Your Busiest Stop May Not Be Your Most Profitable One

Ask a food truck owner which stop is their best and most will name the one with the longest line. The festival weekend, the brewery patio, the stadium lot on game day. Sales are the number everyone sees, so sales become the scoreboard.

Sales alone are a poor scoreboard for choosing where to park. A stop is worth what is left after everything that stop costs you, divided by the hours it takes out of your week. On that measure, the quiet weekday lot can beat the big event.

Every stop carries its own costs

When owners compare locations, they usually compare the till. The costs get lumped together at the end of the month, so nobody sees which stop caused them. But most of the costs that matter are tied to a specific stop:

• The fee to be there: Events charge a flat fee, a share of sales, or both. A regular lot might cost a small permit or nothing at all.
• Labour: A big event needs more hands, and the shift runs longer than the service window once you count setup, the drive, the wait to get in and teardown.
• Fuel and power: A longer drive and a generator running all day add up.
• Waste: Busy events are hard to forecast. Owners prep for the crowd they hope for, and whatever does not sell gets thrown out.
• Food cost: This one tracks sales more closely, but event menus are often cut down to the items that move fastest, which are not always the ones with the best margin.

None of this is hidden. It just never gets written down against the stop that caused it.

A worked example

Here is an illustrative comparison. The numbers are made up, but the shape is one we see often. The hours run from leaving the commissary to getting back, and what is left is the stop's own margin, before owner pay, payroll costs, insurance, the commissary and the truck itself.

Saturday festival

• Sales: $3,200
• Food cost at 32 per cent: $1,024
• Event fee: $450
• Staff: three people for nine hours at $20 an hour, $540
• Fuel and generator: $90
• Waste from overprepping: $160

That leaves $936 for the stop. The truck was committed for nine hours, so the stop earned about $104 an hour.

Tuesday lunch at an office park

• Sales: $1,400
• Food cost at 32 per cent: $448
• Lot permit: $40
• Staff: two people for five hours at $20 an hour, $200
• Fuel: $40
• Waste: $30

That leaves $642 over five hours, counted the same way, or about $128 an hour.

The festival still made more money in total, and that matters. But it kept about 29 cents of every sales dollar, while the office park kept about 46 cents. If the owner is choosing between a second festival and two more weekday lunches, and lunch demand holds, the weekday lunches may be the better week.

The point is not that festivals are bad, and some festivals are excellent. The point is that you cannot tell which ones are excellent from the sales number alone.

How to track profit by stop

You do not need a new system. You need to tag things as they happen.

Tag every sale by location: Many point of sale systems let you set up a separate location, register or device name. Use one per stop, or one per type of stop if you visit the same lots every week. At the end of the month your sales report then splits itself.

Tag the costs that belong to a stop: When you pay an event fee, note the event on the bill. When you schedule staff, note where the shift is. Many bookkeeping packages let you tag transactions with a location or class, and that is exactly what it is for.

Count your waste: This is the cost owners skip because it is unpleasant. At the end of each stop, write down what you throw out and estimate its cost at what you paid for it. A rough number is far better than none.

Count the hours honestly: The hours that matter are the hours the truck and the crew are tied up, from leaving the commissary to getting back. A four hour service window with a two hour drive on either side is an eight hour day.

Divide by the hours: Profit per stop tells you which stops are worth doing. Profit per hour tells you which stops are worth choosing when two of them compete for the same day.

Read the results once a quarter

A month of tagged data will show you a pattern. A full season will show you a reliable one. Once a quarter, sort your stops by profit per hour and ask three questions:

1. Which stops are at the bottom, and is there a reason to keep them, such as building a following in a new neighbourhood?
2. Which events should be renegotiated? A share of sales fee looks very different once you can show the organizer what the event actually left you.
3. Where is waste concentrated? If one event type consistently throws out more food, prep less for it next time and accept the risk of selling out early.

Start with your next five stops

You do not need a full season to start. For your next five stops, write down sales, the fee, staff hours, fuel and waste on one page, and divide what is left by the hours. It should take about ten minutes after each stop.

After those five stops you will have a first read on something many owners only guess at: which parking spot is really paying your bills.

Bashar Qawas is a partner at Better Books Canada, an Ottawa bookkeeping and tax firm, and a former Canada Revenue Agency auditor.

More on food trucks from Trudy's Table: how to start a food truck in Canada and the food truck permits guide.

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