FOOD TRUCK

Food trucks are commonly seen in foreign countries and considered a thriving business there, but

in India this trend is not very common. Over the last few years food industry has gained quite lot

of attention and people are becoming more open to changes.

This particular industry in India seen to be undergoing a rocketed boom. Despite fierce

competition within the industry, it has managed to report profitability and is well-received by the

public.

In India, statistics have revealed that the fast food industry is the second largest industry,

with approximately 169 million consumers, as reported in 2013. Furthermore, this sector

accounts for 16% of the total employment in manufacturing sector. An industry with such

dynamics has a great probability of exceptional growth in future as well.

Within this industry, food truck would be a new concept for most of the Indiai’s. As we all know

Indiai’s love to eat, and they have recently opened themselves to new food experiences.

Accordingly, we believe that with the right marketing strategy we can make our business thrive.

DETAILED DESCRIPTION OF OUR BUSINESS

The food truck Business is a mobile food business that would provide food services to

customers. The truck carrying the food would drive to a suitable location within easy access of

customers so that they can easily walk up to the truck’s window and order their food. Only

healthy and hygienic food will be served in our food truck that is both tasty and affordable.
A food truck can carry quite a variety of foods and some sophisticated equipment for cooking,

storing, preparing foods and serving. Traditional food trucks were known for providing lunches,

typically sandwiches, kebabs, burgers and other standard fare for the lunch crowd.

Food trucks are larger than carts. The trucks can handle more business as they can carry more

food. However, food trucks need more space to park both when doing business and when off-

duty.

There are two types of food trucks. One is the mobile food preparation vehicle (MFPV) where

food is prepared as customers wait, hopefully not very long. The other is the industrial catering

vehicle (ICV), which sells only prepackaged foods. For our business we would drive an MFPV

(mobile food preparation vehicle) as this fits our business description. We would prepare the

food on the spot for the customers so as to keep the food fresh and healthy.

Vision Statement:

The food Truck will help provide community with healthy, sustainable, affordable and simple

food that is both pleasing to the eye and tasty.

Mission Statement:

To become the most popular and successful food truck in Lucknow by providing a complete

package of tasty, healthy and affordable food with quality customer service on wheels.

Value Proposition:

The Food Truck provides the solution of convenience to consumers in Lucknow area, by offering

healthy and sustainable food at a competitive price. The value proposition reaches the consumer,
as it provides sustainable solutions to many of their environmental and social problems such as

affordability and hygiene.

The food truck is a value driven business that provides accessibility, high quality sustainable

food, convenience, all that at comparatively low prices. Our truck provides our customers with

accessibility and convenience in three ways as mentioned below:

1. By providing healthy meals quickly.

2. Making the food in front of the customer so it ensure hygiene

3. By driving near customer’s workplace so they can easily have good food within their lunch

break and reach office in time.

Another competitive advantage is that the food will be consistent in quality, taste and price and

this service will be reliable.

Our business will focus towards providing the following values to our consumers:

1. Quality food

2. Accessibility

3. Convenience

4. Reasonable Price

5. Friendly Environment

6. Sense of community
INDUSTRY ANALYSIS

Porter’s Five Forces Framework:

Threat of New Entrants:

The Fast Food/Restaurant industry in India is highly fragmented; occupied with many quick

service and dine in restaurants and numerous cafes and coffee shops including café burnout or

papa roti. These brands are extremely valuable, boasting strong customer loyalty and

recognition; indicating consistent quality and service. Key players including chaaye khana and

street 1 Cafe adapt their marketing orientation to suit local cultures and social norms,

strengthening the brand and avoiding consumer alienation.

Established cafes and restaurants have the resources to retaliate aggressively through pricing

promotions, deterring new players from entering the marketplace. New entrants lack economies

of scale, which existing cafes have developed over time, and utilize to remain competitive in this

low-margin, high-turnover industry. However, social media websites have evened the playing

field in terms of marketing communications; they allow firms to efficiently communicate their

message inexpensively. Initial capital outlay and fixed costs are low, encouraging new entrants.

In this situation we would be one of a kind food truck. However, the imitability of the product is

such that the threat of new entrant is very high. In these circumstances or brand identity and

customer loyalty are the only things preventing new entry.

