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Food trucks are experiencing high rates of growth. According to the U.S. Chamber of Commerce, the food truck industry has grown to over $2 billion in annual sales. If you are looking for a great entry point to the food truck business, ice cream trucks are the cheapest and most accessible way.
Ice cream trucks have low fixed and startup costs. This means ice cream truck owners can start making profits quickly without the specialized knowledge you would need to plan and operate more elaborate, hot menu-style food trucks.
While ice cream trucks might seem like relics of a bygone era, they are as popular now as ever. Ice cream trucks are experiencing a renaissance and can be an excellent opportunity if you want to own your own business, don’t mind working alone, and love customer service.
Food trucks, including ice cream trucks, are being used in new and innovative ways. They don’t just have to prowl around the neighborhood looking for sales. “Food Truck Nights” are popular attractions at breweries and outdoor shopping arenas. Placement at one of these venues on a temporary or permanent basis ensures a steady stream of customers without burning excessive fuel.
Do Ice Cream Trucks Make Profit?
The answer to this is a resounding yes. Like any business, if you have a good market and work hard to find a niche where you are not crowded out by too much competition, your profits can be quite good. Check out this ice cream truck that was able to bring in $20 million in revenue. While this is not a typical result, it does show that with proper planning, ice cream trucks can bring in lots of revenue. Because of their low overhead, a significant amount of that revenue is profit.
Follow this 4-step process to figure out how much money your ice cream truck could make:
- Estimate your potential revenue.
- Determine the fixed costs.
- Estimate your variable costs.
- Calculate your profit.
- Increase Profits with Add-on Items.
Step 1: Estimate Your Potential Revenue
The first step in figuring out how much ice cream trucks make is to understand their likely revenue. Chamber of Commerce.org estimates ice cream truck enterprises average $200-$300 in revenue per day, which can increase five-fold on holidays and during busier seasons to $1000 dollars daily. For a food enterprise staffed by only one person, those revenues are lucrative.
Factors that Affect Revenue
While $200-$300 is a good estimation, your actual daily revenue will vary according to several factors. To determine if your revenue projections will meet or exceed these numbers, ask yourself the following questions:
1. What is the demand for ice cream in the area where you intend to operate? Let’s face it, ice cream is more popular in some places than others. Potential revenues are going to vary significantly according to the popularity of ice cream where you live. Much of the time this will be affected by the annual percentage of warm days in a particular location. For instance, an ice cream truck in Miami will likely have more sales than one operating under the same circumstances in Anchorage, Alaska.
2. What is the local market saturation for ice cream trucks? At the same time, some of the warmer regions might already have their fill of ice cream trucks, so another one entering the market might have a difficult time earning enough revenue to make a decent profit. Make sure you conduct research in your area to determine relative market saturation before investing in an ice cream truck.
3. Do you have a large enough potential customer base for your ice cream truck? Even if ice cream is exceedingly popular in your area, you are still going to need a large customer base to generate reliable revenues. Look for areas that have a high population of young families with children. Alternatively, if you plan to add a unique twist to your ice cream truck that might appeal to a certain population, like retirees or college students, make sure you have a good local population of those potential customers.
Step 2: Determine Your Fixed Costs
The Ice Cream Truck
The number one fixed cost you will have when opening an ice cream truck business is the cost of the truck itself. At sites like UsedFoodTrucks.com you can find ice cream trucks for sale starting around $6,000 and going all the way up $100,000. The biggest determining factor in the cost of the trucks is what type of product you intend to sell.
If you plan on selling standard prepackaged ice cream, all you need is an ice cream truck with commercial freezers. If you decide to sell soft serve ice cream, you will require a lot more specialized equipment. If you want that specialized equipment built in to the truck, it will cost significantly more.
A likely figure you will spend for a used truck in good condition is around $20,000. Trucks like this are relatively ubiquitous and available in all regions of the country. At the lower end, you can safely purchase your own ice cream truck for around $10,000 though it might not be the newest model.
The cost of permits varies regionally, and some of them require you to pay for and pass a criminal background check. Likely, you should be able to acquire all the permits you need to run your own ice cream truck for around $300. Licenses to operate a food truck, like any busines, are normally an annual expense.
While you may get away with not having liability insurance in some businesses, for an ice cream or any other food truck business, this is an absolute must. You can estimate liability insurance for your ice cream truck business will run you $450-$1000 annually.
