How Much Do Food Trucks Make in London?

How Much Do Food Trucks Make? (Food Truck Profit Margin)

Food trucks in London can make between £70,000 to £100,000 or more a year. That is about £5,800 to £8,400 or more a month. We’ve created this guide to help you get a picture of how much money your food truck might earn, including its profit margin potential. 

You’ll also uncover some strategies for maximising your food business’s income throughout the article. 

Costs to Start a Food Truck

You can enjoy a lot of flexibility with a food truck business, but the startup costs do vary widely, usually ranging from £5,000 to £200,000 (and above) depending on your budget and business idea. It’s vital to consider all expenses in your financial planning at this early stage. Think labour, materials, insurance, and marketing – it’s a similar approach to starting a conventional restaurant.

On top of this, there are unique expenses in this unique industry (but not quite as unique as your funky new idea). These include the cost of the truck itself, obtaining licences and permits, and acquiring the appropriate equipment for your mobile kitchen. You might also need to consider funds for things only your unique food truck business needs, such as leasing a commercial kitchen, obtaining parking permits, and more. 

Are Food Trucks Profitable?

The first year of operation is a big and cost-heavy one because of the substantial initial investment for all equipment, the truck, kitchen space, licences, and more. Plus, on top of the initial outlay, it’s super important to ensure you have enough reserves to cover off all your monthly costs for the year ahead. So, make sure you think about the financial needs for your business's debut year.

It’s wise to have a stockpile of backup funds to see you through the first 12 months until your business turns profitable. What kinds of funds? Look into accessible options, such as personal loans or savings, to cover staff salaries and other surprise costs. It’s true – even the best food trucks aren’t immune to Murphy’s law.

• Startup - £5,000-£200,000+
• Equipment - £10,000-£100,000
• Permits/licences - £500-£2,000
• Contingency Funds - £5,000-£60,000

Average Food Truck Costs

Your monthly operating costs will usually be around 85-90% of your monthly revenue – once your food truck business starts to turn a profit. In the first year or two, you might want to future-proof your business by investing to offset losses from labour, food costs, or marketing activities. Delivering top-notch food and service is the cornerstone of your business, but a solid financial plan is essential for its long-term success. 

• Operating Costs £10,000 - £50,000
• Commercial Kitchen - £1,000/month
• Parking - £400-£800/month
• Insurance - £400-£6,500/month
• Utilities - £800-£1,000/month
• Marketing - £200-£2,000 (3-6%) of sales
• Food Costs £2,000-£15,000 (30-35% of sales)
• Labour £1,500-£15,000 (24-40% of sales)
• Loan Repayment

Forecasting Your Food Truck’s Sales

To accurately estimate your food truck's future sales, take a good look at any sales data you can get your hands on, including labour costs, food expenses, inventory levels, and your business’s serving capacity. Keep in mind that without historical sales data, forecasting monthly growth for your restaurant in its debut can be challenging. When you calculate, consider how seasons change demand in your area, how effective your marketing is working, and other important performance metrics (KPIs).

Start by getting a clear sense of your daily service capacity. For a food truck, this means how many customers you can successfully sell to – that’s how many tacos or chicken sandwiches you and your team can make and serve each shift. By looking at the balance of costs against profits in this time frame, you can calculate your potential revenue per shift.

Keep in mind that demand can vary, so you won’t necessarily be running at maximum service capacity every time you set up at a spot. But with sales data from a given amount of time, like a month (or even as little as a week), you can see the average sales from the period. Technology like the best mobile POS system for food trucks in London can really help here, and you can even use this data to calculate the average for each shift.

Average Food Truck Revenue

An estimated average income, the gross sales prior to subtracting costs, for food trucks in London range from around £6,000 to £10,000 plus a month. If you project your own estimated sales figures, you can get a useful estimate of what your food truck might earn. To calculate this, total your estimated sales for the month across a season – keeping in mind various important performance metrics (KPIs) –  and then divide this total by the total months in your operational season. 

Food Truck Profit Margin Per Month

As a standard, a restaurant or food business’s profit margin is generally around 3%-5%, while some might have barely any margin of 0%, while others can reach as high as 15%. Calculate your profit with the following equation: monthly sales x profit margin = profit. If your food truck averages £10,000/month in sales, and the profit margin is 4%, the profit is £400. Remember, any profit you make can be reinvested into the business – a recipe for future success!

Food Truck Owner’s Salary

It's time to think about your salary when your food truck begins to generate profits. Food truck staff usually see yearly pays that fall between £24,000 and £35,000. Since you’re the owner, the salary you pay yourself is your call. And don’t forget, this could be just your first truck, so think about scaling to multiple trucks (eventually) to enjoy the rewards. Typically, you could expect that your salary as an owner will be at the upper level or well above, but it makes good sense to make it under 50% of the net profit.

In a smaller food truck business, you might be able to pay yourself a more significant piece of the profits, especially if you're the key worker handling multiple roles in daily operations. For example, if you're acting as the head chef, bookkeeper, and even an occasional line cook, you could justify allocating a larger share of the profits to yourself in pay, as opposed to a truck with more staff where pay is shared across a larger team.