Threat of substitutions:

Substitutes are readily available. Fast food products and readymade products are available in any

nearby restaurant, dine-in and cafes. However, convenience is the value adding component of the

service which reduces the threat of substitutes but with many differentiated players and varying

service offerings, customers can select the best value option. Consumers can cook at home
cheaply, but this lacks the convenience element which people require nowadays. Even though the

switching between substitutes is low and market is highly fragmented, we would any edge over

other cafes, being a one of a kind food truck in the area. ,.

Power of buyers:

The market’s competitiveness increases buyer power and customers are price sensitive with no or

low switching cost between providers. However, key players attempt to reduce buyer power,

offering a product range which caters for the entire demographic, rather than one specific

segment. For example we would target youth with our snacks menu and attract professionals by

providing different fast food choices like sandwiches, soups, salads and beverages. Already

present fast food services target the segment, for which the products offered by them are well

affordable as compared to their total spending. High brand value and customer loyalty has

reduced buyers’ bargaining power. Buyer purchase criteria in this market is primarily based on

convenience and enjoying good quality food.

Power of Suppliers:

A fast food truck selling on quality core characteristic cannot afford to compromise on quality.

The quality of the produces has to meet certain standards. The suppliers are not highly

differentiated in this industry that is if quality is not met by one supplier a switch can between

suppliers, so as to not compromise on quality

Competitive Rivalry:

The direct competitors of our food truck would be eating places Cafe Burnout, Clique Café,

Kuch Khaas Gallery Café, Gloria Jean’s and Pappa Roti and indirect competitors include all the
thelay walas as well. Competition is primarily cost based with restaurants and cafes continuously

investing in their production and service processes to undercut competitors.

Exit costs are low and branding is the most prevalent weapon for competing, mostly through

social networking sites.

PEST Framework

Political:

Political factor can have the major impact on threat of entry. In a country where there is

uncertainty and definite political unrest; lead to a negative impact on potential investors. The

firm has to abide by the policies and market regulations imposed by the government of India.

The level of corruption is high and fast food services may use unethical ways to increase their

profit margins.

Economic:

Due to the high income disparity and the adverse economic conditions, unemployment is on the

rise due to which the labor cost is decreasing, increasing the wealth of already well off people

which is our target market, aiding in the growth of fast food services alike. The products and

service offered by them are under the disposable income of our target market. Inflation which is

high in our target region, may provoke higher wage demands from employees and raise costs.

Social:

Due to increasing Health Awareness and consumers’ changing Attitude towards healthy products

it is now important for fast food services to offer healthier selections within their menus. People
are now more status conscious in our society, opinions and attitudes of other people matter. Even

the choice of place to eat is considered important and signify your status. Consumers now prefer

these high end café, fast food services and restaurants. Increasing consumer awareness about

food products, flavors and tastes has led to a demand in more varieties to choose from.

Convenience is also an important factor in our society which constitutes a segment of working

class which prefer a fast food service, dine-in restaurant or a café than to cook at home.

Technological:

With the advancement in technology and innovation the efficiency of operations can be

increased. Technological Innovations attracts people attention and can be an edge for the

operating firms. Modernist-Technological themed café, fast food services and restaurant with for

example Wi-Fi facilities and soothing music playing in the background are getting more

importance in consumer's mind.

MARKET AUDIT

Market:

The market in this scenario for us will be the region of Rawalpindi and Lucknow to begin with.

Depending upon the reaction we receive from the market as well as the time needed to

understand the market and the people’s reaction to it; we will consider expanding to other major

cities in the country.

Our target market will range from about 15 to 40. The range of people mostly comprise of

teenagers and young adults that like to eat out or on the go as well as corporate people that are

short on time and care for a quick and healthy meal on a hurried basis. We will target places like

F-8 Markaz and Blue Area which are the hub of corporate ventures yet often lack the aspect of

quick and healthy meals in the surrounding area. We also intend on targeting the youth present in

universities across the two cities who are interested in fresh and healthy food which is different

from what their daily dose of repetitive food seems to be. The pricing of our food will also

accordingly cater to the target market at hand and we will work on providing food as cheap as

possible.

Competition:

Our competition in this case we would consider to be all the restaurants in the areas that we will

aim to cater to as they are alternatives to our service. Certain trucks of ours will constantly be on

the move and will stop at whatever area seems appropriate to a food truck. This can range from

areas like Gol market in F-7 which is popular in times of cricket season as people all gather to

watch the match on the big screen, certain melas around the city where we can set up our truck
and provide fresh and hot food, commercial and shopping areas across the city during the time of

Eid, such as PWD shopping area, Commercial Market itself etc.

