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Starting a Food Truck Business in India

Narendra Kumar

| Updated: May 31, 2018 | Category: FSSAI Food License

Food Truck Business

Food Truck Business

A decade ago, when it comes to eating outside food, there was either the fine dining restaurant or the street side food which meant that either one goes for an expensive meal or get satisfied with the cheap or unhealthy one.  The growth of the food truck business phenomenon in India is a derivative of a similar business module in the USA. The reasons behind this burgeoning preference for this kind of food are:

  1. Health awareness amongst the masses especially youngsters who love street food but want it the hygienic way.
  2. The inclination to try new cuisines aided by increased spending capacity of the middle class.
  3. On-the-go food has become the preferred lifestyle due to busy schedules. Food is no longer perceived or limited to being consumed at home or sitting in one place. 

What is the Market size of Food Truck Business in India?

The food truck or the mobile kitchen business in India has huge potential as it is still in its nascent stage. In India, it is estimated to be growing at a rate of 8.4% annually. As per a National Restaurant Association report, it was estimated that by 2017-18 the revenue generated from the food truck business in India would touch 2.7 billion dollars approximately, a huge leap from 650 million dollars five years back.

Starting a Food Truck Business in India

To start a food truck business, one needs to plan as per the following defined steps:

  1. Identify the right commercial vehicle or the food truck: One can invest in a new customized vehicle or buy a used vehicle and customize it. Choose the size that fits the requirement.
  2. Choosing the right location for the truck to operate from: One needs to look for a space that has more young professionals and students around and ample space to park and serve.
  3. Deciding the menu – study the market for competition and existing menus; decide cuisine that is your strongholds
  4. Buying kitchen equipment and raw materials – prefer buying new ones with warranty periods
  5. Licenses and permits: Various licenses and permits needs to be obtained so that you can establish your business without any legal hassle.
  6. Recruiting Manpower and staff uniform
  7. Point of Sales software
  8. Marketing the Food Truck – Invest in newspaper inserts and menu pamphlets; billboards and banners
  9. Miscellaneous requirements: Requirements like telephone or mobile phones, calculator, attendance register, big dustbins around the truck, daily log book.

What could be the Initial Investment amount to set up food truck business?

An approximation of the break-up of the initial investment is as below:

  • Cost of commercial vehicle: Rs. 4-5 lakhs (one-time)
  • Kitchen equipment: Rs. 3 lakhs (one-time)
  • License and permits: Rs. 50,000 (one-time)
  • POS Software: Rs. 24,000 annually
  • Raw Materials: Rs. 30000 monthly
  • Staff and uniform: Rs. 35,000 monthly
  • Marketing expenses: Rs 30,000 quarterly
  • Miscellaneous: Rs. 25,000 annually

Required Licenses

The mandatory documents are:

    • Fire Safety certificate from the Fire Department required because of the gas appliances
    • Shop and Establishment license for the rights of workers including wage, leaves, holidays, work hours. (In states where applicable).
    • Commercial vehicle certificate from RTO for selling food
    • No-objection certificate from Municipal Corporation pertaining to the location
    • FSSAI Mobile Vendor’s license to be acquired from the Food Safety and Standards Authority of India to guarantee the availability of safe food for human consumption. FSSAI License is responsible for protecting and promoting public health by regulating and supervising food safety.
    • For the benefit of new and small taxpayers, the GOI has introduced the GST Composition scheme wherein the owner pays GST at a certain fixed rate of his yearly turnover.
    • This applies to all food business with less than Rs. 1.5 Crore annual turnover, if they are not serving alcohol.
    • Enrolling for Central and State GST needs to be done via hhtps://www.gst.gov.in.
    • It is mandatory to register a food business that has an annual turnover of Rs. 20 lakhs or more.
    • Kitchen & Vehicle insurance to account for risks and liabilities

Challenges

Since this is regarded as an unorganized sector with no specific regulations or guidelines and no central or state assigned regulatory body overlooking the working of the food truck industry in India. Hence getting things organized especially licenses etc are a major challenge for the business owner.

If serving delicacies and tasty gourmets are your life, then this is the right time to cover that extra mile as an entrepreneur by starting a food truck business in India with an irresistible menu that would be hard for the crowd to ignore.

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Narendra Kumar

Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.

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