You’re the owner, so you'll encounter decisions that need to be made about how to distribute your salary and how much of the profits to reinvest to expand the business. There are likely to be challenges in the first year, but investing any money back in the business by maximising your sales with effective marketing tactics or using the right technology could put your food truck business on the road to profitability.

Timeline for Breaking Even for Food Truck

Reaching profitability usually happens within the first one and a half to two years for most food trucks. Cost of food and specific business and regional KPIs all have an influence on this.

Striving for profitability before using up your emergency funds and additional financing is key. Now that you know how to forecast your revenue, you can estimate when you'll reach the break-even point – when your business records its first profitable month, offsetting both initial and ongoing expenses.

Keep in mind seasonal opportunities, such as joining in with festivals and events or capitalising on busy tourist seasons, will help you forecast potential sales spikes. After considering these, work out the sales volume your truck must achieve to cover all start-up and running costs. You can use the example below to calculate. Note that this is a hypothetical to help you calculate. You should use our own figures that match your circumstances:

Jimmy’s Jerk Chicken truck of London starts with a loan of £350,000, with a repayment period of 5 years at 5.6% interest:

Equipment (including the Truck): £100,000

Permits & Licences: £1,000

Contingency Funds: £249,000

Jimmy’s Jerk Chicken truck manages to cut down on labour costs since Jimmy himself covers most of the roles in the first eighteen months of operation; nonetheless, his expenditure on parking is substantial due to the extended hours he invests across various spots to establish the business.

Commercial Kitchen Rental: £1,500

Parking: £900

Insurance: £2,200

Utilities: £1,000

Food Costs: £9,000

Labour: £3,000

Marketing: £1,500

Loan payment: £4,400

Total: £25,500

At £25,500, the annual cost of operating Jimmy’s Jerk Chicken truck is £306,600.

Jimmy’s most famous plate, his biggest seller, brings in a profit of £6.75. Complementing the dish are side options of Jamaican rice, yielding a profit of £1.50, and callaloo, which yields £3.50 in profit. With the capacity to produce 150 plates per shift, Jimmy and his team can make a profit of £1,012.50. If they include rice with a third of the orders and callaloo with another third, they can bump up their revenue by £206.25 per shift. At maximum capacity, Jimmy’s has the potential to earn £7,312.50 over a six-shift week.

Monthly Sales: £29,062

Operating Expenses: £25,500

Profit: £3,750

Profit Margin at 100% capacity: 8.8%

At an average of 50% capacity, Jimmy’s can potentially gross £43,403 annually (50% of the gross profit potential x 52 weeks), with a monthly revenue of £11,950. That rises to £286,806 annually at %100 capacity.

• The startup costs of Jimmy’s Jerk Chicken were £451,000, and the monthly operating costs were £25,500. Jimmy’s first year will cost £467,500. 
• Jimmy’s operates at 50% capacity for the first three months – £43,593
• Jimmy’s had a great second quarter (it was a busy summer in London) and operated at 70-85% capacity for that quarter – about £65,398 in total revenue. 
• They kept the momentum going past the peak of summer, operating at 60-70% capacity in quarter 3, earning an additional £56,607.90.
• London’s market does vary seasonally, so Jimmy’s is back to 50-60% in quarter 4, and ends the year with £47,952.30 in revenue.
• Jimmy’s earns £213,551.20 in revenue for the year.
• Luckily, Jimmy’s contingency funds let him stay afloat this year, making up the £262,949 shortfall.

For Jimmy’s Jerk Chicken truck to make a profit, its target is to operate at a capacity of 87%. With a foundation of effective marketing strategies and maintaining meticulous record-keeping, Jimmy can estimate with accuracy that the business will reach profitability before it’s reached the end of its second year cruising the streets and motorways of London.

Improving Your Food Truck’s Sales

There are a number of ways to increase your sales and speed up your pace towards profitability, too. Calculate food costs accurately and upskill your employees on how to upsell your most profitable dishes – that makes a big difference. Designing your menu so that these more profitable items are more visible and enticing helps capture your customers’ attention. Also, getting the right permits or paying the fees for joining in at local events and festivals can market your offering by widening your customer base and introducing your food truck to new people across the community.

And, in today's digitally-led lives, using websites and social media pages for online marketing couldn’t be more essential. Maintain an active online marketing strategy to reach new customers and help them easily locate your truck and keep connected with your business.

The Right Tech

To significantly enhance your efficiency and earnings, use state-of-the-art technology in your food truck business. Put the right foot forward by starting early: adopt systems for managing inventory, tools for time tracking, and apps for handling finances from the start. Choosing a comprehensive point of sale (POS) system that combines these features will help with the seamless and smooth running of your truck, too. So consider the right portable POS solution for your street food vendor business in London. Plus, think about tech that makes things easier for your customers, like mobile order and pay. With powerful technology backing you up, you’ll be ready to expand your business and remain on course for healthy growth.

Related Resources

• How to Open a Food Truck With No Money in London
• How to Design a Food Truck Floor Plan, Layout and Blueprint in London
• How to Write a Food Truck Business Plan
• How to Open a Food Truck: Starting a Food Truck Business Steps
• 12 Licences and Permits Needed to Open a Food Truck