As our food will be mobile depending upon the need and demand, the competition for us will

also differ and range depending upon the areas we are focusing and ranging upon. Certain areas

like F-8 markaz will lack in competition as there are very few restaurants in the area which the

corporate market has access to and the option of eating in.

We could also consider one aspect of our competition to be the thelay walay outside of schools

and colleges as they also provide on the go mobile food, however, the type of food they provide

are mostly snacks and do not have the same type of food as out food trucks will e.g salads,

burgers, sandwiches, pasta etc.

We will test our different menus to begin with and see which suits best with the people. There

might be certain types of food popular in one area, like fast food in universities, which we could

cater to in that particular area alone or even have specific food trucks that offer one type of food

while other offer other types.

ENTRY STRATEGY:

The business would have the first movers’ advantage in the market as no such direct competition

is present in the market for a food truck. The business would also have a novelty value of being

one of its kind, which can be ultimately utilized from the marketing perspective.

The food truck would be the producer and distributor of its own service, i.e. it will fall in the

middle of the supply chain between its suppliers and its customers. This is the best method to

ensure quality which has been our main focus throughout.

One thing to consider is that we will be starting with Lucknow and Rawalpindi region, where we

will be required to have a permit for the business. We would have to get a license from the

Directorate of Municipal Administration of the civic authority before starting any commercial

activity in the federal capital. The licenses will have the whole information of the business and

the business-holder.

The following procedure is required to be followed to register and set up a business. *

1. Obtain approval of company name through the Securities and Exchange Commission of

India website

2. Pay the fees for name registration and company incorporation using bank challans at the

designated Muslim Commercial Bank (MCB)

3. Register the company for incorporation with the Securities and Exchange Commission of

India (SECP) through online e-Services

4. Obtain digital signatures from the National Institutional Facilitation Technologies (NIFT)

through the SECP e-Services

5. Register for income tax by applying for a National Tax Number (NTN) at the tax

facilitation center of the Regional Tax Office (RTO) of the Federal Board of Revenue

(FBR)

6. Register for sales tax by applying for a Sales Tax Number (STN) at the tax facilitation

center of the Regional Tax Office (RTO) of the Federal Board of Revenue (FBR)

7. Register for professional tax with the Excise and Taxation Department of the District

8. Register with the Employees Social Security Institution (ESSI)

9. Register with the Employees Old Age Benefits Institution (EOBI)

10. Register under the West India Shops and Establishment Ordinance 1969 with the Labor

Department of the District

11. After having gone through the procedure we shall move on to the design of the business

canvas model which gives a visual representation of the business details.

BUSINESS AUDIT

Competitive Advantage:

The major competitive advantage that we will have working for us will be the aspect that we

provide food on the go. It is a mobile service that can not only adapt to the area but also adapt to

the surroundings and adapt the ambience accordingly e.g music, folding seating area that can be

set up next to the truck etc.

Another aspect that sets us apart from our competition is the fact that our food will be able to

adapt to the people as well as seasons. We can have soups in the winter and ice cream or

lemonade in the summers. This will attract not only those people that care to have entire meals

on the go but also those people that might be busy in their work, shopping etc. but would like to

stop for s hot cup of soup before they continue on. It is the perfect balance between snacks and

proper dinner which does act as fast food but will provide much healthy and non-processed food.

Our burger patties will be made from scratch rather than store bought K&N’s patties as most

burger vendors do. Our French fries will be fresh and hot and the oil they will be cooked in will

be changed on a regular basis. Keeping this in mind, our prices will be slightly more than our

other mobile competition i.e thelay walay, but it will a much more healthy alternative which a

significant amount of people in the country and beginning to shift towards.

Considering the fact that a food truck will be the first of its kind in the business, we will benefit

from the first mover’s advantage and this will be able to adapt to the environment and establish a

name much before any competitor. Being able to take input and feedback from our customers to

be able to introduce new things or eliminate things that they do not consider value addition in a

timely manner will also be a significant competitive advantage for us.

SWOT ANALYSIS:

Strengths:

 First mover advantage.

 Mobility of the business, making us available to clientele.

 Mobility also allows us to change our location keeping view of the demand.

