Restaurants are central to our social fabric. We all know that the government’s response to contain Covid-19 has universally and severely impacted the restaurant industry and as we all wait for the “New Norm”, it will be interesting to see how the restaurant industry pivots. As a result, could the food truck industry finally rise to prominence in Canada and save the restaurant industry?
Understanding the Benefits of Food Trucks
Food trucks provide an opportunity for chefs to create mobile restaurants where overhead costs are curtailed and the food truck service offerings are more inherently compliant with many social distancing requirements.
In addition, food trucks offer a mobility that facilitates a pop-up restaurant business model, which is very ‘au courant’. The food truck can be a stand alone operation or it can be a compliment to a standard brick and mortar restaurant.
Food trucks advertise and sell direct to the consumer and, given their inherent mobility, can easily alter their location to target their successful and loyal demographic. The food truck can come to the consumer, rather than vice versa.
The food truck industry is not a fad. In fact, it has been consistently gaining in popularity. In the US, the food truck industry is estimated to be valued at $2 billion, with an overall revenue growth of 300% in the last 3 years (pre-Covid). In 2019 alone, the US food truck industry grew 20%. The bulk demographic target of food truck consumers spans between 18 to 34. However, 54% of diners are aged between 35 and 44 years. Interestingly, 90% of food truck diners rate the quality of food truck food as excellent or good.
In the “New Normal”, it is likely that consumers will relish the opportunity of purchasing restaurant quality food without, actually, dining in a traditional restaurant. As always, there are legal considerations involved with operating a business and the food truck industry is no different.
1. Navigating the Regulatory Regime
The food truck industry is a highly regulated industry that is governed on a federal, provincial and municipal level. Abiding by regulatory requirements in respect of food and health safety, obtaining municipal street food vending permits, parking permits and refreshment truck licenses and complying with commercial vehicle operator registrations and permits for customizing the vehicle are just some of the added regulatory hurdles that food truck operators must conquer.
2. Corporate Structuring
Not unique to the food truck industry, it is important to consider the corporate structure of your business. Will you operate as a corporation, partnership or sole proprietor? Do you have investors or business partners? Do you intend to grow your business via a franchise business model?
3. Contract Negotiations
Regardless of your business structure, it is certain that you will need to enter into written contracts for the various players that will help you build out your business: independent contractors, suppliers, employees, etc. As we have all seen, small contractual provisions, such as force majeure, have become critically important. Without a properly negotiated contract, you are leaving your business vulnerable.
4. Building a Solid Brand
As with any B2C business, the brand in a significant corporate asset. This is especially so with food trucks, given their consumer’s target demographic and emphasis on social media following. Utilizing intellectual property laws to protect the creative ingenuity and distinctive components of the food truck brand is critical. Trademarks, copyrights and trade secrets are useful tools to protect your competitive advantage and build your branded monopoly.
5. Complying with Social Media Laws
Food truck entrepreneurs tend to be social media savvy and building a social media following is a prominent part of the business plan. Understanding how to comply with social media laws, anti-spam legislation, launching compliant contests, abiding by marketing and advertising laws and avoiding the ire of the Competition Bureau with compliant influencer marketing campaigns is critical.
Froese Law is here to help you. If you have questions, contact us at here.