Starting a Foodcart Business

A food cart is a business you can start on small capital, ranging from P30,000 to a maximum of P300,000, says Josm Rosuello, president of the Foodcart Association of the Philippines. Ease of set-up, low capital requirement, and high chances of success are making food carts the business of choice of many aspiring entrepreneurs. It’s also cheaper and easier to put up than restaurants.

In fact, even big fast-food chains are using food carts for their events or promotions. Another reason is that depending on your target market and marketing strategy, you can make a food cart either mobile or stationary. There’s also no industry standard for cart size, material requirements, and design, although food carts must use certain basic food-service safety materials.

Industry estimates show that the country’s different food cart formats – from pearl shakes, baked goods, siomai, fish ball, squid ball, to rice in a box-rake in more than P1 billion in sales every year.

In putting up a food cart business, the first thing to consider is the product you will be selling. It could be an exceptional product, maybe a family recipe not known to many, perhaps an innovation or variation of an existing product, or simply a very affordable product. Your choice of product will also determine the equipment you need. Let’s say you want to sell flavored French fries; it will mean getting frying equipment and a strainer. Your product, of course, will also determine the concept design for your cart.

Once you’ve decided on your product and cart design, you can choose your location. Many food carts are located in malls and MRT stations; others are in office buildings, school canteens, terminals—in fact, in any area with high foot traffic. Aside from the foot traffic, you also need to consider the lease contract and rent. Choose a lease contract that gives you a lot of leeway in promoting your business; as to the rent, it should be affordable and within your budget.

The food cart business has other advantages: It is manageable and portable. With a simple four- to 10-product menu, it is not as messy to manage as a full-service restaurant. And if the business does not work out in one location, you can easily move it to one with more foot traffic.

Proof of its ease of set up is the over 400 food cart businesses – some with over a hundred units each – sprouting in Metro Manila in the last few years. And because it is this viable, we enumerate the elements that have been making this a hot business:

The Cart

  • As a basic component of the business, the cart is a mobile, self-contained kitchen. It usually contains a griller or fryer, utensils, and storage space. And because it is also a self-sufficient unit that must push its products, the cart must have a signage – preferably in bold colors and in big print.
  • The minimum P30,000-starting capital will get you a small, wooden cart with a signage (P10,000 to P12,000), fryers and grillers (P10,000), and initial inventory and packaging for selling fish balls and squid balls (P10,000).
  • The capital requirement goes up correspondingly if you want sturdier, stainless steel carts with fancy food preparation equipment like broilers and blenders, and costly storage like refrigerators and freezers.

You can buy ready-made food carts or customized ones. The food cart maker will ask you for the specifications, such as the size of the food cart, the size of the selling area, the type of materials you want for the counter-top and for the signage, and the equipment your cart will need. These are just the basic specifications. Custom-made designs will require you to give more information to the cart maker. Some cart makers would be happy to help you design or conceptualize your cart and its signage.

Location is a factor when choosing the material for the cart. For instance, stainless steel, which can withstand the elements, is best for outdoor business sites. If you gross P2,000 a day, which is not an unreasonable projection if you have a good location, you can recoup your investment in less than two months.

The Location

As in any retail business, where you place your cart is as important as what you sell.

  • Putting one up at the mall food court is not ideal because you would be competing with others who have a complete arsenal of a commissary.
  • MRT and LRT stations are not always ideal locations for a food cart as people here are always in a hurry to get to their destination; they don’t notice what is around them.
  • Remember to factor in the public’s mindset and buying capacity for locations in or near public transport stations.
  • Rent at public transport stations goes for P150 to P200 per day while mall space for food carts costs around P25,000 a month.
  • Schools, where you have a captured market, is good location for a food cart business. But schools are picky when choosing concessionaires.

You’ll only need one or two persons to run each of your food carts, but you have to carefully choose them. They should be trustworthy, conversant, pleasing in personality, meticulous, and able to do basic arithmetic.

Make it a point to thoroughly train your crew on the product as well as on hygiene and sanitation. As important, you must be a hands-on owner. Visit your store frequently and do the inventory yourself. This way, you can effectively monitor the cash flow of your business and continuously improve your product.

Food Cart Tips

Josm Rosuello, Foodcart Association of the Philippines president, and Mark So, Businessmaker Academy chief operating officer, list down the ingredients that will turn your food cart business into a crackling success:

  • Hone your management skills. Although this business is about food, you don’t have to be an expert cook, but you need management skills to make it work.
  • Know your products better. Think of ways on how to make them sell well.
  • Join food cart trade fairs. Mine them for information on suppliers and ideas.
  • Understand your market. Study your market carefully and work on their preferences. “A food cart business may be a little slow in the first three months but if the lean period goes beyond that, you’re already in danger,” So warns.
  • Do not go on a price war. This is a sure way to make your business go bankrupt. “Big companies have extra stocks from other branches to sell, which is why they can lower their prices,” So reveals. Instead, offer value add-ons.
  • Replicate success. “This is a numbers game. Once you’ve successfully set up one, duplicate it at another location,” So says.
  • Cluster your food carts. Open at locations not very far from each other “to make the management and operation of your food carts much easier,” Rosuello says.
  • Sign up. Make noticeable signages that advertise your products well. Opt for colorful and bright colors that would attract attention.
  • Create your own value meal. Customers are always on the lookout for bargains. Offer budget meals and buy one, take one schemes. Make sure your profit margin is protected.
  • Offer value-added services. Free deliveries to customers in nearby areas are sure to generate more orders.
  • Market your business well. Banners and flyers are a good way to promote your business especially if you’re just starting out. Indicate promotional discounts and value-added services.

author: Aireen B. Laserna and Mishell M. Malabaguio, entrepreneur.com.ph