Forecasting Sales for Your Food Truck Business
In your mobile food business, sales are what determine whether you’re able to make it through your first year of operation. Forecasting your future sales is a critical step in ensuring that your food truck is profitable. Prospective investors want to know whether your projected sales will support your business needs. Although no set-in-stone formula can project your sales for your truck, making a well-informed guess is critical to planning your future funding. Pulling numbers out of thin air does nothing for you or investors.
You need to show your sales forecast for the first three years in your business plan. Then show your sales growth for the next two years.
Estimating customer numbers
You may already have a few specific locations, or at least a general idea of some, that you plan to use as regular stops or venues. A great way to find out how many walk-up customers you can expect is to compare your potential business to existing mobile kitchens in those areas. Visit trucks of similar size and cuisine type. Although these businesses may turn out to be your competitors, you can obtain valuable information by observing how many covers (number of meals) they serve during peak hours. You may even speak with the owner to learn about how many covers he sees in a week.
Another way to project your customer count is to determine how long it’ll take to produce a meal for a customer. Start your timing from the moment a customer places an order to the time the transaction is completed. Your projections will depend on the number of staff you have to complete the transaction and the type of cuisine and how it’s prepared. For some styles of food, it may take up to ten minutes to turn an order. Other vendors who serve only prepackaged food can turn an order in two to three minutes.
After you’ve determined how quickly you can serve a single customer, you can estimate how many customers you can serve in an hour, during a full shift, or a full day. For example, if it takes four minutes to prepare a meal for a customer during a rush, you’ll be able to serve 15 customers per hour, 45 customers per three-hour shift, or 90 customers a day if you’re open for two three-hour shifts.
Don’t base your approximations on the maximum number of people you can serve from your truck with perfect conditions because you’ll unlikely be able to hit or maintain these numbers during the first 12 to 24 months of operation. To be conservative in your sales forecasting, calculate how many customers you can serve, and then use only 75 to 80 percent of that number. After you’ve started your operation, you’ll be able to adjust these numbers to match your real sales figures.
Estimating average spending per customer
Using your customer count estimate, the next step is to put together a per-person average based on your menu prices. Make sure you use moderately priced menu items to figure out this average, because you can’t expect all your customers to buy the most expensive (or even the cheapest) item on your menu every time.
Also, be sure to consider the number of customers and per-customer spending averages for different meal periods. For example, lunch periods tend to bring in lower average sales than dinner periods, unless you’re able to park in central business districts with a lot of foot traffic and hungry workers.
Days of the week also bring in different sales numbers; for example, Thursday nights are usually more profitable for food trucks than Monday nights. You’ll also want to break out your food sales from your beverage sales because each of these items is broken out separately when you determine the amounts to purchase and keep in your inventory.
For example: Use a $6 menu item as the base price for your mid-level menu entries. If you add in a $2 side item and a $1 beverage, you have an average of $9 of spending per customer (also known as a check average). To give yourself an average for your slower times, you can cut out the side or divide it by two to represent the idea that every other customer will choose to purchase a side dish in his order.
Generate a chart showing estimated number of customers per meal period each day, as well as the per-person spending average. The data generated in these charts help you determine your estimated monthly and annual sales.
Estimating sales for the year
After mapping out weekly sales projections, some mobile food vendors merely multiply their weekly sales totals by 52 weeks to get a year’s sales projection. Other owners divide the year into seasons to reflect the business they’ll receive during different times of the year. Although using the latter method is a little more complicated because seasons vary per region, it can be more accurate because some months are usually busier than others.
Think about what an average week’s sales may look like, and then ask yourself what your potential earnings are during a slow week and during a busy week.
Consulting with seasoned food truck employees or owners in your area can help you decide what kind of traffic or sales volume to expect at different times of the year. These estimations vary from truck to truck and depend on your menu and your locations. After even a few months of operating, you’ll have a much better idea of what to anticipate as far as sales go, and you can alter your estimations accordingly. You should also evaluate your operations and promotion efforts if sales aren’t matching the projections in your business plan.
To show your potential investors how your business will grow, you need to show them more than a single year of sales forecasting. Financial professionals consider 10 to 25 percent to be a strong sign of long-term growth. You can use 10 percent as your growth factor to apply to your first year’s sales forecast to show strong growth potential in your second and third years in business, without setting the bar too high and having investors question your ability to grow your business.
Here is a one-year sales forecast for a mock food truck business. As you can see, the chart is broken into separate food and beverage sales per day and shift. This forecast shows investors how many covers occur each shift and day as well as the average spending of each cover.