Step 3: Estimate your Variable Costs
Cost of Product
In order to get the best wholesale prices, you are going to have to get a vendor or reseller’s license. Wholesale business-to-business price lists are not readily available because wholesalers negotiate with re-sellers on an individual basis. Assume however, that the cost of sales will be 30-50% of the price you will be able to charge.
Turnkey Parlor has a couple of examples of this. For a Haagen-Dazs or Dove bar, you could pay $1.75 wholesale for a product you will likely price around $3.50 for a cost of sales of 50%. Your customers might be willing to pay $2.25 for a Fruit Bar you paid $.75 for a cost of sales of 30%.
So, if your ice cream truck enterprise generates the average daily revenue of $200 to $300, figure up to 50% of that will be consumed by wholesale costs of product, leaving you with $100 to $150. Luckily, ice cream has a long shelf-life and absent any sudden freezer issues, you should not have a significant amount of food waste, which would add to the variable cost of sales.
Cost of Fuel
Another variable cost you will have to factor in is the cost of the fuel. Fuel consumed by your truck will not just be for getting from Point A to Point B, but it will also be the fuel needed to power your freezers or other equipment.
You can lower the cost of fuel used by designing a good route. The shorter the route, the less fuel you will use, but potentially that also means you will bring your product in the vicinity of less customers too.
You don’t have to drive loops around the neighborhood to make money selling ice cream. Setting up in busy locations like lunch hours in downtown areas or near schools (if permitted) in the afternoons is one way to get more customers to come to you instead of you driving to them.
No matter how well you design your route, you will have to figure in some fuel costs and of course the price of fuel changes over time. Estimate $20-$40 in daily fuel costs.
Other Variable Costs
Other variable costs might include napkins, cups, plates, and wooden ice cream paddles. Make sure you take these into account with your pricing and/or minimize their use, according to customer preference.
Step 4: Calculate Your Profit
If you can reach $300 in daily revenue with a $150 cost of product and $30 in fuel, you will make an average daily profit of around $120. This does not consider your fixed startup costs, which include the cost of the truck, insurance, and required permits, certifications. It also assumes that you are providing your own labor, hiring someone to staff your truck will cost significantly more.
If you work 20 days per month and live in a relatively warm climate, you could bring in $28,800 in profit before your fixed startup costs, which including the insurance, truck, and permits will be around $12,000 per year. This works out to a profit of $16,800 the first year, which will be much higher after that, $26,000 or more on an annual basis.
These figures don’t consider holidays and warm summer days in busy tourist areas, where your average daily profit could easily exceed $500, making your average annual profit $45,000 or even more.
Step 5: Increase Profits with Add-on Items
This profit model is conservative, however, and there are many ways to raise your revenue while lowering your costs. Unfortunately, not everyone is into ice cream all the time. To attract more customers, think about adding items other than prepackaged ice cream to your menu.
While it may seem counterintuitive to sell hot drinks on an ice cream truck, it can actually be a great fit. The Jitter Bus is a great example of how an “ice cream truck for adults” can earn a lot of revenue, like this one does at the Yale University campus. Selling hot drinks like coffee, tea, and hot chocolate is also a great way to hedge against colder temperatures, which drive down ice cream sales.
You could even design your truck to sell ice cream in the summer and hot drinks in the winter… or both all the time. College campuses and busy office districts are ideal places for these products, and you can design your routes to take advantage of high-travel periods, such as between classes and during lunch.
Soft Serve Ice Cream
While pre-packaged ice cream is a great way to enter the ice cream field, you don’t have to stay there. Though there will be an additional cost to purchasing the machines, soft-serve ice cream has a might higher profit margin than the pre-packaged variety.
Like restaurants that sell fountain drinks instead of the bottled versions, there is a higher initial outlay for purchasing machines, but it pays for itself very quickly.
Frozen Yogurt, Gelato, and Craft Ice Cream
Frozen yogurt, gelato, and craft ice cream are other options you can use to appeal to more refined tastes. Locally produced craft ice cream is a great way to attract customers who might not necessarily be into strawberry shortcake bars.
1. What if I don’t have enough money to buy an ice cream truck?
You can also investigate renting your ice cream truck. Rental rates can be as low as $300 per week. If you live in an urban area, you can also look into getting an ice cream cart instead. These are far lower in price, starting around $1500, and you might be able to generate the same revenue.
2. Are there franchise options to get into the ice cream truck business?
You bet there are! Mister Softee has been around for over 60 years and is always looking for new franchisees. They will even arrange for up to 75% of your financing, another excellent entry point to the ice cream truck business.