 An increased level of personal customer service as we can travel to the customers

 We can “cater” for difference events such as festivals, sporting events, shows and

concerts.

 Change the menu according to seasonality

 Offering a large variety of choice in our produce like regular fast food as well as,

providing easier access to healthier options such as smoothies, sorbets, and frozen

yoghurt. –

 A website and Facebook page through which bookings and pre orders can be arranged

and the customer can keep track of area we cover

 Offering reasonable prices

Weaknesses:

 Lack of a fixed position

 No sitting area
  Lack of established reputation- because we are a new business it is important to establish

a good reputation with the target market, as reputation can be the difference between

success and failure.

 We will start small with only one truck. As we’ll be moving around, we might miss our

potential customers

 Need to move away from just targeting youth to include the lunch break business market

as well.

 Can only carry a limited amount of stock - however we need to make sure that we have

enough for busy periods

Opportunities:

 Although we are starting off small we are looking at expanding and growing our business

when more income is coming in which means we will be able to target more areas (e.g.

opportunity to increase mobile vans)

 There is opportunity to market the broader community with healthier options and

products available instead of just targeting we also want to the older target market

 Ever-changing technology that will allow us to improve our product quality and offer

more variety

 Opportunity to work nights for example on the weekends delivering to customers as

home
  An app will be available which can be accessed by all, showing all of the areas that we

will be going to and the menu on that particular day

Threats:

 Competition from similar businesses (fast food chains) operating either in the same

location or surrounding areas

 Easily imitable - New food trucks.

 Seasonality of product – we will offering additional products in winter months like hot

food however most people prefer indoor food access in winters.

 Downturns in the economy

 City’s no go zones

 Political turmoil causing riots and city wide shut down.

SWOT Conclusion:

Based on this SWOT we can see that the business would be in good standing, venture wise. The

ability to capitalize on this opportunity properly would yield great reward translating to high

profits and lower costs. A good strategic defense against threats would lower the risks, which

further profitability of the operations will decrease.

Sustainability:
This food truck has the potential of having a positive impact on society as it will help reduce

automobile emissions. This is because by introducing this one truck a lot of consumers will not

have to drive to and from a food restaurant and this would reduce the car fumes.

RISK ANALYSIS

For this project we will, predominantly, be discussing business risk analysis:

Business Risk:

The possibility that a company will have lower than anticipated profits, or that it will experience

a loss rather than a profit. Business risk is influenced by numerous factors, including sales

volume, per-unit price, input costs, competition, and overall economic climate and government

regulations. A company with a higher business risk should choose a capital structure that has a

lower debt ratio to ensure that it can meet its financial obligations at all times. Business risk can

be categorized further into:

a) Internal risk

b) External risk

Internal Risk:

 Internal risks arise from factors (endogenous variables, which can be controlled) such as

human factors (talent management, strikes), technological factors (emerging

technologies), physical factors (failure of machines, fire or theft), operational factors

(access to credit, cost cutting, advertisement).

  Internal risks that our food truck would have to face are firstly in terms of their

employees. If the employees stop performing up to the standards i.e. the cooks do not

maintain the quality and standard of food and the servers don’t provide good service then

that would result in the loss of profitable customers.

 Technological factors are another important aspect that we would have to keep in mind

and will have to keep ourselves up to date with the latest technology in order to make the

operations more efficient and to reduce their costs.

 In order to protect ourselves from physical threats such as theft we can install a state of

the art security system. There should be SOPs developed for the use of the machines.

 We can focus on strengthening their brand image and develop a proper positioning of

their brand in the market. We can also develop techniques for cost cutting.

 We should have a plan in case a competitor serving the same customer base the same as

us opens up somewhere close to them. To counter this we should widen their target

customer base in future.

Equation:

R= Fixed Cost+ change in consumer tastes (b) + Technology change (b) - advertisements (b)

+labor (b) + e

External Risk:
External risks arise from factors (exogenous variables, which cannot be controlled) such as

economic factors (market risks, pricing pressure), natural factors like weather conditions,

(floods, earthquakes), political factors (compliance and regulations of government). Most of

these are covered in PEST analysis.

Critical Risk:

As discussed above, there are numerous risks that can threat the success of our business plan.

One of the major issues can be what customers seem to prefer & awareness of the customers

towards this new innovative idea in the region in order to cater to these threats, we intend on

advertising via flyers, heavy use of social media as well as running special promotions in order

to be perceived as an eating place of choice.

