The food truck revolution is alive and well in communities around the country, and brick-and-mortar restaurants are fighting back. They complain, rightly, that food trucks reduce their revenue, take up valuable parking space in busy commercial areas, charge less, and produce more litter. But they are wrong when they say that food trucks steal their customers. When it comes to that anniversary celebration, a high-end restaurant wins over a food truck every time.
Still, for remodelers looking for guiding business principles for the “New Normal,” there is a lesson in what makes food trucks successful.
- Lower overhead. Food trucks are as lean as it gets. You may have cut margins, but if profit isn’t at least 6%, you have more work to do. For example, if gross margin is 26%, then overhead, including owner’s salary, must remain at 20% or lower.
- Follow the money. Food trucks change location to keep in sync with where their customers are. I’m not suggesting you physically relocate (although some companies have downsized the office back into the owner’s home), but you can start selling what people are more willing to buy.
In the early 1990s I worked with a wonderful contractor in Marin County, a wealthy suburb of San Francisco. He was used to large architect-driven work, but when the recession hit, those jobs dried up and he was forced to turn to window installation. After a few months of doing windows, he realized his gross profit had nearly doubled, the bidding wars had ceased, and he was happier and more profitable than he’d been before. He never looked back.
Aging housing stock in every community across the country still needs remodeling. The projects may not be the ideal type or size, but people are still spending to get the work done.
- Be unique. Novelty drives marketplace “buzz” around food trucks, and quality products and good service build loyalty. With remodeling, it’s more difficult to offer a completely unique product, but how you do the work and the experience you create around it for your clients can set your company apart.
- Whether it’s a concierge-like product selection service, an interactive website, or an educational seminar series, the more “zing” you add to your service, the better, since that’s what brings people back for a second helping.
—Judith Miller is a Seattle–based financial consultant and a facilitator with Remodelers Advantage. remodelservices.com