way to boost your coffee truck’s revenue is by increasing the frequency of customer visits. After all, the more often customers buy your coffee, the more money you can make.

To encourage patrons to buy your coffee more often, be sure to implement the following tactics:

• Consistent Quality: Ensure that every cup of coffee and food item is consistently high in quality. Positive experiences encourage repeat visits.

• Customer Engagement: Engage with your customers through social media and email newsletters. Share updates, special offers, and event appearances to keep them informed and excited.

• Feedback and Improvement: Actively seek customer feedback and make improvements based on their suggestions. Showing that you value their input can build strong customer loyalty.

Ultimately, customer retention is crucial to the long-term success and sustainability of your business.

Make More Money with Toast’s POS System For Coffee Trucks

As we’ve seen throughout this article, coffee trucks can certainly make a good amount of money. However, it’s key that you provide high-quality products and create an excellent customer experience to achieve profitability.

Of course, it’s also vital that you incorporate the right tools, allowing you to efficiently process transactions, offer loyalty programs, and provide mobile ordering options.

Fortunately, Toast’s comprehensive POS system can do all of this and much more! To learn how Toast can help you run a better coffee truck, be sure to check out all of the amazing features.

Related Resources

• Coffee Truck Business Plan
• Coffee Truck Equipment
• Coffee Truck Menu Ideas
• Coffee Truck Ideas and Concepts
• How to Open a Coffee Truck Business
• How Much Does it Cost to Start a Food Truck