FINANCIALS

This section contains the financial analysis of the start-up business. The costs are divided in 3

sections:

 Stat up costs

 Fixed costs

 Average monthly costs.

Start-up costs

This section contains details of the costs associated with start of the business. These are one-time

costs.
Fixed Costs

This section gives a detailed overview of the fixed cost associated with running a food truck.
Average Monthly Costs

These are the variable/monthly cost of doing a business.

All costs depicted in this section are based on the market estimate and research.

GROWTH AND EXIT STRATEGY

Every entrepreneurial venture must focus on two things more so than others and those are

profitability and sustainability. In order to achieve fruition, any business idea must be translated

into a profitable and sustainable project/business if it is to be considered successful.

Any venture must have the capacity and potential for growth. It is necessary to have a sound and

implementable growth strategy and our business must attain the necessary sustainability for

growth and must generate enough revenue to facilitate that growth.

Similarly, a carefully devised exit strategy must also be prepared for any business. Once a

growing business is able to create value an entrepreneur needs to capture that value. This makes

it important for an entrepreneur to decide what their exit strategy will be.
GROWTH STRATEGY:

Firstly, an appropriate growth model is to be selected in accordance with the terms of our

growth. As initially, we will not be looking into growth in terms of products offered, the only

variables left are serving new customers and expanding our business to new geographies. The

growth models at our disposal are organic growth, franchising and acquisition. Now, as no

similar food-truck businesses or street vendors on a similar scale exist, acquisition can be ruled

out as an option for an appropriate growth model.

In light of the industry that we’re operating in, the conditions in which we will be running our

business and the concerns of funding, we will be selecting a combination of organic growth and

franchising in order to increase the scale of our operations and maximize the potential for growth

and success.

Organic growth, as the name suggests, is the most natural form of growth for a start-up to

evolve into a multi-locality business. It also keeps the independence of the owner and the

business intact. However this does not allow for rapid expansion or growth as its limitations

includes the firm or organization having to manage funding on its own. As we will initially be

starting up our operations in Lucknow, it is easy to organically grow and expand to Rawalpindi.

Similarly, expanding our operations to Lahore will require more investment however it will be

achievable to expand our operations to the city as well. As our points-of-delivery are not physical

stores but instead moving vehicles, there will be minimal need for physical space or property. A

small office space can be rented or leased so that an organizational center for procurement,

distribution and other back-office functions exists in the city in which our services are available.

Apart from the food trucks that we will maintain ourselves in the cities that we operate, our food

truck business can also be expanded through the second avenue of growth at our disposal which
is franchising. Our food trucks will be available for potential franchisees and this will be

especially suitable for geographical locations, such as Multan, Karachi, etc., far removed from

the original place of establishment of the business i.e. Lucknow. The advantages that this model

of growth offers include the risk of doing business being shared between the franchisor and the

franchisee, and will also minimize capital needs and potential losses. However this also means

that a percentage of the potential profits will now go to the franchisee and also there will be a

change in the amount of control that we will be able to exercise over our business as a whole.

Additionally, it is difficult to supply an appropriate value proposition to potential franchisees as

the brand name will not be as established. However, franchising is a growth model used for

removed locations and will be implemented in the long term and only on a very small scale in the

short term.

EXIT STRATEGY:

An exit strategy is defined as a plan for the entrepreneur to capture the value created through

their entrepreneurial activity. There are a lot of factors to consider while devising an exit strategy

and these include the timing of the exit, the nature of the exit, and the extent of managerial

control to be retained. Now, the timing of the exit is aligned with the “grow and sell big” strategy

as we would ideally place the timing of the exit at 5-6 years as a business such as ours will take

some time to break even and grow beyond that. As our growth model entails franchising, we will

also require more time to build a bigger and more recognizable brand name. The level of

managerial control retained relies on the share of equity retained. We aim to retain a certain level

of managerial control in order to safeguard the brand that we will have created. Now, an IPO or a

financial investor for a venture like ours is unrealistic and cannot be classified as an appropriate

exit strategy. What is more suitable is to sell majority of the share to an industry player or
another company. If the brand has been built and the venture is an appropriate success, then the

attention of big business will be grabbed such as the Gourmet group of companies and it would

be highly profitable to sell majority of shares while retaining a certain level of managerial

control to Gourmet or a similar company.